With over 120,000 MBA degrees awarded in the U.S. each year, business schools are scrambling to differentiate themselves from the pack. Unfortunately, most business schools end up being pale imitations of top-tier schools, set apart only by their marketing hype and slight cosmetic differences. Few of them attempt fundamental shifts in focus to wrench themselves away from the same old routines.
At Northeastern University’s College of Business Administration, we believe true differentiation requires administrators to take a cold, hard look at their core competencies and the market demand for their students so they can turn out graduates who truly serve their markets. We have revamped our entire MBA program after analyzing which companies hire most of our graduates for which positions, determining what skills these companies prize most highly in their new MBA hires, and structuring our curriculum around those skill sets and career paths.
Our strategy was to approach business education as if it were any marketable commodity and apply common business analysis to the question of improving our product. We treated key employers as our customers, made ourselves intimately familiar with their requirements, and enlisted their support in identifying what they look for in the graduates they hire. This strategy helped us develop a systematic program of skill development workshops and exercises for our students. It also led us to limit the number of career paths for which we would prepare graduates.
To launch our product development methodology, we used the five-part Stage-Gate process developed by Robert G. Cooper, a world expert in the field of new product management. While the process is widely used by firms driving new products to market, we chose a simplified version as we retooled our MBA program in our quest for true market differentiation.
Identifying the Customer and the Market
We began our market analysis in late 2004 with a preliminary investigation that helped us identify both the customers we serve and the products we offer. All the research work was handled internally by three faculty and three senior administrators.
Traditionally, business schools have perceived their students as their customers, and programs have been focused almost exclusively on student needs. At Northeastern, we decided to consider the hiring companies as our customers. We looked at our students as both our products and our partners in creating value for those customers.
In our preliminary investigation, we examined our market space and tried to determine where our MBAs were headed with their career choices. First, our team reviewed the competitive landscape to better understand how other MBA programs were differentiating themselves. We also took a hard look at our successful graduate placements of the last few years and at those companies with which we enjoyed the best relationships. Then we conducted literature reviews of the skill sets and characteristics that companies said they needed from MBAs today.
We were surprised when the picture that emerged did not suit the comfortable concept we all had of the product that an MBA program should deliver. Companies assume business graduates will have a solid knowledge of financial accounting, strategy analysis, and marketing, but they’re looking for something more. What corporations really want are graduates with intangible personal skills—the ability to use data in a persuasive manner, lead teams and projects effectively, and make an immediate impact.
Our new program model combines a traditional but highly focused curriculum with a “shadow curriculum” of additional workshops and seminars.
We realized that simply teaching theory in a traditional classroom setting would not produce graduates with these intangible skills. We also realized we needed to dig deeper to find exactly what those skills encompassed.
Discovering Customer Needs
As part of our more detailed investigation, we conducted in-depth interviews and ran brainstorming sessions at several levels within the corporate offices. We met with approximately two dozen Global 500 companies, interviewing and polling those organizations separately and in groups.
For instance, to determine what kind of leadership skills our corporate partners really wanted, we brought in several hiring managers and asked how they identified and evaluated leadership characteristics. We didn’t just want to hear, “We’re looking for bright people who know how to communicate.” We wanted to know what defined the difference between an average performer and an excellent one.
One employer told us, “We want students who can take a complex data set, review it, identify patterns, use those patterns to develop new business practices, and communicate those practices in a convincing way to senior management.” Those are concrete deliverables, and we knew we could build exercises into our program that would develop those skills.
Our research also led us to believe that our program would be stronger if we limited our focus to a very few specific fields. To determine what those fields should be, we first relied on input from our hiring partners, who told us what functional expertise they wanted in our graduates. Then, we surveyed prospective students who had inquired about attending the school, asking them to rank a selection of career paths. We also honestly evaluated what we do best and where we have real expertise.
Developing the Product
These combined insights helped spur a real shift in our approach, allowing us to precisely tailor our MBA program to the needs of our end customers.
First, we decided to reduce our specializations from nine or ten to three: finance, marketing, and supply chain management. Marketing and finance had always been very strong parts of our program, so those were natural choices, and supply chain management was an area of interest that turned up repeatedly in our research.
Second, we considered ways to teach students the skills that our partners had identified as crucial, such as negotiations, project management, and data analysis. We decided that a series of workshops—to be run in parallel with the more traditional classes—would combine theory and practice while allowing students to practice important personal skills.
Third, we decided to recruit students who were eager to follow a career path in one of the fields we had identified. Some of our partners are looking for very specific types of MBAs, such as graduates who have technical skills and who previously worked for major corporations. Others, particularly those who run not-for-profits, are looking for younger graduate students who have very different types of backgrounds and careers. We knew we could no longer simply say, “Let’s find really bright people, train them well, and offer them to the corporation.” Instead, we wanted to work with our corporate partners to recruit a class that would reflect the kind of talent they need, and then provide those students with the proper skill sets.
Testing and Refining
Once we decided on a new program model, we once again approached our corporate partners, who unanimously embraced the concept. They helped us develop our new skill workshops, agreed to hire students for six-month corporate residencies, and helped us screen and select students for the revised curriculum.
Our new program model combines a traditional but highly focused curriculum with a “shadow curriculum” of additional workshops and seminars. The workshops are a bit like the intense executive education courses a company might run if it perceived that its young managers had deficient skills in an area like project management.
At our school, a workshop on negotiations might run three hours a week for four weeks. Students are given assignments, work in teams, and practice negotiation skills. Obviously, the workshops increase the student workload—by as much as 20 or 30 percent—but we believe we can push the students harder than we had done before. Students have embraced the workshop idea because they can see that it is important to improve their skill sets, but some have been a little surprised at how much work the new program entails.
The workshops increase the student workload, but we believe we can push students harder than we had done before.
The workload is also substantially larger for faculty, but they’ve learned to work smarter, not just harder. Faculty conduct only some of the workshops; others are taught by executives from our partner companies. In some cases, we’ve also contacted the companies that handle executive education for our partner corporations and hired them to teach our students the skills they need.
The cornerstone of the revised program is the six-month corporate residency required of each student. During this time, students take full-time, paid, MBA-level positions with our partner companies, who often keep real jobs open for our MBAs and simply fill those positions with a rotating cast of students. During their residencies, students might work with a manager to analyze supply chain issues or integrate new customers into IT databases. Students are actively involved in important projects from start to finish and interact directly with top executives. After they complete their corporate residencies, teams of students undertake projects for corporate partners in a capstone business planning exercise.
Students are better prepared for both the residencies and the workshops because our new program requires them to do pre-work even before they arrive on campus. We let them know that, before their first class, they should be able to perform certain functions in statistics, economics, and basic accounting. We send them exercises and worksheets that reflect the skills we expect them to possess in their very first week. Once we know these basic skills are mastered, we can open the program with more targeted learning approaches.
Launching the Product
We launched the revised curriculum in the fall of 2006, after recruiting the incoming class based on a variety of metrics. We asked questions such as: Does this candidate bring something of value to the hiring companies who are our partners? Does this candidate have the appropriate academic and industry experience to meet the needs of specific partners?
Companies want their new hires to possess intangible skills that require practical application. Theory alone isn’t good enough.
It’s likely that, within three years, our recruitment process will be even more finely tuned. We’ll be able to say, for example, that we want 20 percent of our class composed of students who are interested in nonprofit work, and we’ll know how to match our graduating class to our other partners as well.
When students graduate from our program, they’ll have a solid foundation of business experience. When they interview for jobs, they’ll be able to point to the portfolio of projects they completed for existing companies—and they’ll have a rich understanding of essential business tools.
We believe that designing an MBA program around partner corporations is an excellent way for any business school to differentiate itself from the pack. But it’s not easy to retool a program. Schools must be realistic about their chances for success in two key areas:
Student placement. Schools must take a clear-eyed look at which industries they will focus on and which companies they are going to serve, which means honestly assessing where they can place students upon graduation. It can be a painful process to drill down and get a true perspective on the needs of these customers as well as the core competencies of the school.
Administrators might be forced to acknowledge that their school is not going to produce Wall Street money managers. At that point, they need to take a closer look at who they do serve. Keeping in mind that they should target markets that will offer attractive salaries to their graduates, they should analyze their capabilities and the strength of their particular brands. Then they should prepare their graduates for work in those markets.
Some administrators might worry about the possibility of tailoring their classes too closely to one client or one industry. Industry can be fickle, and no one wants to craft a program that’s faddish or suited to only one partner. However, if schools talk to 25 or more companies, we believe they will find what we found: Companies might be looking for students with different backgrounds, but the skill sets they want are very close. If all of a school’s partners say they want to hire MBAs with specific strengths, administrators can rest assured that they’re not just pandering to a particular industry group or employer by focusing on that skill.
Faculty acceptance. Convincing the faculty to make some tough, even ground-breaking, decisions will be a challenge. Nobody in the faculty wants to be perceived as outside the focus area when a school is deciding on career paths or electives to offer. Choosing specialties early in the process helps narrow the focus and makes the difficult decisions less personal and more practical.
Faculty also might be resistant to the idea that outside companies will play a large role in program and curriculum development. In such a partnership, the school is essentially saying, “Tell us what you mean by business analysis or project management. Tell us what tools and executive development programs you use. Help us co-teach some of these topics.”
Faculty might find this approach too radically different to accept easily. They might say, “Business partners are too practical and applied. They will teach gimmicks and fads. Our job is to teach students to understand theory and think long-term, preparing them for a career, not a job.”
But we believe the message is clear. Companies want their new hires to possess intangible skills that require practical application. Theory alone isn’t good enough. Faculty need to understand that the school has real-world customers facing real-world challenges. These companies need to hire graduates with practical, real-world skills.
Fine-Tuning for the Future
We are now through the first year of our revised program, and we’re very pleased with the results. Students have embraced the new program, and our partner companies have become very involved. Our hiring partners were very excited about the students participating in corporate residencies this summer.
We do see areas where we can make improvements. While the workshops have been successful, there have been periods where the workload was so heavy the students found it grueling. We need to level out the requirements in the future, and we will look to improve the delivery of a few workshops.
Overhauling an MBA program is a definite challenge. The self-reflection required is often painful, and implementing new systems is time-consuming. But we believe it pays off in the end for a business school to take a business-oriented approach to defining its market and refining its products.
Once a school distills all the information on its competencies, customers, and partners, it can retool its program to meet customer needs. This revamped program will be so tailored to the school’s specific market that the natural end result will be differentiation—a school that stands out from all the rest in a crowded and homogenous market.
Thomas E. Moore is dean of the College of Business Administration at Northeastern University in Boston, Massachusetts.