The Demise Of The MBA + How Schools Are Dealing With The Supreme Court’s Affirmative Action Decision
Maria |
July 26, 2023

In this episode, our hosts dive into two super important topics related to the recent Supreme Court ruling. First off, they tackle the whole MBA scene, the perceived decline of MBA programs, and what that means with fewer applications and program closures in US MBA schools. They’ll also shine a light on the positive side, talking about the resilience of MBA enrollment and the growth of online MBA programs that make up for it. They also take a look at the rising popularity of MBA programs in China and India, and why they’re becoming promising alternatives after the Supreme Court ruling.

To wrap things up, they talk about the aftermath of the Supreme Court’s decision on affirmative action and share how certain business schools are tweaking their essay prompts to get a better picture of candidates’ backgrounds without straight-up asking about race or ethnicity.

Listen in as we break down how the recent Supreme Court ruling impacts MBA education and affirmative action!

Episode Transcript

[00:00:06.970] – John

Well, hello, everyone out there. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co hosts Caroline Diarte Edwards, Maria Wich Vila. We’ve got two topics for you today. One is the MBA’s demise, and we’re going to talk about that in the context of a column written by the former CEO of GMAC, Sangeet Chauffla, who entitled his essay reports of the MBA’s demise are greatly exaggerated. We’ll explain why he thinks that and what we think of his perspective. And then we want to talk about the aftermath of the Supreme Court decision on affirmative action and how some schools seem to be responding, changing their essay prompts, and getting that things that may help them admit a diverse class in the aftermath of a ban on outright affirmative action. First, let’s talk a little bit about the MBA’s demise. We know, obviously, that we’ve had a few years of declining applications to US. MBA programs, and there have been a number of program closures as well, which is partly the reason why some people might think the bloom is off the rose of the MBA degree, which, as Sangeet points out and this is really true.

[00:01:30.900] – John

It’s the greatest educational innovation of the 20th century because it is, in fact, still the number one graduate degree in America today, despite some decline. His argument is that you need to look at this in a global context. So while residential full time MBA programs in the west have declined and some have fallen to the wayside things in China and India have heated up, schools have gotten better there, and the market has shifted in the same way that the market in the automobile industry shifted from GM to Toyota to Volkswagen to BYD in China. And what we’re seeing here is nothing more than the ebb and flow of the economy and how that changes the dimensions of the demand for the MBA. And at the same time, he’s pointing out, which is something that we’ve pointed out in the past, that if you look at the growth of online MBA programs, you have seen explosive growth in the US. That more than makes up for any possible decline. And in fact, overall enrollment in MBA programs is probably at record levels, given the online MBA phenomena. Maria, what do you make of all this?

[00:02:48.150] – Maria

I think that he makes some really excellent points in his article, so everyone should go check it out, because I think he’s really thoughtful, and I think that it’s easy for people to fall into a pattern of hand wringing over everything. These numbers are down and these numbers are down. But he brings up really good points about the points that you brought up, about the overall numbers going up and just the demand and the locusts shifting more to Asia. The other point that he made that I thought was really insightful was that when a company is growing, it tends to hire MBAs because the MBA has sort of a general management strategic perspective versus when a company is cutting costs. They tend to hire people from the specialized Master’s programs, which are shorter in duration, much more tactical, much more hands on in one specialized area. And that was sort of a differentiation that I had never thought of before. So I think the overall category, I not only think that overall enrollment in MBAs total is probably the same or going up, as you pointed out, but in fact, if you broaden that umbrella to cover graduate education in business related topics, I think it’s overall very strong and will continue to be strong.

[00:04:00.840] – John

Yeah, very true. He makes a point too, and this is kind of interesting, is that for every MBA program in the US. That is closed with 50 to 100 student intakes, they’ve been essentially replaced by programs in the east with 500 to 1000 Cohort programs. Which is true. In fact. Caroline, you’re our global expert. What do you think?

[00:04:24.870] – Caroline

Yeah, I thought it was an excellent article, and I agree that it was a very interesting point, as Maria said, about his distinction of how companies will often recruit MBAs versus specialized masters. And then, of course, it’s true that a lot of those specialized masters are offered by business schools. So business schools have innovated, and they’re offering different programs beyond just the traditional full time MBA programs. So whilst there may be closures of some MBA programs, there are also new programs opening all the time. So it’s not as if there is a demise of the business course sector as such. Definitely not in the US. And I liked his segmentation of the market in how he talked about you have the elite programs in the US. Particularly, that are doing incredibly well and will continue to do incredibly well, and then you have the international programs that are in the one year programs and therefore more attractive to candidates who are looking for a lower cost option, and then you have the online programs. Right? And so there seems to be a sort of segmentation where candidates are choosing one of those three different options.

[00:05:45.470] – Caroline

And if your program doesn’t fall into one of those categories, then, as he says, you may find yourself in the mushy middle, and that’s not a comfortable place to be. And so I think that’s why we have seen the demise of some programs, particularly in the US. Where they struggle to compete with the other options that candidates have now, right. Which they might not have considered in the past. It’s a much more global market than it used to be, or any in the US. Or a much more national market in the US. For candidates who may not consider going abroad, but they may consider other options in the US. Beyond their local area than they might have considered in the past. And so some of those more local options struggle to attract candidates because, for example, why not do a great online program from a prestigious MBA versus choosing a local no name business school MBA option? So I thought that segmentation into those three buckets was quite interesting.

[00:06:51.490] – John

Yeah. And yesterday we had the second day of our online MBA festival. And what’s interesting is we interviewed current students along with admission officials, and many of the students were in that 20 something pocket, which is usually obviously the sweet spot for a full time residential program. And for whatever reason, maybe it’s through the sole earner in their family. Maybe it’s because they just have a job. They don’t want to leave. They’re happy there. They don’t want to go off for a year or two years and would prefer to get the degree online. So you’re also seeing some of this different kinds of segmentation, even in the online MBA market, that’s drawing some people away from the residential full time market. I had to laugh, Caroline, at your use of the word mushy and, of course, your English accent, because it brought me back to the days of stopping by a pub on a road trip in the UK and having fish and chips with those mushy peas.

[00:07:52.970] – Caroline

Mushy peas. I love mushy peas.

[00:07:55.750] – John

There you go. The other thing I think that needs to be pointed out, too, is that we obviously follow very closely and speak most about what I would call the elite programs, the most highly selective programs in the world. And even though in those programs applications may be down, they are still highly selective. Their applicant pools are incredibly deep. It’s very competitive and very hard to get into those schools, which is why Caroline and Maria are in the business that they’re in, helping people get into them because they’re not very easy to get into. And there’s no shortage of demand for programs that have great brands, terrific alumni networks, the best and brightest faculty, and in fact, the best and brightest students. So there is that truth in the marketplace. So when you read the naysayers out there about the decline of the MBA, you got to remember, they may be talking about the closure of a second or third tier MBA program that had 50 people going to it once a year and was in the red. They’re not referring to Harvard, Stanford, Kellogg, Columbia, Dartmouth, et cetera, which is at the high end of the market and still is incredibly strong and robust.

[00:09:19.400] – John

The other thing about business education in general is business schools, I think, have never been stronger, and here’s why. Most schools have capped their undergraduate enrollment. So if they have undergraduate business students, there are so many people who want to major in business today that they can’t accommodate all of them. So in most of the schools, there are limits, quotas that prevent many people who want to major in business from majoring business, because there’s been such an explosion in undergraduate enrollment. And Maria mentioned the specialty masters market. That market has exploded with specialty degrees now in sustainability, in, obviously, supply chain management, which is a very hot topic, business analytics and the traditional finance, accounting, and marketing specialty master’s degrees. Most of the schools out there have a large portfolio of these degrees, and they’re quite popular, and the employment rates out of them are very good. So you look at the overall picture, and business schools probably have never been in a better position. Let’s talk about the Supreme Court’s decision. After the Supreme Court made its decision on affirmative action, we had a podcast and we did an instant analysis. Now we’re seeing more of a market response out there.

[00:10:38.910] – John

Caroline, what are you seeing?

[00:10:40.640] – Caroline

So there have been a number of changes to essays, so some new essays or tweaking of the wording of existing essays. And I found this very interesting because maybe I’m reading too much into the tea leaves, but I do think that a lot of this is in response to that decision. Well, so one obvious change is that HBS has actually taken out a question relating to candidate background. So they have taken out a question that read, we understand that your racial, ethnic, and cultural background may not be fully captured by the above options. So that was referring to the checkbox, right? The racial ethnic checkbox. Please feel free to use the space below to share more about your racial, ethnic, or cultural identity. So they have taken that out. But on the other hand, other schools have asked questions where they seem to be inviting candidates to say more about their background. So it’s interesting that HBS is taking question out and other schools are adding questions in.

[00:11:42.660] – John

And they may be more sensitive to this because the two cases involved Harvard and UNC at the Supreme Court. So they’re probably in the overreaction stage.

[00:11:53.590] – Caroline

Yes, they’re in the hot seat, right? So they probably deleted that pretty quickly. So, number of changes. So I’ve noticed changes at Kellogg, Tuck, Fuqua. I’ll start with Kellogg. So Kellogg has two brand new essay questions. So the first essay asks about so it says, Kellogg leaders are primed to tackle today’s pressing concerns everywhere from the boardroom to their neighborhoods. Tell us about a time in your life where you’ve needed a combination of skills to solve a problem or overcome a challenge. Which skills did you use and what did you accomplish? So I think that the use of the word neighborhoods in there is interesting, right? It’s looking at the context of people’s life experiences beyond work. It’s not just looking for stories about their professional experience. It’s looking at their life experience as well. So I think that’s quite an interesting addition to the wording there. And then essay two is more pointed. So the new question is, at Kellogg, our values are based on research that concludes organizations comprised of leaders with varied backgrounds and perspectives outperform homogeneous ones. How do you believe your personal and professional experiences to date will help to enrich the Kellogg community?

[00:13:21.730] – Caroline

So that’s really looking to tease out stories about how candidates have been in diverse environments or perhaps they have a diverse background. So I think schools are really trying to signal to candidates that they want to know about their background. They want to understand their stories of what has shaped them. They want to really understand their personal story and not just their professional story, and to send a message to candidates that they are committed to building a diverse classroom in the context where they know that candidates know that they are not able to take those checkboxes into account. I think, you know, they have tried to be more explicit in the essay questions to signal to candidates, please tell us your personal stories. Right? And so with Tuck, for example, they have a new question tell us who you are. How have your values and experiences shaped your identity and character? How will your background contribute to the diverse Tuck culture and community? And then they also have a new question describe a time you meaningfully contributed to someone else’s sense of inclusion in your professional or personal community. And CBS has also reintroduced an old question about diversity equity inclusion, which they had dropped, I think, for a couple of years, and they’ve reintroduced that.

[00:14:56.430] – Caroline

So the question is about let me just bring this one up. So the new question is the Phillips Pathway for Inclusive Leadership is a co curricular program designed to ensure that every CBS student develops the skills to become an ethical and inclusive leader. Through PPIL, students attend programming focused on five essential diversity equity inclusion skills. It describes those. Tell us about a time when you were challenged around one of these five skills. Describe the situation, the actions you took, and the that’s, you know, clearly a dei question that was dropped and then has made a comeback. So I think know the schools are looking to signal to candidates that they know they’ve made statements as well, right, right after the ruling came out from the Supreme Court that they remain committed to building a diverse classroom. But I think that they are trying to signal to candidates that they are explicitly looking for those stories from them in their essays because they will be blind to those racial ethnic checkboxes. Right. So they need the candidates to be more explicit in telling them about their backgrounds in those essays.

[00:16:14.910] – John

Right. Caroline, do you think your tea leaf interpretation is on the mark? I think it is. The other thing is, I think people are looking for more detail so that they can admit a diverse class without saying it’s a minority. Right. So, in other words, if you put more emphasis on, and we mentioned this before, income or first generation or you get more information on one’s backgrounds and the adversity that they had faced, it’s more colorblind, but it’s still looking for people who’ve been able to overcome difficulties in a way. Right?

[00:16:52.530] – Caroline

Yeah, that’s right. I think also schools have been preparing the ground for this for some time. And of course, this legal case, I think has been running for like ten years. Right. It’s been running for ages. And so schools knew that they knew that this was going to happen and they knew what the likely outcome was. I was talking with someone from MIT recently and he well, actually, I was talking to him the day the decision came out and he, you know, we’ve been anticipating this. Right. They knew it was going to course, you know, they have a lot to digest because it’s a very complex ruling, it’s a very long ruling and there’s a lot for them to figure out in terms of how they implement this. But I think it’s interesting, MIT last year, they introduced an optional short answer question and I think that that was in anticipation of this decision. So they introduced a question last year which reads, how has the world you come from shaped who you are today? For example, your family, culture, community, all helped to shape aspects of your identity. Please use this opportunity if you would like to share more about your background.

[00:18:05.200] – Caroline

So that’s an optional question. 250 words. Right. So it’s about half a page. So I think that they were anticipating that at some point they’re going to be looking to the essays to learn more about people’s backgrounds because they won’t have access to that checkbox anymore.

[00:18:23.180] – John

Right. Maria, your take.

[00:18:25.490] – Maria

Yeah. In addition to all the changes that Caroline pointed out, there was a subtle thing that I recently, only recently noticed about the Columbia Diversity essay. This was an essay that did exist a few years ago and they brought it back. But I think it’s interesting that there are some little subtle changes to the wording that I think means that the bar is being raised. So I think schools when some of these issues really started to come to the fore of the national consciousness or perhaps international consciousness a few years ago, and schools began sort of introducing some of these diversity essays, it was more around talk about exposure that you’ve had to diverse people. And now I think the bar is getting progressively higher for OK, it’s been a few years now that we are all more aware of these topics. So are you actually doing things about it? So, for example, this is so subtle, but the CBS diversity, the Phillips Pathway for Inclusive Leadership, it used to say, it listed out these five different creating an Inclusive Environment, mitigating Bias and Prejudice, and these sorts of five topics around diversity. And first of all, they’ve updated the language a little bit.

[00:19:38.620] – Maria

So before there were a few opportunities for you to be a little bit more broad. Like one of them was called Managing Difficult Conversations and it’s been changed this year to Managing Intercultural Dialogue. So I think maybe when they first had this question a few years ago, people who had not done anything with people who were different from them were like, oh, a difficult conversation was a time that I told my boss that I wanted to raise. But now they’re making it more specific so that people can’t kind of wiggle out of it. And the core question used to say, tell us about a time you were challenged around one of these five skills and now it’s describe a time where you had the need to utilize one or more of these five skills. So before you were challenged around one of them and now it’s like utilizing to me has a much more proactive connotation. And so I think that they are really trying to raise the bar and I think there are a few other little subtle examples as well. Another school that has changed its essay questions to I believe also incorporate places where people can talk more about their background is Yale.

[00:20:46.130] – Maria

So for years, Yale’s question, they had one question and it was describe the biggest commitment you’ve ever made. And now they’ve got a couple of different options where you can still answer that one if you want. But they gave you an opportunity to talk about a community that you’ve contributed to and learned from and also the biggest challenge that you’ve ever faced or a big challenge that you’ve faced. And so I think that they’re basically opening the door for people to talk about what’s meaningful to them, but just perhaps in slightly different ways. My take on it is that they are still fundamentally the same question. They still want to know what’s important to you but they’re kind of providing different flavors of it so that you can talk about things like coming from let’s being the first in your family to go to college, for example, or coming from a less affluent background, for example.

[00:21:37.710] – John

Right? Yes. And I’m sure that more schools are going to be changing things around a little bit more. Probably we’d see more of an impact next year because in some cases, even though the Supreme Court decision was anticlimactic, everyone assumed that the court would ban affirmative action admissions policies. The full brunt of that and much of the thought about it and how to change admissions policies still lags to some degree. I know some admissions officials who told me they’re having trouble getting real guidance from the legal department about what they can and what they can’t do, just like within weeks before the decision was made. So they felt paralyzed, in fact, to change or do anything about it until a decision was rendered. People could read the decision closely and see if there are other ways that they could sort of get at what they need to get at in crafting a good class. So I would bet the biggest changes will occur in the next admission season when people have had the time to really think about this and figure out, okay, how do we still recruit, admit and enroll a highly diversified class of MBA students?

[00:22:59.450] – John

So we’ll see that, I’m sure, in the next round. Okay, so there you have it. Is the MBA in demise? No. Are business schools in trouble? No. Are business schools changing what they ask of applicants to get a better read on them and make better selections? Yes. All your answers to all the MBA questions are answered here at Business Casual. Thanks for listening. This is John Byrne with Poets and Quants.

The Demise Of The MBA + How Schools Are Dealing With The Supreme Court’s Affirmative Action Decision
Maria |
July 26, 2023


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