2017 was a year of monumental change for the world’s business schools. From Trump’s election and its impact on international applications to U.S. schools to renewed concern over the viability of two-year MBA programs, the B-school market became more competitive and more roiled than ever. With the opening of new modern buildings at Northwestern Kellogg and Cornell Tech in New York City, the arm’s race for the best facilities heated up yet again. GMAT scores continued to climb. The University of Iowa killed its full-time residential MBA program, while the University of Wisconsin tried to walk away from its two-year MBA but failed, costing the dean her job.
White supremacists invalded Charlottesville and shocked a progressive community and a nation, with significant consequences for a great business school at UVA Darden. The deans of three major schools—Kellogg, Berkeley Haas and NYU Stern—decided to toss in the towel. And then there were two big surprises: Wharton’s remarkable ascenion in MBA rankings and a data breach at Stanford’s Graduate School of Management that revealed the school had been lying about its scholarship aid policies for years. Poets&Quants reviews ten stories that defined a year in transition.
New research suggests Trump’s election could drive international MBAs to other shores
Trump’s Impact On International Applicants To U.S. Business Schools
When 2017 began with a new U.S. President in office, B-school deans and admission officials feared that all the anti-immigration rhetoric he spouted and inspired would drive away international applicants. That turned out to be true at many business schools, especially those in the second-tier. The most common question admission officials were getting on their tours of international locales was “Would I be welcome at your school?”
For years, growth in international applicants for U.S. MBA programs had offset a decline in domestic candidates. This year that was no longer true, causing some schools to rethink their commitments to the two-year, full-time residential MBA program. One school after another found that the international candidates in their applicant pools had fallen by double-digits. At Georgetown’s McDonough School, for example, international candidates fell to just 32% of the applicant pool from 43% a year earlier. At Cornell’s Johnson School, the international applicant pool fell to 57% of the total number of applicants, down from 61% in 2015-2016.
Many schools outside Poets&Quants’ Top 25 reported even greater declines in international applicant pools. At Arizona State University’s W. P. Carey School, international applicants fell to 49% of the pool, down from 62%. At the University of Southern California’s Marshall School, international candidates made up 46% of the past year’s pool, down from 51%.
The U.S.’ loss was Canada and Europe’s gain. Many international applicants who would otherwise have applied to U.S. MBA programs tossed their apps to what they perceived to be more welcoming campuses in Canada and Europe. Toronto’s Rotman School of Management was a major beneficiary, with MBA applications up by 27%.
The Graduate Management Admission Council says younger test takers and the ability to preview and cancel low test scores are responsible for the rise of average scores in recent years
Why GMAT Scores Keep Rising At The Leading Business Schools
By all accounts, the Graduate Management Admission Test is no easier today than it was five or 10 years ago. Yet in recent years score averages for elite business schools have been on the rise — including some dramatic examples recently reported by Poets&Quants. The puzzle has drawn enough speculation that the Graduate Management Admission Council, which administers the GMAT, released a report in June to address the issue.
In The Fallacy of Score Increases and the Impact of Score Preview, GMAC analyzed GMAT scores for citizens of eight countries that account for about 80% of GMAT exams taken each year since 2011 (the United States, Canada, France, Germany, the United Kingdom, China, India, and South Korea). Rebecca Loades, report author and director of innovation and next generation systems at GMAC, concludes that GMAT scores are actually stable, remaining consistent or growing by a statistically insignificant amount. But she added that given trends and persistent perceptions, the report — five months in the making — may be the first of an annual series.
Despite the organization’s claims to the contrary, you can’t dispute the evidence. At nearly all the leading business schools, average GMAT scores for the latest entering class broke new records. At nearly every Top 10 U.S. school is reporting higher average GMAT scores for the past year with only a couple of exceptions: Wharton which maintained its already high 730 average and 740 median, and MIT Sloan which slipped a mere two points to 722. The largest jump for a Top 10 player goes to UC-Berkeley’s Haas School of Business. At Haas, the incoming MBA class sports a record high 725 average, an eight-point rise from the previous year’s 717. At Kellogg, the school’s new 732 average allowed Kellogg to leap frog Wharton with the second highest reported GMATs of any prestige business school in the world with the sole exception of Stanford’s Graduate School of Business.
The MBA Shakeout Begins
On one level, it was an agonizing decision to shut down the full-time MBA program at the University of Iowa’s Tippie College of Business. On another, it was a no-brainer.
When Dean Sarah Gardial announced her decision in August, she knew the incoming class would total just 54 students. The program had been in the red for years on a $3.5 million budget. With state appropriations falling and budgets tight, it no longer made sense to pour resources into the tiny program. Earlier this year, no less, Tippie’s U.S. News’ MBA ranking plunged 19 spots ito 64th from 45th. It was the proverbial perfect storm.
“We’re seeing clear shifts in what students and businesses need,” Tippie Dean Sarah Gardial said at the time. “Both are expressing preferences for non-career-disrupting options for the MBA, while others are increasingly drawn to the focused education provided by master’s programs in specific subjects.”
As a business school in the Big Ten, Iowa’s decision has been something of a wakeup call to many in the MBA market. In the aftermath of that decision, however, Dean Gardial has gotten a surprising reaction from some rival deans. They’ve quietly conceded they have been grappling with the same issue and that her decision may help them deal with the political consequences from alumni, students, and faculty of ending their own money-losing MBA programs.
Wisconsin School of Business
Questions About The Two-Year MBA Cause One School To Try To Kill It
Months after the University of Iowa announced that it would shutdown its two-year MBA program, a new dean at the University’s of Wisconsin Business School attempted to do the same thing. But Dean Anne Massey, in the job as dean for little more than 50 work days, was forced to back down and ultimately to resign her job after a backlash from alumni and students. The story behind her failed leadership of the school is a fascinating tale of the heavy politics in academia.
Dean Massey admitted that she had moved too fast, without building consensus for the change among the school’s shocked students and alumni. “We have heard from our community of students, alumni, and friends; therefore, we are going to stop further discussion of the one-year suspension of the full-time MBA,” she said in a statement. “We moved too quickly without the broad consultation and discussion that our stakeholders can and should expect.”
Ultimately, though, her deanship had been wounded, and the announcement in December that she would step down at year-end indicated she never recovered the confidence of the students or staff after the misstep. The embarrassing reversal will, no doubt, give other deans pause when considering whether to end their flagship MBA programs.
Wharton MBA graduates at 2017 commencement
Wharton’s Ascension In The MBA Rankings Game
Little more than a year ago at a crowded town hall meeting on the Wharton campus, Dean Geoffrey Garrett found himself addressing the concerns of Wharton MBA students who peppered him with questions on a number of thorny issues. Among all their worries, one especially loomed large: The school’s deteriorating performance in rankings.
Ever since Aussie Dean Garrett’s arrival in July of 2014, the school has lost ground in every major ranking with only one exception: the Financial Times where it eked out a one-place gain. Even more disturbing for Whartonites, Chicago Booth has outranked the school on six of the past eight Poets&Quants’ lists, giving rise to conversations that a new Big Three has emerged with Harvard, Stanford and Booth in that category. Last year, the Poets&Quants’ composite ranking saw Wharton tied for fourth place with Kellogg.
Just 13 months after that October session with students, Garrett has delivered the goods. For the first time ever, Wharton claimed the top spot in Poets&Quants’ composite ranking in 2017, narrowly dislodging Harvard Business School which lost the No. 1 honor for only the second time in eight years. The only other time HBS failed to win top honors was in 2014 when Stanford’s Graduate School of Business nudged it aside. Wharton accomplished the feat by moving up a combined 21 places in all five of the most influential rankings used by Poets&Quants to construct its annual list of the best full-time MBA programs in the U.S.
To celebrate the building’s lakefront location, Kellogg’s new 415,000 square foot Global Hub pays pays homage to the environment in two ways – the curved exterior walls reflect the wave movement on the lake, while the glass reflects the blues of the water as well as the sky.
The Arm’s Race In New Modern B-School Buildings Heats Up
2017 was yet another year when the arm’s race for new modern business school facilities heated up yet again. Northwestern University’s Kellogg School of Management debuted a stunning new 415,000 square foot Global Hub on the shores of Lake Michigan. Kellogg’s $250 million marvel on the lake has transformed the school with an expansive interior that is a mix of sweeping sight lines, wide corridors, and natural light. The building’s exterior boasts curves galore, with each floor lined differently to reflect the wave patterns rushing off Lake Michigan.
UC-Berkeley’s Haas School of Business opened the doors to the $60 million Connie & Kevin Chou Hall, a new six-story structure that is entirely devoted to Haas students. There’s not a single faculty or staff office in the 80,000-square-foot building, but rather 850 new classroom seats in eight tiered classrooms and four flat flexible classrooms. There are 28 student meeting rooms, a top floor convening space capable of hosting 300 people, and finally a cafe with an outdoor terrace that will soon serve sustainable, locally sourced food (this is Northern California, after all).
And Cornell University’s launched Cornell Tech on New York City’s Roosevelt Island. Built on a two-mile-long strip of land in the East River, Cornell Tech represents New York’s attempt to compete with Silicon Valley and become a global leader in technology and innovation. The campus was built from scratch on an island that once housed a prison, a lunatic asylum and a women’s workhouse that at one time hosted Mae West. A major beneficiary of the ambitious project is Cornell’s Johnson Graduate School of Management, which has some 20,000 square feet of space in The Bridge, the building meant to connect academia and industry for startups and job creation. The business school space includes two tiered classrooms, eight breakout rooms, and work space for mor ethan 20 faculty and staff.
Stanford University Graduate School of Business – Ethan Baron photo
A Data Breech Reveals That Stanford GSB Has Been Misleading Thousands Of MBA Applicants & Students
As scandals go, this was a big one. In late November, Stanford Graduate School of Business publicly admitted that it misled thousands of applicants and donors about the way it distributes fellowship aid and financial assistance to its MBA students. The disclosure came to light as a result of a computer breach that exposed 14 terabytes of highly confidential student data detailing the most recent 5,120 financial aid applications from 2,288 students, spanning a seven-year period from 2008-2009 to 2015-2016.
The information was unearthed by a current MBA student, Adam Allcock, in February of this year from a shared network directory accessible to any student, faculty member or staffer of the business school. In the same month, on Feb. 23, the student reported the breach to Jack Edwards, director of financial aid, and the records were removed within an hour of his meeting with Edwards.
Allcock, however, says he spent 1,500 hours analyzing the data and compiling an 88-page report on it. His conclusion: “The GSB secretly ranks students as to how valuable (or replaceable) they were seen, and awarded financial aid on that basis. Not only has the GSB also been systematically discriminating by gender, international status and more while lying to their faces for the last 10 to ~25 years.”
Darden School Dean Scott Beardsley saw the white supremacist rally on the campus of the University of Virginia up close — participants marched right past his home’s front window. “Hate like that has no place in a university,” he says. “That’s not what our community is all about.” NPR photo
White Supremacists Invade Charlottesville, Shocking A Nation & A School
When deadly violence unfolded in the sleepy, college town of Charlottesville in August, some 20 first-year MBAs—all incoming students of color at the University of Virginia’s Darden School of Business—gathered together. It was supposed to be little more than a get together at the student housing complex.
But after the city was beseiged by hundreds of neo-Nazis and white supremacists, the meet-and-greet would become a place for an outpouring of emotion, the most poignant moment of that hellish day for Martin Davidson, a long-time leadership professor at Darden and the school’s chief diversity officer.
When he walked into the room, the professor could literally feel the anguish and pain. “These students were terrorized, fearful and deeply distraught,” recalled Davidson. “This was their very first weekend in Charlottesville. Now they were questioning coming here in the first place. They were full out scared to death.”
Even though the protesters came in from out of town and even though it was a random event in a place known for its progressive values, the incident is having a predictable impact on early applications to both the wider university and its business school.
For international students, who have little understanding of American politics and protests, it has been enough to scare off many who might have had the highly ranked Darden on their target lists. For underrepresented minorities and Jews in the U.S., the torchlight procession and racist chants on the university’s grounds—meant to evoke marches of Hitler Youth—may well be hard to erase. One thing is certain: Darden Dean Scott Beardsley is doing everything possible to put the protest behind the school.
2017 saw deans of three major business schools announce they were stepping down: Haas’ Rich Lyons (top left), Stern’s Peter Henry (bottom left), and Kellogg’s Sally Blount
A Big Year For Dean Turnover
Business school dean turnover is nothing new. The average tenure of a business school dean tends to be just five years. It’s a tough and often under-appreciated job. But it is also rare when the deans of three schools, often in the Top Ten of rankings, all decide to leave in the same year. 2017 saw step-down announcements from Peter Henry at NYU Stern, Sally Blount at Kellogg, and Rich Lyons at UC-Berkeley’s Haas School of Business. Many other deans also tossed in the towel, from Boston University’s Ken Freeman to Wisconsin’s Anne Massey (see above).
The dean of New York University’s Stern School of Business, the youngest ever in the history of Stern, left as a result of the political climate. “I do not make this decision lightly,” Peter Henry, 47, said in a letter released in February,, “but given the current trends affecting the national and global economy, I feel compelled to re-engage now with policy and re-commit, full-time, to scholarship and my lifelong interest in the linked fortunes of advanced and developing economies.”
Across the country, at Berkeley’s Haas, Dean Lyons announced he would step down at the end of June of 2018 after an 11-year run as dean. “Haas is in a good place for the next dean to carry our school forward — it’s exactly the right time for this transition,” said Lyons in June. The guitar-strumming dean who returned to Haas from Goldman Sachs where he had been the chief learning officer has led major changes at the school. He oversaw an overhaul of the MBA curriculum, crafted a set of guiding principles for the school’s culture, launched Berkeley’s own Executive MBA program as well as a novel joint undergrad program with the university’s engineering school, and raised subsantial funds for a new $60 million building on the Haas campus. In fact, Lyons reeled in eight of the school’s ten largest gifts in its history.
Of all the resignations, perhaps the biggest one was at Kellogg. The first and only woman to lead one of the famed M7 business schools, Blount has clearly made her mark on the school where she once arrived as a young graduate student in organizational behavior some 29 years ago. She successfully completed Kellogg’s first-ever major capital campaign, raising $365 million, including a doubling of contributions to the school’s annual fund which exceeded $10 million for the first time. She was directly involved in every significant detail of Kellogg’s new $250 million Global Hub on Lake Michigan which officially opened in mid-March. But she concluded it was time to leave in July in Rhode Island at one of Blount’s silent retreats, a multi-day period of quiet reflection that she has taken for the past decade. The 56-year-old Blount intends to take a one-year sabbatical to travel, write and ponder her “final chapters in education.”
Duff McDonald (left), author of The Golden Passport, and HBS Dean Nitin Nohria
Harvard Business School Gets Slammed In A New Book
Harvard Business School has had many critics throughout the years. But perhaps the harshest and most serious has been Duff McDonald, a veteran journalist and author, whose book on HBS was the most critical ever written about the school and business education in general. The slam even prompted a rare public response from Dean Nitin Nohria who said, “In many ways I think the book doesn’t give justice to the many ways in which Harvard Business School is trying — and not just today, but has always tried since the beginning of its history — to remind its graduates that as business leaders they have a deep and important relationship with society, and that the health of society is something that is their responsibility.”
From the very beginning, the Harvard Business School treated McDonald as a barbarian at the gate. McDonald first approached the school about cooperating with him on a book in late February of 2013. But the guardians of HBS’ history, myths and truths quickly slammed the door shut, preventing access to all administrators, staff and faculty, even the school’s own historical archives.
The school, says McDonald, rebuffed at least a half dozen requests for cooperation, though the author was able to visit the Harvard Business School campus on four occasions. More than three years later, McDonald’s The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite was published by Harper Business in April.. As the lengthy title suggested, HBS stakeholders didn’t enjoy what they read in the book’s formidable 672 pages. McDonald’s conclusion is that the Harvard Business School has abysmally failed the goal of its founders who sought “the multiplication of men who will handle their current business problems in socially constructive ways.” While HBS graduates tend to be very good at whatever they do, McDonald claims, that is rarely the doing of good.
DON’T MISS: OUR FAVORITE MBAS OF 2017 or OUR MOST READ STORIES OF 2017
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