Universities and business schools are being hit by a technological revolution that is wreaking havoc on their traditional business models and generating “creative destruction” of a magnitude that would have awed the economist Joseph Schumpeter himself. Online learning – and in particular Moocs (Massive open online courses) – as well as increasingly universal access to portable computers, tablets, smartphones etc, are revolutionising the industry. In a nutshell, clients (students and parents) now have low or no-cost alternatives to increasingly expensive universities.
The technological pressures facing universities are compounded by ageing infrastructure, a backlash over rising costs and in the case of US schools, competition from international universities. Business schools around the world are scrambling to figure out how to adjust to the brave new world. Most are gearing up to blend online materials into their courses; a growing number are producing 100 per cent online courses.
However the chips may fall, the impact of technological change will differ markedly between the rich and the poorer parts of the world. In advanced high-income countries, where between half and two-thirds of student-age youth are enrolled in tertiary education, the impact will play out on cost and quality. In south Asia, only 16 per cent of young people go on to university and in sub-Saharan Africa the figure is only 9 per cent. However, in these two regions well over half the population has access to mobile phones and an increasing proportion to smartphones. In the developing world, as broadband expands and becomes more affordable, the technological revolution will play out first and foremost on access.
While the vast majority of online courses and other materials are being produced in high-income countries, by far the largest underserved populations live in the developing world. There may ultimately be a huge export potential and revenues for universities and companies in the advanced economies that are able to monetise these offerings. In particular, Moocs may serve as a “loss leader” to stimulate interest in online degree-granting programmes. This prospect could be of particular interest to business schools.
With rapidly growing middle-classes in the developing world, “exporting” high-quality online courses to students, corporate managers, small enterprise owners and others would open new outlets at a time when “northern” markets are not exactly booming. Producing and exporting online materials would turn internationalisation into a business driver to be reckoned with and a powerful incentive for business schools to put their money where their mouth is.
Such a process is consistent with “base of the pyramid” business strategies in which multinationals seek to re-engineer products and processes so that they can deliver high value at low cost to developing-country consumers. While the business model and the ability to generate sufficient revenue from these ventures is not always obvious, some multinationals such as Procter & Gamble, Unilever, General Electric and others are pursuing these efforts in earnest. They see vast potential from the 4bn lower-income consumers worldwide and recognise that “scaling” these ventures can help make up for relatively low margins per transaction
How might this work in the educational world? The answer lies in innovative partnerships, tying the links in the value chain between top schools and developing-world clients together. Here are two examples:
Clients require content that is relevant and accessed on readily available devices. So, for example, content must be adapted to smartphones in rural markets where computer penetration is low. Relatively little effort has been invested so far in mobile education, because it is largely irrelevant in affluent parts of the world. Furthermore, while strong business models exist for online financial services, scalable mobile education business models are in their infancy. Partnerships between business schools (generating content and helping develop business models for mobile education) and local telecom companies would have high potential. Classes could be taught asynchronously with some live offerings. Local partners might arrange face-to-face discussion sessions and ultimately payments might be arranged through some of the burgeoning online payments systems.
Content that is relevant locally calls for close collaboration between “northern” and local business schools in the developing world. This might mean producing teaching cases that blend global best practice with local relevance. As “northern” schools engage in such research and other collaborative activities, they will automatically enhance the internationalisation of their own capabilities.
Degree programmes between business schools in the developed and developing economies have been proliferating; to date, however, most of these involve US and European schools and schools in high-income Asian emerging markets. Incorporation of low-cost technological delivery could make it possible to broaden these relationships to relatively poor countries and, in so doing, create a truly global educational product.
Guy Pfeffermann is chief executive of the Global Business School Network and was previously chief economist for the International Finance Corporation. Jonathan Doh is chair in international business and director of the Center for Global Leadership at the Villanova School of Business.