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Hybrid MBAs To Cause Major Disruption

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

High-quality hybrid online MBA programs will soon be poaching students and their tuition money from part-time and executive MBA programs, UC-Berkeley Haas School of Business Dean Richard Lyons argued during a major online conference involving thousands of participants, 17 CEOs and 23 deans.

Some 5,000 people from 93 countries logged into Boston University’s Business Education Jam, which saw 6,200 posts across 10 discussion forums during the three-day first-ever event Sept. 30-Oct. 2.

Lyons, who has predicted that half of the business schools could be out of business within five to ten years, addressed disruption in business schools during the Challenging the Business Model of Education forum.

Business Jam“Near term, I expect the major financial disruption of business schools to come from the delocalization of the working professional MBA market (both Part-Time and Executive MBA),” Lyons wrote in a post discussing the hybrid programs, which blend online work with limited on-campus education. “The advantage of physical proximity to working students will be greatly diminished in a high-quality, largely digital-program world. Given the financial contribution of this category of program is important to most schools, the impact will be large.”

Lyons said that that schools “whose main competitive advantage in this segment is physical proximity will find their students poached by high-quality hybrid online programs with which they didn’t used to have to compete. Hybrid online programs that have 70% or more of their program online will enjoy a large addressable market.”

‘ONLINE PROGRAMS ARE STILL STRUGGLING MIGHTILY WITH CUSTOMER EXPERIENCE ISSUES’

Lyons’ contention drew a response from Timothy Westerbeck, president of higher education consulting firm Eduvantis: “This presumes (and it is probably a good presumption) that there will be many more purely online programs that will offer a high-quality online experience,” Westerbeck wrote. “From what I can tell from our analysis, online programs are still struggling mightily with customer experience/journey issues. Good hybrid options, I predict, are the real factor that will counterbalance delocalization.

“The data I have seen suggests that when given the option to learn online AND actually spend a little time on a local campus, people prefer that (on-campus time). You make a great point, but I think the jury is still [out] on whether or not there will be a major financial disruption or more of a market erosion around MBA programs in any particular local market.”

Lyons has predicted that 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, a development that would cause far more applicants to seriously consider a digital MBA over a part-time or executive degree.

DEAN PREDICTS THAT ‘DIGITAL EDUCATION WILL BE BETTER THAN OUR TRADITIONAL OFFERINGS’

To Westerbeck, Lyons posed a question about the ideal proportion of online vs. on-campus learning: “At what % digital/online does a program’s addressable market become the world? The sweet spot – or sweet interval – will be those percentages that have both a large, possibly global addressable market and not so high as to significantly lower quality.

“Many of the ed tech innovations being worked on now are actually going to make the digital education we provide better than our traditional offerings (e.g., forms that use synchronous delivery in new ways, or make learning adaptive and personalized, or make use of alumni in the delivery of education in ways that traditional methods cannot). My view is that the ‘sweet interval’ may be larger than we realize.”

Lyons has said that within five years, it’s not farfetched to believe 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.