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Chair's Exchange: Change is in the Air—Confronting a New Reality

By Robert S. Sullivan, Dean, Stanley and Pauline Foster Endowed Chair
Rady School of Management, University of California, San Diego
Chair, AACSB Board of Directors

Dr. Clark Kerr was an exceptional president of the University of California system from 1958 to 1967. These were very tumultuous years for higher education in the United States, with war protests, the civil rights movement and civil strife all serving to make Dr. Kerr's tenure especially remarkable. Following his presidency, Dr. Kerr was invited to give a series of lectures at Harvard University that captured his thoughts and insights. In his 1984 lecture, Kerr noted:

"Everything else changes, but the university mostly endures—particularly in the United States. About 85 institutions in the Western world established by the year 1520 still exist in recognizable forms, with similar functions and unbroken histories, including the Catholic church, the Parliaments of the Isle of Man, of Iceland, and of Great Britain, several Swiss cantons, and 70 universities. Kings that rule, feudal lords with vassals, and guilds with monopolies are all gone. These 70 universities, however, are still in the same locations with some doing much the same things, and with governance carried on in much the same ways."1

Fast forward to 2013–2014 and the new academic year that is upon us. Focus on our business schools—often a part of a larger campus system. Can you smell change in the air? Are there new challenges or opportunities? With the availability and provision of new educational technologies, the cost of education, a decline in state and federal funding, new market entrants, new job skill needs and more, is the proverbial 'tsunami' coming?

Let me focus on one simple topic where many business school deans are confronting a new reality: applications and enrollments in traditional MBA programs have nearly leveled off. For 2011—2012, applications for MBA programs in the U.S. increased by only 0.6 percent, while they increased by 4 percent worldwide. The size of the pie is almost static, yet new programs are being launched and new technologies deployed to enable established programs to penetrate new geographic markets. Competition for the best and brightest students is at an all-time high—and increasing. One school's gain may be another's loss.

Why is this different? Why is this new competitive world important? Each of our programs may be impacted in different ways—the quality of students, the need for financial aid, the tuition revenue model. It can be a challenge—even to the point of stressing the school's resource model to its breaking point.

Business schools have often been on the forefront of change and innovation in higher education. Today's business schools are (and must continue) innovating at an even faster pace to remain relevant and competitive. Business schools are challenging Clark Kerr's depiction of the higher education industry. The business school environment is changing rapidly, and business schools are breaking the mold. This may include curriculum changes, the use of technology, industry partnerships, school consortia and more. Tomorrow's most successful schools will challenge even today's wildest imagination—change and opportunity are in the air.











Robert S. Sullivan
Dean, Stanley and Pauline Foster Endowed Chair, Rady School of Management, University of California, San Diego

Chair, AACSB
Board of Directors