The Future of Higher Ed Is Stacked
- By sharing courses across programs and departments, the Smeal College of Business has grown its professional graduate program portfolio into a 34 million USD enterprise.
- This course-sharing model benefits students by allowing them to stack courses toward multiple certificates and degrees.
- College leadership overcomes bureaucratic obstacles by using objective third-party market data to make a strong business case for launching new programs.
Our graduate program portfolio today bears little resemblance to what it looked like just eight years ago. In 2014, the portfolio included four master’s programs and one online graduate certificate. By the end of 2019, the Smeal College of Business at Pennsylvania State University in State College was offering 14 master’s programs and 11 online graduate certificates. Our “course-sharing” model enables students to stack courses and online graduate certificates toward multiple degrees. Our objective: to tailor our programs to a growing market of working professionals with differing interests and needs.
Our Smeal Professional Graduate Education Portfolio now enrolls close to 2,300 students, including around 900 students in our online MBA. It brings in a gross annual revenue of approximately 34 million USD—a revenue goal that we reached two years earlier than we originally projected.
We believe that stackable education, with more flexible delivery options, represents the future of higher education, as students at all points of their careers seek to add credentials as efficiently and affordably as possible. By giving working professionals the flexibility to stack and layer courses and certificates in a multitude of ways, we are tapping into that ever-growing market.
Expectations for Growth
We have expanded the portfolio significantly since 2019 (see the graphic below). In the last three years, we have added an online master’s program in taxation, as well as online graduate certificates in taxation, supply chain risk management, and real estate law and evaluation. These additions bring the number of master’s programs we offer to 17 and the number of online graduate certificates to 14.
In August 2023, we will launch a master’s in hospitality enterprise management (in collaboration with the School of Hospitality Management) and a master’s in accounting analytics. In August 2023, we also plan to launch a hybrid-format Executive Doctor of Business Administration.
The Smeal Professional Graduate Education Portfolio, 2022
Graduate students at Smeal College can stack courses and certificates toward master's degree programs, or they can apply certificates they earn in one master’s program toward additional degree credentials.
The example that perhaps best illustrates the flexibility of our stackable online portfolio is our online MBA program, which offers 27 concentration areas. Most concentration areas map to graduate certificates and associated specialized master’s programs. The online graduate certificates often provide students with a “bridge” for stacking master’s degrees. This design enables interested students to earn more than one master’s degree in a time- and cost-efficient manner.
Approximately 10 percent of our professional master’s students are pursuing second master’s degrees, and we expect that number to grow in the future. We estimate that, within the next five years, our existing portfolio has the potential to enroll more than 3,200 students and generate annual revenues of approximately 55 million USD.
A Business Within a Bureaucracy
At the stage where we are now, we are essentially operating a 34 million USD business inside of a university bureaucracy. This is not an easy thing to do. Our operation never has a “slow” time, and we just move from one set of challenges to the next.
But although we are bound by the policies of Penn State’s graduate school and World Campus, dedicated to online programs, we have learned to work effectively within these bureaucracies. Hiring outside consultants and obtaining current market studies that provide objective data have been crucial steps in effecting change within the college and larger university. We use persuasive data to try to sidestep internal politics and personal agendas, while challenging “doom and gloom” scenarios that so often can be excuses for inaction.
To implement our integrated portfolio model, we have had to work with university administrators to modify several outdated Penn State graduate school policies, most of which were written decades ago without having working professionals in mind. We have been successful in updating many policies, but we still have more work to do.
As part of Penn State, we also work within a universitywide budgetary system. We return to the university 25 percent of the gross revenue from our residential professional master’s programs and 33.3 percent of the gross revenue from our online professional graduate programs. Our profit margin varies by program, but averages around 25 percent to 30 percent.
We will consider discontinuing any professional graduate program that doesn’t reach its enrollment goals within five years. However, we have not yet had to make this decision. So far, all of our external market research has been on target, and each new program has met its enrollment goals.
The Persuasive Power of Data
Throughout this process, we have learned two valuable lessons. First, we cannot let people with outdated perspectives and market knowledge dominate discussions. Instead, we counter such perspectives with solid market data and champions who understand current market conditions.
And, second, we make sure to secure the backing of senior leadership. Our dean, Charles Whiteman, supports me in my role as Smeal College’s associate dean for professional graduate programs and executive education. Without his input, we would not have been able transform Smeal professional graduate education in such a short time. When the “keepers of the status quo” attempt to stifle innovation, he helps my team maneuver around bureaucratic obstacles.
Most of our master’s and certificate programs have a history of persistence, in which we have had to overcome significant organizational hurdles to bring these programs to fruition. For example, six years ago we wanted to launch an online master’s program related to strategic leadership. But certain groups at our university opposed this effort. They claimed that there was no market for the program and that it would cannibalize existing master’s offerings, including our own online MBA program.
With the support of Whiteman, we hired a market analysis firm to explore both claims, something that had not been done before at the university. Substantial market data demonstrated that there was a very viable market for such a master’s program, and that any cannibalization of existing offerings would be minimal to nonexistent. In the end, after about four years of effort, the program moved forward. Today, it is one of our most successful master’s programs.
What We’ve Learned So Far
In an integrated portfolio environment, a change in one part of the portfolio has an impact on many other parts. Schools following this path must take a more comprehensive approach to curricular review and planning than they might to manage a more traditional curriculum. This approach should include:
Creating dedicated positions. In 2019, we introduced a new position called the director for excellence in teaching and learning. Our current director, Janet Duck, acts as the center of our curriculum planning process. We no longer form program-specific committees that meet every three to five years to discuss curricular changes. Instead, Duck facilitates what we call the Creative Team Model, a nimble approach based on continuous improvement. This model ensures that we maintain instructional quality as we grow.
Having the right people in the right roles. Our organizational structure is constantly evolving as our portfolio grows and changes. We now have an exceptional team because we have not been afraid to change the program structure and roles as needed.
Building a network of course support. We supplement instruction in our online graduate courses with help from a worldwide network of Teaching Support Specialists (TSSs), whom Duck hires, trains, and evaluates. All graduates of our online programs, TSSs have at least ten years of experience in relevant fields and are currently working full-time. They each provide approximately 10 hours of high-touch course interactions each week, ensuring that students have high-quality learning experiences.
We assign a TSS for any course enrolling more than 40 students; courses enrolling up to 120 students might have up to three TSSs. This provides a student-to-instructional-resource ratio of approximately 25 or 30 to 1. We now have 180 TSS contracts for 104 courses, and we will continue to add TSS positions as the program grows.
Sharing courses across programs. All graduate certificate courses are used in multiple master’s programs, either as required components or as elective concentrations. Most courses enroll students coming from several master’s programs. This audience aggregation model enables us to add courses and concentrations that would not be financially viable if they were serving only one audience.
Gathering data and tracking results. Duck leads an extensive learning analytics program and a series of master’s program surveys. These resources provide data and feedback that the team uses to inform the continuous curricular improvement.
Setting up appropriate governance. We have formed a governance committee consisting of faculty directors from each of our professional graduate programs. This group, which I lead with support from Duck, meets on a regular basis to discuss future program changes that have implications for other parts of the portfolio.
Restructuring faculty compensation. We created a new faculty supplemental compensation model that incentivizes course growth and effective use of TSSs. Under this model, we pay faculty a base rate for the first 60 students, plus an additional amount for each student above that number.
A Community of Lifelong Learners
In the next phase of our programs, we plan to engage in more intercollege collaborations. We currently have 10 collaborations with other Penn State colleges and campuses. These collaborations range from the use of a few courses in a master’s program to full partnerships on master’s programs.
Even more important, we are planning several initiatives designed to create a community of lifelong learners. Achieving this goal will require us to integrate, revise, and grow the offerings of our noncredit executive education unit. In July 2021, we engaged an external market research firm to examine how the executive MBA and exec ed markets have changed, particularly in the wake of the pandemic.
The firm’s findings strongly suggest that executives now prefer hybrid, synchronous, and asynchronous online education over traditional fully face-to-face offerings. In addition, the research revealed a strong market for higher-quality remote synchronous delivery models for more senior-level audiences.
To serve this market, we are making a multiyear, multimillion-dollar investment in developing new teaching studios and remodeling graduate classrooms to accommodate hybrid, remote, synchronous formats. The market research also suggests possible new noncredit executive education options that can be offered to our professional graduate program alumni as part of our lifelong learning mission. Examples include a leadership accelerator for our early career alumni and senior-level post-master’s topics and programs.
Our internal learning design team is currently designing a faculty development program, where our professors can receive mentoring and share best practices in using new technologies and classroom spaces most effectively.
The fact remains that enrollments in traditional two-year residential MBA programs continue to decline, as more students show preferences for part-time and online educational delivery. Over the years, we have had to significantly increase the amount of tuition support needed to attract qualified students to our two-year residential MBA program. Given such market shifts, we view our planned changes as necessary for long-term growth and financial success.
Designed for Change and Growth
My team and I often wonder how many good ideas and programs never see the light of day because schools have not adopted the strategies necessary to counteract innovation-stifling politics. But with the right people, the right culture, and a dean who champions curricular innovation, such comprehensive change is possible.
We have transformed our college culture from one that was very traditional and more resistant to change to one that is more entrepreneurial and more willing to embrace change. Our programs will continue to evolve—and that’s by design. Our hope is that we have sufficiently set the stage to ensure their ongoing growth and success.