How will online and blended MBA models change in the next five years?
The traditional higher education business model is being challenged and critiqued more than ever. In Rethinking the Business Models of Business Schools, Professor Rick Smith and co-writers argue that “Management education is changing, and business schools must be ready to re-evaluate their strategies for growth.” Many other commentators stress that it is time for business schools to prioritize their digital strategies and respond constructively to the societal and economic changes impacting education across the world. Driven by many learners' desire for more flexible and career-enhancing programmes, there has been a significant increase in the number of online and blended MBAs. But what does the future look like for these programmes? I sat down with Rick, Strategy Professor and Vice Dean for Corporate and Global Partnerships at Johns Hopkins Carey Business School, to discover more.
Even pre-pandemic, online and blended MBAs had a notable impact on the business degree market. These MBA programmes allow schools to expand their geographic footprint and thus extend their reach. Rick notes that this opens up growth opportunities into new markets and this has certainly been the first step for several institutions: “IE in Spain is a great example of a school that created a global MBA experience many years ago for their students through an online program. This model was not a possibility in prior decades when the education experience was bound to traditional physical classrooms—unless people were willing to take that opportunity cost by quitting their jobs and moving to Spain for two years.” Undoubtedly, this has been step one of the online MBA: growth through reach beyond geographic boundaries. The online MBA has made obtaining a degree from a top school a little easier for many.
With the increase of online and blended MBAs, it is likely that we will see more stratification of the market as it begins to shift into different strategic groups of online education. On the one hand, schools can use online to create economies of scale and have a lower price point; on the other, they can narrow focus on higher end online educational experiences. Rick remarks: “I think we're going to see growth in both directions. But it's going to create different strategic groups of competitors and unique marketplace opportunities.” The University of Illinois is disrupting the graduate degree market by using technology that reduces faculty time and input to scale programmes to thousands of students at a cost of $22,000 for an entire MBA. Similarly, Questrom School of Business at Boston University is also playing in this space by focusing on a larger volume of learners and a broader market MBA with a price point of $24,000 .
Rick notes that this is going to do a couple of things for the overall marketplace. Firstly, more people are going to get an MBA: “This may be important right now in a market where not everybody is sold on the value of an MBA, and so this takes the hurdle of getting one of these degrees to a lower level. It's a little bit easier to get an MBA if it is more affordable.” However, this price difference also creates a student experience difference between a low-cost online MBA versus a very high end online programme. As a result, a new competitive landscape for the online MBA will emerge.
For context, Rick invites comparison with other markets. In the automobile industry, every car is not the same and every car does not appeal to the same type of consumer. Volkswagen and others are appealing to the mass market by trying to create an affordable vehicle. At the higher end, Mercedes or Ferrari are appealing to a different type of consumer with different needs, desires, and psychological drivers. “Are they in the same industry? Yes. Are they competing? Not at all. That's how I see the MBA market shifting into more strategic groups,” Rick posits, adding “the challenge will be for schools that are stuck in the middle somewhere with an unclear value proposition, that will be a problem unless they find a unique market niche.”
When it comes to MBAs, some learners will hope to gain their qualification from a high-ranked school with a prestigious brand to use as a personal differentiator. Others will capitalise on commodity MBA programmes with lower price points. Future learners are likely to scrutinize the price and value proposition of online and blended MBAs more closely .
With online and blended programmes going mainstream during the pandemic, it begs the question: how well will
online and blended MBAs sit in the future against the rise of credentialing and the ‘unbundling’ of traditional degree structures? Rick believes we are likely to see more of this unbundling activity, aided largely by technology. He recognises that there will be limits: “Several business schools started unbundling curriculum to offer stand-alone courses and certificates and I think they’ve been disappointed from a school perspective. What many have found is that learners enjoy singular, unbundled offerings but they don't necessarily go back to get the rest of the degree.” It may be that unbundling and credentials are more appealing to the executive education market.
But Rick expects that what will be more palatable is when business schools connect smaller offerings with either an industry or a more specific disciplinary focus. For example, if schools begin with an unbundled offer with a corporate education client, it may provide an easier continuation point for study. Otherwise, schools are likely to see high dropout rates because students haven't made the commitment to continue necessarily: Rick notes that “unbundled models still require a great deal of refinement and school-specific modification - the challenge is that prospective students who are not sold on doing the whole MBA and just want to do a couple courses are still not necessarily sold on doing the whole MBA after completing a few courses.”
Have we seen the death of the ‘one-size fit’s all’ MBA? Without doubt, the MBA is an interesting product. Rick reminds us that it is hard to find another industry where all the players in the industry offer essentially the same product and are successful. The reasons for this are twofold: one, business schools have until now been relatively geographically bound operating effectively in catchment areas. Secondly, schools have been accustomed to the rapid growth of the MBA over the last few decades. There are over 13,000 unique business schools in the world, many of whom needed only to put down an MBA flag and students would sign up. Rick cautions that those days are over. Schools around the world are seeing a declining number of MBAs enrollments. Some European and American MBA programmes have been propped up with international students, particularly from Asian countries. But as Asian schools develop and strengthen their own programmes, students may be less likely to go to second and third tier Western schools, which may create a slowdown, if not steady decline, of growth in the MBA market.
The impact of this is that business schools are likely to become increasingly attentive to forms of differentiation, and one way to differentiate is by looking at their curriculums. We are likely to see more specialisations, pathways and experience differentiators, Rick advises: “What we see now are MBA programs with some type of unique spin to them, whether it's an industry orientation, perhaps, or a strong functional capability such as an MBA with strong finance concentration, for example, for those that want to go into financial services.”
Johns Hopkins Carey Business Schools, Rick’s academic home, offers a specialization within the MBA on health, technology, and innovation which is popular because it resonates with the Johns Hopkins brand and provides a form of differentiation. “I think we're going to continue to see more differentiation and I wouldn't be surprised if we see other significant programme changes as well. In addition, I think we will also see more global partnerships. For example, if we look at the top EMBA programmes we see marriages of different schools with dual degrees and global experiences. These school alliances often create unique global experiences that cannot be offered by one individual school and provide a level of differentiation as schools compete for a smaller pie of potential students.
The long term impact of hybrid delivery
The pandemic has pushed business schools to leverage technology to deliver classes in new ways. Hybrid teaching or hyflex environments deliver synchronous educational experiences to face-to-face and online learners simultaneously. Like many, Rick believes the hybrid model is here to stay: “Many schools have figured out how to do hybrid well and this has re-calibrated student expectations related to this new found flexibility: in other words, students don't want to be bound by a specific time and place for learning, so I think hybrid will continue in many programmes. This new flexible approach may also drive up the interest and acceptability of online MBA programmes, both at the lower price point end of the market, as well as at the high end.” We will watch how business schools respond to the possibility of hybrid learning experiences when they are no longer forced to depend on these technologies. As Rick remarks, it will be interesting to see whether top brand MBA programmes (e.g. Harvard, Wharton and LBS) will move permanently from predominantly campus-based experiences to hybrid models.
AI and analytics-driven student support
There has been a great deal of focus on how technologies may be further employed to support new MBA models. With some schools looking to target higher numbers of enrollments, the option to use AI student support is a possible way for schools to provide high-touch, personalised experiences at lower costs. There are some early adopters already using AI to help to guide student experience or to filter content to students. London’s Imperial College Business School has trialled using AI chatbots to answer students’ questions. Georgia Tech uses robot teaching assistant ‘Jill’ in many online computer science classes. Other examples include MIP in Milan and their "Flexa" AI solution for life-long learning, developed in conjunction with Microsoft. However, universities are a little hesitant to move too quickly, Rick suggests, and reluctant to jump full swing into these kinds of interventions: “We may see use of these technologies in non-core areas such as continuing education, alumni engagement, or lifelong learning offerings.” AI and new analytic interventions clearly require critical analysis so that they have a positive impact on student experience and engagement without creating a culture of surveillance for learning communities.
Future winners and losers in the online and blended MBA market
Although the last fourteen months have brought many challenges to business school and educational institutions more generally, it is certainly an exciting time for the MBA market. “We're heading into new territory in terms of the quality of online education,” Rick reflects, and one important after-effect of the pandemic is that business schools no longer need to debate whether teaching and learning can happen effectively online: “Suddenly students are a lot more aware of the difference between ‘getting by’ vs. ‘high quality’ online education looks like.” Rick dubs this “an interesting inflection point” in the industry, where our understanding of quality online education will only become more sophisticated.
Rick elaborated, noting: “Potential students are going to make more informed choices when it comes to online programs and I think, from a school perspective, this provides a tremendous opportunity to think differently around how we approach the market. As geographic boundaries disappear, the winning schools will be those that are able to deliver on the promise of high quality online education and their ability to reach global audiences.”
Inevitably, as the market becomes increasingly competitive, there will be winners and losers. In the past, many schools were able to thrive in an ever-growing market, but Rick, like others, believes that going forward this is unlikely to be the case. We will see more traditional MBA programmes close and some schools retract from certain markets. The business schools that have partnered together to succeed in these volatile times will learn faster, achieve higher quality, and create collective differentiation and may be more likely to find a winning strategic position in the increasingly global competitive marketplace.
Rethinking the Business Models of Business Schools by Kai Peters, Richard Smith, and Howard Thomas (Emerald, 2018).
About the author
Dr Charlotte von Essen is Director of Academic Engagement at insendi. She previously worked at Imperial Business School’s Edtech Lab and has a background in university teaching and learning design. She has designed and delivered numerous online and blended programmes and helped faculty across the world develop hundreds of courses for a range of audiences - undergraduates, postgraduates, executive education clients, and corporate learners.
At insendi, Charlotte leads the Academic Engagement team, which is devoted to supporting and nurturing the company’s relationships with current partners. She also supports insendi’s user communities, including the award-winning FOME alliance. Charlotte is fascinated by the ever-evolving models and practices of Edtech. The innovations and insights of this rich and dynamic sector excite her work. She loves learning about new projects and initiatives insendi partners are planning, all of which offer fresh, exciting ways to enrich and deepen learning.