Can Half The Business Schools Really Go Out Of Business?

by John A. Byrne on

Dean Richard Lyons of UC-Berkeley's Haas School of Business

Dean Richard Lyons of UC-Berkeley’s Haas School of Business

A few months ago, Richard Lyons stunned many when he boldly predicted that half of the business schools in the U.S. could be out of business in as little as five years or as many as ten.

The dean of the University of California at Berkeley’s Haas School of Business made the rather Draconian forecast based on the likely disruption of the higher education business by technology.

The proliferation of online business degree programs and business MOOC courses, Lyons reasoned, would especially hurt the cash cows of every business school: part-time MBA programs, Executive MBA programs, and open-enrollment executive education courses.

FIVE TOP 25 BUSINESS SCHOOLS WILL OFFER ONLINE MBA DEGREES WITHIN NEXT FIVE YEARS

In an interview yesterday (July 14) with Poets&Quants, Lyons made another bold prediction: Five of the top 25 business schools in the U.S. will join Carnegie Mellon, the University of North Carolina and Indiana University in offering online MBA programs over the next five years. If his forecast comes true, that development alone will hasten the likelihood that many second- and third-tier business schools will lose out to the bigger brands.

Lyons, who has been dean of Haas since 2008, says that the first online MBA programs at such top ranked schools were initiatives that came out of offensive strategy, attempts to gain competitive advantage in the marketplace. But in the future, Lyons says, online degree programs will be launched as part of a defensive strategy, efforts to prevent loss of market share. “If we don’t do this, a school’s programs are going to be cannibalized and absorbed by other players,” he says.

When Lyon’s more dire prediction was quoted by Bloomberg BusinessWeek in March, it lacked any context or perspective. Lyons explains that he came to his conclusion after Harvard Business School innovation guru Clay Christensen said that half of U.S. universities could go bankrupt in 15 years due to the impact of online learning on their business models.

WITHIN FIVE YEARS, 10% OF THE COURSES TAKEN BY FULL-TIME MBAS COULD BE ONLINE

Within five years, the Haas dean believes, it’s not farfetched that 10% of the courses taken by full-time MBAs would be digitally delivered, 30% for part-time MBAs and Executive MBAs, and as much as 50% in executive education. Online delivery could potentially be especially important in custom exec ed, thinks Lyons, where companies often want educational programming given to senior leadership “cascaded” down the ranks electronically because it can be done more economically that way.

Lyons partly bases his beliefs on the success of a course run as a pilot of sorts at Haas by Professor Cameron Anderson. He took his highly popular Power & Politics In Organizations course and delivered it online, with 40% of it synchronous, or given in real time. Offered to full-time and part-time MBA students, the course was oversubscribed. When it was done, the school found that 96% of the students were likely or very likely to recommend the course to a friend.

TRUE DISRUPTION OCCURS WHEN IT CHANGES THE PRODUCT

No less important, during a review by Anderson in front of Haas faculty, the professor spoke glowingly of his experience. “‘The course is better than the traditional version of the course,'” Lyons recalls Anderson saying. “He also said, ‘I will never teach the traditional course the same way again.'”

“Digital delivery made for a better course,” Lyons observes. “Someone noted that industry after industry has gone digital. Sometimes, it causes disruption. Sometimes, it’s just another form of distribution. It becomes disruptive when it changes the product. That’s what it does.”

1 2
  • Learner4Ever

    This is a great article. The whole idea of MOOCs and online distribution is something that never really set well with me (I am NOT an MBA, full disclosure). Why? Because in today’s day and age, anywhere that technologists aim at, they are considered “disrupters” and celebrated as such. But at least in the context of business education, I’m not sure that is a good thing.

    I do not believe that business schools should be under pressure to give away their product for free, so I guess I am in agreement with the Dean. After all, what do business schools sell? It’s not really the knowledge – after all, anyone can get the text used in a class, and if they are smart enough, to read it. I’ve always thought they were selling the networking, the brand, the interaction, and having that on your resume.

    This trend with MOOCs anyways is merely a way for the technologists to profit under the guise of “disruption” but I see it as giving away something for free. Simply put, if you can’t get into a top school, I don’t believe you are entitled to take a course the school offers to regular students. Schools that offer these classes dilute their brand.

    I was surprised to hear the professor’s comments about how the digital version was so much better. He didn’t really elaborate on that, but it surprised me because it seems to me that the content of the course, or maybe how it was delivered, changed, but the product itself is still the same. Take course, get knowledge, get grade, get course on transcript. I don’t see how the methods here in this article are so disruptive.

    Remember, MOOC is only one letter away from MOOCH.

  • Wesley Ellis

    This is a great article but they forgot Cornell is the front runner in this with their Cornell-Queens program

  • DutchS

    Undergraduate business schools definitely need to go. Business should be a graduate-only major. Get a factual base before thinking you can run a company.

  • cking6178

    Undergraduate business school isn’t about learning how to run a company, it’s about learning how to be productive in a company. Oddly enough, the first year of grad school is full of courses that most business undergrads have already taken – Accounting 1 & 2, Micro, Macro, & Managerial Econ, Stats, Corp Finance etc…

  • CornellJohnsonWatcher

    Agreed. Cornell Johnson, with its innovative Cornell-Queen’s eMBA program is a true pioneer in disrupting the marketplace with a top tier MBA delivered in a transformational blended learning manner. And it is not credited nearly enough for this contribution in my opinion…
    Good on them for having the vision to see the future and building around it, versus waiting for others and then following suit.
    I think their NYC Campus will also prove to be very forward thinking and elevate the school further still.

  • Exec Ed Proponent

    “Would recommend to a friend” is nice, but it is more important to measure the learning–how well were the learning objectives met? can the online learners apply this in the real world? How does their performance on these measures compare with students taking the F2F MBA program?

  • Avinash Tyagi

    Lets be serious, all the big schools hand out is the brand name

    Its like driving an expensive car with a big name, is the car really that much better, probably not, but people buy it for the prestige of the name.

    Is HBS really that much better than a B-school ranked in the top 10-25? Probably not, but it has the bigger name

  • Mr. Warr

    This is a stupid comment. An MBA isn’t a major in anything, it’s a broad exposure to business school curriculum, where the rigor comes from the depth of reading and analysis. Back in the 70s and 80s, the MBA was primarily designed for professionals who did not have an undergrad in business, like an engineer or physician looking to move into management. Undergraduate business schools were (still are) professional degrees in their own right.

    Rarely in my Blue Chip career have I met MBAs with undergrad backgrounds in liberal arts and sciences, even from top schools, who could stand up to true undergrad majors in marketing, accounting, finance, etc. who also had MBAs. Unfortunately, all the marketing hype around MBA programs has created this myth that an MBA is something like an MD or JD. It’s not.

Partner Sites: C-Change Media | Poets & Quants for Execs | Tipping the Scales | Poets & Quants for Undergrads