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Can Half The Business Schools Really Go Out Of Business?

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.”

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