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The Disruption of Business Schools Has Been Slightly Exaggerated

According to a new Wharton study, open online courses are complementary to current B-School offerings, rather than a force than cannibalizes current students.
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Are massive open online courses (MOOCs) a competitive threat to traditional business schools? A new study says maybe not.

The topic has been hotly debated. A few months ago, Richard Lyons, the dean of University of California, Berkeley's Haas School of Business, predicted that "half of the business schools in this country could be out of business in 10 years--or five."

That possibility puts both prospective students and educators in a difficult position. Students need to consider whether business school remains a worthwhile investment, given all the free courses. Schools, with the traditional-classroom nature of their existence facing a possible competitive threat, need to strategize about their MOOC offerings. Of course, what schools decide to do depends largely on just how much of a competitive threat MOOCs present. 

Thanks to the study coauthored by Wharton professor Ezekiel J. Emanuel, schools now have some answers. According to the study, summarized recently on the Wharton site, MOOCs do not poach traditional students from schools. In fact, they reach many of the audiences these schools have been targeting. "It doesn't seem that MOOCs are undermining traditional business schools, but may be complementing them, enriching them and providing a great opportunity to [engage] other diverse student bodies," observes Emanuel. 

Here are a few takeaways from his study (which appeared in full on the Harvard Business Review site): 

  • MOOCs seem to target groups that "aren't involved" in traditional MBA or executive MBA programs: students in developing countries, first-generation Americans, recent immigrants, and under-represented minorities such as African-Americans and Hispanics.
  • Women are not enrolling. "There may be bigger barriers for women. Maybe they don't have the educational preparation to take advantage of the business-style MOOCs," says Emanuel. "It may also be that they don't have access to the Internet and necessities like computers."
  • Only 3-5 percent of MOOC enrollees complete their courses and get certificates. "So, we need to think through how MOOCs are actually satisfying the educational needs of students, rather than figuring out that the end result is to get everyone a certificate," says Emanuel. One implication: "Charging at the end for a certificate may not be the wisest move. Maybe another platform for charging--like a monthly subscription fee or some other [payment] program--would be a much wiser way of revenue generation."

Given this knowledge, what steps will educators take?

Interestingly, Emanuel's study came out only a few days after a New York Times article by former Inc staffer Jerry Useem explored Harvard Business School's approach to MOOCs as a potential disruption.

For the time being, Useem notes, HBS has chosen not to heed the advice of its in-house disruption expert, professor Clayton Christensen. Christensen, he explains, believes that the only way "market leaders like Harvard Business School survive 'disruptive innovation' is by disrupting their existing businesses themselves."

Stanford and Wharton have done this. Their "professors stand in front of cameras and teach MOOCs free of charge to anyone, anywhere in the world," writes Useem. By contrast, he notes, HBS's online education program "is not cheap, simple, or open." Nor is it disrupting HBS's traditional MBA programs the way the MOOCs at Stanford and Wharton are disrupting theirs. Instead, the program (called HBX) has its own admissions office and "aims to create an entirely new segment of business education: the pre-M.B.A." 

It's too early to predict whether Harvard's approach will proove wiser than the more radicalized responses of Stanford and Wharton. Regardless, perhaps the most fascinating ramification of MOOCs is the possibility of a future in which professors are no longer affiliated with universities. Useem explains:

François Ortalo-Magné, dean of the University of Wisconsin's business school, says fissures have already appeared. Recently, a rival school offered one of his faculty members not just a job, but also shares in an online learning start-up created especially for him....Mr. Ortalo-Magné spins out the possibilities of disruption even further. "How many calculus professors do we need in the world?" he asked. "Maybe it's nine. My colleague says it's four. One to teach in English, one in French, one in Chinese, and one in the farm system in case one dies."

Useem takes Ortalo-Magné's vision one step further, and asks: "What is to stop a [prominent MOOC such as] Coursera from poaching Harvard Business School faculty members directly? "Nothing," replies HBS dean Nitin Nohria. "The decision people will have to make is whether being on the platform of Harvard Business School, or any great university, is more important than the opportunity to build a brand elsewhere. 

"Does Clay Christensen become Clay Christensen just by himself? Or does Clay Christensen become Clay Christensen because he was at Harvard Business School? He'll have to make that determination."




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