The MBA Value Proposition in Europe

AACSB International Conference Madrid, May 23, 2005 The MBA Value Proposition in Europe Dr. Peter Lorange, President, IMD The Nestlé Professor Copyright 2005 © by IMD International, Lausanne, Switzerland Not be used or reproduced without permission A Key Question is: What is the MBA Value proposition in Europe? • • • We shall concur that there is a good European – based MBA value proposition But, what is different with this from a good Non-European one? Or, are we in fact talking about a good MBA Program vs a less good MBA Program? Dr. Peter Lorange, President 2 PL-AACSB International Conference A European MBA Value Proposition? • We shall see that there indeed is a merit in a European MBA value proposition – up to a point! Still, my belief is that the distinction between good vs less good programs in general is the more relevant question • • Thus, a top notch MBA could perhaps be formed virtually everywhere – provided that conditions such as the following are fulfilled: Dr. Peter Lorange, President 3 PL-AACSB International Conference A Good MBA Program • • Quality of faculty The quality of the participants • • • • • Innovativeness of program / Custom-based curriculum Leadership focus Entrepreneurship Networking Career services support Let us now consider some of these quality factors more carefully – but, first, a brief recap of some of the recent criticisms Dr. Peter Lorange, President 4 PL-AACSB International Conference Some recent criticisms. Challenges • Attacking the very core of the MBA re. • • • • relevance of programs? axiomatic nature of program structure teachers not managerially up to speed? motives and altitudes of the candidates? • And, perhaps, lack of development of a European MBA Value-Proposition? • Still, clearly we need good MBA education – we need good leaders for the future Dr. Peter Lorange, President 5 PL-AACSB International Conference Mature Nature of the MBA – Falling Demand • • • Let us keep in mind that the MBA degree is mature Demand is falling Placement is harder – and added value to the candidates is less clear Dr. Peter Lorange, President 6 PL-AACSB International Conference GMAT Application Trends Survey 2004: Full-time programs declining, EMBA increasing Application Trends by Program Type Up 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 78% 67% 48% 25% 16% 6% Full Time 2 year 8% 27% 25% 53% Flat Down 26% 21% Full time 1 year Part time Executive Source: GMAC Dr. Peter Lorange, President 7 PL-AACSB International Conference Dimensions of a Winning MBA Concept • • Here are some The European dimension is part of it! Dr. Peter Lorange, President 8 PL-AACSB International Conference Clear Uniqueness of a Program • In the past – a supply-oriented world of higher education • Today – demand oriented. The participant has an important view – hence listen! • It was • Axiomatic learning • • Professors acting alone giving their own topical, freestanding courses The participants’ learning profile: Rather passive Cross-disciplinary modules, integrated around problem area • Today • • • • Team teaching Dilemma focus, not on clear-cut answers Action-learning • Projects Dr. Peter Lorange, President 9 PL-AACSB International Conference Find the Right Participants • • • Good practice orientation – work experience Strong intellectual level – test(s) (GMAT) International experience • • Application process – to assess the clear leadership potential. Interviews – to sense the interpersonal dimension • Class profile / Diversity • • • • Gender Race Geography Educational and experience background Dr. Peter Lorange, President 10 PL-AACSB International Conference The need to listen to the customer • • • Participant feedback Alumni feedback Company/recruiter feedback Key themes seem to be: • • • Practically relevant learning Hands-on project-based action learning In an international, cross-cultural setting To summarize: • • “Real Life – Real Learning” “The Global Meeting Place” Dr. Peter Lorange, President 11 PL-AACSB International Conference The need to be flexible, team-oriented, network focus • • Focus on working in networks Team – based projects • Including consulting projects • Small group discussions • • • • Team-based grades Simulations and role plays Cutting-edge dilemmas Cross-cultural reality Dr. Peter Lorange, President 12 PL-AACSB International Conference Leadership and Entrepreneurship Develop Learning insights in how to: – – – See business opportunities Mobilize resources Lead a team of equals • Listening skills • Behavioral motivation • How? • • • Real-life projects Discussions with leaders Coaching, tutorials • Action learning Dr. Peter Lorange, President 13 PL-AACSB International Conference The Investment in Support • • • Career services support: coaching, recruiting, networking Marketing support: PR, Advertising, Brochures Computer-based support • • • academic: distance-learning marketing: the web administrative Dr. Peter Lorange, President 14 PL-AACSB International Conference In all of this, the Unique European MBA Value Proposition is key • Build on what might be unique in the European stakeholder context. Let us first – perhaps unfairly – contrast this to what might be a US profile European US • Monoculture • Profit maximization • Shareholder and individual wealth • National focus • “right” answers • Multiculture • Many stakeholders, framing a quality of life • Global Meeting Place • Dilemmas • Multicultural teams • Boundary spanning • Relationships; co-exist • also, inefficient Dr. Peter Lorange, President 15 PL-AACSB International Conference • National culture • Inward focus • Transactions; negotiations • also efficient, best practices The European MBA program challenge thus is to • • • • • Build on the meaningful European characteristics in the curriculum But in a way that brings all perspectives together – from all over the world The Global Meeting Place And European is no more “right” than views from any other part of the world Focus on Dilemmas – not Right-or-Wrong Dr. Peter Lorange, President 16 PL-AACSB International Conference Beyond this – a critical Issue: Role of the MBA in a School’s overall portfolio of activities – A school’s new thought leadership, knowledge edge comes from • • Research Learning from leading executives – – This must be brought into the class-room fast! Key that the MBA program becomes an accelerator for development/dissemination of new knowledge Dr. Peter Lorange, President 17 PL-AACSB International Conference Integrate new Research Insights Fast • • • How to integrate this into the MBA program – fast? One-section program – with no coordination across section issues Flexibility of small program Dr. Peter Lorange, President 18 PL-AACSB International Conference Integrate learning from leading executives – Best Practices • Symbiosis is critical of: – – leading practitioners MBA candidates – – executive participants faculty • • • MBA Program to be taught by professors who are also active in executive education teaching – and in research based on practitioners Not a separate MBA program group, but the same team that also works with executives! One learning portfolio! Dr. Peter Lorange, President 19 PL-AACSB International Conference In all of this – also some key Financial Issues • The MBA represents a value proposition that is relatively mature • • • • Supply by far outstrips demand New programs are added every day The number of takers of the GMAT test is falling! The value to the participants is perceived to fall Dr. Peter Lorange, President 20 PL-AACSB International Conference Financial Issues of MBA programs • • • The Economics of offering a MBA does not give much leeway re. the upside Competition on the fees Expensive program design to run: • • • Field trip Specialization sessions Auxiliary learning offerings, beyond the professor • Heavy on IT, the Web, etc. • • Hence, not much positive financial contribution Scalability of several sections not obvious either re. financial benefits Dr. Peter Lorange, President 21 PL-AACSB International Conference Hence, should we reconsider the size dimension of MBA program? • • • One year, instead of two? Why large, multisection programs? But, are our schools able to make such shifts? – – – our professorial staffing the size of support staff cash-flow dependency Dr. Peter Lorange, President 22 PL-AACSB International Conference Conclusions • • • There is a fundamental restructuring of the MBA “industry” ahead! Demand is falling – dramatically There is a strong MBA value proposition – built on quality, on excellence – probably not on mass! A European perspective can add significantly to this The strong MBA must be seen as an integral part of a School’s broader portfolio of offerings – particularly executive education • • • Innovation will be as key as ever – but harder than ever to achieve! Dr. Peter Lorange, President 23 PL-AACSB International Conference Backup Slides Dr. Peter Lorange, President 24 PL-AACSB International Conference Briefly also, some contrasting dimensions with Asia • China – A capitalistic focus – “copy” of US model? – Still, very old society – Relationships! Rather introvert/isolated Language disadvantage Only a few companies “ready” for MBA? • Japan – – • India – – Language advantage Dr. Peter Lorange, President 25 PL-AACSB International Conference Median MBA compensation at graduation Thousands $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 HBS Insead LBS IMD 2000 2002 2004 Source: Business Week Rankings Dr. Peter Lorange, President 26 PL-AACSB International Conference