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MBA Programs Face Fresh Digital Disruption From Mooc Platforms

Business schools have been disrupted by the innovative use of new digital technologies. Platforms for Moocs are increasingly encroaching into the territory of the traditional MBA.

Tue May 5 2015

The decision by Silicon Valley start-up Coursera to host the world’s first “open” online MBA on its 12 million-plus user platform is poised to further shake up the flagging MBA market.

But the program will face several challenges that will determine its future success.

Business schools have been disrupted by the innovative use of new digital technologies and platforms for Moocs, or massive open online courses, like edX and Alison, are increasingly encroaching into the territory of the traditional MBA.

“This is an MBA that’s democratizing top-quality education,” says Raj Echambadi, associate dean of outreach and engagement at the College of Business at the University of Illinois, in an interview with BusinessBecause.

The University of Illinois has partnered with Mooc maker Coursera to host the iMBA – believed to be the first digital MBA from a top business school that is open to applications from anyone.

The tie-up is the latest illustration of the disruption of the business education market witnessed over the past few years. Tech companies like Nasdaq-listed 2U and soon even LinkedIn, the social network, are helping to spur the digitization of the business education industry.

Daphne Koller, co-founder and president of Coursera, says the iMBA program “reimagines graduate education to be more flexible and accessible”.

Learners can take one course, one Specialization – a Coursera online course – or go on to take a set of Specializations in order to earn an MBA degree from the University of Illinois.

The iMBA will cost $20,000 – about one-third of the price tag of a traditional MBA from a similar institution.

Coursera has been the front-runner in the race to develop Moocs – short, online and usually free courses on topics ranging from everything from data analysis to social media marketing. Its platform has hundreds of courses and business schools will be concerned about the growing number of management-related content hosted by the Bay Area group.

“Online technologies continue to rapidly reshape our world,” says John Matsusaka, online MBA academic director at US business school USC Marshall.

Business schools have been forced to adapt to the disruption of their business models.

“Being a leader in digital management education in general, is increasingly important,” says Peter Zemsky, dean for strategic initiatives and innovation at INSEAD, the global business school.

It builds up reputations, he says, and being innovative is particularly important for premium MBA brands.

Over five years the number of schools offering online MBA programs has ballooned by around 25%, according to AACSB International, the accreditation body. New entrants in the online master’s race include the University of Miami, and Mason School of Business in Virginia.

The latest development in online business education has been a focus on careers. Companies like Coursera are bundling Moocs into longer modules and are incorporating certificates and industry projects that are akin to internships.

“We’ve expanded in two other directions,” says Nancy Moss, director of communications at edX, the non-profit Mooc platform founded by Harvard and MIT. These include the launch of “professional education” for working professionals looking to advance their careers, she adds.

Tech groups like edX are also trying to monetize their online management courses – further moving into business schools’ terrain.

Udacity, for example, runs a business unit that works with Google, Facebook and Capital One, the financial services group. Telecoms company AT&T recently paid Udacity $3 million to develop a series of “nanodegree” programs.

What sets the iMBA apart is that it is geared towards working professionals in a way that other online programs are not, according Raj at the University of Illinois.

Its strength lies in the flexibility of study – iMBA students are free to take any set of courses in any order that suits them.

Larry DeBrock, Dean of the College of Business, says: “We’re finding new ways to mix content and active learning that’s better suited to high-level business leadership.”

Raj adds that the course aims to disrupt the very definition of who an MBA student is, with its open admissions policy. “That’s hugely exciting,” he says.  

But that raises the question of whether the iMBA will suffer from a lack of peer learning – a huge benefit of MBA programs is the chance to learn from a diverse and experienced cohort. The University of Illinois would not answer questions about the potential iMBA class make-up.

Another issue is the theory that employers see online programs as second-rate to traditional, campus courses.  

Raj’s riposte is that markets have matured. “Years ago, there was only one legitimate degree but that’s no longer the case,” he says. “It’s about the actual quality of the material you’re delivering,” he adds.

Disruptive online courses and the tech companies helping to develop them tend to talk about democratizing access to education for the masses.

The iMBA’s price tag is low by MBA standards but is significantly more than a user would be expected to pay for a typical certificate of completion for a Mooc.

But Raj says: “We are a public university that takes its mission of accessible education seriously, and we’re looking for ways to use the online space to deliver on that mission—not to squeeze as much revenue as possible from participants.”

For business schools that have yet to fully adapt, further disruption looms large.

Ivan Bofarull, director at ESADE Business School’s global intelligence office, says the market will continue to see new players with lower cost structures tapping into the “ocean of opportunities that digitization has unleashed”.