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Dean's Corner: The Future Business School: Restaurant, Buffet, or Club?

April 2014

Francois Ortalo-Magné
Albert O. Nicholas Dean
Wisconsin School of Business
University of Wisconsin—Madison

The business model of business schools is under assault. At a time when the number of MBA candidates is falling, innovation in online technology is opening the door to new forms of learning experiences, offered at a price much lower—and a scale much greater—than in standard brick-and-mortar classrooms. Much of the disruption is focused on exploiting the multitude of new ways that overcome distance to enable people to deliver knowledge, collaborate, and learn—from anywhere, at any time. This new landscape not only poses a threat to many business programs, but also presents new opportunities. Success lies in optimizing how we source the delivery of knowledge, and re-inventing how we complement knowledge to inspire our graduates to join our communities of successful and grateful alumni.

Our colleague, Rich Lyons, Dean of the Haas School of Business, shared his prediction in the March 14, 2014 issue of Businessweek: "Half of the business schools in this country could be out of business in 10 years—or five." His argument builds on the observation that many business schools derive a large share of their revenue from part-time and executive MBA programs. Students in these types of programs keep their jobs (and associated earnings) during their education, and therefore face a lower opportunity cost than full-time MBA students. They are also often constrained by their jobs to a limited set of schools located within an easy commute. Rich Lyons argues that online technology changes the geography of competition by allowing the very best business schools to expand their reach, drawing upon top students from any location. Gone is the local market advantage of the regional schools—and with it—the crucial source of revenue from part-time and executive MBA programs.

Or is it? For now, the premier players in the online MBA market have been some of the top brands in business education—but not necessarily who you may think. Indiana University, Arizona State University and the University of Florida topped the most recent U.S. & News and World Report ranking, not Wharton or Harvard.

Wharton's first foray into large-scale education mimicked that of many other business schools: offering free lectures on the Coursera platform. More recently, Harvard Business School launched their own online learning platform, HBX, which promises to stay true to the Harvard approach by immersing students in real world problems through original case studies. Neither Wharton nor Harvard seem geared towards the large-scale online MBA programs that could re-shape our industry by undercutting the many residential part-time and executive MBAs that many of us run within our regional markets. Could it be that they see greater opportunities?

Rather than using new technologies to deliver the types of 'fixed menus' we've all offered for years, we could very well be on the cusp of redefining how we prepare our graduates to pursue life-long learning in the field of business, moving from 'set menus' to 'great buffets'—affordable and of the highest quality.

Since the advent of the book, the best scholars have had the opportunity to expand their reach beyond their university. But we all know how tedious it is to pick up a book and learn from it in the solitude of our home office. Online learning platforms offer much more. Udacity, Coursera, edX and others have demonstrated the promise of online technology in delivering engaging learning experiences right to our screens. Individual dishes prepared by master chefs are now available in a readily enjoyable format to anyone with internet access.

For the motivated life-long learner, these new platforms open up unlimited opportunities. Gone is the requirement to consume education in pre-packaged selections set by a business school curriculum committee. Instead, a wide variety of classes is available for free, opening the door to customized experiences that match one's career progression and curiosity. The buffet is open, and so far, all-you-can-eat is free!

What future, then, for the more upmarket learning institutions with their set menus of learning opportunities crafted by master chefs, served by teams of experts in environments designed to support premium residential experiences? I see a great future for such premium residential experiences, especially for those of us who will succeed not only in offering great menus, but also fostering club-like followings.

As deans, we are fortunate to interact with many alumni who have enjoyed outstanding careers. We have all learned how much they relish their campus experience, reminding us of specific co-curricular or social experiences that helped them understand who they are. When they remind us of specific faculty or staff colleagues, it is usually not because of eloquent lectures, but rather because they were challenged, inspired, and supported to redefine their dreams.

Furthermore, beyond a sequence of certified learning experiences, our degrees have the potential to introduce graduates to prized alumni networks. We all have the opportunity to create residential experiences that lay the foundation upon which a community is created, nourished by friendships sparked in the hallways of our brick-and-mortar facilities, student unions, and stadiums; much more club than restaurant. Our alumni become co-investors in our brand. At Wisconsin, we say once a Badger, always a Badger.

This is why our most successful and grateful alumni support a business model less dependent upon who pays now (the students and in some cases the state), but instead built upon who pays when (as a student in the form of tuition or as an alumnus in the form of philanthropy). And as alumni, they engage with us in strengthening the menus we offer our current students and the value of their network.

And so I see a bright future for business schools that articulate a value proposition that goes beyond the delivery of knowledge, and whose degrees or certificates are more than stamps of successful knowledge acquisition delivered by the select few stars who will shine on screen and take over the market. Our success no longer hinges on assembling great chefs who invent new dishes and deliver set menus for our classrooms, but on providing a vibrant platform where chefs and a much wider variety of excellent colleagues and club members create experiences that nourish the life-long learning community of alumni.

One question I am left wondering in a new world of free buffets and pricey clubs concerns the future of the production of academic research. Will the market for business education support the many chefs to whom we gave tenure when we all ran our full kitchens? And if not, who will fund the continued production of business scholarship?

Francois Ortalo-Magné
Albert O. Nicholas Dean, Wisconsin School of Business, University of Wisconsin—Madison

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