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60 March/April 2014 BizEd Moving an Industry Forward Since John Fernandes took the helm of AACSB International as its president and CEO in 2000, the organization has had tremendous global growth. Its member- ship grew 65 percent to include 1,343 schools, and the number of nations rep- resented in its membership grew 75 per- cent to 84 countries. Today the majority of AACSB members are from countries other than the U.S. In 2000, only 19 schools outside the U.S. held AACSB accreditation. Today, 185 schools in 44 countries other than the U.S. are accredited. Fernandes will retire in May 2015. As the industry looks ahead to the next 15 years, BizEd asked Fernandes what he sees as the most significant chal- lenges—and potential solutions that lie ahead for business education. What do you think will be the big- gest global challenge business schools will face? In the 1950s in the U.S., most burgers were made-to-order at popular diners and restaurants. Then, McDonald's began to offer cheaper, more convenient options. Consumers were willing to accept a less expensive, mass-produced alternative in lieu of a customized hamburger of higher quality. Higher education could go that same route, in which people will value convenience and affordability over quality. I also fear we're moving too far away from the liberal arts, which could result in graduates with an imbalance of knowl- edge, skewed too much to engineering, mathematics, and the sciences. Business schools need to embrace the value of lib- eral learning and soft skills to prepare grad- uates to be innovative business leaders. How do you foresee business schools adapting to rising costs and decreased funding? Schools in North America derive nearly 85 percent of their revenues from tuition; schools in Asia and Europe derive more than 70 percent. But we're hitting a tuition ceiling, reinforced by students' reluctance to take on too much debt and lenders' reluctance to grant large loans. The inability to raise tuition will cause a shift. Some, such as Google Fellow and Udacity founder Sebastian Thrun, predict that in 50 years, there will be only a handful of universities. I do not think that will happen, but ris- ing tuition costs will force a change in the market. We will always have those "life-fulfilling" business school brands whose programs can guarantee their graduates successful careers. There are only about 30 of these schools in world, and I think that number will stay fairly stable. It is astounding to me that it can cost more than US$100,000 to complete an MBA at these major schools. In 25 years, that cost might rise as high as $300,000. If these brand-name schools continue to raise their tuitions, the other 99 percent of schools will be forced to lower their costs and adopt other models. What kinds of models? A valuable tool that I think could benefit schools financially, once they're ready, is faculty leveraging. With faculty leverag- ing, schools invest in a strong academic who understands the research on a given topic and the pedagogical strategies and classroom environment to teach it well. These doctorally qualified faculty will conduct research and have light teaching loads. Under AACSB's 2013 standards, such faculty would be considered Schol- arly Academics (SA). Each SA could work with four or five other faculty classified as Instructional Practitioners (IP) under AACSB's 2013 standards. Practically speaking, one SA in accounting who makes $175,000 a year could work with five IPs who each make $70,000 a year, which could bring a school's costs down significantly. What could spark widespread adoption of faculty leveraging? One trend that could push schools toward this model is the increasing emphasis on assessment of learning out- comes. Society and governments no lon- ger accept the idea that students learn just because a great faculty member is in front of them. Rather, they want to mea- sure those results. By adopting faculty leveraging, schools will be better able to assure positive outcomes over many more students at reduced cost. What kind of leadership do you think business schools will need? I think that business schools increas- ingly will have to be run like businesses, choosing people with business skills as their leaders. They will need leaders with the skills to inspire and motivate faculties to want to change. Absent that approach, important work will not get done because of a lack of motivation. As a result, business schools will fail to react to external factors until the situation is dire. We will need inspirational lead- ers with business acumen to move the industry forward.