In this episode of Business Casual, our hosts are going to discuss one of the biggest questions that most aspirants are probably wondering but are not openly discussed: Do M7 Business Schools offer the best MBA programs, or are they a product of an artificial construct orchestrated by elite private schools?
For decades, M7 has been a deciding factor for most students when deciding which business school to attend. Now the big question is, which one should you look at first in choosing a school: your focused subset or the brand reputation that comes with it?
[00:00:07.330] – John
Hi, I’m John Byrne with Poets and Quants. Welcome to our podcast Business Casual, with my co host Maria Wich Vila and Caroline Diarte Edwards. This podcast is sponsored by the Gies College of Business. Are you thinking about earning your MBA with the fully online IMBA from the University of Illinois Gies College of Business? You can earn your degree on your schedule without ever leaving your home. You’ll learn from Gies College of Business top faculty and build a global network of experienced peers. At a cost of just $23,000, it’s no wonder the IMBA comes with a 96% student satisfaction rate. Apply by October 6 to start classes in January. Learn more at onlinembaillinois.edu. Well, today we want to talk about the M 7. Now, you might ask, what is the M7? If you are a regular listener to this podcast, you probably know only because you would be in the know. But if you’re not, the M7 refers to the Magnificent Seven. It’s a group of super elite private business schools in the United States. Each of them recognizes each other as peers, and they’re generally considered to have the world’s best MBA programs.
[00:01:31.620] – John
Now, this is something that’s existed for decades. It was originally formed as an informal gathering of the deans. But even to this day, the deans of these M7 schools still meet on a regular basis, as do the admission directors, the career management directors, and even the PR people of the M7 schools must have the chagrin of other schools that are not included in this M7 construct. So to me, the question is, is this an artificial construct that has no meaning for the applicant and in fact, does disservice to the broader array of excellent business schools that have stellar MBA programs? The M7 are obviously Harvard, Stanford and Wharton. MIT, Columbia, Chicago, Booth and Kellogg’s School of Management. Every year we do a look at the M7. We basically examine them on every possible level, from the cost of the degree of these programs to their admit rates to their latest rankings. It’s a dissection of not only which schools they are, but how they’re performing against each other. Now, Caroline, I’m sure, will have a very strong reaction to the M7 because, after all, it’s completely US centric and fails to recognize the global nature of graduate management education.
[00:03:01.610] – John
Caroline. Am I right?
[00:03:04.190] – Caroline
Well, it’s fine as a reference point, I guess, for the US. Market, but as you say, it’s a rather myopic perspective of the business school market and the best business schools out there. This is a group of wonderful institutions and things don’t change terribly rapid in the business school world. So, as you said, top institutions decades ago, and they are still outstanding institutions, and I can understand the benefits for them of networking together and sharing information and collaborating and so on. But from a candidate’s perspective, I’m not sure it’s terribly useful. But there are a lot of other great programs out there that are, in my opinion, some of them as good as these schools in the US. As well as internationally. So internationally, in Sierra and on the business school are our peers with this group. And even in the US. Schools like Berkeley, Haas are just as good as these schools. So it’s a bit of an old fashioned perspective of the market, I think, and I’m not sure it’s terribly useful for an applicant.
[00:04:23.070] – John
Yes, I would agree with you. And I think it’s misleading because there is an obsession with the M7 when you could very much argue that schools like London Business School. INSEAD Yale School of Management. Dartmouth Tuck School of Business. UC Berkeley Haas School. Every British is good. If even not better. Than some of the M7. Certainly. And in many cases would be better suited for a given applicant. Given their own interests and passions. Maria, your thoughts?
[00:04:54.290] – Maria
Yeah, absolutely. I think whenever I’m in doubt for anything, I always go to the numbers. Not that numbers are the whole story, but numbers can tell a lot of the story. And so if you go to look at, for example, the starting salaries for graduates of not just the M7, but the top ten, top 15 programs, there is very little variability. And so what that says to me is that the market, even though applicants themselves may say, oh, it has to be M7, or bust the market, aka. The free market recruiters and employers are valuing people from other programs that are very good programs, but not technically in the M7, employers are valuing those graduates just as much. So when applicants get really all bent out of shape about it, it is an artificial construct. If there were like a 20% difference in that post graduation compensation, I would say, well, maybe you should really think about it. But it’s very little variability. And so, I don’t know, I feel so bad when I meet someone. Just yesterday I was talking to someone who is an aspiring web designer, web entrepreneur who got into the MMM program at Kellogg.
[00:06:15.240] – Maria
And I know that Kellogg is in the M7, but there are people out there who are like, well, Harvard, Stanford, Wharton and it has to be that. And if it’s not that, then I’ll be disappointed. But I’m like the MMM program, which those of you who don’t know, it’s like a design master, masters in Design. That’s one of the most amazing programs out there for what this person wants to do. And I was like, even if you were to go to Harvard, you would not get those design classes that you’re going to be getting at the Kellogg MMM program. So, I mean, we could talk all day long about all various examples about depending on what your goals are. I see. Use this example a lot. If you want to go into the entertainment industry, yeah, you can target the M7, but UCLA or even USC is going to get you in front of those decision makers doing projects, doing internships, and getting yourself set up on that career path. For example.
[00:07:06.650] – John
If you want a global education and you want to rub shoulders with people from all over the world and not token representatives in a US class, you would go to INSEAD and London Business School or at the same Paris or IESE in Barcelona rather than a US school. Caroline that’s what drew you to INSEAD originally?
[00:07:30.710] – Caroline
Yeah, absolutely. I was already working outside of my home country when I was thinking about applying to business school, and I was interested in having an internationally mobile career. And so in Sierra was extremely attractive, and it adds a huge amount to the learning experience to be in a classroom with people from literally all over the world who’ve worked in so many different industries and careers from different backgrounds. It adds a lot of richness to the conversation and to the learning experience. So it’s a tremendous community. And of course, that then gives you access to an incredible global alumni network. So wherever I go in the world now, I have friends, I have classmates, I have a database of alumni that I can reach out to. So it’s a wonderful asset to have.
[00:08:28.670] – John
And going back to what Maria said about compensation levels, not only are the compensation levels not all that different across, let’s say, the top 15 schools in the US. And some of the European schools. But more importantly, even the acceptance rates in some cases are lower at non M7 schools than they are at M7 schools. Berkeley’s acceptance rate is extremely low, lower than Columbia, lower than not MIT, lower than Kellogg or Chicago Booth, for example. And that acceptance rate, while it’s not everything, it does suggest how highly selective the school is. And some of these schools have. When you look at the stats on incoming classes in regards to standardized test and GPAs, some of these other schools have actually Gmail scores that are in the same ballpark with the M7. It also strikes me that in this day and age, the M7 strikes me as an elitist construct that’s more or less out of tune with today’s times. And I know there are schools just below the M7 that are frustrated, unhappy, and I’ll use the word pissed off that they are excluded from these meetings of admission directors, deans, and other officials of these schools.
[00:10:06.490] – John
Just because of some old fashioned notion of what the best MBA programs are isn’t any latest in a way for seven schools to continue to meet together. And I don’t even know they’re supposed to talk about best practices, but that even to me, suggests that there can be competitive interests or issues that evolve in these conversations, like we’re going to charge X amount for our tuition this year. We’re going up by 8%. What are you doing? Now, I know you guys might be squirrely about that, but I’m being realistic. Maria, can’t you imagine that happening?
[00:10:53.510] – Maria
I mean, they’d go to jail, I think, if they did that, so I can imagine it if they were caught in a fictitious Hollywood version of that meeting. I mean, yeah, only if they were caught, I guess. But why would you want to risk going to jail? Like, the tuition numbers are pretty public information, and the historic increases in tuition is also public information. So I don’t really know that there would be like, a huge benefit to being like, ha ha, you’re going to increase your prices by two 4%. We were only going to increase ours by two 2%. I don’t think that the benefit is worth the risk. Out to your question about whether or not it’s elitist, I just think it’s an interesting sort of artificial construct. Like, it just so happens that these seven schools were at the top of their game at a certain point and they decided to get together. It’s kind of like when people look at the Ivy League and they think that, yeah, it just so happens that the Ivy League schools often do have a good education. But the Ivy League was never founded as an educational it was founded as an athletic conference, like the Big Ten.
[00:11:57.530] – Maria
So when people say, like, oh, it has to be, I have to go to an Ivy League school, it’s like, well, yeah, but wow, you could probably get a better education at the University of Michigan or depending on what you want to do. And so I just feel that these labels it’s just an interesting human trait. Like this need to even within it’s not good enough to say, I’m going to a top 50 business school or a top 25 business school. Like, I’m not even going to a top ten business school. No, I’m in M7. And then within the M7, it’s like, well, there’s Harvard, Stanford, Wharton, and within Harvard, Stanford, Wharton, there’s Harvard, Stanford, and within Harvard, Stanford, there’s Stanford. And so it’s just like there’s this weird psychological need to always be kind of one upping the eliteness of something, and I don’t know what that says. There’s some sort of evolutionary psychology reason for that.
[00:12:48.210] – John
It’s true. We’re so rank conscious, aren’t we?
[00:12:50.310] – Maria
Yeah. But at the end of the day. It doesn’t matter. Especially because not to keep going back to career outcomes. But as soon as you get on that job. If you do go to one of those big employers. If you set foot on Amazon or Microsoft or McKinsey or whatever. Like the day you start working. It’s all about how well you work and what your output is. And no one’s going to be like.
[00:13:10.300] – John
[00:13:10.480] – Maria
Wait a minute. You went to Harvard. But you did a lousy job. But you went to a school that’s ranked higher than this other person. You went to Haas. Like, no one’s going to give you a free pass. You still have to do the work. So, I don’t know, I understand why from, again, evolutionary psychology and when we were hunters, gatherers, whatever, but boy, oh, boy, there are certain vestiges of our brains that do not serve us well in the modern world, and I think this is one of them.
[00:13:36.670] – John
So, bottom line, Caroline, what do you tell your applicants when they tell you, I want to go to an M7 school?
[00:13:44.090] – Maria
[00:13:44.780] – Caroline
I think it doesn’t serve candidates very well because they’re short changing themselves. If what they’re focused on is a specific subset of schools or a brand reputation, what they need to do is get to know the school as well and understand, given their background and given what they need to learn and given what they want to do post MBA, which school is going to be the best fit for them and which is the right community. And you need to do a lot more research to understand that than just to focus on shortlist of schools. As you say, that was formulated years and years ago. So it’s a starting point.
[00:14:29.880] – Maria
[00:14:30.430] – Caroline
And it’s a brand, I guess.
[00:14:32.630] – Maria
[00:14:32.840] – Caroline
It’s brand positioning. But it’s important as a candidate, given the amount of time and money that you can invest in your MBA, to really get under the hood of the program and understand how you’re going to fit in and what you’re going to get out of it. And that may well not be an M7 school.
[00:14:51.960] – John
Really true. The other thing I wanted to talk about is, what about going to an M7 school? So obviously we have Caroline, who went to INSEAD, which is often at the top of all the rankings of non US schools and has also been at the top of all the global schools in a ranking at the Ft in the past. And we have Maria from Harvard. I wonder if there’s a disadvantage in actually going to a school like INSEAD or Harvard because it sets expectations. Now, I’m not suggesting that a graduate from one of these schools cannot meet or exceed those expectations. What I’m suggesting is that sometimes people can have misinformed or misleading expectations of what to anticipate from a Harvard MBA, an INSEAD MBA, and could transpose certain attributes. Like everyone might think, not knowing Maria, that because she has a Harvard MBA, in her resume, she must be a sharp elbow master of the universe who only went to Harvard because she’s interested in making money. Maria, is that you?
[00:16:12.240] – Maria
[00:16:14.970] – John
We know you, and we know it’s not true.
[00:16:17.320] – Maria
I mean, if it is me, I’ve certainly made very odd choices in my life. Very good. I am not very good at executing on goals. Yeah, I think there’s obviously the stereotype around all elite MBAs. I think Wharton also suffers quite a bit from that sort of negative brand recognition. And yeah, I also think that there is an element of if an employer hires an MBA from a certain school, again, it’s so interesting to me how people tend to obsess with just getting into school. As if getting into school is the end of your life. You still have a whole life afterwards and you still have to work for 30 more years afterwards and you still have to you know, it’s so funny to me because if you get into the school and then they hire you and you’re not all that good at what you do, you don’t really have a lot of insight. People don’t like to work with you, it’s not going to matter. And in fact, if especially, like a smaller company hires you, they are going to expect you to do a whole lot of really impressive stuff all the time.
[00:17:25.010] – Maria
And so if you’re like, well, that’s not me, but if I can fool the admissions committee into letting me in, that’s all I need to do. It’s like, well, okay, even if you manage to do that, at the end of the day, you’re going to go work for someone and you’re going to have to have a lot of positive attributes. So it’s not just about getting in. It’s a marathon, not a sprint. It’s such an overused term. I hate it. But it’s overused for a reason, because it’s true.
[00:17:50.790] – John
Now, Caroline, your husband assures me that your elbows are as sharp as razors. Is that right?
[00:17:57.870] – Caroline
Well, I only sharpen them on him. I think there are misconceptions about people who go to business school and my experience has been very positive of my classmates, of the alumni. It’s an incredibly supportive community. So I think it’s a shame if there are misconceptions about who those people are. But I think employers and those are the people that count at the end of the day.
[00:18:31.760] – Maria
[00:18:32.030] – Caroline
The recruiters, they understand the value that MBA graduates bring and I’m sure that sometimes there are situations when those graduates are a bit too big for their boots right. And come in thinking that because of what they have achieved and the fact that they have graduated from a certain school, that their success is assured. I’m sure that does happen. Right. And I’m sure they get brought down to earth fairly rapidly in the real world. But generally, I think the schools do a good job of picking students who have the qualities that they will need to succeed. As Maria says, there is no point in getting into the school and the schools want to bring people in who are going to make the most of the program and be able to succeed where they graduate and make the most of that educational experience. So they are doing their best to pick people who have the qualities that will enable them to succeed. And hopefully that’s not all about sharp elbows.
[00:19:42.630] – John
Agreed. So there you have it. Yes, the M7 is an elitist, artificial construct. People are still obsessed with it. They shouldn’t be. There are many of the schools that are good or better for you than an M7 school. So I think the advice that Caroline mentioned earlier is the appropriate advice. And Maria, too. You find the school that’s right for you, and it may be at UCLA or USC, because you’re focused on the entertainment industry. Or it could even be a school that you wouldn’t think of that’s not even the top 20 or whatever. Or if you want a global lifestyle and global professional career, you might be far better off in an INSEAD London business school at Paris and Issa and Barcelona, or another European school. It’s all about you and what you need to succeed in life and to make it a meaningful experience, which is something we always say. But I think it’s important to remind people who are fixated on the so called M7. And I’ll admit, we feed this obsession with our annual looks at the M7 because we know, yes, people do search on Google for the M7, wondering what it is or how they compare with each other.
[00:21:10.840] – John
So we’re as guilty as anyone else out there for propagating this notion that there is an M7 that exists and is alive and well. And in true truth, it does exist. These deans are still meeting on a regular basis, but it shouldn’t mean a whole lot to you. This is John Byrne with Poets and Quants. I want to thank Caroline and Maria for their loss today. And I want to thank our sponsor, Gies College of Business. Are you thinking about earning your MBA with the fully online IMBA from the University of Illinois Gies College of Business? You can earn your degree on your schedule without ever leaving your home. You’ll learn from Gies College of Business top faculty and build the global network of experienced peers at a cost of just $23,000. It’s no wonder the IMBA comes with a 96% student satisfaction rate. Apply by October 6 to start classes in January. Learn more at onlinembaillinois.edu.