Why B-Schools Should Worry About This New Harvard Business School Study

There’s little dispute that the best brand in business education belongs to the Harvard Business School. Since its founding in 1908, HBS has been the most resourced and most influential business school in the world. Placing those three words on one’s resume has opened untold doors to immense opportunities for hundreds of thousands of high achievers.

So it will come with little surprise that today (Jan. 8), the school is rebranding its digital learning initiative, sending its HBX acronym to the archives and embracing the full glitter of its powerful brand with the rather prosaic “Harvard Business School Online.”

“I don’t want to overstate it,” explains Patrick Mullane, executive director of HBS Online, “but I do think it’s an interesting change given how long we’ve been around and given what we have done with the MBA program and online. We are more directly tying the online position to the school in a way that people might not have contemplated.”

‘IT WOULD HAVEN TAKEN 40 YEARS TO TOUCH THAT MANY STUDENTS IN THE MBA PROGRAM’

“When HBX was founded four and one-half years ago, we did what a lot of people did back then,” adds Mullane. “We threw an X on it and at the time that made sense. But the market has matured early and it made us realize that we really obscure who we are with that name. It’s not obvious it is Harvard Business School and that we are a cohort-based, paid for business model.”

Since the launch of its first online offering in June of 2014, nearly 40,000 students have taken a long distance course from Harvard Business School. “It would have taken 40 years for us to touch that many people in the MBA program,” points out Mullane. “If you believe that there are more than 930 people in the world who could benefit from the HBS to educate better leaders, it clearly gives us a great opportunity to expand our reach.”

The school, moreover, has expanded its online course catalog to a dozen options that range from a three-week-long course on Sustainable Business Strategy costing $950 to an eight-week dive on Scaling Ventures with a price tag of $4,500. HBS’s very first online play, the bundled trio of business fundamentals dubbed CORe for Credential of Readiness, has now been completed by more than 22,000 students, including nearly a third of the latest entering class of Harvard MBAs.

Despite the impressive growth, the school’s online initiative has yet to make a dollar of profit. According to the last annual report made public by Harvard Business School for fiscal year 2017, ending June 30th, Chief Financial Officer Richard P. Melnick noted that “it will take several more years for HBX to become a surplus generating activity.” The school reported that its operating deficit on the digital learning initiative came to $11 million in 2017 on revenue of $12 million, after losses of $12 million on $10 million in revenue a year earlier.

WHAT WILL CAUSE RIVAL DEANS REAL HEARTBURN

Ultimately, the name change was something of a no-brainer, says Mullane, who took over the online operation three years ago. “It was an easy decision to tie the school more closely to what we are doing in the online world. There was a lot of work done on this to decide what we would call it. I wasn’t here in the very beginning but it is fair to say that if you ask around campus at the time there was great enthusiasm for it but uncertainty about how it would all play out. After the past few years, we all agree there is a there there. And once you came to that conclusion, the rest is pretty easy.”

The rebranding—complete with a new logo—comes with the release of an eye-popping survey commissioned by the school of nearly 1,000 graduates of its online courses. The results of that survey are likely to cause a good bit of heartburn among second- and third-tier business schools as well as some top business schools who are in the online, part-time and executive MBA market. While many in academia have long expressed worry about the potentially disruptive impact of technology on higher education, Harvard’s results should give more urgency to their concerns.

The study by City Square Associates demonstrates the value of the Harvard brand as much as it does the value of the education, even though the students who have completed the school’s online courses couldn’t fully leverage the HBS’ prestige on their resumes due to the HBX nomenclature. Yet, in many ways, the career and personal benefits reported by students mirror and, in some cases, exceed those commonly reported for far more expensive and time-consuming degree programs.

A THIRD OF HBS’ ONLINE STUDENTS SAY THEY WERE ABLE TO TRANSITION TO A NEW FIELD

One in four of the respondents said they have received a promotion or a title change as a result of the HBX course they completed.  More than half said it led to an increased scope of work, and even more surprising, one-third said they were able to transition into a new field. No less important, one in two respondents said they have received increased attention from recruiters. Those are objectives commonly sought by applicants to most MBA, specialty business master’s and non-degree executive education programs.

Other core results:

• 96% of students said the online course they took led to personal betterment
• 91% said it improved their professional life
• 90% believe it made them a more confident leader
• 90% said it increased their knowledge of business terminology
• 93% believe it bolstered their resume

The highly positive findings surprised even HBS officials. “It’s understandable that an MBA would give people the opportunity to make a big pivot in their careers, but I never would have expected that students in a non-credit, non-degree course or program would have those kinds of outcomes,” adds Mullane. “What we are doing has had an impact.”

Other business school deans see the far-reaching potential of what Harvard is reporting. “The HBS results are far advanced from the canary in the coal mine,” says Edward ‘Ted’ Snyder, dean of Yale University’s School of Management. “A major shift is underway. Advancements in online learning in combination with the now proven model of relatively small cohorts of online students paying premium prices changes the landscape.

“Lower-tier schools that haven’t established currency with their students and alumni are vulnerable,” believe Snyder. “Students will ask, ‘why not get a valuable credential from a top school?’ And this has huge implications for elite schools as well.  The scramble among the top-tier schools to compete with high-quality online programs is now underway.”

DON’T MISS: HOW HARVARD BUSINESS SCHOOL IS REIMAGINING ONLINE EDUCATION