Byrne: What did you do that didn’t work?
Anand: There’s two capabilities that you need in an online startup, which most of us don’t have at universities. One is deep consumer marketing. We hired a marketing director who is one of our graduates from 20 years ago. The second is IT. We have IT on campus, but platforms which are scalable and robust and can handle hundreds of thousands of people are totally different.
There is a third challenge too: figuring out when to integrate online with the rest of the school. I taught corporate strategy for nine years, and one principle was: Make sure you get the business units right before you do anything. So we wanted to make sure we first built out HBX. But there’s always the temptation to leverage it across the whole school. You can’t do it too early.
Byrne: But you want more than just a third of the entering class to take CORe, right? How would you integrate it? Into the MBA curriculum?
Anand: I’m referring here to Harvard Business Publishing and Executive Education, not just the MBA program .Another idea gets at culture and process. We spent about nine months creating each of these courses. It’s a lot of effort, partly because you’re trying to hard-code the pedagogy from the classroom into these courses.
If I’m teaching a course or a case, I might spend a few hours thinking about the plan and who to call and how to direct the discussion. If something unexpected happens, I can react on the fly. There’s no such thing as reacting on the fly in an online course where there’s no live faculty interaction. You’ve got to anticipate everything, and make it flexible but robust. It takes us a long time to create these courses.
Now that we’ve had some of our more experienced faculty creating follow-on courses, we have about nine courses on the HBX platform, from finance to negotiations to entrepreneurship. I don’t think we realized is what it takes to create an online course, and how it’s so different from residential teaching.
Last year, we realized this, and now we’ve created processes to guide the faculty and research associates as they go along. Processes, culture, all the usual things about startups, are probably things we can figure out. The executive director is really leading this on a day-to-day basis.
Byrne: One of the classic dilemmas in any successful organization is that you’ll cannibalize existing products and services with new technology. How is that filtered into your thinking about expanding HBX into the Executive Education market. HBS is incredibly strong there, with a lot of revenue and profit.
Anand: It’s a great question. Early on, we had an advisory group for HBX, which had the Dean, the three of us, who were creating CORe, the head of the MBA program, the head of Executive Ed, and the head of publishing. Everyone who might be impacted by HBX. We had tried to avoid cannibalizing anyone else with a pre-MBA program that is perfectly complementary.
Having said that, it’s a concern that when you’re creating a financial accounting or business analytics course, that Executive Education, say, may have covered the same material. In these meetings, I could almost count the time it would take before the first question was raised about cannibalizing. We decided early on we were not going to put the first year of the MBA program online. We used the pre-MBA courses, some Exec Ed and some disruptive strategy. The overlap is really, really small.
There’s a classroom about a mile from here. It has 60 seats and 60 TV screens, where we can run case discussions with people anywhere in the world. We want to make sure that we don’t overlap with Exec Ed. But that leaves so much space. For example, Exec Ed has many courses on strategy, but we don’t really have a course entirely on strategy execution. We’re gonna launch one through HBX Live in the fall.
We have a course on leading professional service funds. But, there’s only so much you can cover in that one-week course. There’s a lot of material that’s left out. Let’s say for junior partners at law firms and accounting firms. That’s what we’ll move to HBX Live. Uber went through some convulsions last year. They were trying to re-anchor all their 3,000-or-so senior managers around the world. It’s really hard for them to go to headquarters and do the training, so they used HBX.
Anand: At Exec Ed, we’re sometimes missing either the very senior managers or the startups. Neither group can take multiple weeks out of their schedules. For them, online or digital is fabulous. So, we’re trying to think of complements. Our Exec Ed program has a capacity constraint, so we have to turn away companies, many of whom are potentially fabulous clients. A lot of organizations want to train their incoming hires, but don’t have the resources to do it for 300 or 700,000, people. The online platforms again are a complementary solution.
Byrne: In the last fiscal year, ended June of 2017, HBX had $12 million in revenue and a little over 8,100 students. The end report says that you’re expecting a 50% increase in next year. That’s pretty ambitious, right?
Anand: In this past year, yeah. The growth is coming from two places. One is CORe, our flagship online program. It has a potentially massive market. It’s not just for kids going to business school, but for people throughout their work life. The other growth comes from a product pipeline of three new courses a year.
Byrne: What does this look like in five years?
Anand: After four years, we’ve had roughly 30,000 people go through HBX online. I don’t think it’s a stretch to think that number would triple in five years. And we have, let’s say, seven-to-nine courses in the portfolio right now. So again, you’re up to about 18 in three years. At that point, other possibilities can kick in such as subscription models.
I grew up in India, where education is really important, and to be able to see this impacting at scale is personally satisfying. I was a student of digital strategy, and I was writing this book called The Content Trap. A lot of the ideas in the book ended up informing my thinking around HBX, and vice versa.
Byrne: Terrific. Well, thank you for sharing your perspective, the story of HBX. I’m sure we’ve all learned a lot. Does anyone have a question or two?
Audience Question 1: Was it a challenge to get the faculty on board with this? I’m in Rotterdam School of Management, and developing blended or online programs was a challenge. Some of it also boils down to faculty. Were there any challenges there?
Anand: As I said, Nitin Nohria, the Dean, had set up a small group of faculty and staff just to work with us. By the time we launched, 95% of faculty still had no idea where we were. A month before launch we described HBX to the full faculty, but at this point we had a platform and courses that were ready to launch. Most importantly we leveraged the DNA of the school with case-method teaching
What is your DNA, your context that you’re leveraging online? That’s got to be front and center in whatever you do to get faculty behind it. To create a startup like this, you don’t want to get permission. You want passion and protection. Early on, I had to knock on some doors to get faculty to create courses. Now we have probably more faculty wanting to create courses than we have capacity, and now we’ve got nine faculty, one from almost every department, creating courses. They become cultural evangelists in a sense.
At least 90 faculty have taught in HBX Live over the past four years. The engagement metrics, completion rates, NPS scores, obviously help to convince the faculty. Then there are stories. One faculty member said students could never get up to speed with analytics in a 9-week online course. After we launched CORe, she came to us and said, “We have to hold those students back. They are running ahead with the material.”
It’s been a journey. The only relevant question for us is when are we going to break even, which will be soon.