In this episode of Business Casual, the hosts delve into how AI revolutionizes business education. They discuss the integration of AI into MBA programs and admissions processes, and how it creates new opportunities and ethical challenges, leading to the development of novel policies. They also explore how this technological shift reflects in the evolving formats of the GMAT and GRE tests, adapting to changing applicant preferences amidst a decline in traditional MBA program applications. Additionally, the episode highlights the increasing focus on sustainability and healthcare in MBA curricula, as well as the growing importance of DEI (Diversity, Equity, and Inclusion) in MBA applications.

In this rapidly changing educational landscape, marked by technological advancements and shifting needs, adaptability and forward-thinking become essential for students, educators, and institutions. So, listen in and get involved.

Episode Transcript

[00:00:07.530] – John

Hello everyone. It’s business casual, the weekly podcast of Poets and Quants. I’m John Byrne with Poets and Quants, of course, with my co hosts, Maria Wich Vila and Caroline Diarte Edwards. Caroline, of course, I’ll remind you all the time, was the former admissions head of INSEAD a program that today we just named the program of the year, incidentally, for the lead on sustainability. And of course, Caroline also is the co founder of Fortuna Admissions and gets to work with many of the applicants out there to the elite business schools. And Maria is the founder of Applicant Lab, who also works with a lot of new applicants, both virtually and in person. So here we are, the end of the year, and we thought we’d look back over the year and kind of highlight the top stories in business education. We’ve come up with a pretty big list of things that have really been impactful. And Caroline, I’ll start with you because you were the first one to mention what is at the top of my list. Artificial intelligence.

[00:01:19.350] – Caroline

Yes, of course, it’s the year of AI and ChatGPT, Bard and so on, which has become an incredible phenomenon this year. And we are all figuring out how this is going to impact a lot of different industries, and I think we’ll see a lot of transformations next year. But I think it’s a challenge for schools, both academically and in admissions. And everyone is trying to figure out how to grasp this and how to integrate AI into their curriculum, because of course, students need to be at the cutting edge and AI is going to have a dramatic impact on business. And students need to understand what the possibilities are and need to be able to harness this technology. And so schools are figuring out how to integrate this into the curriculum and how to enable students to take advantage of this technology. Of course challenges academically as well, because schools are concerned that people will be taking shortcuts in their learning journey using AI. And some schools have come up with quite strict rules and policies about how students can use AI. Sometimes they’re not allowed to use it and sometimes they are able to use it, but they have to be transparent about that and own up to it.

[00:02:46.730] – Caroline

And of course, it’s a concern for the admissions office and who knows to what extent candidates are out there using AI and to what extent recommenders are also using AI to turn out their recommendations. And I think that we will see an increasing reliance by schools on video questions and interviews as a result, because those are harder to fake, as it were, with artificial intelligence. And we’ve seen increasing use of video questions. More schools are embracing those options to get a snapshot of the candidate live and see how they communicate. And I think that those exercises are a great opportunity for candidates and a great opportunity for the schools to get a feel for how the candidate thinks, how they react in a spontaneous context where hopefully they have not figured out how to use AI to respond questions.

[00:03:56.090] – John

It’s a big deal. It really is.

[00:03:58.360] – Caroline

And it’ll just be very interesting to see how it plays out over the coming years, because it’s going to have a massive impact, for sure, on the education industry. So lots to come, I’m sure.

[00:04:09.070] – John

And the ripple effects are amazing, right? Because as we know, GMAT and GRE introduced much shorter tests, and GMAT got there by eliminating the writing requirement, just as admissions officials are having some concern over whether or not essays are being basically done by ChatGPT instead of by applicants. So you would think that that could give GRE, which still has a writing requirement, an advantage. The other thing we’ve seen is the first professor who’s actually used ChatGPT and generative AI to actually create a course in disruptive technology, where the professor fed ChatGPT essentially the outlines of every single lecture he would do, and had ChatGPT create the scripts for each lecture. Then the professor edited them, then fed them back into software attached to generative AI to create an avatar of himself delivering those lectures. And in 20 or 30% of the actual online classes, the students that actually be engaging with an avatar instead of a real person. This is over at the Gies College of Business, and he is the head of disruptive technology there. This, you know, I don’t see this as something that’s going to happen in many courses, but certainly in the course on disruptive technology, it seems to make sense, and everyone is discussing the impact of it.

[00:05:47.230] – John

And I’ve had deans tell me that they’ve actually used it to write sympathy notes to people who’ve lost someone dear to them. I’ve had professors tell me that they now use it as an editor for their scholarly papers. And we know this is only the very beginning of how sophisticated this is going to be. Maria, what’s your top one?

[00:06:14.150] – Maria

Well, I have to give credit to Caroline for mentioning it in our pregame chat, but I do think that it’s really important one to note the lower application volumes that a lot of programs are seeing. I do think that business schools know it’s interesting, right? Business schools are a business, and like every business, they are finding themselves being disrupted or having to adapt to changing consumer interests. Right? Journalism has seen it, medicine and every field has seen it. Entertainment has seen it. And now business schools themselves are, I think, having to scramble to adapt to what do people want out of their MBA experience? Are they looking for a residential program? Are they looking for more flexibility? Are they looking for a two year program or a one year program? And so I think the decline in applications to the typical traditional, stalwart two year residential MBA program is a sign that what students are looking for in their MBA experience is differing. And the schools are going to have to. And some of them are indeed issuing or launching new offerings to adapt to those changing student interests.

[00:07:23.730] – John

True. And there are a number of schools that have actually taken down their full time enrollments, including UCLA and USC Marshall, among several other schools, in part because of the application. You know, there’s a lot of handwriting about this. Most people will tell you they think it’s a function of a relatively strong job market in the United States that is keeping people away from graduate school. I think that it’s a confluence of factors that have led to the decline in applications, particularly domestic applications, where there’s a much more serious concern. I think part of this has to do with undergraduate debt and the perceived high price of a full time two year residential MBA, which is very costly, or at least it looks that way because you’re not seeing the discounts that schools provide students either through scholarships, fellowships or outright deals. And they’re quite plentiful. I mean, there are many schools, particularly in the second tier, where you can pretty much get a full ride on their MBA program because their programs are so small. But the perception is the cost is very high. You have undergraduate debt already and that’s a problem. And I think there’s far greater acceptance of the undergraduate business education.

[00:08:56.810] – John

And undergraduate majors have been the beneficiaries of really terrific education. The undergraduate programs have really upped their game in the last decade and provide terrific grounding in the fundamentals and more so in specialties. It’s leading many people to think, okay, I really don’t need an MBA. And then you have the specialty master’s degrees, which is cannibalized part of the MBA market. And of course you have the explosive growth in online options which afford people greater flexibility where they don’t have to quit their jobs. So all of these factors, I think, have come together to result in these declines in application volumes and in some cases smaller intakes at some top schools. What’s going to turn it around? If anything, a downturn in the economy, because that’s what always turns it around. And I’m hopeful we won’t see that over the next year or two, because it would really not be a very good thing in the United States to have an economic downturn right now, that’s for sure. Let me have one. I’m going to say that, to me, the two biggest trends, they’re really three, but two, in terms of subject matter that schools are really marshaling resources toward and changing curricula for are the business of health.

[00:10:24.440] – John

And know I mentioned earlier that we just named the INSEAD MBA program the program of the year. And it’s because they basically made an upheaval on their MBA curriculum and embedded sustainability issues throughout the entire program and did so in a way that was creative, innovative, and something of a forerunner as well, before many other schools jumped on this bandwagon. And almost every school is now talking sustainability. And now I hear almost every school is talking the business of healthcare. Healthcare in the United States is 20% of GDP. It’s an industry that historically has attracted few mbas, but it’s also an industry that’s ripe for disruption and innovation. And so there are a number of business schools, Johns Hopkins Business School, the school at Vanderbilt, that are leaders in this field. But now you’re seeing many other schools basically link up with their med schools and schools of public health to offer some fairly significant and deep innovations in the area of health. And we’re not just talking about working for hospitals and healthcare systems. We’re talking about biotech, med tech. We’re talking about revolutionizing the whole payer system for health care and really rethinking this.

[00:11:53.260] – John

Telehealth is another area. So it’s a broad expanse. And even if you’re not in the 20% of the economy that’s impacting the area of health, the other 80% is concerned about it as well because of the cost of health care in America. I mean, you’d be hard pressed to find a company in America that doesn’t have a chief medical officer to try to manage these expenses and make sense of them and having staff and people needing to help that person manage those expenses. So I think we’re going to see a real big scaling up of the healthcare sector in business education, because it’s already happening, and so is sustainability. Caroline, what’s your other big trend?

[00:12:42.780] – Caroline

Well, there were various reports this year of the job market being down. So many schools reported downturns in placement. So, for example, the percentage of graduates who had positions within three months of graduation was down at a lot of schools, including, for example, Harvard Business School. So tech recruiting was down. What also happened was that some employers were deferring job offers. So they may have made job offers to graduating students and then said, actually, don’t join us in the summer, join us six months later. I think partly it was a factor of some of those firms having recruited extremely heavily over the past years and maybe finding that they have sufficient resources and didn’t need to recruit, continue to recruit at such a tremendous pace. And so there was a slowdown in recruiting. But nevertheless, I mean, for example, HBS consulting salaries were up. Management consultants typically do well whether the economy is growing or the economy is in decline, right? Because if the economy is doing well, then they’re getting jobs, lots of projects, doing innovation and strategy and building new businesses. And then if the economy is in decline, then they get lots of cost cutting projects.

[00:14:04.660] – Caroline

So the management consultants tend to do well in both scenarios. And they have recruited more heavily at some of the top schools. And I think also, for example, at HBS and GSB and those top schools, sometimes the management consultants struggle to recruit in those groups because those graduates are enticed to other opportunities that may seem more exciting than going to work for McKinsey, Bain, BCG, et cetera. But with other opportunities being in decline, those firms have benefited and been able to soak up more graduates from those top schools.

[00:14:43.730] – John

Yeah, good point. And then the median salary for a consulting job is now 190,000. That is really high. And that does not include a signing bonus. Median is 30 to 35,000, depending on the school and who’s recruiting and consulting. And you look at some of the schools and my goodness, the numbers of students going into consulting is breathtaking. At Dartmouth, Tuck, it’s 46% this past year. So, Caroline, there are some bright spots, even though employment may be down at the three month mark.

[00:15:22.550] – Caroline

Yeah, for sure. And something that I found very interesting in some of the statistics that you published, John, in relation to your previous point about sustainability and healthcare and so on. At Harvard, more than half of the startups coming out of HBS are social impact related, which I thought was a very impressive number. And goes to show that this generation really do want to have a positive impact, not just make vast sums of money, but it’s definitely something that we’ve seen grow tremendously over the past few years, is candidates and students, their interest in sustainability, in having a positive impact and combining that in their careers. And so it’s wonderful to see that startups are coming out and that’s going to drive wonderful innovations. That gives me great hope for the future.

[00:16:16.920] – John

Another interesting data point related to our discussion here is business week surveys a lot of graduates. And if you look at the latest survey by Businessweek, the fourth largest sector of employment is healthcare, now exceeding consumer products, manufacturing, real estate and media and entertainment in other fields, which is something of a surprise because consumer products used to always be number four after consulting, finance and technology, and now healthcare is already number four and gaining. So that’s another sign of interest in those jobs and the opportunities in that industry. And again, that’s a social impact thing because, boy, do we need a lot of professional attention in that field, and it is so massive and really, like I said before, ripe for disruption. So, Maria, do you have another one?

[00:17:18.190] – Maria

Yeah. Well, we mentioned earlier how AI is shifting the trend in admissions itself towards perhaps more video essays or things that can’t be changed as much. Another sea change was the Supreme Court ruling in affirmative action. And again, Caroline, for reminding me, as we talked about this topic in one of our earlier podcasts earlier this year when we covered that Supreme Court ruling, one of the things that came out of that, in a pragmatic sense for applicants, and I think this will continue into the next year for applications, is an emphasis on showing within the application that you are someone who is open to either diverse points of view or someone who is cognizant of creating an inclusive environment. Now, obviously, diversity and inclusion, those are terms that can be used in a very broad way.

[00:18:07.760] – Caroline

Right?

[00:18:08.010] – Maria

I think sometimes we immediately jump to things like gender or ethnicity, but it can really be shown and demonstrated in many ways. And I think a lot of business schools are increasingly and explicitly asking for candidates to talk about times that they have maybe thought about someone who is a little bit different from themselves or different from the rest of the group and found ways to include that person or to bring that person in to the fold and incorporate their ideas, let’s say, into perhaps an environment that was initially not open to them. So that is a trend that I noticed very strongly this year in application topics, and I suspect it will probably continue into the next year.

[00:18:48.560] – John

True. And Maria, I wonder if you think, and Caroline too, if the Supreme Court decision kind of diminished the forward momentum of DEI programs at the business schools. Almost all the business schools now have a DEI officer, and I wonder if Supreme Court decision kind of hinders those DEI officers from taking certain actions that they would have otherwise taken. What do you think?

[00:19:17.990] – Maria

I think the schools are still going to be really committed to DEI because it’s not just sort of a rainbow and unicorns type of thing like it. Actually, research has shown that having differing points of view and differing backgrounds in any team tends to be very beneficial for the outcomes of that team. So I don’t think the schools are going to back away from it. However, I do think that the tools available at some of these officers, DEI officers disposal now the schools are going to have to get a little bit more creative in terms of really digging into what someone’s experiences have been. But I do think that the good side of this is that if the essay questions do start asking about, well, when have you been inclusive? When have you tried to create a positive environment? Even people who are, quote unquote, in the majority, the sort of standard white males, can now have an opportunity to really show that, look, even though I’m not a member of one of these groups, I have actually taken steps in using perhaps some of my privilege to try to make things better for other people.

[00:20:15.620] – Maria

So in that sense, I like it in the way that it gives a lot of people an opportunity to talk about, look, I might not be from this group, but I’ve still tried to help people who aren’t like me.

[00:20:27.480] – John

Right.

[00:20:29.210] – Maria

But obviously, if you can no longer explicitly state on your application form in an easy to filter checkbox, that then if I have a software tool in the back that helps me slice and dice my applicants by different things, they entered into their application form and I now no longer have that data point to use to slice and dice. Yeah, of course, it makes my job as a diversity officer a little know or someone in admissions a little bit, a little bit harder, for sure.

[00:20:55.240] – John

Yeah, that’s true. Now, let me dare mention Maria and Caroline’s favorite topic, rankings. This year we’ve seen really a shake up in the rankings game, largely because both Forbes and The Economist are no longer ranking business schools, MBA programs and whatnot. Their withdrawal has created a little bit more of a vacuum. LinkedIn came out with a new ranking based on LinkedIn profiles of people who say they have an MBA degree from a top 50 school. So they essentially ranked for the very first time the top 50 US MBA programs by virtue of the career advancement of their graduates and their ability to network. Because obviously the more network connections you have on LinkedIn, the presumption is the better networked you are. And if you are networked and connected to people who have influence and authority, I. E. Directors, vps and up, you could argue that your network is stronger than someone else. And LinkedIn took all of that into account in doing their ranking. But I think the absence of The Economist and Forbes does leave a bit of a hole. And I wonder if it’s more indicative of something else, that the business school is no longer the IT school on the university campus, that the business school has been replaced by the school of Computer Science, given the fact that everything we do, no matter when we do it or where we do it, is influenced by technology.

[00:22:42.130] – John

And now their donors are throwing lots of money at computer science schools, are building new schools of computer science and putting up new buildings, and it could very well be that the heyday of the business school, it’s not over, but it’s not what it was. And I think that The Economist and Forbes walking away from these rankings may be a symbol of that. It’s not to say that business education isn’t valuable. It’s not to say that it’s not dominant, because the MBA remains the most popular graduate degree in America and the business major is the most popular undergraduate major in America. But it’s a sign of the times it’s change. Caroline, what do you think about that?

[00:23:32.280] – Caroline

Well, I also think that no one’s going to mourn the passing, for example, of The Economist ranking.

[00:23:37.670] – John

Sure. Especially me, Maria and Caroline. I’m a little more ambivalent about, because we do get to cover it and get clicks out of it, right?

[00:23:48.380] – Caroline

Yes, but it was an appalling ranking, and I think reflected very badly on The Economist.

[00:23:54.020] – John

That’s true.

[00:23:54.840] – Caroline

Which is otherwise a very admirable institution, which produces some wonderful journalism, and the ranking was a very bad example of that.

[00:24:05.090] – John

Very good point. It’s something I made over and over again. I may have just chased them out.

[00:24:14.210] – Maria

We hurt their feelings too much by eviscerating them time and time again. They packed up their toys and went home.

[00:24:23.830] – John

Caroline, anything else you want to mention?

[00:24:27.750] – Caroline

Well, of course, there were the new tests that launched this it, and we hadn’t seen any change in the test for many years. And so the GMAT launched a new version, a shorter version, with some elements taken out, including, as you mentioned, the analytical writing. The essay, which perhaps in retrospect, given the appearance of AI on everybody’s computers, was possibly a mistake. But nevertheless, it’s a shorter test, and I think that will be welcomed by candidates. The GRE has also shortened their test. So whereas the GMAT is actually a revamped test, the GRE is, from what I understand, the same test, but just shorter, fewer questions. And so I think that these companies are looking to make it more approachable, a less intimidating prospect for candidates. They’re looking to encourage people to give it a go and to apply. So it will be interesting to see how that plays out in admission statistics, whether that actually does encourage more people to take these tests or not. And, of course, it’s a big change for the schools. They have to monitor whether these tests are indeed a good predictor of academic performance on the program, which they typically have been.

[00:25:48.000] – Caroline

I would imagine that that will continue to be the case. Hopefully, these organizations have tested these new versions of the test very well before they went live, and I’m sure that they’ve had to communicate a lot with the schools on those changes and how to evaluate the new tests in order to have the credibility with the schools.

[00:26:08.240] – John

True.

[00:26:09.060] – Caroline

But it’ll be interesting to follow that next year and see how that evolves and what the schools make of the new tests and the students and stepping.

[00:26:18.820] – John

Back from the change, I think it’s reflective of two things. Number one, trying to reduce the friction to apply to business school because of these declining applications. But also it’s an indication of the competitive battle between GRE, which has been gaining market share on GMAT for a number of years, and GMAT’s attempt to try to end the decline in market share. Because it was GMAC that actually initially announced the much shorter test. And then GRE came right back and followed suit, and not only followed suit, but then was able to get to market slightly earlier than GMAT with their shorter tests. So it’s a function of two things, I think the declining apps and trying to reduce friction at a time when many schools are going test optional and waiving the test, and for new programs not requiring it at all. So it’s an attempt to try to stop that, and it’s a competitive effort between GMAT and GRE, both of whom have been waging a war against each other for the last ten years that has resulted in substantial declines in market share for the GMAT. But really interesting to watch and see. Now, Maria, you had some interesting stuff go on at your alma mater this past year, the dean has been under fire by largely female faculty for his handling of a disciplinary proceeding against one of the superstar professors there.

[00:27:56.590] – John

Francesca Gino, would you elevate that to one of the big stories of the year?

[00:28:02.830] – Maria

I mean, I feel like there have always been stories of professors behaving badly, or in some cases, deans behaving badly. I think a few years ago at some of the schools there have even been know either involving personal lives or involving questioning of professional ethics. I don’t know that I would make it one of the. I mean, it was certainly a fascinating story in that it seems that HBS may have created its own brand new disciplinary method for just this one professor. But I guess we’ll never know to the extent that a lot of these things happen behind closed doors. So I don’t know that I would call. It was certainly one of the more salacious stories of the year.

[00:28:45.000] – John

Oh, yeah, for sure.

[00:28:46.120] – Maria

I don’t know that it would be one of the top trends, I think, not a trend.

[00:28:53.070] – John

But it’s not every day when a Harvard business School professor of some note sues the school for $25 million for breach of contract and defamation. And it’s not every day that the dean of the Harvard Business School tries to revoke tenure from a professor. In fact, in the entire history of Harvard University, no single professor has ever forcefully lost tenure. If he’s successful in doing this, he would be the first. So that’s quite a big shock. And the other shock of this, it’s gotten a fair bit of publicity in places like the New York Times and New Yorker, and, of course, a lot of stories that we’ve written about. This is the whole question of behavioral research in business schools and how solid it is, because like it or not, the Francesco Gino case has also cast a shadow over academic research at business schools, which is really unfortunate and negative consequence of all the publicity. And I have deans telling me they have donors that are demanding new governance procedures before they donate to support academic research because of the headlines that they’ve read. And that’s really sad that it’s come to that. And then, of course, who knows what else is going to come out when these lawsuits proceed through the courts.

[00:30:26.150] – John

Harvard has asked for summary judgment in the case. We’ll see if that’s granted, probably in the first quarter of the new year. But meanwhile, you know, there are a lot of angry people about this, and not only at Harvard, but throughout the, you know, professors work across borders with lots of different professors in different business schools, and many of them had worked with Francesca and had very positive experience with. Then, you know, there’s an open call by data colada to basically ask people to go and examine everything she’s ever done to try to dig up dirt on her, which is also pretty is this is something that’s not going away and it’s not a trend for sure, but it’s definitely noteworthy.

[00:31:20.370] – Maria

But even Amy Cuddy’s power posing research was discredited a few years. A lot of the behavioral things are often discredited because they can’t be replicated. Yes. So it’s not the first time it’s happened. I will say one thing that is notable about the Francesca Gino case is that I believe Dan Arielli, who is a superstar, perhaps an even more of a quote unquote household name, so to speak, was her co author on some of these papers. And it’s not clear to me that he has. I think some of his work has also been retracted due to perhaps questions around the data integrity. But it’s not clear that he has faced the same calls.

[00:31:55.650] – John

Definitely has not. He has not faced fame at all. And then with know, Amy gave back her tenure and left as a tenured professor at Harvard over this. So she also had suffered some consequence over it. But that was her decision to leave, and there was no investigation in the committee and really tough decisions taken on her.

[00:32:20.530] – Maria

If she wouldn’t have left, though, there may have been. So perhaps she was trying to sidestep that.

[00:32:25.390] – John

That’s possible. And we know the president of Harvard University who’s been called know accusations of plagiarism, and she has since basically changed two of her research studies, adding quotation marks and citations, where there were few, if any, to address the claims that she plagiarized other scholars in her work. This seems to be, all of this is a piece of something bigger that also shows, I think, it just doesn’t reflect well on universities, which we know in this country, sadly, are under attack. Some of this attack has occurred over just statements that presidents made or didn’t make over the Hamas attack in Israel. But it’s much deeper than that, because you have a lot of republicans calling into question the whole idea of college and higher education and claiming that colleges and universities basically train young people to be liberals. It’s sad that something that is so essential to a person’s development and essential to living a more fulfilled and meaningful life should even be questioned. In a way, the legitimacy of it should be questioned, which is really troublesome to me.

[00:33:50.490] – Maria

Maybe one of the benefits of AI, like AI, seems to be, I think, unearthing a lot of potential things like plagiarism or data shadiness. And so perhaps we’re going to see more and more of, you know, as AI can quickly say, wait a minute, this is plagiarized, or wait a minute, this data doesn’t make.

[00:34:11.410] – John

True. So true. I’m thinking that the IRS is going to use generative AI to audit everybody. We have that to look forward to.

[00:34:27.110] – Caroline

I was just going to add that I think that what you mentioned, John, is really an interesting example of how culture wars are spreading in the US. And that is really huge issue on american campuses. And it’s not necessarily the same situation in other countries to the same extent. But I think as we go into an election year, next year, things may become more polarized and these culture wars on campuses may become an ongoing issue as these issues are used as a sort of battleground to try to mobilize people on one side or the other. So it’s unfortunate, but I think there will be many difficult issues for schools to manage. And education is. Leading an educational institution in the US is a pretty hot seat right now.

[00:35:23.270] – John

Yeah, definitely. So lots of change, lots of really interesting developments that occurred in the past. You know, I think this is what makes business education, higher education in general, fascinating and challenging. And it makes us have endless things to talk about every week. And if you’ve been tuning into our podcast every week, you know, we’re not afraid to tackle all of these subjects and we kind of enjoy doing it. We hope you enjoy listening, and we really want to thank you for hanging in with us this year. We hope that the new year is one of great health and prosperity for you and your family. And if in fact, you are applying to go and improve yourself by getting a business degree of any kind, be it an undergraduate degree or a graduate degree, we wish you the best success possible. Hey, this is John Byrne with Poets and Quants. Thanks for listening.