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Business schools were braced for disaster less than five years ago, with the arrival of massive open online courses, or Moocs, and the platforms that hosted them.
They had watched as the digital revolution upended the music industry’s business model. Previously lucrative compact disc sales plummeted as consumers switched to cheaper, faster digital music downloads and then to third-party streaming services. Could a similar revenue disaster befall the moneyspinning business education sector?
Not quite. Early indications suggest that, far from cannibalising existing revenue streams such as income from executive education courses, the availability of online content is broadening the reach of institutions.
Today, schools work in partnerships with Mooc platforms such as Coursera, so that interactive content and broadcast lectures complement study tours and time spent by students on campuses.
Data from the FT business school rankings show that downloadable lectures tend to widen the market for business education, to people who may otherwise have been unable or unwilling to study for an MBA. Traditional classroom-based MBA programmes at top institutions are dominated by people working in the financial services and consultancy sectors, accounting for 24 per cent and 16 per cent respectively of the students, according to the FT’s 2016 Global MBA rankings data.
Online MBA students, on the other hand, are much more evenly spread between sectors.
The FT’s online MBA survey found that 16 per cent of students were from a financial services background and 6 per cent were from consultancies. The military, which provided just 2 per cent of students in the MBA rankings data, was one of the larger groups in the research of online MBAs, accounting for 7 per cent of those taking such courses.
What is more, online offerings tend to attract students from more diverse backgrounds. The Wharton School in Pennsylvania reported that 78 per cent of those registering for one of its online business courses came from outside the US, compared with 14 per cent of those attending its executive MBA programmes, and 45 per cent on the full-time, two-year MBA.
The Mooc platforms that stream online lectures, such as Coursera, edX, Udacity and NovoEd, point to partnerships with the leading business schools as a sign of their credibility. Rick Levin, former president of Yale University, now chief executive of Coursera, talks about disrupting education while praising the value of his technology company’s partnerships with leading business schools.
“These schools are not going away soon,” Mr Levin says. “The residential experience and the whole package of attending a campus is too valuable.”
Since it started streaming online courses in October 2013, UK-based FutureLearn, a platform backed by the Open University, has enrolled almost half a million students on business school courses, a fifth of whom have not studied at university and 62 per cent of whom are women.
This may indicate a latent demand for learning that can be tapped only by online education, says Simon Nelson, chief executive of FutureLearn. But he also thinks that demand is an opportunity for business schools, not a threat.
“Rather than committing to 12 to 18 months away from work and a serious financial outlay, new students can access high-quality courses from leading business schools at a time and place that suits them,” he says.
“For business schools, a taster course is a great way to encourage students to consider a full MBA and widen the pool of students.”
Proportion of students from financial services studying online
The fear that people may bypass business school altogether, because they would be able to cobble together an MBA for free from certificated Mooc programmes, has proved largely unfounded.
However, several fast-growing start-ups are trying to provide a rounded education, and are claiming some success — such as London-based teaching app SmartUp. The app is aimed at entrepreneurs, who in the past may have been less inclined to attend business school.
Their success suggests that disrupters and schools can both benefit from a market expanded by new techniques, such as games to promote learning and exchanging online credits earned by playing the game for business services.
Online education has also gained formal endorsements from exam bodies, blurring the lines between study at a computer and on a campus.
Proportion of students from financial services on campus MBAs
EFMD, the Brussels-based accreditation body for management education, last month launched its online course accreditation system. The move acknowledges that online education can “open up more efficient and effective” ways of learning, according to David Asch, EFMD quality services director.
Alison Davis-Blake, dean of the University Of Michigan’s Ross School of Business, claims that demand for traditional programmes has risen even as her staff members have seen strong demand for the online courses put on the Coursera platform.
Almost 850,000 people have enrolled on Michigan Ross’s most popular course on the Coursera platform, Introduction to Finance, since it was launched in 2012. Its successful Mooc on negotiation skills has attracted close to 430,000 enrolments since it launched in October 2014.
At the same time, MBA applications for the 2014/15 academic year were up 30 per cent year on year at Michigan Ross and have risen a further 6 per cent this year.
“The people who are taking a single Mooc are very different from the people who are coming to the campus to study for a degree,” Ms Davis-Blake says.
Despite its success in online education, Michigan Ross has only recently introduced its first paid-for certificated online education programme, reflecting a widespread belief among academic management that online courses are more about raising awareness of the school’s brand globally than generating additional revenue.
Good online learning should be aligned with the needs of students, according to Tony Sheehan, associate dean for digital learning at London Business School. “Students on our degree programmes grew up with Google,” he says. “Digital transmission of knowledge is wonderful but the very best way of learning the art and science of management and business will always include face-to-face interaction in a community of the curious.”