09/12/2009 05:12 am ET Updated May 25, 2011

The Coming B-School Collapse

As is well known, one of the consequences of the economic and financial malaise that has engulfed the world for the past couple of years has been a very substantial increase in the number of applications to MBA programs. B-school has traditionally been a safe haven for those unlucky enough to count themselves as workplace victims of downturns and recessions, a nice hideout where to seek refuge for a couple of years in the hope that better job conditions would await once they graduate. But this time, the tradition seems to have played out with particularly passionate forcefulness. All across the board schools have been deluged with a flood of interest, happily collecting record numbers of application fees. The GMAT was taken in 2008 by more people than on any other prior year.

Not only are the sheer numbers different, the composition of the MBA cohorts may also be unprecedentedly unique this time around. Simply put, never before may so many highly-experienced, (formerly) highly-paid folks have decided to join the campus and embrace late-night homework assignments. Not only would a lot of the potential students be laid-off bankers and assorted refugees from the financial industry, but tons of decently-senior professionals have lost their jobs across a full spectrum of business fields and they too would rather go back to school than stay at home watching tv and wondering why the headhunters don´t call anymore.

Sitting next to those former corporate stars would be three other types of clearly distinct groups of students: 1) the typical MBA candidate that never fails to show up (27-28 years old, decent resume, ambitious, hungry), 2) youngish junior professionals who in fear that they may get fired in such unpredictable economy choose to take initiative and fly to the comforting safety of the university life, 3) high-flying undergraduates who would rather get the MBA thing over with now than risk facing an impossibly unfriendly job market for yet-to-prove-valuable rookies. All of those three groups are going to be very demanding when it comes to securing a very good job upon graduation. Group 1 because that´s how that group has always been. Group 2 because they gave up a monthly paycheck and because they thought they were walking into a better career in exchange. Group 3 because they think very highly of themselves and have never experienced failure. Needless to say, the older erstwhile Masters of the Universe won´t be content with meager post-MBA wages either.

B-schools are then going to be overpopulated and to present a student mix that is potentially explosive. I contend that things could get really ugly and this time typically-complacent deans may have a hard time finding a place to hide. Why am I so alarmist? Because I think that a lot of those students are probably not going to find jobs once they get their MBA crown, that´s why. Or at least not the kind of jobs that someone borrowing in excess of $100,000 and irresistibly enchanted by the promises emanating from the glossy brochures expects. A lot of those guys and gals are not going to get what MBAs got for the two decades prior (the sign-on bonus, the first-class plane ride, the six-figures package, the rosy future), and they are not going to like it one bit. And they may be loud about it.

I taught at a highly-ranked B-school during 2004-2007. My students were of good quality, but year after year the complaints were the same: they couldn´t get truly glamorous jobs (the kind that all top MBAs were getting around the globe back in those sensationally prosperous days). The best that most could hope for appeared to be to get some job, any job at all, that at least would let them repay their hefty student loans. So I wonder, what about these days? If those MBAs had a hard time when times were impossibly rosy, imagine now. Sometimes I picture students rioting and tearing down the school amid screams of "where´s my Goldman job! where´s my McKinsey job!"

Of course, the potential backlash that B-schools may face in this job-lite environment is compounded by the facts that the institutions themselves share some blame for the financial mayhem in the first place, and that the structure that, generally, dominates them (a fifty-year old status quo) is rotten to the core. B-schools are completely dominated by theory and theoreticians, bent on embracing failed and lethal dogmas. The credit crisis (largely caused by flawed mathematical models let loose) has shown how irresponsibly antisocial it is to peddle the quantitative snakeoil. Yet B-schools show no signs of abating their analytical practices, no real atonement, no true repentance.

If you were a current MBA student, witnessing how the expensive diploma can´t deliver corporate heaven and seeing how your professors keep teaching and promoting failed deleterious dictums, how would you react? Possibly not amicably. Who knows, we may yet witness a popular mutiny that unleashes the radical transformative revolution that B-schools should have voluntarily embarked on a long time ago.