Are American business schools at the brink of collapse?

Former business school dean Roger Martin sees early warning signs of a collapse in the U.S. business school model, as he told U.S. magazine Fortune. Exaggerated? Beyond realistic you might say? Here are the worries that keep the former dean of the University of Toronto’s Rotman School of Management awake at night:

Enrolments at US business schools have been held at a high level due to an increasing percentage of international students. (LINK TO article U.S.: The online MBA programmes with the most international students) According to Martin, rising tuition and relatively stagnant starting salaries for MBA graduates have weakened the value of the degree, from a 170 per cent return in 2001 to 96 per cent last year.

Enrolments at US business schools have been held at a high level due to an increasing percentage of international students. (LINK TO article U.S.: The online MBA programmes with the most international students) According to Martin, rising tuition and relatively stagnant starting salaries for MBA graduates have weakened the value of the degree, from a 170 per cent return in 2001 to 96 per cent last year.
Technology has an ever increasing impact on traditional teaching methods, be it the introduction of MOOCs or online offers.
The more schools are struggling to attract paying students, the less faculty positions can be paid for. As Martin predicts: “Some 90 per cent of current tenure-stream faculty positions will not exist in the future.”
Due to less return on investment, Martin foresees many MBA students opting for one-year specialised master’s degrees, enrolling in online MBA programmes at a fraction of the cost of full-time, two year MBA experiences, or trying to get degrees by doing advanced education and progressing in their current jobs.

Martin’s quick MBA history run:
“The MBA has had this awesome run from a tiny business in 1955, when it was 5 per cent of all master’s degrees awarded in the U.S., until it became the dominant educational option in the U.S. In 1985, the MBA degree started to flatten out compared to other graduate education. It ceased to become the winner, but graduate education was growing by leaps and bounds so it became a bigger and bigger business largely due to the growth of graduate education overall. There were things about the market that allowed the people in it to say, ‘Things are fine. There is no problem here.’ But there are signs that things weren’t so great.”

What will the future hold according to Martin:
“In 20 years, there will be 10 per cent as many tenured faculty members as there are today. What I predict is that there will be specialist researchers and the really rich business schools will have 35 to 50 of them and Iowa State will have one. Students will mainly be taught by teachers who have a focus on teaching. “
Read the full article on Martin’s predictions in Fortune.

Barbara Barkhausen