Stanford tops Poets&Quants’ ranking of the best business schools
(Poets&Quants) — To everything there is a season, a time for every purpose. And so it is in the world of business schools. With interest in startups and entrepreneurship reaching a fever’s pitch, Stanford Graduate School of Business emerged as the No. 1 business school in the U.S. in Poets&Quants’ 2014 ranking of the best full-time MBA programs.
At a time when Silicon Valley can now boast an HBO television series that pays homage to the pervasive startup culture that defines the region, Stanford nudged aside Harvard Business School for the first time since P&Q’s composite ranking debuted in 2010.
Rounding out the top five programs were the University of Pennsylvania’s Wharton School in third place, the University of Chicago’s Booth School of Business in fourth, and Columbia Business School in New York in fifth. For the first time in five years, Wharton pushed ahead of Chicago Booth to claim the No. 3 position.
In a separate ranking of full-time MBA programs outside the U.S., London Business School repeated its first place finish for the fourth time in five years. INSEAD came in second, while IMD finished in third place. Two business schools in Spain—No. 4 IE Business School in Madrid and No. 5 IESE Business School in Barcelona—completed the top five non-U.S. MBA programs.
Unlike other rankings, the Poets&Quants composite list combines the latest editions of the five most influential business school rankings in the world: U.S. News & World Report, Forbes, Bloomberg Businessweek, The Financial Times, and The Economist. Instead of merely averaging the five, each ranking is separately weighted to account for Poets&Quants’ view of their authority and credibility. (U.S. News is given a weight of 35%, Forbes, 25%, while both the FT and Businessweek is given a 15% weight, and The Economist, 10% weight.)
Combining the five most influential rankings doesn’t eliminate the flaws in each system, but it does significantly diminish them. When an anomaly surfaces on one list due to either faulty survey technique or biased methodology, bringing all the data together tends to suppress it. So the composite index tones down the noise in each of these five surveys to get more directly at the real signal that is being sent. The upshot: The list is far more stable—and reliable—than most rankings published elsewhere, taking into account a massive wealth of quantitative and qualitative data captured in these major lists, from surveys of corporate recruiters, MBA graduates, deans and faculty publication records, to median GPA and GMAT scores of entering students, as well as the latest salary and employment statistics of alumni.
This year, 25 of the top 30 schools had either an identical position as they had last year or experienced a change of only one place up or down. The stability in the list is reflective of the fact that from year to year, MBA programs rarely change dramatically.
Yale makes strongest gains
Besides the switch at the very top, Yale University’s School of Management and Cornell University’s Johnson School experienced the largest changes in this year’s ranking.
Fueled by significant gains in the Financial Times and Businessweek rankings, Yale climbed five places this year to finish 12th, its best ever showing. The school is in its fourth year of substantial change under new Dean Edward “Ted” Snyder. This is Snyder’s third deanship. He was at at the helm of both the University of Chicago’s Booth School of Business and the University of Virginia’s Darden School, and that experience has clearly paid off at Yale.
Snyder’s strategy rests on three guiding aspirations: to make Yale the most distinctively global U.S. business school, to leverage the world-class university that Yale is by making the business school the most integrated with its home university, and to be recognized as the best source of leaders for all sectors and regions. These days, you’ll hear similar things from many deans but few have delivered creative and innovative ideas as Yale has done under Snyder and his two key deputies, Senior Associate Deans Anjani Jain and David Bach.
Cornell, on the other hand, slipped four positions to a rank of 15 from 11 in 2013, after declining in four of the five most-watched rankings this year. It’s not always easy to discern why a program might lose ground in any of the rankings because each list is based on multiple metrics, some that overlap and some that are unique to the individual ranking. However, it is generally rare for a school of Cornell’s prominence to fall in every ranking in a single year. In both U.S. News and the FT, the school slipped by just one place. But it dropped six rungs in the newly constituted Businessweek ranking, moving from seventh to 13th, while it lost similar ground in The Economist, dropping from 11th to 17th among U.S. schools. Forbes, which ranks schools every other year, did not produce a new list this year. Cornell’s Johnson School had a relatively new dean in Soumitra Dutta, a former INSEAD professor, who is in his first deanship and is leading a major expansion of the school in New York City.
But at a time when one school after another is adding faculty and centers to support entrepreneurship, this was clearly Stanford’s year. With applications up 3.5% this past year, the school has the most selective MBA program in the U.S., accepting only 6.5% of its applicants. Stanford MBAs typically land among the highest first-year pay packages in the world. And MBA startups at Stanford have been at record levels in the past two years, making the school the place to start a business from scratch and search for capital from angel investors and VCs. This year, roughly 17% of the graduating MBAs—exactly 65 students—went the startup route. That’s about the same as last year, when a record 18% chose to start new firms.
In fact, the startup mindset has become so dominant at the school that the dean of its MBA program now believes Stanford should try to discourage it. “From our standpoint, we don’t need to sell entrepreneurship here because we get it for free,” says Madhav Rajan, senior associate dean for academic affairs. He believes that the school’s location–in the heart of Silicon Valley–allows it to have a near hands-off approach to entrepreneurship.
“Students will automatically think Stanford is entrepreneurship,” he adds. “We don’t need to sell anybody on it. If anything, this is a trend we have to push against more than embrace. We have a completely different problem than anybody else. We don’t want to be the graduate school of entrepreneurship. We are a school of general management.”
Winners and losers
Stanford’s latest crop of MBAs is the largest class in the school’s history, with record percentages of both female and international students. Out of a class of 410 newbies (vs. 406 last year), 42% are women, up six full percentage points from last year’s 36%, while 44% come from outside the U.S., up three percentage points from 41% last year. The international contingent at Stanford hails from 62 different countries, an all-time high. The average GMAT score for the class is also the highest of any U.S. business school yet again: 732.
The most improved school on Poets&Quants’ Top 100 was the University of Pittsburgh’s Katz Graduate School of Business, which rose 18 places to a rank of 43 this year. Generally, dramatic rises or falls on the P&Q list come from MBA programs that suddenly appear or disappear from one of the five major rankings. Katz made its way onto The Financial Times and Bloomberg Businessweek’s rankings. Katz also gained ground at U.S. News, going from 61st to 52nd, and at The Economist, moving up from 47th to 43rd among U.S. programs.
Brigham Young University’s Marriott School of Management inched up a dozen places to finish at an impressive 31st place; Pepperdine’s Graziadio School of Business and Management, rose 14 spots to No. 69; UT-Dallas’ Jindal School of Management, also jumped 14 places to finish 60th; and two University of California schools, UC-Davis’ Graduate School of Management and UC-San Diego’s Rady School of Management, both gained 10 positions to rank 44th and 57th, respectively.
And the big losers? Fordham University’s Graduate School of Business took the biggest dive. Under interim dean Donna Rapaccioli, an accounting professor who has led the undergraduate program and who only got the graduate job in June of this year, Fordham plummeted 15 places to barely finish in the top 100, at a rank of 98. The school disappeared from Businessweek’s list entirely, after ranking 56th two years ago, and it also plunged 13 places in U.S. News’ ranking to finish 93rd from 79 a year earlier.
Meanwhile, the University of Iowa’s Tippie School of Business fell 14 places to a rank of 49, while three other well-known schools each plunged 11 positions: Babson College went from 53rd to 64th, Thunderbird fell from 65th to 76th, and Syracuse University’s Whitman School dropped from 72nd to 83rd. Case Western University’s Weatherhead School of Management was the only other MBA program to drop in double digits, falling 10 places to a rank of 62.
A host of schools fell off the list entirely this year. Among the schools that disappeared this year: The University of Massachusetts in Amherst, Howard University, Auburn, Virginia Tech, Bentley, St. Louis University, the University of Oregon, the University of Kentucky, and Tulsa.
Climbing onto the list for either the first time or reappearing after an absence last year were the University of Cincinnati at 69, Texas Tech (86), Florida International (89), the University of Kansas (90), the University of Houston (91), Rensselaer Polytechnic and Claremont (both tied at 93), Hofstra (97), the University of Illinois at Chicago and the University of West Virginia (both tied for 98th place).
This year marks a slight change to the weighting in Poets&Quants’ ranking. Due to significant changes in the methodology at Businessweek that have made that ranking less credible and authoritative, we have reduced its weight in our composite ranking. Instead of weighing Businessweek 25% as we have in the past, the magazine’s ranking is now valued at 15%. The additional 10 percentage points were assigned to U.S. News’ ranking largely because it uses metrics—GMAT scores, GPA, acceptance rates, starting salary and bonuses, and job offers at graduation and three months later—that are clear and unbiased indicators of a program’s quality.