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Business Schools: Disrupted, or Reinvented?

Facing an uncertain future, academic leaders adopt new financial strategies that will sustain their schools for the long term.

The moment Australia closed its borders to international travel, many of the country’s academic leaders had to rethink their institutions’ long-standing business models. At Curtin Business School in Perth, for example, international enrollments had historically accounted for 40 percent of revenues. But travel restrictions might keep international students from coming back in full until at least 2022, according to Nigel de Bussy, the school’s pro-vice chancellor.

“The old business model looks like it’s sadly broken, or certainly severely disrupted,” de Bussy said during a presentation at AACSB’s Deans Conference held in February.

Of course, de Bussy is far from being the only business school administrator facing reduced enrollments and decreased revenues. Deans worldwide are grappling with the ways that COVID-19 pandemic has substantially—and perhaps permanently—changed the higher education landscape. They now are considering how they can restructure their schools’ budgets, programs, and staff to prepare for what many are calling “the next normal.”

What conclusions have they come to so far? What are the best next steps? Below, we share some of the insights highlighted at the Deans Conference. In addition, we recently spoke to Jim Hundrieser, vice president for consulting and business development at the U.S.-based National Association of College and University Business Officers (NACUBO). He discusses the challenges that are top of mind for financial officers at NACUBO’s more than 1,900 member schools.

Focusing on Value

Two sessions at last month’s Deans Conference focused on how to manage the financial impact of the pandemic crisis and design sustainable financial models for business schools.

In a session on pricing strategies, for instance, there was a consensus that while strategies such as cutting costs or discounting tuition might seem appealing, they would not be sustainable over the long term. Instead, speakers cited the importance of setting tuition and fees to reflect the value that business education can deliver.

For example, Paul Kofman, dean of the Faculty of Business and Economics at the University of Melbourne, emphasized that leaders at his school had eschewed the idea of discounting. Instead, they “agreed to invest heavily in supporting the value of education.” They are focusing their efforts on ensuring that students have quality learning experiences whether they are learning online or face-to-face.

Steven De Haes, dean of the Antwerp Management School in Belgium, delivered a similar message. Even before the pandemic, his business school had phased out discounting schemes in favor of a value-based pricing strategy. “We have to be strong in the value that we deliver,” he said.

With this idea in mind, Antwerp Management School has adopted a pricing strategy that reflects the value that the school’s programs deliver to the market. “We will be closely monitoring the impact of each pricing change on our pipeline,” De Haes said. “At the moment, we feel we still have some room in that area.”

Creating New Revenue Streams

In a session on financial strategies and sustainable business models, Richard Phillips, dean of Georgia State University’s J. Mack Robinson College of Business in Atlanta, discussed how he managed a collegewide 10-percent budget cut. After asking each department to develop a plan for cutting its costs, he spoke one-on-one with each department head to talk through next steps. “I owe them that respect as the dean and as the leader of the college,” he said. “You can’t outsource that.”

Phillips also explained the important role of his school’s faculty advisory group in setting the college on a financially sustainable path. The group, which includes external advisors, takes a broad view of the college and its curriculum to identify “low-value programs” and recommend ways for the school to invest its resources more productively.

In that same session, de Bussy of Curtin Business School noted that lifelong learning will be an especially promising opportunity for growth, especially as alumni are upskilling or even relaunching careers. “Right now, we have to get serious about lifelong learning,” he said. “Lifelong learning is now a lifeline.”


Lifelong learning will be an especially promising opportunity for growth, especially as alumni are upskilling or even relaunching careers.

That mindset has led Curtin Business School to offer students more opportunities to stack short-form credentials toward full degrees. For example, its new Curtin Credentials program offers a series of "bite-sized" online courses. Last year, the school also launched a new graduate Certificate in Business Futures, a six-month series of customizable one-day programs on subjects ranging from data analytics to complex project management.

“We have to grow our revenues and control our costs,” said de Bussy. New programs focused on the lifelong learning market, he added, “hopefully will start to create significant new revenue streams for us over time.”

Taking a Broader View

As business schools work to guarantee their own financial stability, it’s worthwhile to consider how the broader university is responding to the crisis. While government funding has not completely offset the financial shortfalls at many schools, it has helped ease the blow.

In the U.S., for example, Congress is likely soon to pass a stimulus package that allocates 40 billion USD for higher education institutions. The bill includes the caveat that half of any funds institutions receive must be dedicated to emergency financial aid grants to students. This money comes on the heels of last year’s 2020 CARES Act, a stimulus package that dedicated 22.7 billion USD to colleges and universities.

In its October 2020 report, the European University Association outlined the funding resources that had become available to higher education in European countries. For example, the U.K. government allotted 100 million GBP (approximately 139.6 million USD) for research and 2.6 billion GPB for tuition fee payments; it also has a recommended restructuring plan for schools in danger of closing due to loss of revenue.

In Spain, the government has allocated 400 million EUR (approximately 482 million USD) to support universities’ research and teaching activities. Additionally, it has instituted measures to help universities maintain their operations for the rest of the academic year.


Universities will have no choice but to invest in upgrades to their digital infrastructure, while putting large capital investments in their campuses on hold.

Those responding to EUA’s survey also noted that universities will have no choice but to invest in upgrades to their digital infrastructures, in response to the ongoing adoption of blended/online learning and remote work. As a tradeoff, many schools reported putting large capital investments in their campuses on hold, other than those necessary to adapt facilities to the need for physical distancing.

Universities in some countries are streamlining their technological adoption by sharing their digital resources and platforms. In Austria, for example, universities each established new vice-rector positions, whose responsibilities will be to oversee the digitalization of their institutions’ programs.

If schools are willing to adapt to a changed market and maximize their value to society, the report suggests, they could emerge from this crisis stronger positions than before. “Solutions to overcome the crisis will come from research and skilled university graduates,” its authors conclude. “The current enhanced confidence in research-related expertise and in university experts is an opportunity for universities to engage strongly with decision-makers and society.”

Preparing for Next Time

Business schools that effectively take advantage of such opportunities to strengthen their role in society will be likely to weather the current financial storm successfully, agrees Jim Hundrieser of NACUBO. He points to students’ increasing need to “upskill” and the growing demand for credentialing in industries such as data analytics and marketing. He adds, “Academic leaders must ask themselves, ‘How do we think about a revised economy? How do we build revised programs to match those changes? Are there opportunities for us to serve audiences that we have not served in the past, and if so, how do we do that?’”

Hundrieser has already seen some schools take advantage of online learning to expand options for their students. “Students are looking for internships and hands-on experiences that schools now can deliver through online environments,” he says. “We’ve learned a lot about skill sets that can be developed without requiring someone to be in a face-to-face setting.”

If higher education institutions are to serve the market going forward, Hundrieser believes their leaders will need to take several critical steps:

Link strengths to opportunities. Hundrieser advises all academic leaders to undertake a rigorous analysis of their program portfolios, as administrators at Antwerp Management School and Georgia State have done. With such analysis, they can better determine which offerings are delivering the best outcomes for students and employers. He also thinks university leaders should draw as much as possible on business school faculty, who have the expertise to help them develop more sustainable business models.

“I’d like to see schools have more collaborative campus discussions about future financial strategy and be transparent across the campus,” says Hundrieser. “Schools need to align their strengths with the best opportunities for revenue growth, in ways that support the mission and health of the institution. I don’t think institutions do that nearly enough.”

Take a holistic view. Once they have completed their analyses of their program portfolios, says Hundrieser, they can begin to refine their strategies. To help administrators assess whether different strategies make sense within their missions, NACUBO has created its Economic Models Project. The free online tool asks academic leaders to examine their financial models in four subject areas: mission, structure, strengths, and resources.

Have a continuity plan in place. Most important, Hundrieser urges all academic administrators to make sure they have developed strong continuity plans, so that their institutions will be ready when the next crisis hits. For many schools, especially those in the U.S., that means taking steps to bolster endowment funds.

Those funds turned out to be a sustaining force for many schools over the last year, according to the 2020 NACUBO-TIAA Study of Endowments. The data, which went through mid-2020, show that the 705 responding U.S. institutions saw average one-year returns on their endowments of 1.8 percent, down from 5.3 percent in the previous fiscal year. 

Of these institutions, 70 percent increased their endowment spending in the 2020 fiscal year; collectively, these institutions spent 23.3 billion USD from their endowments in the 2020 fiscal year, up 4 percent from the previous year. Seventy percent of the schools reported that they had increased their endowment spending, by an average of 3.3 million USD, dedicating the largest portion of that spending to student financial aid.

Although lower returns and greater spending during the pandemic might be interpreted as negatives, says Hundrieser, these trends indicate that the “rainy day” planning these schools had put into place worked as it should.

He adds that careful long-term contingency planning can be just as valuable as endowments. “Some will argue with me and say, ‘But we never could have anticipated this crisis!’” he says. “The strongest institutions aren’t necessarily the ones with the largest endowments—they’re the ones that have been operating conservatively within their means. I understand why organizations feel they must take risks, but when crisis hits, those that have taken huge financial risks are going to struggle a whole lot more.”


Tricia Bisoux of AACSB InsightsTricia Bisoux is an editor with AACSB Insights.