The MBA has much to offer aspiring leaders: a foundation of knowledge in core business disciplines and opportunities to improve critical thinking, communication, and team building skills. But as organizations strive to conquer complex issues related to everything from supply chain management to social media, they’re finding they need workers with niche expertise just as much as they need leaders with broad organizational knowledge.
“The student population has started to demand education in very specialized areas, so we’ve started to evolve in that direction,” says Michelle Hadley, associate director of MBA programs and student recruiting at Purdue University’s Krannert School of Management in West Lafayette, Indiana. “Specialized master’s programs give us an opportunity to serve a huge population of students.”
The evolution of specialized master’s programs could reflect a larger shift in demand for business education. Like Krannert, many schools—especially those in the U.S.—are rethinking their mix of graduate offerings to satisfy growing demand for workers with deeper functional knowledge. But as they rebalance their programs, schools must be careful to stay true to their strengths, manage resources wisely, and stay responsive to an ever-changing market.
REMIXING THE PORTFOLIO
Interest in specialized programs has been steadily rising for the last five years, according to the Graduate Management Admission Council’s Prospective Students Survey. In 2009, 13 percent of respondents surveyed were considering only master’s programs, not MBAs; by 2013, that number had grown to 20 percent. At the same time, those considering only MBA programs declined slightly, from 55 percent in 2009 to 53 percent in 2013.
Business schools’ portfolios of programs seem to be evolving in a similar fashion. In the last five years, the total number of all types of MBA programs at AACSB member business schools has fallen by more than 8 percent, according to AACSB International. During the same period of time, the number of specialized master’s programs they offer has increased by more than 10 percent.
At the same time, GMAC data shows that, after a period of decreased application volume, 65 percent of responding schools report that applications to their full-time two-year MBA programs have increased or stayed steady. That’s good news, but it also means that some schools are still seeing their full-time enrollments decline. Schools like Wake Forest University’s School of Business in Winston-Salem, North Carolina, for example, has closed its full-time MBA altogether after seeing enrollments drop from close to 240 in the 1990s to 114 in its most recent class. The business school now plans to focus on flexible, online/hybrid, executive, and specialized master’s programs in management and accountancy. “Our school very much believes in the value that an MBA provides to our graduates and their employers,” says dean Charles Iacovou, in an announcement last October. “Our decision is a proactive step that will allow us to redirect resources and energy to meet the changing needs in the market.”
"BUSINESS SCHOOLS ARE LOOKING TO DIFFERENTIATE THEMSELVES IN AN INCREASINGLY CROWDED MARKET, SO THEY'RE 'TAKING IT UP A NOTCH' BY OFFERING SPECIALIZED MASTER'S DEGREES."
-DAN LECLAIR, AACSB INTERNATIONAL
Likewise, the Krannert School will pay more attention to its portfolio of 12- to 18-month master’s degrees, because of its early success with the format—it offered its first specialized degree in 1999—and because of “shrinkage in the number of applicants to our MBA,” says Tom Brush, senior associate dean, management department head, and professor of strategy. “We’ve had to ask, ‘How do we maintain a critical mass of students?’”
These changes in direction don’t surprise Dan LeClair, executive vice president and chief knowledge officer at AACSB International. He points out that as more business schools start programs in new geographical markets and offer a wider array of online programs, competition for strong applicants is more intense than ever. “Business schools are looking to differentiate themselves in an increasingly crowded market, so they’re ‘taking it up a notch’ by offering specialized master’s degrees,” says LeClair.
And while MBA programs usually target post-work-experience individuals, specialized master’s programs offer recent college graduates with little or no work experience the opportunity to hone their skills. “It’s becoming harder to get a great job with just a bachelor’s degree,” LeClair says. “More millennials believe they’ll need to take a deeper dive into a specialization to land a job after graduation.”
WHERE THE MARKET IS
Since its introduction of a master’s degree in finance in 1999, the Krannert School has added programs in accounting, economics, human resource management, global entrepreneurship, and, most recently, marketing and global supply chain management. In the next year, the school will introduce a new master’s degree in data analytics. “These programs target students who aren’t willing to take time out of the job market to earn a full MBA, but who still want a targeted education experience at lower cost,” Hadley says. The school now enrolls 170 students in its MBA programs, and 120 in its specialized master’s options. The data analytics program, along with a new STEM-focused MBA the school introduced last year, are part of Krannert’s effort to align its offerings with Purdue University’s strengths in science, technology, and engineering.
Alignment with market demand also is at the heart of the specialization strategy at SDA Bocconi School of Management in Milan, Italy. Taking advantage of Milan’s high concentration of companies in the fashion, arts, and hospitality industries, SDA Bocconi offers one-year master’s programs in fashion and design, food and beverage, arts management, and healthcare. Also in its portfolio are master’s programs in strategy and entrepreneurship, administration, finance, marketing and sales, and human resources. Approximately 100 students enroll in each of SDA Bocconi’s MBA cohorts, compared to between 25 and 40 students in each cohort for its specialized programs.
To attract more international students to its specializations, the school plans to expand its global branding efforts, says Rossella Cappetta, director of the master’s division. These efforts recently included creating a series of MOOCs on Coursera, including “Managing Fashion and Luxury Companies,” “Managing Food and Beverage Companies,” “International Leadership and Organizational Behavior,” and “Financing and Investing in Infrastructure.”
Developing MOOCs is a way to keep the content and delivery of specialized programs fresh and relevant, Cappetta notes. “We have seen that students are more aware of and passionate about specific areas, with an ever stronger knowledge base,” she says. “Even more than in generalist programs, it is essential that we continuously innovate our specialized programs so that our courses challenge participants, not simply cover basic knowledge that they already have.”
At many Latin American schools, employer demand is driving growth in specialized programs—including two at the ESPAE Graduate School of Management in Guayaquil, Ecuador. The first, established in 2002, is a two-year specialized master’s in project management, which started as a certificate program established at several Ecuadoran universities by Inter-American Development Bank. So far, the program has graduated 190 students—most engineers working in mid-level positions. “Demand for the master of project management has been growing during the past five years,” says Virginia Lasio, ESPAE’s dean.
The school’s two-year specialized degree in hospital management was established in 2003, growing out of a one-year graduate degree ESPAE first offered in 1996. With a structure similar to an MBA program, the program enrolls about 40 students each year, 70 percent of whom are physicians. The growth in healthcare has driven business schools in Ecuador to “professionalize the management of public and private healthcare institutions” through such degree options, says Lasio. ESPAE’s specialization in hospital management is one of six similar programs offered throughout the country. Some healthcare institutions in Ecuador now require job candidates applying for executive and managerial positions to hold the credential, Lasio notes.
ESPAE’s next specialized degree option will be a master’s in sustainable agribusiness, expected to launch in 2016 with a cohort of 30 to 40 students. Ecuador’s agricultural schools produce many graduates who wish to deepen their knowledge, but while three other business schools in the country offer similar programs, all are in the country’s highlands. No such degree is currently offered by a school along the coast, making it “long overdue for our region,” Lasio says.
She adds that the master’s in sustainable agribusiness also is a way to communicate ESPAE’s role in supporting regional economic growth. She says, “This new program allows us to introduce a focus on sustainable business, which is in line with our mission and our commitment to the United Nations’ Principles of Responsible Management Education.”
A snapshot of the growth in specialized master's programs at business schools compared to growth in MBA programs:
> Click the image to enlarge
Correction: “Specialized Growth," shown above, has been corrected from the version that appeared in BizEd's September/October issue. In print, the numbers cited in the introduction were incorrectly described as the percentage growth in these programs over five years. However, the numbers that appeared in print actually refer to their share, as a percentage, of the 1,532 specialized master’s programs in all disciplines that AACSB-member schools reported in 2013-2014. For that academic year, accounting made up 20.5 percent; finance, 12.3 percent; and management and CIS/MIS, more than 7 percent each. Here, the text has been corrected to reflect growth over five years by number of programs, not percentage.
For a long time, ESSEC in Cergy- Pontoise, France, has adopted a different specialization strategy. It offers two specialized MBAs—one in international luxury brand management and one in hospitality management—alongside two executive MBA options. Its two flagship programs draw heavily on the school’s location near Paris, a global center for tourism and luxury brands.
The cohort for ESSEC’s luxury brand management degree has grown from 15 students 20 years ago to 45 students today. “That’s the right size, considering how carefully we need to choose the students,” says Jeanine Picard, ESSEC’s academic director of MBA programs. “And it’s the right size to ensure there are jobs for them after graduation.”
While it’s more common for a school to offer a single generalist MBA program with two concentrations or two specialized master’s tracks, Picard says, ESSEC’s niche MBA programs help differentiate it in the crowded French market. “We have built our reputation on our specialized MBAs,” she says. “Just as it makes sense for a school to offer a wine MBA in Bordeaux, it makes sense for us to offer a luxury MBA in Paris. We would have more to lose than to gain by merging them into one general program.”
To be more globally competitive, however, ESSEC recently introduced a Global MBA. “As a mature business school, we felt we needed to have a generalist MBA for rankings,” says Picard. “We arrived late to the market, so we created a Global MBA to differentiate ourselves from what was already here.”
RESHAPING THE CURRICULUM
Cappetta of SDA Bocconi has found that those who pursue generalist MBA degrees are unlikely to return to attend specialized degree programs, and vice versa. But Jagdish Sheth, professor of marketing at Emory University’s Goizueta Business School in Atlanta, Georgia, believes that overlap between the two groups is likely to increase. He predicts that a growing number of students will become what he classifies as “deep generalists”—people who want to know the basics of business as well develop deep knowledge of a functional area.
“The MBA is designed mainly for corporations who need general managers, but today most students who get their MBAs at top schools go into a specific area such as consulting, investment banking, finance, or marketing,” says Sheth. “The MBA needs to be revised to reflect this reality.”
That revision, he suggests, could involve compressing the time it takes to deliver core courses. “Students could complete core courses in finance and accounting online—through the school or a MOOC—before the program begins. They could have some courses exempted based on credits they’ve earned elsewhere or on skills they already possess,” says Sheth. “This would allow them more freedom for specialized courses, whether in data analytics or supply chain management.” Such a revised format would allow business schools to deploy their resources in more efficient and targeted ways, he adds. (To read about how other schools have adopted similar models, see “Going All In” on page 30 and “The Customized MBA” on page 36.)
Sheth also sees specializations as a way for business schools to encourage more BBA students to stay on campus for one more year of study, as part of increasingly popular 4+1 programs that combine a four-year undergraduate degree with a one-year master’s. Goizueta began experimenting with this model in 2013-2014, with its launch of a 4+1 that offers BBA students the opportunity to earn a master’s in accounting. The first cohort of 30 students, who will graduate with both degrees in 2016, must complete four semesters of liberal arts requirements; five semesters of business coursework; and a semesterlong internship.
“The standard model for this program takes five years, but some will be able to complete the program in four years, if they enter college with one semester of advanced placement or international baccalaureate credits and if they substitute a summer internship for the semesterlong experience,” explains Andrea Hershatter, Goizueta’s associate dean and BBA program director.
This model doesn’t just reduce completion time and tuition costs for students. It also reduces the effort the school puts into recruiting, because it targets students who are already enrolled. Sheth believes that such five-year BBA/MS programs could be a boon for business education, especially at public universities that need to retain students to offset declines in MBA enrollments.
WHERE THE MARKET WILL BE
Specializations could also allow business schools to more nimbly address the changing needs of business without need for a complete curricular overhaul. “With smaller specializations, business schools can focus on areas where demand for talent is large, such as social media, big data, and marketing,” Sheth says. “When an area has lost its glamour, they can let it go and add a new area. This allows schools to stay ahead of the curve.”
That’s not to say that expanding the curriculum to include shorter functional programs does not present challenges.
Because one-year students work at a different pace and are on campus less time than their two-year counterparts, it’s easy for them to feel left out of the campus culture, says Brush of Krannert. For that reason, Krannert has designed its electives, orientations, and other events to bring one-year and two-year students together, so that both groups feel like members of a single community.
"WITH SMALLER SPECIALIZATION, BUSINESS SCHOOLS CAN FOCUS ON AREAS WHERE DEMAND FOR TALENT IS LARGE, SUCH AS SOCIAL MEDIA, BI DATA, AND MARKETING. WHEN AN AREA HAS LOST ITS GLAMOUR, THEY CAN LET IT GO AND ADD A NEW AREA. THIS ALLOWS SCHOOLS TO STAY AHEAD OF THE CURVE."
-JAGDISH SHETH, EMORY UNIVERSITY
With so many programs on offer, it also can be challenging to ensure consistent quality across specializations. “We initially allowed program directors to be very independent, each responsible for his or her own area, but that led to a lack of uniformity,” says Brush. The school has been gradually moving to a more centralized curricular structure, with an academic director, a program director, and an administrative staff member who work together to manage the school’s specialized degree options.
However, Brush emphasizes that the interactions between generalist and specialist programs also produce unique benefits. “Our MS programs create a critical mass of students and electives that otherwise we wouldn’t be able to offer,” he says. “The two-years create a leadership cycle for our clubs and courses, while our one-years bring their specialized knowledge to discussions. It helps each group to be more successful.”
Sheth sees an even more critical relationship between generalist and specialist programs—specializations could help many business schools breathe new life into their shrinking MBA programs. “The MBA has value, but it has reached a plateau and needs to be revitalized,” he argues—particularly for those schools ranked in the middle tier of the market.
There’s no denying that business schools must offer specialized programs very strategically, based on their faculty’s core expertise, available resources, and market demand. But when these programs align with all three areas, they offer business schools opportunities to build their brands, showcase their strengths, and build stronger relationships with industry. Most important, specialized curricula could help business schools successfully navigate an uncertain future for the traditional MBA.