How Harvard Business School Is Reimagining Online Education - Poets&Quants

Bharat Anand, a Harvard strategy professor, provokes a lively discussion

Before Harvard Business School launched its digital learning initiative five and one-half years ago, the school looked inside its ranks for the ideal professor to head up the effort as faculty chair. It turned to one of its most popular strategy professors, Bharat N. Anand.

After all, he had been studying the impact of technology on old media companies for years, having authored numerous business school cases on the topic as well as a newly published book, The Content Trap: The Strategist’s Guide to Digital Change. If higher education was about to experience the digital disruption that had already roiled the media industry, who better to head up the academic side of the school’s digital learning efforts?

But Anand did not merely lead the academic efforts, he became one of the very first HBS profs to enter the virtual classroom, creating and teaching one of the first online classes offered by Harvard Business School,  Economics for Managers. That course was one of a trio of offerings that formed the school’s first online program in. business basics called CORe for Credential of Readiness.

NEARLY 40,000 STUDENTS HAVE NOW TAKEN ONLINE COURSES FROM HBS

Of the nearly 40,000 students who have taken online courses from Harvard business School, slightly more than half of them have done the very first CORe program that launched in June of 2014 with a short of more than 600 students. Only this week, the school rebranded its online initiative, adopting the brand “Harvard Business School Online” to replace the initial choice which has lasted until now, HBX (see Why Business Schools Should Worry About This New Harvard Business School Study).

In this wide-ranging interview with Poets&Quants Founder & Editor-In-Chief John A. Byrne, Anand reveals some of the earliest thinking at HBS about the online space, the most important lessons the school has learned, and has its digital learning initiative has evolved. The interview, on the campus of the Harvard Business School in Boston, occurred at the annual client conference of C-Change Media in the spring of 2017.

At this point, HBS 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. 

The Henry R. Byers Professor of Business Administration and head of Strategy at Harvard Business School, he has been the faculty chair of HBX and Harvard Business School Online, the rebranded new identify for the school’s long distance learning offerings, since September of 2013. Anand has a BA in Economics from Harvard and a PhD from Princeton.

John A. Byrne: So, it was January of 2013 and Harvard Business School had decided on a proprietary software platform to deliver online learning. Why?

Bharat N. Anand: Just a little bit of context: Harvard and MIT had gotten together about a year before that. It was important for every school to make a decision about what to do with online education

First, like, most faculty everywhere, we weren’t sure what this trend was and where it was going. It was also clear that besides universities, the space was crowded. So why should we enter and how can we differentiate ourselves? Very quickly I think we realized that it’s not just going to be ideas and content. It’s got to be something about the pedagogy at Harvard Business School. The architecture of these classrooms and case-method teaching really are in the DNA of HBS, and now HBX. 

Byrne: And there were two principles: action learning and case study.

Bharat N. Anand, faculty chair of HBX

Anand: There were three, actually, which I’ll come to. So, it was gonna be something about the pedagogy, not just content. We looked at a lot of platforms, and very few allowed us to leverage case-method learning in a digital format. 

We were very reductionist. We said, “Look, if we try to mimic what happens in the classroom, we will fail.” But we boiled it down to three principles. The first was using real-world problem-solving. Every case starts with someone trying to figure out what to do. Then inductively you back it in theory.

The second principal was interactive learning. Everyone’s all-in in these classrooms. Everyone’s participating. It’s not just lecture. And the third was social learning, which is peer-to-peer. 

We realized that there’s no platform out there that … allows us to do what we want, and that’s when we started to build our own.

Byrne: Which is a pretty big and bold move, requiring a good amount of investment.

Anand: If we had known how much work it is to create these platforms, I’m not sure we would have done it. We had three staff and three faculty members. We got together to create these courses on this platform. We thought of it as a side project, not as the 24/7 operation it was. All of us had full-time teaching and research responsibilities as well.

 Byrne: Often in the Academy, faculty tend to be skeptical, particularly initially with an online learning initiative. Were you a skeptic or a believer?

Anand: I’d been studying digital change for 20 years, focusing on the media entertainment space. So, the possibilities of technology were exciting to me. But you’re right. Most of the faculty was pretty skeptical. Many platforms in online education, then and now, were going after “the metric of reach,” or scaling up what you can deliver; rather than teaching 100 people you can teach 100,000.

We felt that reach was not the right metric for us, that we have to figure out how to engage people online. Engagement was our main metric. I think the pursuit of reach is the Achilles’ heel of most digital startups. Business models that ended up being buyable often rely on deeply engaged viewers, readers, listeners, customers.

Byrne:  That flies in the face of the old theory of first-mover advantage, where you’re willing to rack up loss after loss to gain market share.

Anand:  First-mover advantage helps when you’re in a market with very strong network effects. If you’re the first social network, or the first people in the marketplace, it’s fantastic. You get scale, and it’s hard for someone to compete.

When we look at online learning, there’s no advantage to scale. It doesn’t make a student sticky to one platform. He could take one course on Coursera, another on Udacity and a third on edX. But I’m not going to switch from Facebook to Google Plus. (In fact, no one did.) Because all my friends are on Facebook. I think first-move advantage helps when you have scale in the form of a community or network.

Byrne: And having studied the adaption of technology by the media industry, you knew the power of technology. But you also knew its disruptive nature. In my last three years at Fast Company and Businesseek, I had to reduce expenses every year and that often involved losing staff.  You also saw other schools take completely different paths. For example Wharton is probably the most aggressive pursuer of MOOCs. They decided to give content away for free, just as old media did. Early on, you decided to avoid that. How did that come about?

Anand: The decision started with, figuring out how to engage learners online with case-method-type pedagogy. This is pretty fundamental. Business models arise once you figure out how to create value for customers. Right? They don’t precede that conversation.

Building this platform turned out to be difficult and costly. Now you’ve got to figure out how to recover this cost. That conversation didn’t start with a complex analysis. Instead it was literally: Do we charge $50? $500? $1,500? We were trying to create a sustainable enterprise.

Someone suggested that we could charge about $1,500 but also give financial aid to students, allowing us to balance pricing with access. We were looking at all kinds of models: residential bootcamps, pre-MBA bootcamps for board, like Tuck, which I think is somewhere in the $7,200 range. We looked at China, where accounting courses were priced at $100, $200, and you have thousands of people taking them. We settled on $1500 but are still trying to figure out the price.

The control room for HBX Live! at public broadcaster WGBH

Byrne:    I was shocked at how low the price was, because it’s probably the least anyone could pay to have Harvard Business School on their resume.

Anand:   Yeah, and at that time it was $1,500 more than Wharton. People were asking: “How can you charge $1,500, when Wharton’s free?” And we do regard Wharton as a peer. But Wharton’s not our competition in this space. We are trying to create an experience for a learner that is highly curated, and holds your hand, from beginning to end.

Byrne:   In June of 2014 when the beta launched, you made it available to undergraduates and alumni of colleges in Massachusetts and then followed up with the B2B test. What did you discover initially and how has it evolved?

Anand:   About 15% to 30% of our students come here without deep knowledge of business. We’ve got to evaluate: “Are they ready for day one of the MBA program?” So we started by creating three pre-MBA courses: financial accounting, business analytics and e-commerce for managers. We created these three courses online, what we call CORe: the Credential of Readiness. The idea was to create a 10-to-11-week program for students to get up to speed when they come to campus.

There was no reason to keep CORe limited to our students. In fact, the first cohort was not our students. It, as you said, was a pilot, with students restricted to Massachusetts colleges and universities. The logic there was if something goes wrong, we can reach out to them. 

We had about 600 students in that first cohort, and we learned many lessons. The first was sometime in April, just after we had announced the launch of HBX. We were sort of twiddling our thumbs, waiting for applications to come in. Then we realized we didn’t get the word out. We had a “silent marketing strategy.” We got one application, and he wasn’t even eligible, because he was from San Diego.

Byrne: So much for notion, “Build it and they will come.”

Anand: I learned three big lessons: The first thing is about engagement. On the first day we started getting feedback from learners saying, “This is unlike anything I’ve taken online as a student.” One Harvard biology undergrad logged in at noon that first day and finished the first module of all three courses by 9:00 p.m.

Obviously, that is really quick, and she seems pretty smart, but had we gotten it wrong? I got an email from her, saying “Professor Anand, I just wanted let you know I’ve viewed the platform for the last nine hours at a stretch. I can’t tear myself away.”

It was one of those amazing moments where, you know, this is a year-and-a-half effort, and we got it right. But we still had problems. We released the modules over time and had encouraged students to do a little every day. Of course, when the module deadlines came along, everyone tried to finish the modules at the same time, and the systems crashed. So we had to make those more scalable and robust.

We were looking at two metrics from that first cohort: engagement and completion rates. Completion rates ended up being about 83% to 85%. What’s interesting is we’ve built the platform so we had no live faculty interaction with the students. I think this is really important as a design principle. Online education right now involves a trade-off between reach and engagement.

You can broadcast a TED talk and reach billions of learners. Typically, those (reach) models have low engagement. Faculty conversations with small groups of learners are fantastic for engagement, but not so good for scale, because the faculty is a bottleneck. How do you break that trade-off? For us, the design principle was highly engaging outcomes with no live faculty. Otherwise we won’t scale. How do you achieve that with social learning?

We were relying on the learners to go to the discussion boards and help each other with their questions. We thought about searchability, fun, and incentives, and we got 75% to use the discussion boards. We worried that they wouldn’t answer the questions the right way, so we had content experts ready to jump in if the discussions went wrong. The number of times we had to jump in during the first three weeks was zero.

Byrne: In fact, wasn’t it even difficult to resist jumping in?

Anand: Very difficult. One of our most experienced faculty told us one line when I came here 20 years ago. He said: “Trust the students.” Your instinct is to jump in and correct them. Let students discuss with each other, and they’ll figure it out.

It’s even harder online, because you’re not seeing the students. You see a comment which may not be right, and you feel like jumping in. But we waited and sure enough, the conversation converges. It’s very humbling. They don’t need us. One of the first people to take the course was the head TA for computer science 50 (CS50), which is the most popular MOOC at Harvard. It has 300,000 students and 100 TAs, so that every time you answer a question, within five minutes, a TA jumps in.

He said, “Your design principles were literally the mirror image of CS50 in every respect. Completely the opposite.” He didn’t realize that so many TAs might be quashing the incentive for people to answer each other’s questions.

Byrne: Actually, that’s a big surprise, because you often have undergraduates with no full-time work experience. They can’t take what they’ve learned from the workplace into the classroom.   

Anand: That’s right.The first cohort was fairly young, and they did really well. We thought they were an exception because they were from Massachusetts, which has some great universities, colleges and kids. But we opened CORe globally six months later to anyone, anywhere, and got 900 people from 300 universities, who did better than that first cohort.

Byrne: Were the completion rates as high as 83% to 85%?

Anand: Completion rates have stayed steady now for about … 19 waves or more. They remain roughly 83%. It starts shaking our assumptions about the distribution of talent and where it lies. 

When we opened up globally, we said we’d restrict CORe, a pre-MBA program, to people three, five, and seven years out. A third of the applications we received were from people who were over 30 years old. Our first instinct was to reject them. Then we started looking at the applications, and this was a big learn. We got people from all walks of life, physicians, lawyers, educators, airline pilots, real estate developers, software engineers, school teachers. And the age distribution spans 18 to 60 years old. They all said they never learned this stuff before.

Byrne: That’s fascinating and rewarding.

Anand: We got rid of that residential boot camp, which was called analytics and replaced it with CORe, and required 150 would-be MBAs to take it before going into the first-year curriculum at HBS. We decided to open it up to the whole MBA class, because there might be other students who couldn’t get into the residential boot camp because on paper, they didn’t need it.

Our admissions director didn’t approve: “No student will spend 10 weeks in the summer on an online program before they come to campus,” she said. Anyway, we gave them the option. That first year, 350 entering MBA students took CORe; an extra 200 beyond those required to take it. A third of our MBA class now takes CORe, in some form, before they come here. We run into students who say, “Thank you for creating CORe. I was a banker, worked in Wall Street for four years. I’ve taken finance. I thought I knew this stuff. I actually didn’t.”

Byrne: So you can use CORe to replace the old residential boot camp to even up incoming students.

Anand: This is why we created CORe. You might have taken four years of economics or two years of accounting and you still don’t understand it. We have an executive program (PMD), for people who have, say, seven-to-10 years of experience. The head of this program wanted one of the CORe courses as module zero for that program because he didn’t think they understood the material.

I thought he was stretching this. These are executives, who have been out in the world for maybe 10 years. But they loved it. Then the faculty chair of the General Management Program (GMP) program wanted it and now we’re talking with 15-to-20 years of experience. Finally, for the advanced management program, which is our senior-most executive program with people who have 30 years of experience, wanted it. They’re now taking the financial accounting course before coming to AMP.

CORe takes a cohort-based, case-driven digital platform beyond the confines of Harvard Business School (Photo Credit: Jeffrey Wai)

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 firm that 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.

The third is 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?

Bharat N. Anand

Anand: No, I’m thinking about Harvard Business Publishing. 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 wing it. There’s no such thing as winging it in an online course. 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 missing either the very senior managers or the startups. Neither group can take a week 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 evangelists in a sense. 

At least 90 faculty have toured 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 kids could never get up to speed with analytics. 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.        

A screenshot of the CORe program

Audience Question 2: Hi, I’m from Cornell University. In 2014, eCornell launched a MOOC in global hospitality management. It was incredibly successful. We saw around 25,000 registrants in two years, but what we saw was a decline in registration for our traditional certification. How should we approach setting up a secondary I secondary MOOC if we want.

Anand: Let me offer some principles: With CORe, the first question was, “What’s the problem we’re trying to solve and for which learner?” The answer for us was, “We want to create something which really captures what we’re offering here.” Before they come here, there’s a challenge of getting up to speed. You almost have to flip the process around and think from the learner’s aspect. Are there places where you could intervene? You know, a service before they come, or after they’ve come that might be complementary.

When we think about lifelong learning for instance, there might be places after they’ve got the certificate, where we could offer one case a month and call this the “Best of 2019 Series.” The learners can take 10 exciting new cases that the faculty are writing in 2019. It’s like MBA-plus. The key point is not thinking about content, but about the learner experience, and where you can intervene. 

Byrne: I always thought that one of the smartest decisions was to avoid creating a program that competed with another, to actually enter a new space, where you hadn’t been before. That way you couldn’t be threatened, and it couldn’t even remotely cannibalize anything you were already doing.

Anand: We want to avoid even remote cannibalization partly to avoid the headaches that come with those conversations. If there are opportunities to actually do things in adjacent spaces, why not? 

Audience Question 3:  You emphasized that engagement is crucial and should come before content. What were some best practices, or how did you make sure that you got up to the right level of engagement?

Anand:  Twelve months before we launched, we had three MBA students working with us, as an independent study. After three months, I realized we weren’t listening to their perspective, which was: “We don’t just learn from faculty in the classroom. We learn from each other. We learn in the study groups outside the classroom.”

They were talking about social learning. We had written that down as a principle, and we had ignored it. This is what I call the “content trap.” 

How do these things manifest on the platform? The first stage is a global map where all you see is pulsating bubbles of who’s on HBX at that point in time. When you click on any bubble, It tells identifies the nine people in that region who are logged in. It shows their profile picture, and you can message them.

The first day we launched CORe, we had 300 people logged in and 30,000 profile views. They all wanted to check each other out. That’s the first step in engagement. You’ve got to know who the other learners are. If they’re all anonymous, it becomes pretty lonely. Step two is making the material come to life. We started out each lesson with a real case study as opposed to the nine-page, text-based case.

We have what we call the “three-to-five-minute rule.” You can’t go for more than three-to-five minutes on the platform without doing something. No video is longer than three minutes. Text can be read in three minutes, and is peppered with polls, reflection questions, and interactive exercises. The social learning side is through engagement with each other. You can ask questions of each other, get to know each other. 

We have about 10 features on the platform that would capture this notion of engagement in some way. Say, you’re trying to learn the concept of willingness to pay in the econ course. Most faculty would go out and tape a video explaining what willingness to pay is.

We do exactly the opposite. We’d start with a ticket reseller in Boston saying, “I’m selling tickets for the Patriots. I know what inventory is. I don’t know pricing. How do I figure that out?” It’s a three-minute video. We say: “Here’s a snapshot of his website and here is the process. What do you think? Is the price too high? Too low?”

Students quickly realize that they can’t figure out the right price unless they know the willingness to pay. So you back into the concept. We then give them five other examples to play with. After they’ve gone through this, they’re now looking for the answer. They’re like, “Okay, so what should we take away?” At that point, we interpose the faculty video. 

 When we first launched CORe, we noticed that learners were forming meet-ups in cities around the world. We didn’t anticipate this. We reached out and asked if we could facilitate these meet-ups? But they weren’t interested. The member of this 30,000-strong community are getting to know each other. 

Anand: Once a year, we have an event, called ConneXt, where we invite all the HBX learners who’ve done one of the courses to come to campus and get to know each other. Roughly 600 people come every year from Australia, Kenya, India, Qatar, Denmark. 

Byrne: Bharat, thank you so much.

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