Midway through his MBA program, Andy Brown had a big decision to make. His career choices -- to start his own small private equity firm with a partner, or join a prestigious firm and learn at the feet of the masters -- were enviable for any soon-to-be graduate. But Brown, a student at Northwestern University's Kellogg School of Management, was torn. So he did what he'd done dozens of times before. He turned to Professor Larry Fox.
At Fox's home north of Kellogg's Evanston, Ill., campus, the two spent hours sipping tea and sorting through Brown's options. Fox, 61, who led an elective class on private equity in 2003, helped Brown hash out the pros and cons of each path and examine his long-term goals. Fox shared his own experiences at similar career crossroads. When Brown left, he had the names of three high-level executives Fox knew personally to call for more brainstorming. For the next year, the two continued to dissect Brown's choices by phone — by then, Fox had retired to California.
It might seem an unusual relationship, but for Brown, 29, it was not uncommon. Other professors had been equally generous: One was a sounding board for Brown's business ideas, and another helped Brown raise money for a Kellogg business plan competition. "One of the main reasons I chose Kellogg was for its extremely accessible faculty," says Brown, who ultimately chose to join a Houston-based private equity firm. Kellogg's academic rigor, responsive administration, and close-knit community were equally appealing.
The balance between an in-depth academic experience and a welcoming culture is what once again put Kellogg at the top of BusinessWeek's 2004 biennial survey of the world's best business schools. In a year when MBA students rebelled against academic corner-cutting and sloppy ethics, Kellogg's achievement represents a high-water mark of sorts. With five No. 1 rankings to its credit, Kellogg now has more than the University of Pennsylvania's Wharton School, the only other school to win the top spot since BusinessWeek began ranking B-schools in 1988.
No. 2: University of Chicago
Clearly, Kellogg's is a formula that works. But it wasn't the only way to ascend to the top. Downtown rival University of Chicago Graduate School of Business, with its cerebral environment and research-oriented bearing, stands in stark contrast to Kellogg -- and it landed at No. 2 for the third time since the rankings began. Yet it may be what Chicago has in common with Kellogg that made the difference this year: a mix of pure scholarship and can-do culture that permeated the ranks of administration, faculty, students, even recruiters. Indeed, Chicago's grads were hands-down favorites in our survey of companies that hire MBAs. More than just a factory for churning out economic whiz kids, the school's capacity for shaping students' thinking was at the top of recruiters' minds.
"Everything is grounded in theory and analytics," says Blaine Barnett, a 2004 grad now working for high-end recreational product maker Brunswick Corp. "In every class it was, 'prove it to me,' 'show it to me,' 'tell me why you think that,' 'give me the data.' It's a way of thinking, a way of conceptualizing the problem."
Chicago's penchant for critical thinking has a long and storied history. But enthusiasm among students, and even faculty, is a newer phenomenon, ushered in by alum and now-dean Edward A. Snyder, who joined the school in 2001. Just three years later, his ambitious plans to revitalize the school and shape the program's culture around its academic strengths and thought-provoking environment are bearing fruit, and Chicago has ended its inconsistent performance in the eyes of students. The success of this type of culture, says Snyder, hinges on the expectations he announced on day one, including mutual respect, professional communication, and personal responsibility. Snyder's weekly roundtable breakfasts are a hot ticket, and not just for the flapjacks. Every student (each class has about 500) is invited at least once to the anything-goes meetings. Just weeks ago, a big source of student gripes — poor facilities — was remedied when a new seven-story, 415,000-square-foot home for the business school opened.
Satisfying students
If there's one lesson to be distilled from this year's ranking, it's that student satisfaction is crucial. At Wharton, a new building did little to remedy student unhappiness in 2002, when the school fell from its long-held No. 1 spot to No. 5. Waning student satisfaction, an ineffective placement office, and a dip in hiring by its most reliable recruiters led some to question whether the venerable finance school had lost some of its luster. But in 2002, Dean Patrick T. Harker hired Peter Degnan, a former investment banker, to overhaul career services, and students have taken notice. Says one Wharton grad, who landed a six-figure job at an investment management firm: "Degnan and his team have done an incredible job attracting employers, increasing the number of interviews and the number of job offers -- all in a very short period of time." Recruiters noticed the well-oiled machinery, too -- they named the placement office at Wharton the most effective of any school. It all added up to a No. 3 spot for Wharton this year.
Also on Wharton's improvement checklist: 23 new faculty across several disciplines and some fine-tuning of the program, including more "soft-skill" classes in communications, and experimenting with new interactive tools developed in the school's learning lab. And though students still complain about spotty teaching, Wharton's faculty — 223 full-timers — rivals that of any program. That's borne out by the school's intellectual-capital ranking — based on published research and book reviews — which was among the best this year. It's not uncommon at Wharton to look down at a class textbook and find that your professor wrote it.
Schools of hard knocks
For the class of 2004, a school's intellectual prowess was just one way students judged a degree that was beginning to feel less valuable. Remember, the most recent group of MBAs applied not long after September 11, with the economy in tatters. They witnessed the layoffs of tens of thousands of employees, and some were downsized themselves.
What's more, just a few months before applications were due, the Class of 2004 watched in disbelief as recruiters in 2002 reneged on job offers to hundreds of newly minted MBAs. An MBA was no longer a golden ticket, and more and more grads found themselves without jobs, even months after commencement. At the same time, B-schools continued raising tuition, making the price tag for the degree — already staggering — an even bigger reach.
All of this at a time when pundits and even B-school insiders were questioning the value of the degree after a spate of corporate scandals that often involved MBAs. "It has been a sobering experience for the business community as a whole," says Bruce Willison, dean of UCLA's Anderson School of Business, No. 14 this year. "People are mindful of that as they decide to go back to business school."
The tumultuous state of corporate America and the world of management education created near-perfect conditions for a backlash against the "glitz factor." In the late 1990s, many MBA programs catered far too much to student whimsy, sometimes to the point of dumbing down curriculum, reflecting the "I-want-more" culture that permeated the boom years. But the MBA is, after all, a $100,000 investment, and the country club atmosphere just doesn't cut it anymore with students.
"[The MBA] is really about investing in yourself, acquiring a knowledge base you didn't have before so that you have a professional future that's brighter," says Robert L. Joss, dean of Stanford Graduate School of Business, No. 4 this year. "That has to come from effort and work, and there has been a growing awareness of that."
That may be why business schools known more for their tough academic environments have gained ground in the ranking this year with students and recruiters. Carnegie Mellon Tepper School of Business, with a reputation for turning out grads skilled in quantitative analysis, shot up four spots, to No. 15, and technology powerhouse Purdue University's Krannert School of Management leapt five spots, to No. 21. For Purdue, the improvement came despite student complaints that the career services office didn't do enough to help them with job searches. They also said alumni contacts were barely useful in the hunt.
Schools that failed to meet students' intellectual needs paid dearly in the 2004 student survey. University of Southern California's Marshall School of Business fell 10 spots overall, to No. 27, and nine places in the student poll, to No. 23. In spite of a class boasting perhaps the highest average GMAT scores in the school's history, "the administration failed to match the caliber of students with an equally tough and challenging curriculum," says one grad.
2004 graduates see a recovery
This year's class saw the first signs of a recovery in the MBA job market after three years of lackluster recruiting. You could almost hear the sigh of relief. About 75 percent of grads at the top 30 schools had at least one offer by graduation. By three months after graduation, only 11 percent were still looking for work. That's in stark contrast to 2003, when nearly 35 percent of grads at the top schools were still pounding the pavement at summer's end. Harvard took the lead this year -- 94 percent of the class of 2004 had at least one job offer by graduation. And even though students complained about the school's lack of connections with smaller recruiters, grads received an average of 2.6 offers per student -- more than any other school.
Most schools had to pull out all the stops to maintain and strengthen relationships with companies -- and get them to come back to campus. Cornell University's Johnson School of Business, No. 7 this year, used a private jet, loaned by its B-school namesake, S.C. Johnson & Son Inc., to fly recruiters to out-of-the-way Ithaca, N.Y., for presentations and interviews. Some 29 companies took advantage of the unique perk to recruit first- and second-year students. And 14 job or internship offers from companies like GE Consumer Finance and IBM Global Services came about as a result of those trips.
Companies weren't just back in hiring mode for the Class of 2004. They were also more willing to pay a little more for grads' skills. Median graduate-reported total compensation -- salary, signing bonus, and other guaranteed payments -- was up 26 percent, to on average $136,569 in 2004. Many grads had something even better to be thankful for -- a big part of the compensation increase came from companies paying off their loans. Others were just happy to see more recruiters on campus -- and to be among the employed.
Return of the recruiters
Career service directors privately worried that 2004 wouldn't be much better than 2003. But in the spring, their phones started ringing. Banks and consultancies, months after fall recruiting ended, came back to campus to snatch up uncommitted grads. Hiring among consulting firms and banks that answered the BusinessWeek survey in 2002 and in 2004 was up 21 percent this go-round. And prospects are looking even better for the Class of 2005. "Two of the major firms hosted summer receptions for students who hadn't even started business school yet," says Sheryle Dirks, career services director at Duke University's Fuqua School of Business, ranking No. 11. "We haven't seen anything like that in at least five years." Students' growing coolness to hard-charging Wall Street jobs has pushed the banks, in particular, to be more aggressive in their recruiting.
And that's not all. Recruiters, who have long grumbled about MBAs who can't hit the ground running, now say MBAs are making a contribution from the get-go. Of those who responded to the BusinessWeek survey, about 50 percent reported that grads' skills and abilities were better today than they were three years ago. Only 4 percent said grads were worse now than in 2001. "Before, everybody was going to business school just to go or because they were [laid-off]. Now, the people who are there really want to be there. It's more competitive to recruit, but the quality [of grads] is much better," says the head of a top consulting firm.
One reason could be that schools have become more innovative, adopting hands-on learning techniques designed to give them a taste of the business world they're about to inhabit. What had been a smattering of experiential learning projects at a handful of schools has turned into a full-fledged phenomenon over the last few years. Students at most schools aren't just learning about structured finance, marketing strategy, or brand management. They're doing it. Through a variety of consulting projects, teams of students get a chance to test-drive their new skills.
At Kellogg, students have hundreds of opportunities to consult or work on real-life corporate projects -- often as a supplement to a particular course. The combination has won them kudos from corporate recruiters who named the school's curriculum the most innovative. For example, students in technology marketing studied the latest marketing concepts for high-tech firms under the watchful eye of professor Mohan Sawhney and Dean Dipak C. Jain. Between pop quizzes and homework assignments, they consulted with senior management at Microsoft Corp., identifying business problems, writing case studies, and developing solutions for the company. Microsoft has already implemented several student marketing ideas related to its .Net initiative to sell Windows software as a service.
Turning out leaders
One of the biggest changes in the B-school world this year has been a recognition among students that leadership is important. As important as, say, cost allocation or strategic planning. But teaching the fine art of leadership to Type-A MBAs is a challenge, especially when many already see themselves as destined for the corner office. Harvard Business School, alma mater of a sitting President and dozens of CEOs, made the biggest splash by making its first core-curriculum change in 25 years. Last fall, it launched a year-long required course on leadership and ethics, team-taught by 10 of the school's top professors (35 applied to teach it). Student response was overwhelming: One student wrote to a professor about his visit years earlier to a Polish concentration camp where he lost relatives during the Holocaust. The trip left him certain that human beings were incapable of changing their ethical stripes. "You have proven me wrong. While we become harder to convince over time, we are still ... 'moldable' at any age."
Of course, Harvard doesn't own the market for creating leaders. Under Dean Robert J. Dolan, University of Michigan's newly named Stephen M. Ross School of Business expanded its flagship leadership program from one week to two and added a third week just before students graduate — and won raves from recruiters, pushing it up two spots to No. 6. University of Virginia's Darden Graduate School of Business Administration, at No. 12, creates leadership and ethics case studies from its own center dedicated to the subject.
And Emory University's Goizueta School of Business moved up two spots to No. 20 this year, with grads giving it the highest score among all programs for the school's numerous efforts to nurture and improve their leadership skills. Through a mix of seminars, workshops, and year-long class work, the school constantly reinforces the idea of leadership. Next year, Emory will add a Leader's Academy for students who want even more training. They'll have to be committed, though — the academy meets on weekends and requires serious sweat equity in exercises that include working a minimum wage job and spending a long weekend at Marine Corps boot camp.
Demand rises for entrepreneurial thinking
Grads who are grounded in the fundamentals but who also have business-building skills are in high demand these days. That's something that sets Babson College's F.W. Olin School of Business apart from its peers. "Companies can only do just so much with operating excellence or cost-cutting," says Dean Mark P. Rice. "At a certain point, you need new products, processes, and services. That's what drives revenue growth, and that's what Wall Street wants to see." In recent months he has received many requests to talk to executives at companies like Gillette Co. and United Technologies Corp. about innovation.
Babson, which enters the ranking for the first time at No. 26 this year, lives and breathes entrepreneurial zeal -- even though upwards of 80 percent of its grads go on to work for traditional companies, which increasingly appreciate their creative thinking. Even hard-charging schools are getting on board the innovation bandwagon. R. Glenn Hubbard, recently appointed dean of Columbia Business School, hopes with a new mandate he can infuse a dose of entrepreneurial thinking into every course the nearly 500 MBAs take each year.
Such changes reflect a sense of optimism in the classroom that was fading two years ago. After surviving an economy in free fall and an unprecedented loss of faith in business itself, it wouldn't come as a surprise if the class of 2004 were a hard-nosed lot. But that's not the case -- and with good reason. Recruiters are back, and schools are making meaningful changes. In the increasingly complex business world this year's grads have inherited, it may just be worth more than ever.