Bringing Prestige & Status to the Online MBA

by John A. Byrne on

When the dean of the University of North Carolina’s Kenan-Flagler Business School first broached the idea of launching an online MBA program, his faculty and students were highly skeptical. “Many of our full-time MBA students are not convinced this is a good idea,” says Dean James W. Dean. “They underestimate the challenge of what it is for people to remain in their jobs and work and study for the degree.”

Even Dean concedes that he had doubts. “To be honest, I was initially skeptical,” he says. “I wondered: Can you really do an MBA online that you could be proud of? I came around to the idea that this was a great opportunity for us and could change the nature of business education at the top schools.”

The upshot: This July, Kenan-Flagler will be the highest ranked business school in the U.S. to offer an online MBA program. In the initial class, the school expects to enroll 50 students at a cost of $89,000 each, a price tag that includes up to four weekend residencies at different locations around the world. UNC is partnering with 2tor Inc., a company that provides the technology platform and instructional design to deliver courses online.

The two-year program, dubbed MBA@UNC, will feature pre-arranged live sessions that employ live streaming video as well as archived lectures and interactive simulations that can be accessed 24/7. Case study and lecture discussions also will be in both real time and via forum boards. “The level of intimacy will be at least as high or higher than in the classroom because there are fewer people involved,” says Dean. “You can hide in the back row in a classroom, but if you are one of ten on a computer screen you can’t.”

THE UNIVERSITY OF PHOENIX NOW HAS MORE THAN 30,000 CURRENTLY ENROLLED MBA STUDENTS.

Online MBA degrees, of course, are nothing new. About 11,000 MBA students are currently studying for online MBAs at some 90 schools accredited by the Association to Advance Collegiate Schools, the same accrediting body that gives approval to the Harvard’s and Stanford’s of the B-school world.  Accredited institutions with online MBA programs include the University of Florida, Arizona State, and Penn State. The largest for-profit player, the University of Phoenix, has been offering an online MBA since 1989. More than half of its 66,000 graduate students are enrolled as MBA candidates, and Phoenix now buys more case studies from the Harvard Business School than any other institution.

But very few of the online players boast the prestige of the Kenan-Flagler Business School, which typically ranks among the top 20 U.S. MBA programs. “If you look at the trend, it started out that the only providers were low quality and low reputation,” Dean says. “Over the last few years, there’s been a gradual migration toward the top so you see lots of reputable schools offering these programs. It follows the pattern of disruptive innovation, which starts from the outside and then makes its way inside.”

Some believe that high quality MBA degrees are likely to follow the pattern of how socially acceptable online dating has become.“Ten or 12 years ago, online dating seemed to have some scary edge to it,” says Ian Van Tuyl, who as vice president of production at 2tor is working with UNC faculty to build the curriculum. “Today even your grandmother is urging you to go online and find someone. My sense is that online degrees will become as accepted as online dating is today.”

IE Business School in Spain arguably has the high status global online program available today. The 15-month program has four 32-student cohorts a year, three in English and one in Spanish. With the exception of two one-week residencies at its main campus in Madrid, the entire program is online (see story on IE’s Global MBA Online). The cost: about $50,000 for an MBA. Since the launch of the program in 2001, IE has turned out about 1,000 MBAs, a number that includes grads in its specialized business master’s programs in sports, digital marketing and biotech. “We’re looking at our peer competitors and we can’t believe they are not getting into this,” says David Bach, associate dean of MBA programs at IE. “There is going to be a lot more of these programs at top schools. Companies haven’t cut back on training and development as much as they have cut back on travel. So if you can provide high quality instruction anywhere in the world without people having to get on a plane, that is a competitive advantage.”

INDIANA’S KELLEY DIRECT PROGRAM NOW HAS 1,500 STUDENTS ON FIVE CONTINENTS.

In the U.S., the pioneering top-rated institution so far has been Indiana University’s Kelley School of Business. Now ten years old, Kelley Direct boasts 1,500 current students on five continents, with roughly 40% of them in graduate business programs in partnership with such firms as John Deere, United Technologies, and Cummins. Indiana’s program also requires two one-week residencies at its main campus in Bloomington. The total cost: $57,000. Most students complete the MBA in 27 months though the coursework can be spread over five years.

Duke University’s Fuqua School of Business boasts a pricey $146,600 hybrid program, with five short, in-person residency sessions at its campus in Durham, N.C. as well as London, St. Petersburg, Dubai, New Delhi, Shanghai and Singapore. In between each residency, there’s about two months of learning from home via online classroom sessions, team projects and exams. Some 116 students from 105 countries are enrolled this 15-month-long Global Executive MBA program.

Not everyone is convinced that online instruction is a quality substitute for an MBA program that brings together faculty and students on a campus for two years. Dave Wilson, CEO of the Graduate Management Admission Council, which administers the GMAT exam, says he believes online education is best suited for “rudimentary” courses in basic accounting or finance. “I’m not convinced you can use technology for deeper Socratic inquiries between a professor and the students,” says Wilson.

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  • Spencer

    [Cosgray also counters criticism that online students sacrifice the camaraderie and outside of class activity that results in deep and enduring relationships with classmates that can help them throughout their careers. “That’s a common myth,” he says. “In fact, you can network with people across the country and across the globe. You may be on a team with someone in China, California and New York.”]

    This is a weak argument. That’s no where near the same as being involved in student clubs and spending time with fellow students outside of the classroom.

    Another knock against online MBAs is that career changers don’t have access to the all important summer internship.

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne

    Spencer,

    You raise an important point. Online MBA programs are not a good idea for career switchers or job changers. The reason: there not only is the lack of an intern possibility, but there also is less access to career services and the infrastructure that allows MBAs to land great jobs. It’s best to think of an Online MBA as an alternative to a part-time MBA program, rather than a full-time, two-year, on-campus MBA experience.

  • Joe

    Hi, I am in an online health care MBA program. I am a manager at a medical center, and wish to move into executive leadership. I am in my early 30s, just starting a family, and don’t really wish to leave the region for a better position. The MBA will be my second graduate degree. When doing my pro/con list of whether to do the program, I encountered an article citing research that online MBA grads are quantitatively comparable to traditional programs but suffer in the networking. I then devised a personal strategy to compensate. I am a member of professional associations in the area, and am focusing my scare networking time to developing these connections. As effective as contacts in a full time program? I don’t know, but also can’t confirm that my networking needs are as great. However, in the interest of full disclosure I am not a job changer, rather I am well entrenched in a large organization.

  • mba2011

    Many releases on Chapel Hill’s new program (and to be fair, this article is more balanced than many) are proclaiming it to be the first “top ranked” or “high quality” program to offer an online MBA. That sentiment is faulty. As noted in the article here, Indiana has offered an online program for over a decade, and is a direct peer of Chapel Hill. Depending on the year and source, Indiana and Chapel Hill trade order in the rankings. How about valuing these programs like any investment – what is the outlay and what is the return? Indiana’s cost differential alone outweighs any trivial perceived difference in prestige. And other areas where Chapel Hill might have a real advantage over Indiana – like geography and career services – are rendered null in the online format. Selecting an MBA should be viewed as a business decision, but far too many MBA aspirants eschew good business sense altogether when presented with some fleeting notion of “prestige”.

  • http://poetsandquants.com/members/msshona/ Rishona Campbell

    Now THIS article is why I love Poets & Quants! Not because I totally agree with it, but because this type of viewpoint regarding MBA studies is just too rare to come across…

    As an online MBA student myself, I had several thoughts while reading this:

    1) It is not said explicitly, but you can see that one of the biggest obstacles to online college degrees is not the quality of the programs, but the perception of them. If alumni have their doubts and employers have their doubts, then the degree is instantly cheapened. It is really unfortunate that adoption of progressive methods of learning are held up because people wish to maintain the (outdated) status quo.

    2) University of Phoenix has WAY too many MBA students! I know that their enrollment is huge…but that number is just way too big (makes me wonder about the quality of the entrants).

    3) What about quality? I feel (although I don’t have any proof to verify this) that just because a particular B-school has a strong full-time program, that does not mean that its part-time or online programs are just as strong. Conversely, the online program at a “lower” university may actually be better than other school who is ranked higher because of their on-campus program. Of course you’ll have a spectrum…but there can be some big differences from school to school. From the article: “And it’s not just dumping content on a website that you can read.” — except for with some programs, it IS just like that. In my online studies, I have had professors that have done exactly what was quoted. Thankfully, they have been in the minority; and were not representative of my entire program. But yes, I see quality control in online MBA programs to be a big ‘white elephant’ in the room.

    4) Rankings. This is related to my 3rd point, but I agree with mba2011. I think we are giving too much credence to rankings, especially when the program has not even started and there are no “products” (alumni) by which to judge.

    In a nutshell, what I read and hear as far as remarks about online MBA degrees is a bit different than what I actually experience. What I see is not a decrease in quality regarding the MBA, but an increase in options for people who want to pursue an MBA. I have some brilliant classmates; many of whom travel or have a spouse that cannot relocate, or some major issues that life threw at them (ok, ok…so that’s me!) and cannot be on campus for even 1 full year. Unfortunately for every decent online MBA program, you have 5 ‘money-shark’ programs that can’t offer any real value for what you pay in tuition.

    Oh and as for the networking benefits of on-campus MBA programs…they can be overrated. A friend of mine graduated from Pitt’s Katz School of Business last year and many MBA student events fell through due to lack of interest and time conflicts. She remarked that she had gained many more valuable contacts through the separate professional organization (non-MBA related) that we were both a member of! I think that this ‘network-brand factor’ only comes into play in the very top tier programs.

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne

    Rishona,

    Thanks so much for your really thoughtful comments. You raise very good points here and much to think about it. Really appreciate it.

  • Jim

    Touching on what Spencer said,

    Clearly, the article misses one of the major reasons for seeking business education, and that is the career and recruiting opportunities that come along with top business programs. That is arguably half of the benefit of doing an MBA or other business-related degree.

    I thought the perspective of the Accenture consultant who did the IE online executive program was particularly interesting because… if he liked his job at a prestigious firm so much and didn’t want to leave the salary, I’m left wondering why he even feel it was necessary to get the degree anyway. To me it would seem he has no reason to need or want an MBA at all and certainly didn’t have the time, so I’m left questioning the value of his investment.

    MBA’s are such big financial investments that at the end of the day, if it comes down to spending $90k for the online version or $150k to go to campus, why wouldn’t you get the most bang for your buck by actually doing the physical program if you’re going to bother with such a lofty loan burden?

    I predict that we will see more and more programs that leverage technologies and allow people to stay connected. I think the Fuqua EMBA program mentioned in this article is an interesting case study in this, as well as the ways in which INSEAD connects its two campuses in France and Singapore. But I do NOT think we will ever see a fully online program ever attain the prestige of more traditional programs because of what you give up in the in-person interaction and career opportunities.

  • http://poetsandquants.com/members/msshona/ Rishona Campbell

    @Jim

    The scenario that present is not always the case. I would say that if you are the type of MBA applicant who is looking for an “in” into a particular B-School alumni network and you thrive off of the idea of participating in weekly MBA peer networking dinners, then you are right, an online MBA will never fit the bill. But there are many people who already have (or are capable of building) their own professional networks. However they may need those three letters in order to progress to the “next step”…for various reasons.

    In addition to that, there is the educational aspect of the MBA degree. For many of us who have non-business degrees (like myself), we have opted for the MBA in order to hone our business acumen. My prior work experience did not expose me to all of the various aspects of business that my MBA studies have presented to me. That alone, I feel, is worth the price that I am paying (which is no where near $90K).

    I think (and this is just my opinion) that online MBAs a catering to a new type of business professional. One that does not fit the mold of the traditional professional career ladder (and in today’s increasingly unorthodox business climate, this is not surprising).

  • Vic

    @Jim: Let’s remember that its not just the difference between $90k or $150k in your example. If you go with an online program, you don’t give up your salary for two years so that needs to be factored in as well.

  • http://poetsandquants.com/members/msshona/ Rishona Campbell

    Oh my, I’m not sure where my brain was on my previous comment! That first sentence should say “The scenario presented is not always the case.” Yikes! :-(

  • Chris – Kellogg

    I admit that I’m skeptical of the competitiveness of online MBAs, mainly because (my impression is that) they focus on only one dimension of management education: academics.

    Like most other schools, Kellogg has no shortage of professional and social groups and clubs, that offer hundreds of non-academic events per term. Guest speakers, conferences, industry treks, seminars, networking opportunities, etc. All these provide students with the additional value of contextualizing their classrom lessons, establishing personal relationships with current/future leaders, and providing experiential aspects. I would be interested in learning how online MBA programs provide similar experiences.

    Obviously, as a Kellogg student, I’m very accustomed to group work in just about every class. Our philosophy is that you can’t succeed in business without being able to work in a team, and nothing teaches you the pains of collaboration more than telling 4-6 top-notch people (who are all convinced they have THE answer) that they have to agree on what they hand in. Over +20 classes, the effect this has on students’ abilities to thrive in a corportate environment with other bright peers cannot be underestimated. Rishona, do online programs offer similar exposure to collaboration?

    I admit, I haven’t thoroughly investigated online MBAs, but I suspect that my skepticism about how effectively they provide these non-academic experiences is the core behind why some people do not put the same value on them as a traditional program. If administrators and alumni want to convince the world they’re on par, they need to honestly communicate that these aspects are present in their online programs.

  • Javier Gregori

    My experience as an Online MBA somehow overruns some of the main concerns expressed here.

    First of all, I hold an IE business school Global Online MBA (but my opinions are in no way endorsed or sponsored by IE).

    On the subject of networking, I would dare to say that our group had a level of companionship even greater than many “in-campus” programs. Although face to face communication is not possible, many hours of “net-work” on elearning, webconference and other tech solutions forged not only colleages, but close friends (We even travel together from time to time).

    As On-line students we had full access to all School services and network, I do not feel I have missed anything since there was a wide range of, clubs events and activities all over the globe. I would say more, personal attention recieved by IE staff had been simply outsanding, in many ways closer and warmer than you would even expect on an online program.

    Flexibily may be a key issue, (by the time I enrolled, it would have been impossible for me to attend to regular clasess). But if we speak about quality, the point is that program qualitiy is not on presence or distance, it is on the students, the syllabus, teachers, and technology. Presence itself does not add any value to the learning process.

  • Dan

    There are other signs of more prestigious universities experimenting with online/distance learning.

    Carnegie Mellon’s Tepper School of Business has a flexmode program. It is not a true online degree (video conference lectures at corporate sites) but is true distance learning.

    Duke’s Fuqua offers a Cross-Continent MBA that combines distance with residency learning.

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne

    Javier,

    Thanks for adding your perspective. I think you make a very good point about how program quality is a direct function of quality students, faculty, curriculum, and the facilitating technology that effectively brings these core ingredients together. But the widespread suspicion is that students in online programs are far from the best, that the very best faculty refuse to teach online, that the curriculum is a no frills, basic cookie cutter program and that the technology is still more Compuserve than Facebook. What do you say about these concerns?

  • http://poetsandquants.com/members/msshona/ Rishona Campbell

    @Chris,

    There is definitely collaboration in my online MBA program; only one of the 9 courses I took so far did not feature it (the Accounting course). However, like many things in online learning, it takes a bit more work and creativity to make your experience meaningful. Last summer I had a group that was simply amazing. You utilized Google Groups & Docs for our projects and would text each other in order to get quick feedback. In another course, we (4 of us) developed a website for a MIS course. Yes, sometimes the learning curve is high and the demand to have both the business skills and the technical know-how to use the technology to connect us can lose some people. But overall, the experience with group work has not been bad.

  • Deepa

    I have to disagree with your sentiment John and am surprised by some of your gross generalizations. I am currently a student in Duke’s Cross Continent MBA (a hybrid program). I have only finished about half the program so far, but I can assure you that the quality of the professors has not been compromised. The same high caliber professors instruct our classes during our intensive residency periods, and continue their teachings during the weekly live online sessions. For example, our accounting professor was a former member of the FASB and our econ professor was former chief economist at the FCC. Perhaps more important than any accolades our professors have received is that they have shown genuine interest in our learning, despite (or maybe even because of) our current and relevant work experience. The curriculum is most certainly not a “no frills, basic cookie cutter program”. In fact, one would be hard-pressed to find a more innovative option available for working professionals. The diversity of our students (cultural, professional, and geographic) provides not only for stimulating class discussions while in residencies, but also for thoughtful commentary during our message board interaction. Admittedly, I initially had some hesitations when selecting this program over the highly ranked local part-time program in my area. Based on my experience thus far, I have no regrets.

  • http://poetsandquants.com/members/jbyrne/ John A. Byrne

    Deep,
    Thanks for your feedback on the Duke experience. I do think you may have misread the story, though. The point of the piece was that in general online MBA programs have been the province of unaccredited for-profit schools or accredited schools in the second or third tier. Most of these available programs are very basic, offering few electives and little innovation. IE Business School, Indiana, Duke and now UNC are bringing new prestige and substance to online MBA degrees and we’ll likely see more highly ranked schools get into the game.

  • avinsh

    So according to John’s last comments, 2nd and 3rd tier schools’ online programs are generalized to be basic with little innovation. It is surprising to see that you are clubbing for-profits institutions like UofPhoenix with the accredited institutions and making such a broad statement about a host of schools many of which have good recognition in their local areas and may have a prestige from a different context. It is too much of a broad swipe to club these with the for-profit institutions. And I think there was another comment on Kelley’s program – they have been doing this for the last 10 years so this is not new for Indiana, and it is unfair to club them with UNC when UNC’s program is so new.

  • Tony

    Hi Jim,

    “I thought the perspective of the Accenture consultant who did the IE online executive program was particularly interesting because… if he liked his job at a prestigious firm so much and didn’t want to leave the salary, I’m left wondering why he even feel it was necessary to get the degree anyway.”

    As the Accenture consultant in question, I might be able to answer some of your questions.

    Regarding “why get the degree anyway”, I’m driven by the idea that you have to make hay when the sun shines. I can’t imagine an MBA class full of people that desperately “need” the degree.

    Further, at this point in my career, I wouldn’t want to be a member of an MBA class in which my classmates’ opportunity costs were so low that they found quitting work to be an attractive option.

    Regarding loans, one advantage of working while in school is that I didn’t have to take out any loans.

    Regarding the costs, your 90-150K estimates seem to exclude the opportunity costs I faced.

    Regarding networking, it has been incredible. I regularly speak and travel with school mates. In fact, I just returned from visiting a friend in Berlin this month. At the risk of sounding petty, I think the bonds of friendship are somewhat easier to form and maintain in a class like ours where personal finances are not as much of an obstacle (as compared to unemployed full time students).

    I can’t comment on the school’s career services as I haven’t used them.

    Regarding the lacking prestige factor of online programs, I suspect you’re right for now. I think this will ease up a bit when reputable schools find better ways to seperate themselves from the degree mills and when opinions about online programs come from more people who have attended online programs. :)

  • Kevin – Indiana

    I’d like to address some of the “concerns” regarding distance education.

    I am a student in Indiana’s Kelley Direct program, and I think it’s important to note that they make their outstanding career services organization available to all Kelley Direct students. In fact, they have a director within Career Services specifically to service the students of Kelley Direct. There have been comments above that career services for online programs may be lacking. I can say this is not the case at Indiana. They will even work with you if you are a career changer and want to land a summer internship, although, admittedly, it is more difficult for a distance learner, as you have to travel to their many on-campus events to participate in the internship recruiting.

    Second, regarding social clubs and networking, the Kelley program includes two one-week residencies, during which you meet your peers and professors, and truly experience life on Bloomington’s campus. You are even likely to get drunk at “Nick’s English Hut” during a game of “sink the biz” ;) Also, I chuckled when I read Dr. Cosgrove’s comments regarding teams- my teammates in my Capstone course are located in New York, California, and China (plus one more in Indiana). You do meet people from all over the world, and are likely to stay in touch with the friends you meet. I’m sure the networking is not the same as the full-time program, and the relationships students build are likely not as deep – but it is there as much as any part-time program. You are not just working with a computer screen – virtually all of the Kelley curriculum involves a substantial team-based element.

    As a working professional who occasionally travels, the Kelley program was perfect for me. I do not feel I have sacrified a quality education in any way by choosing that program, and I will be graduating with numerous new friends and a top-20 degree. I’m sure UNC will put up a great program, but at least for right now, I couldn’t imagine going with any program other than Kelley. They have over 10 years experience, have learned many lessons, have a great staff that is very student-focused and responsive, and offer the same Top 20 degree as their full-time program. Not to mention they are much more affordable!

  • Jeffrey Macias

    I think in human nature we tend to take the perspective of the current environment. Of course in any online MBA there is a chance that someone will look at this a not the same as my MBA, this is only human nature. Remember the joke when I was your age I walked to school up hill both ways?

    The big difference that won’t be played out for a few more years is that the people going through online MBA’s will eventually replace the decision makers who devalue them.

    It takes a little bit of futuristic thinking, which MBA’s in my opinion generally lack, because current with most coursework they are taught to think in financial quarters as opposed to decades. If you research this point, look at how the top schools are re-looking at their programs and revising them as evidence.

    I work for a global corporation I work 50-60 hours per week, I make over $100K per year, I have 2 small children, and I am doing an online MBA that is being payed for in full by my corporation. Do the NPV.

    One last point, online MBA’s do mimick the way real work is actually structured, my on campus experience quite frankly didn’t. Online MBA’s do enhance your skills of being able to work virtually to accomplish task and goals.

    I do think AACSB is critical, the course work is the same and to be quite honest my experience thus far has made me a much more effective manager, in the end it’s about challenging your brain, you get out what put into it, one site or virtually.

    I’ll be doing a live Webinar next week for Washington State University, many of these points I will bring up. We have entered a new era of and those institutions that lead in this space will have a competitive advantage over those late to the game.

    Jeff

  • http://www.treesfullofmoney.com Benjamin

    Good discussion here. I’m currently enrolled in an online MBA program through the UMass Amherst and I am very happy with the quality of the program (so far). I didn’t go into the program looking for prestige, I just wanted to learn about business and the program has been exceptional in this regard. No complaints!

  • danielbarn

    I think that online MBAs are a really good option for people who want to become proficient in the areas of marketing, finance, public relations, HR, business development, etc., but do not have the time or the luxury to physically attend classes. Whether you’re working, running your own business, or raising a family, an online MBA degree from an accredited college is worth its weight in gold because it gives you the credentials and knowledge required to gain employment, get promoted, or run your business successfully, and still allow you to fulfill your responsibilities.

  • Arun

    Very good discussion. THanks for sharing the experiences, views and opinions. Can someone comment on career growth / shift opportunities of online mba? Is it as good as regular mba?

  • Robinboca

    You have to experience on-line education to know exactly what you are talking about. The rest is conjecture.

    I have attended several universities as an ungraduate and grad student at Boston University, U. of Wisconsin and the U. of Wisconsin at Milwaukee. I am also graduating in with a B.S. inBusiness Administration from Kaplan University.

    I love campus life but there is a point in life when it no longer is possible to attend a campus program. I had a wonderful time at Kaplan, the pace was fast, I didn’t have to sit in a classroom and I found it just as challenging in most classes as those in my previous education.

    What I found is that all of the professors are working at real jobs in the field that they teach, not just holding academic degrees. I also found that since most professors are ad-hoc that they also hold “day jobs” in very prestigious corporate positions or professorships at prestigious universities. The variety of opportunitiies is enormous. Like in any other school, you have to seek them out and join them. There is a placement center but my best references come from professors who are executives in the business that I want to work in.

  • JP

    To Spencers final statement, “Another knock against online MBAs is that career changers don’t have access to the all important summer internship.”  

    I have to say if you’re working already an internship is irrelevant.  As for those people that want to change careers an MBA from a highly accredited program helps break a tie.  Experience, an excellent resume, solid references, strong work ethic, and being able to interview effectively are the most important pieces to any job search.  If you have an MBA without the other 3 out of the 5 qualities I mentioned it’ll be tough finding any type of work.  And anyone that has all those skills and is not employed is lazy or is cursed with an unrealistic sense of entitlement!  

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