2020 Volume 23 Issue 1

Editorial: COVID-19 and the Future of Management Education

Editorial: COVID-19 and the Future of Management Education

Even prior to the onslaught of COVID-19, the business school community was experiencing continued fissures in their basic financial model. This condition was being driven, in part, by the decline in demand for MBA graduates. The recent outbreak of COVID-19 has further exacerbated an already dicey situation. Many B-schools have quickly responded to COVID-19 by increasing their online presence as a stopgap measure in the short term and potentially a long-term solution to their ongoing economic challenges. Alas, these actions may not be a complete solution to the problem. To remain competitive in an ever-crowded field, some business schools are offering online programs at prices 50 percent less than their comparable traditional programs. Moreover, to help facilitate the transition to distant learning many B-schools have reached out to the burgeoning online program managers (OPMs) community.

Online Program Managers (OPMs)

During the present crisis OPMs have done yeoman service in helping some B-schools make the transition to online in a timely manner. Other schools have made this transition internally through a combination of their LMS and Zoom platforms. With respect to the OPM approach, the basic financial model is to share the revenue stream, often more than 50 percent of tuition income, via a long-term contract, which can last a decade or longer.

The OPMs claim that these long-term, high-revenue share contracts are required because they assume most of the costs at the beginning of the partnership. Large student enrollments, which OPMs assert is one of their specialties, are needed to make up for the net low margins per student. At a minimum, the academic institution needs to cover the basic operational cost for delivering the program, which means employing highly paid faculty to teach online sections can become a prescription for financial ruin, especially if enrollments lag. Furthermore, some OPMs market in the school’s traditional recruiting space, which results in the OPM directly competing with the institution for the same students. In response, some B-schools have established zip code-based exclusionary zones.

The issue of maintaining accreditation also comes into play with the OPM model. For example, to achieve and maintain AACSB accreditation, the institution must align with a set of 15 business standards ranging from mission and strategic management to student engagement. In some scenarios, the OPM provides the course instructors, who may or may not have the academic standing to pass accreditation muster. Also, whereas the basic objective of the for-profit OPMs is to satisfy their shareholders, the primary mission of the university is to focus on quality and values, specifically developing young men and women for lives of purpose, service, and leadership. Clearly, the classic OPM model is not for everyone. In response, some schools have developed an internal online capability, while others have adopted a hybrid approach where one or more program components are contracted out to third-party providers, for example, marketing.

If you are planning for a year, sow rice; if you are planning for a decade, plant trees; if you are planning for a lifetime, educate people. – Chinese Proverb

Business Community Demands

These delivery and financial dynamics are compounded by the growing divide between the business community and work product from many business schools. Today, business is looking for graduates that are adaptive, problem-solving oriented, and web-savvy. To that end, industry has increased spending for both training and education, which is estimated to exceed $200 billion annually by mid-decade. One significant exception to this disconnect are graduates with a STEM specialization. Recent estimates suggest that the demand for graduates with deep analytical skills will approach 200,000 in the United States alone over the next few years, with requirements for supporting personnel reaching nearly five times this estimate over the same period. While the impact of COVID-19 will affect these estimates in the short term, there is little doubt that business community will continue to move towards a more evidence-based management style in the years ahead. To provide a perspective, B-schools in the United States graduate only a fraction of these numbers and most do not possess deep analytics skills. Furthermore, the number of students graduating with an analytics specialty is even lower.


And so, the basic question, given these ongoing challenges, is how can schools of business remain both competitive and economically viable throughout the 21st century? For many, the answer is globalization! Yes, globalization … which of course has been the vehicle for distributing the current plague on a worldwide basis. Nevertheless, a recent AACSB report suggests that business schools should consider forming strategic global partnerships, which have the potential for improving operational efficiencies, thus resulting in a competitive advantage. These strategic partnerships can foster collaboration across many dimensions, including business schools, business entities, research associations, governments, and third-party providers. To this end, crowdsourcing provides the vehicle for connecting these groups for the general purpose of developing global-centric management capabilities. Typically, the crowdsourcing paradigm is facilitated through social media. Social networks have improved workplace productivity by enhancing the communication and collaboration between employees, which aids knowledge transfer and consequently makes organizations more agile. This same technology-driven approach can be applied to improve the learning process and outcomes throughout the management education universe. What is needed, in this regard, is a leadership awakening that embraces the globalization-technology paradigm.

Suddenly, the fingers of a human hand appeared and wrote on the plaster of the wall, near the lampstand in the royal palace. The king watched the hand as it wrote. His face turned pale and he was so frightened that his legs became weak and his knees were knocking – Daniel 5:5-6.

Historically, many schools of business have established relationships with educational institutions and business entities throughout the world, which have provided a source for both faculty research/consulting opportunities and student international trips/internships. However, these initiatives often tend to be discrete in nature, for example, annual trips and exchange students. What is needed, and is at the heart of the globalization paradigm, is a continuous operational process. To achieve this objective, B-schools need to establish long-term relationships with like-minded institutions around the globe, for example, schools that believe that students should be trained to promote sustainable value for business and society.

One starting point, in this regard, are the Principles for Responsible Management Education set forth by the United Nations. The establishment of core mission and vision statements between partners represents a critical step in the maturation process. Any strategic alliance agreement will also need buy-in from both sets of stakeholders. The establishment of global institutional networks will, for example, allow students to take courses at multiple universities as part of their degree program. This learning format will not only provide students with a more global learning perspective but will also improve institutional efficiencies by offering courses that would otherwise not be offered due to low local demand. Common core curriculum design and adoption represents another benefit of strategic partnerships. Going global also expands market opportunities into population sectors that are presently not well served by the business school community. Global internships represent another significant benefit of strategic partnerships. The Graduate Management Admission Council reports that internships continue to serve as an avenue to full-time positions for many business school graduates. Imagine the learning opportunities associated with a student or student team engaging in an internship with a firm located in another part of the planet. These type of experiences can go a long way in helping to close the gap between the needs of business and the management education universe. Specifically, global-based networks encourage students and student groups to work collectively and with other groups on an international basis, which better prepares them for employment opportunities in the post-COVID-19 global marketplace.

Mergers and Acquisitions (M&A)

Mergers and acquisitions (M&A), which were experiencing an uptick in higher education, represent a natural complement to developing strategic partnerships. Historically, M&A were viewed by most educators with utter disdain. However, given the new dynamic, M&A provide a vehicle for maintaining economic viability for candidate institutions facing financial challenges via economies of scale, scope, and fit. For example, the merger of an undergraduate business school with a primary graduate business school could provide a steady stream of candidates for various graduate programs as well as enhanced internships and employment opportunities for the undergraduate students.

Another benefit of a well-designed M&A would be the consolidation of IT resources, which continues to consume a larger portion of the overall business school’s budget (i.e., economies of fit). The onslaught of COVID-19 will make already marginal schools even more susceptible to the M&A process. One of the key steps in the M&A process, of course, is to identify candidate business schools or entities that are in a state of financial distress or facing other challenges. Interestingly, OPMs could serve as a third-party intermediary for various B-schools under their umbrella and could provide integrated services during the M&A transitional process. OPMs can also assist in times of unexpected disasters, for example, school closures prompted by COVID-19. In this role, OPMs could serve as important transitional vehicle for helping schools manage in both the short term and long term. It is difficult to imagine that after COVID-19 passes; B-schools will ever return to business as usual. That being said, B-school leadership in a post-COVID-19 world needs to transition from defense, which was totally prudent in combating this plague, to offense. Specifically, leadership can go on offense by embracing a combination of strategic alliances, M&A, and enlightened OPM arrangements as the core pillars of the new business school universe.

If you find yourself in a hole, get smart and STOP your digging immediately. – Mark Twain

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Author of the article
Owen P. Hall, Jr., PE, PhD
Owen P. Hall, Jr., PE, PhD
Owen P. Hall, Jr., PE, PhD is a former Corwin D. Denney Academic Chair and is a Professor of Decision Sciences at Pepperdine University’s Graziadio School of Business. He is a Julian Virtue Professor and a Rothschild Applied Research Fellow. Dr. Hall received the Harriet and Charles Luckman Distinguished Teaching Fellow in 1993, the Sloan-C Effective Teaching Practice Award in 2013, and the Howard A. White Teaching Excellence Award in 2009 and 2017. He is the vice-chair of the INFORMS University Analytics Programs Committee. Dr. Hall has more than 35 years of academic and industry experience in mobile learning technologies and business analytics.
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