The Impact of Online Education


February 2016

Dan LeClair: [0:07] How do you think the advances that we've seen in online education will impact business schools?

John Byrne: [0:15] It's a big, scary thing. It's especially a big, scary thing if you have been a very good school in local or regional market and you've served that market well because now you have big brands coming into your market and creaming off your best students.

[0:33] I actually think the most vulnerable schools to the technology revolution are those who now have new competitors. Before, you had geographic boundaries. Students didn't want to travel. They already had jobs in many cases. We're talking primarily part time programs and executive MBA programs here. And, to some extent, residential programs for people who didn't want to really go far away.

[1:05] Now you don't have to go far away. You can get a highly ranked, highly selective degree, whether it be a specialized Masters or an MBA from a prestigious school like UNC at Chapel Hill, or Indiana University's Kelley School of Business, or Carnegie Mellon.

[1:26] They can compete with you in Topeka, Kansas, or in Amarillo, Texas, or you name your spot. The trick there for those schools is to more deeply develop relationships with their alumni and with the current employer base to assure their survival because I do not see how you compete in the world otherwise with bigger brands that have better faculty and only slightly higher costs without having very deep connections with your employer base and your locality, or using those alumni connections to make sure that your future is assured.

[2:16] Those schools and programs are the most vulnerable by far. The positive side of all this is that more people will have easier access to higher education, and at their terms. Many people are traveling. If you're in business you're on a plane a lot today. You're very busy and in many cases you can't take advantage of more traditional education.

[2:46] Online education affords you the opportunity to study on a plane, take a lecture on your smartphone, be in your hotel and do your homework or access a class or your student group. Before, all this was impossible.

[3:02] That's one major benefit, the access to education. The second thing that it can do is lower costs. Everyone knows the costs of education are extremely high. It's become a big issue of late, particularly with all the attention focused on student debt levels.

[3:18] Technology brings the cost of education down dramatically. If you think about the most democratized piece of what's happened, the MOOC, MOOCS are basically available for free. They're often taught by a school of best professors. Some of the biggest brands in business education have gone full hog into the marketplace, including Wharton and UVA.

[3:48] Many other schools have dabbled with fewer courses in MOOCs but enough, essentially, to allow someone to cobble together the equivalent of an MBA degree for free, and not from any old school, from the best schools.

[4:01] You have no face to face element. You have none of the stuff that occurs outside of the classroom in a traditional program, which is often more important than what occurs in the classroom. You don't have access to alumni network. You don't have access to the faculty as mentors as you would if you were in an on campus program.

[4:21] But they fill the need for people who don't have the time, don't have the money, or guess what, aren't even good enough to get into an elite school. And yet now, they can have an elite education which is a beautiful and wonderful thing.

[4:35] It is scary because down the road if employers recognize these free credentials and grant raises and promotions and even employment on the basis of them, that severely undermines the higher education model, which has essentially been, "You have a degree. I therefore think you're qualified to work in my company. I therefore assume that you have certain skills.

[5:06] Now, if you can prove that to me because you've taken a half dozen MOOCs in a particular field that's important to me, whether it be supply chain logistics, or whether it be finance, or whether it be even marketing, and marketing strategy, and segmentation. You can show me the five courses on your résumé, show them your grades, show them the institutions that you took them from and when you took them." Why wouldn't I accept that, particularly if I'm more of a middle market employer?

[5:34] McKinsey, Goldman, Bain, BCG, JP Morgan Chase, Citi, Google, Microsoft, Apple they might not accept that but there are a lot of companies in the middle market that would more than likely accept that.