MBA Apps Drop in United States: Could More of an IP Law Focus Help Some Schools?

In an article titled, “MBA Apps Take a Shocking Plunge” published at Poets & Quants,  John A. Byrne discusses how the number of MBA applications in the United States has dropped substantially.  The amount of the drop depends on the particular school; however, even top schools are experiencing a substantial decrease.  The article states:

At Rice University’s Jones Graduate School, for example, candidates to the school’s full-time programs plummeted by 27.7% to just 587 applications from 813 a year earlier.  At the McCombs School of Business at the University of Texas-Austin, applications fell 19.6%. At the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill, applicants declined by 18.3%. Applications dipped 16.2% at Georgetown University McDonough School of Business, while they fell 13.2% at Indiana University’s Kelley School of Business. 

The article provides several reasons for the decline in applications: difficulty for international students to obtain visas; some international students choosing MBA schools outside the U.S., such as in Canada; a booming economy; and high cost.  While I do not think it is a cause of the decline in applications, I do wonder if the business schools who have suffered a decline have adapted their curriculum to include intellectual property law related subjects.  I have not reviewed their course offerings, but I wonder if a school that did emphasize intellectual property would have a competitive edge.  Others have made this point, but I am not sure if there has been much change.  This may be a good time for innovation for some schools.  

The Missing IP Narrative

It remains my most vexing professional challenge. The "it" is how to integrate IP/IC into management education. The vexation comes from the seeming paradox tha, while intellectual property and intellectual capital are routinely described as cornerstones of innovation, if not modern business itself, their systematic presence in MBA curricula remains sporadic at best. I was reminded of this in connection with two quite different experiences that I had during the week.

In the first, I had occasion to spend some time with the dean of a local business school. Recently appointed, he was taking bold action to modify the schools's MBA program to make it more appropriate for today's student body. In that connection, he wanted to hear more about my class on IP and Management that I teach elsewhere. His question, half  "devil's advocate", half an expression of curricular skepticism, was simply this: "I have space for 20 or so courses in the program. Why should a course such as yours be part of the curriculum?"

The case in favour of inclusion is not simple. In the face of multiple courses in strategy, finance, marketing, and operations, the role of a course focusing on IP is dfficult to explain. The uneven diffusion of IP subject matter throughout an organization, the origin of IP as a branch of legal practice and its intangible character all give IP a bit of orphan status within the school's curriculum.

The Dean pushed me for examples of how the course works in practice. A pregnant pause ensued, finally punctuated by several examples of IP and management that seemed to pique his interest. All the while I stressed that one can look at MBA education as a platform for imparting relevant narratives to the students. Taken from this perspective, the ultimate justification for the course is that it highlights the IP narrative in a manner that is front and centre: "Can you imagine a manager who does not have the ability to apply the IP narrative to his daily businsess?", I asked. I am not sure that I convinced him that the answer is "yes". If I failed, cohort after cohort of young managers will be trained at his school without receiving any systematic tranining in this field. The managerial narrative for these students will simply lack a meaningful consideration of IP.

This absence of a narrative for IP was reinforced in listening to a podcast that featured a well-known venture capitalist describing the foundations of the VC world. The speaker did not disappoint. He described the flow of foundation money from university and similar endowments as the turning point for VCs to attract substantial investment capital. He emphasized the importance of the human dimension in any investment, and observed that any prospective company that puts special emphasis on an exit strategy for the company lacks the necessary patience. He distinguished between great innovative ideas and market potential. There are a lot more of the former than the latter.

These multiple narratives about the VC enterprise were interesting and instructive. Except for one thing: the speaker mentioned IP only in passing. Based on his words, IP was not a central part of the VC narrative. In follow-up correspondence with the speaker, he replied briefly that the company "of course" takes an interest in the company's IP, ie., "FTO and patentability." In his view, IP is largely limited to patents, and the work required is the purview of patent technocrats, far removed from most of the company's managers.


This podcast and email correspondence reinforced the sense of frustation that I had felt in my meeting with the dean, namely that IP is not part of the mainstream MBA narrative for most students. The upshot is that most MBA students will continue to go through their programs with scant or simply no attention being paid to IP. Is there a price to be paid for this? Perhaps. It is frequently observed that innovation has materially declined over the last few years. There are no doubt a number of reasons for this troubling state of affairs. Against that backdrop, one wonders whether the absence of a meaningful narrative regarding IP within the context of most MBA programs is another source of the innovative malaise. This is at least narrative food for thought.

Trade Secrets: Front and Center?

Permit me to add a few additional thoughts to the post of 3 April by Jeremy Phillips, "Research circles: new and useful"? Jeremy reported on what Jonathan Murray of GE Healthcare describes as a new innovation model called "a research circle." I found Jeremy's skeptical conclusion to be of most interest, in which he observed that "I hadn't realised that the concept was new, and it's certainly not inventive. The real challenge, though, isn't conjuring up the 'research circle' as a new model but in creating the right atmosphere of trust and respect that will enable it to function successfully, not just when it's achieving positive results but when the collaboration is doing no more than eliminating the negatives."

One view of the Open Circle

I would like to push Jeremy's comment further. In my view, one of the biggest failures of the legal education of IP is that it has largely ignored the "trust and respect" scheme of trade secrets as an integral part of IP thinking. This means that IP legal education focuses on the "traditional" forms of IP protection--patents, trademarks and copyright--which can be roughly characterized by disclosure and transparency, elaborate statutory schemes and international structures, and, in part, systems of registration. As such, the focus is proprietary in the purest sense in that these rights are presumably good against the entire world (at least as bound by the relevant territory) and the relationship between parties is morally neutral. If anything goes wrong between the parties, they look first to contract and in a lesser degree to tort to seek remedy.

In such a world, there is no sustained place for trade secrets (or whatever synonym you choose to call it) protection, which is characterized by lack of public disclosure and the centrality of trust between discrete persons, where the right can be lost forever by either disclosure or independent invention, where there are only rudimentary forms of statutory protection and virtually no international structures. In a word, trade secrets is a form of protection of human invention and creation which is in many ways diametrically opposed to the traditional IP rights.

The neglect of trade secrets carries over into MBA and management education, despite the fact that the best evidence that we have seems to show that trade secrets may be no less important than the traditional IP rights as a way of protecting inventions and creations. Anyone on the ground knows this, but those few courses that attempt to genuinely integrate IP into an MBA setting for the most part are driven by the categories of analysis and discourse borrowed from the law school treatment of IP. Indeed, my own MBA teaching experience shows that the students find my treatment of trade secrets and trust to be the most unexpected, and in many ways, most useful part of the course.

Seen in this light, it less perhaps less surprising that the report on "a research circle" seems to have neglected an emphasis on the trust aspect of innovation and development. Without any meaningful legal discourse on IP and trust in legal eduction, and only sporadic treatment of the subject in MBA education, it will take a rare person indeed to successfully integrate the concept into the analytical structures that he or she may have learned in law or business school. There is hope, however. The current economic crisis may well force both legal and management education to a long, hard look at themselves. If so, one result may be that the treatment of the trade secret and trust paradigm will be front and center in such curricular changes.

Trade secrets: secret no longer?