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The Impending Disruption of Traditional Business Schools

Some think B-schools are headed online. Others don't think B-schools can even teach entrepreneurship.
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"Half of the business schools in this country could be out of business in 10 years--or five," is the prediction Richard Lyons, the dean of University of California, Berkeley's Haas School of Business, made to Bloomberg Businessweek not long ago. 

Robert Lytl, an education consultant at the Parthenon Group, is advising directors at B-schools "to stop dallying and start building [online] programs," according to the Bloomberg Businessweek article. "Once you get out of the top tier of schools, you're either already online, on your way there, or dead in the water," he observes.

Which raises two questions for entrepreneurs: (1) Is traditional B-school education going the way of Blockbuster video? (2) If so, does it matter for you, as the leader of a startup or growing business? 

Online Learning vs Business Schools

Why might business schools go out of business? Lyons believes more top MBA programs will start to offer degrees online. That could cause trouble for lower-ranked business schools. "When the big players start offering online degrees, they'll draw far-flung students who might otherwise have opted for the convenience of a part-time program close to home," notes the article. 

Fair enough. But is it a sure thing that top MBA programs will start to offer online degrees? 

I'm not sure it is. I presented both Harvard Business School and Dartmouth's Tuck School of Business (neither of which currently offers an online MBA) with Lyons' theory, as it was presented in the Bloomberg Businessweek article. Then I asked: How do you make the case that attending B-school in person, in the flesh, in classrooms, on campus, is actually important in 2014, in a way that provides a legitimate value-add over pursuing an online degree?

HBS's Director of Media Relations Jim Aisner promptly replied (the bold emphasis is mine): 

Each year, the Harvard Business School MBA program brings some 900 students with at least two years of work experience to campus from about 70 different countries to immerse themselves in a program that requires constant interaction among students and professors via the case method....Students learn from their professors, but they also learn from one another both inside and outside the classroom via their courses, numerous experiential and entrepreneurial learning opportunities, and extracurricular activities. One result of this is a deep-felt camaraderie among the students, most of whom live on a 40-acre campus community....

As you can see, Aisner mentioned (and I highlighted) a few aspects of a B-school education that are harder to come by in an online setting: Interaction, experiential learning, camaraderie, and community. As for Tuck, here's what Penny Paquette, assistant dean for strategic initiatives, had to say (boldface is mine): 

As Dean Paul Danos recently wrote in an article for Tuck Today, the school's alumni magazine, "Virtual, online experiences will never be the same as immersing oneself for two years of intensive learning with talented, like-minded people from all over the world and interacting one-on-one with faculty who are thought leaders in their fields and passionate about sharing that knowledge. There is no synthetic substitute for that. There will always be a place for full-time residential programs like Tuck's if we continue to provide a truly transformational experience." A Tuck MBA is so much more than a collection of courses--it is an experience in the best sense of the word and our students live and breathe it 24/7.

I'm not trying to make this article an advertisement for HBS or Tuck. But it's telling to read responses like these to a media inquiry about the rise of online B-school degrees--and the potential demise of formal B-schools. 

Do Entrepreneurs Need Business School? 

Mind you, whether entrepreneurs or small business owners truly "need" B-school degrees is an open (and often hotly debated) question.

And the parameters of the question change every day. For example, it's possible undergraduate institutions will increasingly cater to aspiring entrepreneurs. Just last week, Emerson College announced the launch of The Emerson Accelerator, a two-year program providing funding and space for students to launch businesses.

Moreover, so much of the B-school question depends your individual career path. Cliff Oxford, a three-time Inc. 500 CEO and former IT manager at UPS, has persuasively argued that business school is a bad idea for aspiring entrepreneurs. But simultaneously, Oxford says that for other parts of his career, he found his M.B.A. (from Emory in 1994) to be helpful: "It gave me exposure to other disciplines beyond information technology, like marketing and strategy. The accounting and strategy courses were useful even when I was building my business," he writes in the New York Times.

Then there's the question of getting capital. Chamath Palihapitiya believes there's a bias against Harvard MBAs, when it comes to raising money from investors. He is the founder of the venture capital fund Social+Capital Partnership, as well as an original member of Facebook's management team and co-owner of the NBA's Golden State Warriors. "It's really unfair to you guys, but I think you're discriminated against now," he said at a conference organized by HBS's venture capital and private equity club, as reported in The New York Times.

So: Should aspiring entrepreneurs go to business school? I sent a tweet to Palihapitiya (@chamath) asking him this very question. Specifically, I asked: If MBA's are being "discriminated against" by many investors, would you advise entrepreneurs, then, to avoid business school?

His reply: "I would advise everyone to learn to code. What you do afterwards is your own moral hazard."

Last updated: Mar 17, 2014




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