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

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 HBS was founded five 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 obscured to us 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.”

In the five and one-half years since the launch of its first online offering, nearly 40,000 students have taken 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, 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 HEART BURN

Patrick Mullane, executive director of Harvard Business School Online

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 heart burn 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 of 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 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 on-line learning in combination with the now proven model of relatively small cohorts of on-line 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 on-line programs is now underway.”

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

‘PEOPLE SAY THAT OUR ONLINE COURSES HAVE CHANGED THEIR CAREERS & LIVES’

The new logo for Harvard Business School Online

For many who can’t spend either the money or time in a full-time business program, the online courses could very well be the next best thing. “We tend to get a sense that something can’t be transformational if it’s not a two-year residential program,” says Mullane. “But transformation is really in the eye of the beholder and we need to be cognizant of the fact that the way we think about it is not the way others will think about it. In the main, people say that it has changed their careers and lives.

“The value is there for people who need just enough business education to allow them to ask the right questions and speak intelligently about business,” says Mullane. “Someone who is business inclined and just needs some pointed basic education in negotiations, finance or entrepreneurship, can get what they need and have impact fairly quickly.  I met a guy who was a minister in a church in the south and he realized that managing a church is like managing a business. And he found CORe incredibly valuable. That is where it delivers the value well beyond it’s punching rate.” 

Mullane cites other examples. A person who went from an entry level administrator to a college campus president and gained acceptance to a doctoral program at Johns Hopkins University; . a biochemist who wanted to do a startup and needed the skills, or a dancer who needed to transition to choreographer. “That is why we want to be connected to the brand more closely because of the impact on our students,” adds Mullane.

‘FROM THE VERY START, I FELT CONNECTED TO OTHER LEARNERS IN CORe’

Sheneka DeBerry

Sheneka DeBerry, now 41, agrees that CORe changed the trajectory of her career. “I felt stuck in my career even after having earned two degrees,” she says. “When I enrolled in HBX I was a mother of two young children, ages 3 and 5. I worked at Western Governors University in a support role as a faculty mentor. I was also delivering newspapers in the early hours of the morning to make ends meet for our family.”

She had enrolled in online classes before with little result. “I had taken online courses before and dropped out of them because I felt disconnected to the content and to other students,” says DeBerry. “My prior experience with distance learning made me feel isolated and I quickly lost interest. HBX was different. From the very start, I felt connected to other learners from around the world.”

Within months of completing the program, she was promoted at Western Governors University with what she calls a “considerable increase in my compensation.” Then, in 2016, DeBerry was accepted into Johns Hopkins University doctoral program. “I would never have dreamt that I was smart enough or good enough to be a student at one of the top universities in the county,” she says. “HBX helped me to realize my potential and equipped me with the knowledge to complete doctoral coursework.”

‘THE COURSE IS DELIVERED IN DIGESTIBLE BITS FOR THOSE OF US ON-THE-GO’

Jenna Pollack, a New York-based dancer, took CORe to shift into choreography and production

Last year, DeBerry was recruited to turnaround a campus at a career technical college. “Not only did my earnings increase once again, the knowledge I gained at HBX played a significant role in my success managing campus operations. I understood how to read P & L statements and how to read and interpret data that influenced my strategic plans for the campus.”

Jenna Pollack has a similar story. A freelance dancer in New York, she took CORe during the summer of 2016, hoping to use it to shift her career toward the choreographic and producing side of the field. While she first found it difficult, Pollack says it ultimately has paid dividends. “For a more untraditional candidate like myself, I would warn that one’s curiosity has to be really piqued and aligned with the course to make it through,” says Pollack. “Still, the value placed on being an active member of the online community through discussions was invaluable to my understanding of the material. It also drew me back in when I was feeling frustrated, or like I didn’t belong in a business class as an artist. The course is set up to relay information in many ways for many types of learners, and in digestible bits for those of us really on-the-go. “

The program, she adds, exposed her to business language and thinking that she previously would have considered elusive. “I feel like now I am able to plan ahead in thinking about my career in terms of budgeting, and am making wiser economic decisions for the long-term,” she told Poets&Quants. “This feels especially important inside of a freelancer culture where it’s so easy to get caught up in living gig-to-gig. Taking the course didn’t debunk my artistic intuitions or visions, but gave me a way of speaking about them that I feel has set me up to be taken more seriously in my widening professional circles.”

ABOUT ONE THIRD OF LAST YEAR’S INCOMING MBAS TOOK CORE

Of the nearly 40,000 students who have taken HBX courses, 22,472 of them have done the very first CORe program that launched in June of 2014 with a short of more than 600 students. Tuition for the initial cohort was $1,500, though 85% of those enrolled were given need-based financial aid. The CORe program now costs $2,250.

“Last year around 300 incoming MBA students were required to take CORe Last year around 300 were required to take COre, about a third of the class,” estimates Mullane. “A nd then a significant portion of the class took it anyway. A lot of them said a faculty member said they got the top grade in their financial reporting and control course, and they couldn’t have done it without having been in CORe.”

The online student survey, according to Mullane, also reconfirmed the value of Harvard’s case study approach to learning business. For survey respondents who had other online learning experiences, 94% said the Harvard courses were more impactful. “That is largely attributed to case learning,” believes Mullane. 

‘CASE LEARNING REALLY WORKS’

“The case method of learning really works and people love it. I tell people all the time that the case method was 100 years ahead of its time because if you think about online learning today it is about storytelling. The case method effectively teaches business concepts by storytelling, by putting you in the shoes of a protagonist. I have come to believe it’s really the only effective way to teach online.”

The cohort nature of HBS’ programs may put off some who want more flexible, on-demand online coursework. Mullane acknowledges that some potential students may prefer other options in long distance business education. “At first, you might consider that a negative because of the lack of flexibility,” he says.

“We are not on demand. You have to sign up for a start date and a cohort. So you have a bounded time from start to finish, and we do that to drive students through the coursework at the same pace. Once people do it, they really value it significantly. They develop relationships with their fellow learners and many of them go far beyond the course and into the real world with long-term friendships.” 

HARVARD EXPECTS TO LAUNCH FOUR NEW ONLINE COURSES IN THE FIRST QUARTER OF THIS YEAR

The one time HBS invited students enrolled in its online courses to a live event on campus in 2017, some 500 people showed up for the one-day conference to meet their peers face-to-face. “When we did it virtually last year, a lot of people complained. We will do it in April this year for current and past participants. I think we will have to put a cap on it because the pool of people is larger, and I suspect we won’t be able to handle all the people who want to come.”

Looking ahead to the near future, Mullane says the school has four new courses teed up in the first quarter alone Two of them are on leadership, and then there is another global business course that takes a look at business and strategy from a global economic perspective.

“The other thing you will see in the next couple of years is that we are finding ways to integrate back into the MBA program some of the stuff we are doing online,” says Mullane. “That will be an important milestone. I suspect that will happen more here over the next couple of years.”

This infographic is being released to promote the new rebranding effort of Harvard Business School Online

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