For those who don't want to read through my scenarios, please see the suggestions for current students, admits for fall 2020 and applicants for 2021 at the end of this post.
McKinsey had originally projected three scenarios. Frick’s summary:
- Quick recovery (least likely)
- Global slowdown (base case)
- Global pandemic and recession (conservative case)
Given the many schools that have already announced that will be going online for the Spring Term, I think we can dismiss the Quick Recovery scenario. The best case at this point is Global Slowdown but given that WHO has already stated it is a Global Pandemic, I think we can safely assume that Global Pandemic and Recession is the base case. So, we need a new third case, which I will call Prolonged Global Pandemic and Recession/Depression (Worst case). See, for example, here, here and here for why such a scenario needs to be considered.
What I have done on the following tables is take Frick’s analysis and consider how it might impact students, incoming students for fall 2020 and applicants for 2021. Frick identifies 4 context variables (teaching, operations, community, and financials for higher education institutions), which I have utilized below. Please note all content in “FRICK SCENARIO” below is taken directly from Frick and placed in quotes. All other content is mine. With respect to Global Slowdown, I have already modified it because Frick's scenario of just a few days ago is already too optimistic as business schools have already or are going online.
GLOBAL SLOWDOWN: Scenario assumes a return to the status quo pre-Coronavirus by fall 2020. Also assumes the global economy begins recovery by end of 2020. Hence I keep this scenario as the optimistic option which assumes things suddenly get better really quickly because Coronavirus hates the spring and summer and containment measures prevent a massive return in the fall.
| FRICK CONTEXT VARIABLES | FRICK SCENARIO ANALYSIS (and MARKUS comments) | IMPACT ON MBA STUDENTS FOR 2020-2021 | IMPACT ON MBA APPLICANTS FOR ENTRY IN 2021 |
| TEACHING | “Major effect on many campuses on spring residential classes and canceling of study abroad programs” PLUS spring and summer programs go online or are cancelled. Programs commence normally in the fall. Comment: This is has already happened. B-Schools are switching to online format so we have already moved into McKinsey’s Global Pandemic Scenario. It is still an open question whether summer and fall classes will be cancelled/switch to online. | -No on-campus program for spring 2020. This will obviously significantly impact the student experience. -In the US, international students visas will still be valid for those who have already commenced studies at this time. See here on the current visa policy for international students if programs shift to distance based. -Potentially significant impact on recruiting and interning for summer 2020 -Potential impact on visa issuance (delays) and entry for new students commencing studies in summer/fall 2020 | No huge impact because programs will have returned to normal by fall. However, no campus visits possible in the spring of 2020. Assumes a return to campus and the regular campus and off-campus admissions event schedule by the fall. Possible delay in test preparation because of uncertainty about applying leads to reduced applications for Round 1 for fall 2021 entry. Applications increase significantly in Round 2. |
| OPERATIONS | “Many employees affected and not able to work; others work from home; conferences canceled in spring and perhaps summer; employee travel limited; major campus cleaning” Comment: This has already happened and/or is happening. | For this spring, programs with strong distance learning programs will be able to more quickly expand their service offerings than those that don’t. Depending the school, students will have a highly variable distance learning experience. Assuming a return to normalcy by fall, no significant long-term impact except for greater preparation for the next similar kind of crisis. | The primary process for admissions is online so this will not prove to be significant. Many interviews have already been conducted online/by telephone for many years. |
| COMMUNITY | Canceled attendance at sporting and other events; coordination with local department of health and other communities on risks/actions“ Comment: This is has already happened and/or is happening. All events on B-schools campuses have been cancelled. | Given the high value placed on the on-campus, in-person group experience, clubs and networking, there will be a significant negative impact on the experience for this spring. However, students are comfortable with on-line communications, so workarounds will be put in place. -Assumes a return to normalcy by fall 2020 | Applicants will learn about programs virtually and through online communication during the spring but can visit campus again in fall 2020. |
| FINANCIALS (IMPACT ON SCHOOLS’ FINANCIALS) | “Major .5 to 4.9 percent of operating expense” Comment: This is has already happened and/or is happening at the university level. | No certainty whether short-term financials would have any significant impact on students at well-funded B-schools. Assume marginal or no impact. Applicants will learn about programs virtually and through online communication during the spring but can visit campus again in fall 2020. | Admissions offices will scramble to increase on-campus and off-campus events in order to make up for lost time. |
Global Pandemic and Recession: This is my base case based on the fact that WHO has already indicated it is a Global Pandemic. Assumes a recession lasting into 2021.
| FRICK CONTEXT VARIABLES | FRICK SCENARIO ANALYSIS (and MARKUS comments) | IMPACT ON MBA STUDENTS FOR 2020-2021 | IMPACT ON MBA APPLICANTS FOR ENTRY IN 2021 |
| TEACHING | “Dramatic effect -- spring, summer and fall in-person classes canceled/switched to online format” Comment: We have entered this scenario. It is an open question as to whether the situation will have improved by the summer or fall. | For all students, a total change in what they had expected to experience. -For international students, the real possibility that they would be unable to travel to campus and be offered either a total distance or mixed distance/short-term residential (possibly at satellite locations) experience. High likelihood of experiencing 1-2 years by distance. Visa difficulties. Reduced opportunities to work in the US/Europe -Depending on the school and the situation as it unfolds, admits for fall 2020 could be offered deferment, especially if they are international students. | Applicants will wonder about the continued value proposition offered by full-time programs that will not in fact operate for part of their degree as full-time total experience. -Applicants will increasingly be invited by schools to view/experience online classes in order for schools to promote their continued value proposition. -International student applications to MBA programs will greatly decline assuming that visa/travel remains difficult. -Acceptance rates at all programs will increase significantly for fall 2021 as applicants will decide to wait until 2022 entry to apply. |
| OPERATIONS | “Campus shutdowns through end of fall semester; employee layoffs/furloughs” Comment: MBA programs have the technical capability to deliver a total online experience so while campus services would be greatly reduced. Faculty, administration, career services, and IT can continue to function. | Students entering would experience an online education for at least the fall semester of 2020 and possibly all of the 2020-2021 academic year. -For all students, a change to the recruiting process for those who avail themselves of on-campus processes. That said, assume that career services offices will be able to make a full switchover to an online model by fall 2020. -Significant reduction in placement opportunities for both internships and recruitment similar to past recessions. The lower ranked the program, the greater the impact. | All interviewing will be conducted online. Team-based interview processes will need to be further refined and/or prove so burdensome that they will be eliminated. |
| COMMUNITY | Canceled fall sports, concerts and major events; preparation for shutdown of local tourism/restaurant offerings” Comment: If programs are run on distance basis none of this will matter. | After working through the challenges of organizing an online community by fall 2020, a workable solution would be in place for online communications, socializing, and networking. Professional and other clubs not requiring in-person activity would continue to function. Other clubs (sports for example) would go dormant. | Applicants will wonder what kind of community they will experience |
| FINANCIALS (IMPACT ON SCHOOLS’ FINANCIALS) | “Dramatic 5 to 50 percent of operating expenses” Comment: This applies to all higher education institutions and is not MBA specific. Assume that schools with more money can handle this change more effectively. | Comment: Assume possible impact on tuition and scholarships at schools with less deep coffers and/or those that experience significantly reduced enrollment. | Applicants will be closely considering opportunity costs. While the numbers of those entering into MBA programs (and other graduate schools) typically increases during a recession without good prospects for employment post-degree, the value proposition for an MBA program will look weak in the short-term, which may very well reduce the number of applications. Assuming that there is no huge number of seats set aside for admits for fall 2020 who deferred until 2021, assume acceptance rates will increase as the number of applications will be reduced. |
Prolonged Global Pandemic and Recession or a Depression: Scenario is based on Coronavirus causing prolonged disruptions to the economy, free movement between borders, visa issuance, and the potential need for extended and rolling periods of social distancing and other negative impacts on offering an on-campus MBA program. Assumes that either the virus does not reduce in the spring/summer of 2020 or a second wave of the virus hits in fall 2020 and continues well into 2021. Assumes the worst case.
| FRICK CONTEXT VARIABLES | SCENARIO ANALYSIS FOR MBA PROGRAMS | IMPACT ON MBA STUDENTS FOR 2020-2021 | IMPACT ON MBA APPLICANTS FOR ENTRY IN 2021 |
| TEACHING | Need for a total switch to online higher education and a partial or complete disruption to the existing on-campus/experiential/group based model prevalent in business schools for at least 2020-2021. Best case for continuity would be blended learning like in Executive/Distance MBA programs (distance plus short-term residential). The programs with strong online/distance learning in place already are best equipped to handle this change. As are schools that rely less on community engagement and more on class attendance. | The graduating MBA classes of 2021 and 2022 experience a distance-based education with limited or no campus experience. Campus based programs return in either fall 2021 or as late as fall 2022. | See prior base case scenario but assume that the level of pessimism about a return to normality on the part of both schools and applicants results in programs shifting to a distance offering and a radically changed value proposition. Assume a significant decline in applicants |
| OPERATIONS | Need for major restructuring, at least over the next 1-2 years. | Assumes no campus experience except for possible short-term programming. Experiential programming maybe possible but will require reinvention. | See prior scenario. Assume that career services will have to radically change itself to be of any relevance to international applicants. Schools like LBS and INSEAD are better positioned to handle this than schools with a domestic recruiting focus. The US schools will have to consider greatly expanding their international career service focus to offer one of the core expectations of full time students. |
| COMMUNITY | Online community as primary. Switch to the distance model which in some cases allows for short-term in-person study. | For those impacted, their experience of community will be virtual and/or short-term in-person. | Applicants will put very little value on community because essentially schools will be only offering a weaker one. In this respect schools like Tuck that are highly dependent on selling a community experience are facing a potential radical drop in applications. |
| FINANCIALS (IMPACT ON SCHOOLS’ FINANCIALS) | Unknown for MBA programs that currently charge comparable tuition regardless of method of delivery and hence might actually save money by reducing on-campus operations | Potentially significant impact on the MBA value proposition. Possible changes to tuition/scholarships. -Experience interacting with diverse people would be virtual. Limited opportunities for deep connection or bonding and no opportunity to live abroad. | Applications will significantly decrease. Strong applicants will get large scholarships. Programs with deep pockets will offer incredibly large scholarships to keep their numbers up. For those who want a degree regardless of the experience offered, this will be an ideal time to apply. |
For those already attending an MBA program, for the most part, you will likely have to deal with the cards you have been dealt. You will get your degree but perhaps not the experience you had hoped for. I don't have any specific suggestions for you except that you should make the most of a very changed situation. Certainly this is a good opportunity to focus on hard skill development (coding, financial analysis, analytics), language learning, and online networking.
For Fall 2020 admits, I have a number of suggestions to maximize your ability to choose what is right for you. I believe in optionality Use it to your advantage:
- If you are currently employed, don't quit till you can really decide whether to enter in fall 2020.
- If you are offered the option of a deferment consider taking it if the experience of being in the MBA program is as important to you as just getting the degree. Things are likely to be better in academic year 2021-2022 than in academic year 2020-2021.
- If you are primarily concerned with the degree (and the brand associated with it) and an online format works for you, then attending now, in whatever format it is offered in, makes a lot of sense.
- I would highly recommend trying to maximize any scholarships from programs if their value proposition has been radically altered because the program has become distance-based.
- If the school(s) you have been admitted to don't have a clear plan for what will happen if you can't get a visa or travel, request they establish one. My assumption is that such plans will be in place.
- If you are an international student, given that the US and Europe may very well be more dangerous than where you are now, factor that into your decision.
- Consider how a recession might impact your short to medium term employment, depending on how things go being in school during such a downturn can be a good way to escape the worst of it or unfortunate if you graduate at the wrong time.
- My base assumption is that it will be easier to get admitted to an MBA program for 2021 entrance because the current crisis and all the uncertainty around it will likely reduce the number of applicants.
- For those who care more about getting a degree than the way it might be experienced, 2021 entrance might be the best possible year for ease of entrance.
- However If many admits for fall 2020 can defer for a year, entry in 2021 might be the same or more difficult than it was for prior to Coronavirus.
- If you are considering application for 2021 entrance, I do recommend focusing as much as you can on test prep right now because many potential applicants will be too distracted to do it. They will be focused on worrying about the current situation and uncertain whether to apply. While I cannot be absolutely certain, I expect the number of Round 1 applications to be low because too many applicants will be distracted and not ready in time for that round. Assuming the outlook improves in the fall and life returns to relative normality, I expect a stronger Round 2.
- The good news is that you don't need to worry about whether you visited a program, on the other hand, you had better attend their online chats and info sessions.
- Assuming either my base or worst case, if you are unsure about whether you would enjoy doing a partial or completely distance based course, I suggest you take one now and figure that out.
- Finally beyond doing MBA admissions consulting, I do offer degree planning for those who are a year or more from making application. To learn more how I can help you with either MBA or other graduate degree admissions or with degree planning, please complete my intake form.
Finally, I know the above scenarios are speculative and I am sure that I will be reconsidering this analysis as the situation develops.
