The MBA program rankings that come out each year get debated over and over again. Students from schools cheer when they find out their ranking has been bumped up. Applicants in forums discuss for hours on end why school X ought to be ranked higher than school Y and why it’s easier to get into particular industries from school X vs. school Y. So do these rankings matter at all you might ask? The answer is, absolutely. Let’s step back and think about this.
MBA program rankings matter because in business school, it’s really not about the education. Rather, it’s about the network that you build. The higher quality the students at a given school, the better your network will be. And how do top applicants and rock stars from private equity firms, Fortune 500 companies, and consulting firms choose which schools to go to? They choose it based on how their peers perceive which schools are the best. It doesn’t matter if Tuck gets ranked #1 by one publication if everyone implicitly understands that Tuck is more of a top 15 school. As a McKinsey applicant, you’re not going to go to Tuck just because one of the 6 ranking publications says Tuck is the number one ranked MBA program. If you’re applying from McKinsey, likely you’ll go to a school that is well respected amongst your friends at McKinsey, Bain, Goldman, BCG, and Morgan Stanley. And those schools are Harvard, Wharton, and Stanford. It doesn’t matter what the rankings say when in the real world when you graduate from business school, most people still have the most respect for Harvard, Wharton, and Stanford.
MBA program rankings matter only to the extent that those rankings can change the perception of relative quality amongst the schools. And this, unfortunately, takes a really long time to change. School reputation and brand is something that takes generations to develop, and therefore generations to change. HBS is so well regarded not because its program is necessarily better than any other business school. Rather, it is so well regarded because so many famous people have graduated from HBS. Great schools attract great applicants and have a greater probability of producing the next Fortune 500 CEO. It’s a virtuous cycle that works well for the schools at the top, and one that makes it hard for lower ranked schools to move up the rankings. For example, it would take at least a handful of famous and high profile graduates from UCLA Anderson to start raising the brand perception of the school. Cultivating these successful alums is not an easy endeavor. The “product lifecycle” is generations long as it takes a long time for a school’s top students to move up the ladder in the corporate world. What top schools like HBS and Wharton do well is attract the top students so that they have a higher probability, year after year, of having one of its graduates become the next CEO of Proctor & Gamble than any other school. For a school like Haas, the odds of producing the next President of the United States are stacked against them because it’s harder for them to attract the top students in the first place. Further, the strong networks at HBS, Stanford, and Wharton have multiplying effects. The stronger and better your peers, the better your network, and the more likely your network will help you succeed and advance your career. Over time, probability of success gets stacked in favor of graduates from the top schools.
In terms of MBA program rankings, the only publication that accurately reflects public perception of school rankings is US News & World Report. What US News does well is it reactively measures implicit majority public perception of what the MBA program rankings ought to be. The US News has a little bit of power in terms of changing the public’s perception of rankings over time, but it would take years for that to happen. The fact of the matter is that schools like HBS, Stanford, and Wharton are great brands like Coke and Pepsi. There is tremendous brand equity and significant competitive barriers to these brands. It will take a lot for other brands like Tuck, Anderson, Cornell, and Yale to compete. It will take years of success before 2nd tier schools can chip away at top tier schools.