Even though the 2015–2016 MBA application season is still in full swing, we can already anticipate the next one beginning in just a few weeks. Typically, top MBA programs start to release their essay questions on or around May 1, and that is when the proverbial starting gun is fired for a marathon with thousands of hopeful “runners” all striving to get into their dream schools. What are some of the key factors that will shape the 2016–2017 admissions race? We have identified six for this article:
1. A Larger Applicant Pool?: To an extent, MBA application volumes are linked to unemployment rates. When unemployment skyrocketed to 10% in the wake of the financial collapse, business school applications surged. Right now, unemployment is near historic lows, but confidence in the economy is also low, and the stock market has proved to be erratic. Several bulge-bracket banks—including Barclays, Citi, Bank of America, and Goldman Sachs—have announced significant layoffs, mostly in sales and trading. Meanwhile, there is talk of billion-dollar start-ups at risk of failing. The prominent venture capitalist Bill Gurley has been speculating that there will be “dead unicorns” (unicorns are venture-backed companies with private valuations of $1 billion or more) as soon as this year. If some of the approximately 175 larger unicorns start to collapse (because they cannot achieve profitability or secure venture funds to extend their lives), this could result in a lot of young, well-educated people being out of work for the first time in their careers—and some will inevitably seek to reinvent themselves through an MBA. If the unicorns start falling soon, we may see the impact in the second application round, and this could quickly alter the competitiveness of the candidate pool.
2. Closer Scrutiny of Career Goals: Regardless of the volatility outlined in factor one, do you want to become an entrepreneur? Is it in your bones? Admissions officers at the top MBA programs are becoming less convinced that the ever-growing number of applicants making this claim truly mean it or could successfully break into the field. Academics at the leading schools are sounding the alarm as well, whispering “bubble.” Professor Thomas Eisenmann, faculty co-chair of Harvard Business School’s (HBS’s) Rock Center for Entrepreneurship, told the Wall Street Journal that the surge in interest in entrepreneurship among MBA students seems like “herd behavior.” And Leah Edwards, director of the Stanford Graduate School of Business’s (GSB’s) Center for Entrepreneurial Studies, expressed concern about the purpose of MBA entrepreneurs, telling the WSJ, “We don’t need another app to order food.” In short, we expect that admissions officers will start to more carefully scrutinize applicants who declare their Silicon Valley dreams, in hopes of distinguishing the true contenders from the mere pretenders. If you have neither evidence of entrepreneurial experience nor the grittiness that is frequently associated with entrepreneurial success, then you should think carefully about writing your application essay about the start-up you intend to launch post-MBA. Doing so will likely reflect negatively on you. MBA admissions committees often consult with their school’s career offices and want to be sure you have a legitimate shot at achieving your dreams. You must prove that you are indeed capable of what you claim, and that starts with goals that are not only ambitious, but also realistic.
3. HBX as a Credential: There is certainly no rule that says you must complete HBS’s Credential of Readiness (CORe) program—known as HBX—before applying to HBS. However, according to an annual report that HBS’s dean sent to the business school’s alumni, last year, 300 of HBS’s more than 900 admits took the CORe program before matriculating. In a competitive applicant pool, some people will view this as a sign that CORe is practically a requirement. In actuality, it is not, but perceptions and reality do not always align, of course. For some, HBX is indeed an opportunity to reveal their competence and fluency in the language of business. If you were a speechwriter with a liberal arts background (like the author of this piece), then the CORe could be a great way for you to establish a baseline of knowledge—much like passing Level I of the CFA exam might be. If, on the other hand, you have a business degree and have been working in consulting for a while, the CORe will not likely do much to help you establish competency, because you have actually already done so. Still, competency be damned! We expect that more and more people will enroll in HBX, merely out of fear of not having this small, figurative box “checked” in their HBS application file.
4. A New Dean of Admissions at HBS: Last year, Dee Leopold announced that she would be stepping down after more than a decade as managing director of MBA admissions at HBS. After interviewing approximately 100 candidates for the position, HBS has just chosen one of its own recent MBAs, Chad Losee, as her successor. However, Ms. Leopold will continue to work in HBS admissions, serving as program director for the 2+2 Program she initiated and which has truly reshaped the HBS class. This means Mr. Losee will have easy access to her input and advice during his transition, but he undoubtedly has opinions and plans of his own, and ultimately, the proverbial “buck” for HBS applicants will stop with him. He will surely bring some fresh ideas to the position, and the next class admitted under his purview will bear that imprint—only, no one yet knows what that imprint will be. Approximately ten thousand HBS applicants in the coming year will therefore have to deal with some level of uncertainty for part of the admissions season. For anyone concerned about what Mr. Losee’s preferences might turn out to be, we offer this word to the wise: rather than focusing on what you think he wants and trying to match that, put your efforts into conveying who you truly are as an applicant.
5. A New Day at the Stanford GSB: If we are going to consider the impact of the changing of the guard in HBS’s admissions office, we should also discuss the impact of a new dean at the Stanford GSB. Although a school’s admissions director clearly plays a central role in shaping each incoming class, he/she must still answer to the dean, who sets the tone for the school as a whole and has certain expectations of the applicants who are admitted to it. We anticipate that the scandal that recently rocked the Stanford GSB will have little to no impact on the program’s application volume or on the prestige of this vaunted institution, but the new dean will undoubtedly have opinions about the desired composition of the class and what makes an excellent manager—and this will ultimately be felt and applied in the admissions office.
6. Higher GMAT Averages: The GMAT averages at the leading MBA programs seem to rise higher and higher each year—almost impossibly so. For the classes that matriculated in the fall of 2015, the Stanford GSB’s boasted the highest average GMAT score at 733! Where can we go from here? Higher, actually, and here is why:
a. Changes in the GMAT: GMAC, the organization that administers the GMAT, has taken steps to make applicants more comfortable with the idea of taking the test multiple times and more frequently. Last year, GMAC made changes that allowed candidates to take the test every 16 days, rather than every 31 days (up to a maximum of five times per year). We assume that the goal of this change was to encourage individuals to take the test more often. Because the MBA programs include only your top score in their averages, this gives you additional incentive to take the test several times (or more!) so as to do your very best. Further, GMAC allows applicants to see and cancel any scores they do not want to appear on their score reports, thereby taking the pain out of a cancellation and increasing an applicant’s willingness to try again. The bottom line here is that more candidates taking the GMAT more times should translate into higher averages.
b. The Rise of the GRE: The GRE and the GMAT are equals in the eyes of almost every admissions officer. HBS’s Dee Leopold told me directly, “We view these tests as equal and have no preference,” a sentiment echoed by Yale School of Management’s (SOM’s) Bruce DelMonico, who added, “We wouldn’t accept the test if it were going to disadvantage people.” The Yale SOM has been a leader in accepting the GRE, with more than 20% of its applicants having taken the alternate exam. How does the increasing acceptance of the GRE increase GMAT averages? Some applicants treat the GRE as a “work-around.” If they fear doing poorly on the GMAT, they take the GRE instead, because the GRE is not yet weighed in some MBA rankings. In effect, the rise of the GRE has eliminated some weaker test takers from the applicant pool. We must note, however, that this is not a foolproof work-around; although your low GRE score may not reduce a school’s GMAT average, you will still need to prove that you are capable of managing a rigorously quantitative curriculum.