More Thunderbird, Less Phoenix

MMBA - Word Strip BlueThere is an interesting situation unfolding in the world of graduate schools that reflects upon many trends in MBA education you should know about. The Thunderbird School of Management has a tradition, reputation and connection with military students. It sits on a former Air Force base in Arizona and provides some of the better quality international MBA programs in the market.

When we worked with them to help recruit military students several years ago they were flourishing. However, recently they have floundered and their administrators now find themselves, in reality, forced to support a controversial new rescue plan to save their institution.

According to The Economist this week, enrollments in their full-time MBA program outside of the military during the last 12 years are down from 1,000 to 142 students. And, “Despite (an infusion from) a wealthy alumnus who donated $60 million in 2004, the school’s endowment fund is just $27 million.” Thunderbird admits to spending less on teaching and, during the 2009 academic year, the average student retention rate was just 4 months. This is a period of time that’s incompatible with completing a 2-year MBA degree.

Thunderbird recently announced that a partnership with Laurette, a for-profit education company, was the remedy it needed to get back on top. Thus far, it has met with unequal levels of support among management, students and alumni.

We are of the opinion that the partnership is more of a placebo rather than a cure for all that ails the former stalwart. Here’s why. As it relates to MBA enrollments among military students, (i.e., according to a study of Service Academy graduates), only 2% received their MBA degrees from a for-profit education provider. According to Military MBA, military enrollments grew by 42.1% from 2011 to 2012 across a multitude of MBA schools. Overall, during this time according to Bloomberg Businessweek, “Top business schools have reported single-digit, and in some cases double-digit, declines in applications for their full-time (a.k.a., traditional) MBA classes.”

Accepting financial investment from a for-profit won’t help Thunderbird recruit more military applicants, which given their history and reputation should be one of their core student populations. And, according to these enrollment data, attracting veterans is one of the fastest growing communities of MBA students. Without a core community of military students that is consistent with Thunderbird’s identity, it will be increasingly difficult to recruit traditional MBA students to its program and campus.

No matter what Thunderbird decides to do to resolve its cash imbalances, it should get back to basics and solve imbalances among its management, students and alumni. Only then will Thunderbird regain the strength and reputation it once had.

The lesson here is the market needs more of Thunderbird and less emphasis on for-profit (a.k.a., Laureate and the University of Phoenix types of schools) as the prophesy and the cure.

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