A Research Paper on Online Education Industry, big players in EdTech sector, MOOCs and their possible business model and how Harvard Business School can become a market leader in online education space.
Online education, EdTech Industry, MOOCs and Harvard Business School's Online Education Strategy
A Research Paper on Online Education Industry, big players in EdTech sector,
MOOCs and their possible business model and how Harvard Business School can
become a market leader in online education space.
HBS has a legacy of energy and innovation, in its own words- “everyday HBS strives to redefine the
nature of management education and invent the future of business”. With Harvard’s reputation as
world’s most elite institution, everyone around the world echoes the similar sentiments for this 100+
year old business school. Among all the wonderful offerings, HBS primary focus has been on offering
following academic programs:
MBA An intensive, two-year residential program leading
to an MBA degree
Executive Education More than 80 programs preparing talented
professionals from all over the world for new
levels of leadership in their careers and within
their organizations (in class)
Doctoral Program Eight full-time programs leading to a PhD or DBA
Yet, over all these years there have been significant technological developments that have paved the
way for the disruption in the education industry, and one such significant disruptive model that has
emerged is- the online learning methodologies.
Online Education Industry – What is really happening there?
Let’s look a little deeply into the online education industry. Here are some insightful industry updates-
The Sloan Consortium an organization dedicated to furthering online education, releases annual reports
on the quality and growth of online education in the United States. Their first report, entitled ""Sizing
Opportunity", was released after the 2002 - 2003 academic year. The report touted the then-impressive
number of 1.6 million students taking at least one online course in the Fall 2002 semester. This was one
in every ten students.
Sloan's latest report, "Class Differences", covers the 2010 school year and the results are amazing. The
report states that now 5.6 million students took at least one online course in the Fall. This is a 350%
increase from Sloan's first report and a 21% growth rate from the prior year's 4.6 million students. In
just one year, one million more students got online. This is a record increase according to Sloan's
reports. In 2002, the number of students taking at least one online course was roughly one in ten.
Today, it's almost one in three. Just as the Internet has supplemented industries like banking, travel and
real estate, it has contributed massively to education.
Now focusing specifically on Business Education, you will again notice a massive upward trend of online
education. From the data collected by online learning platform, Eduson, and reports from Financial
times 2012, it shows that the top online MBA programs already attract 3 times more students than the
top traditional MBA programs.
The question many ask is, "is online learning effective?" When polled by Sloan, 66% of academic leaders
rated online education's learning outcomes at the same as or even better than face-to-face, traditional
classes. This number is higher when only public institutions are polled. This can be attributed to the fact
that public learning institutions have been quicker to integrate online learning into their curriculums
than their private counterparts have been. The opinion of public university leaders' is that, over 75% of
the time, online learning is just as good at educating students as traditional courses if not better.
Opinions are changing across the board, as 63% of academic leaders said they believe online education
is integral to their institutions' long-term academic strategy. This is the highest positive response to this
question in Sloan's eight years of conducting this survey. In contrast, only 12% of academics disagreed
with online education as a crucial part of their strategy - the lowest response yet. Online education is
growing and it is here to stay. (Source- http://www.wwwmetrics.com/education.htm)
More recent data and why online education is important?
A 2012 Babson Survey of online learning revealed that over 6.7 million students were taking at least
one online course during the 2011 fall term, an increase of 570,000 students over the previous year.
Based on responses from over 2,800 academic leaders, the survey, "Changing Course: Ten Years of
Tracking Online Education in the United States," also found that online learning was critical to the long-
term strategies of 69% of chief academic leaders.
77% of academic leaders rate the learning outcomes in online education as the same or superior
to those in face-to-face.
Affordability of Online Education
One of main reasons for the upcoming of online education is low cost availability. Generally, the way
online education has been offered it’s clear that online courses are more affordable than offline
counterparts. From the data collected by online learning platform, Eduson, and reports from Financial
times 2012, it shows that the top online MBA programs are way cheaper than the top traditional MBA
Big Industry Players Other Than Traditional Education Providers
Here is an interesting research on the Education industry, where we will be focusing on the players
other than the traditional education providers such as Universities and Colleges those are extensively
using online learning as a model of knowledge transfer. Looking at the research will give us an idea of
how the online education industry has blossomed beyond the typical service providers and how this is
such a huge market with the potential of accommodating both traditional and non-traditional online
The top 5 revenue earners of the 2011: Pearson ($7bn), Apollo Group ($4.5bn), Benesse Education
($3.7bn), Laureate ($3.2bn) and Kaplan ($2.5bn) clearly show that there can be many successful players
worldwide in the education industry. One common prominent aspect of each of them is that they all
have adopted the online learning methodologies quite well and still working to enhance the learning
experience using new technologies. The writing on the wall is- “Online education is their key area for
Harvard Business School Offer Online Learning?
Given the current market environment and the opportunities in the online education world, it would be
naïve to say that HBS should not offer an online learning program. There is certainly a growing
popularity for online education around the world, especially in the developing markets due to its
accessibility and affordability.
Online education is a significant “disruptive technology.” It gives an exciting opportunity to HBS to
provide a mixed-model, combining in-residence and online programs. This could result in the ability to
reach more students. It could, potentially, result in higher facilities utilization. The online element of
such mixed-model offerings could result in higher flexibility for the students, again making such offerings
Exclusively online offerings take the education model further, virtually eliminating the need for physical
locations and making the course or program offerings almost totally flexible. It should enable providers
the ability to reach large numbers of students without the need for expensive physical plants, making
the education much cheaper for the student customer. The MOOC model, in theory, could reach a
virtually unlimited number of students, around the world, on their individual schedules, at very low unit
The major challenges have to do with the quality of the course offerings, accreditation issues, the
monetization of the model (how do the suppliers get paid by the users), the guarantee that the students
purportedly taking the courses/programs are, in fact, doing so, testing procedures, and, finally, the
offering and recognition of online degrees.
Online-learning SWOT analysis for HBS:
HBS brand image and elite business
education provider status
Harvard university already offers online non-
business courses as part of its non-profit
collaboration with MIT on EDX, HBS can have
faculty development program with Harvard
university to build online offerings from its
EDX’s experience and platform technology
can be great help to HBS to launch business
For HBS, it would be easier to attract venture
funding for development of the online
technology infrastructure because if its brand
HBS have a world class faculty to offer the
HBS’s vast alumni network could be of great
help for setting the technology infrastructure
as well as online lecture offerings
Setting up online technical infrastructure will
involve a lot of investment
HBS’s in-experience in the online learning
space will pose a challenge in designing the
HBS could face internal resistance, not all staff
within may be fully engaged and supportive of
Lack of online-content will lead to a lot of time
consumption of the professors’ extra time and
will cost to HBS
Availability of faculty, beyond their research
and teaching schedules
Could cannibalize traditional class room
Ability to reach more students worldwide
Could evolve more engagement of students
with the subject matter experts and vast peer
group using the technology
Effective experience for the students, as they
could pause the videos anytime and see
multiple times until they understand
Possibility of providing a mixed-model,
combining in-residence and online programs
Collection of massive online learning data,
which could be used for research of the
learning behaviors of the students
Upcoming market offers, higher growth
More flexibility, eliminating the need for
Could become a pioneer for online education
and may be create global standards for
education and sell it to other universities
E-learning being seen as ineffective
Organizational change e.g. departmental
restructuring, work pressure may cause faculty
Monetization of the model
Competition from other elite business schools
such as Wharton, Stanford and independent
service providers such as Coursera etc.
Verification of students taking the online
courses, making sure they haven’t cheated
Online education not seen of value by
Assessment and evaluation of so many online
We will look into key weaknesses and threats in detail, but before that look into few of the options using
which HBS can go into the online learning space.
Possibilities for HBS in Online Learning
These are following possibilities of entering the online learning space for HBS-
1. Using it for the students on the campus
2. Using it for the students not on the campus
3. Share/Sell it to other universities and colleges
4. Open Source alternatives: MOOCs
1.Using it for the students on the campus
Online learning provides a wide possibility of providing a mixed-model, combining in-residence and
online programs especially for the full time students at HBS in order to enhance their learning
experience. One of the most famous concepts, which is finding huge acceptance among the full time
university students is the “Flipped Classroom” concept.
Flipped classroom is shifting some course content online to free up classroom time for discussion. The
expectation is students watch the videos before coming to class and have useful learning discussions
during the lectures, which saves a lot of time doing more relevant stuff during the class time.
The “flipped classroom,” as the idea is commonly known, is a relatively new approach. Texas A&M’s
Mays Business School has experimented with it. Some faculty members at UNC’s Kenan-Flagler Business
School now require students to watch an online lecture before class and Dartmouth’s Tuck School of
Business is employing the flipped classroom for economics, statistics, finance, and operations courses.
Columbia Business School is already using it good effect for its residential MBA program (Source:
and Stanford is another prominent school doing so, Stanford calls this an approach where students do
their class work at home and home work in the class (Youtube video: http://youtu.be/Gm9NxzgoOQo)
2.Using it for the students not on the campus
HBS could purely adopt online learning for students not on the campus, the biggest flaw for such an
approach comes from the MOOCs (Massive Open Online Courses), because they are offered on pretty
much no cost at all and to run an online program when there is already substitutes available at no cost,
it doesn’t make a sense to go for such a delivery model. For instance, Wharton’s first-Year MBA courses
are already online for free on Coursera (Source: http://www.businessweek.com/articles/2013-09-
13/wharton-puts-first-year-mba-courses-online-for-free).This model certainly won’t be possible in
the given market environment.
3. Share/Sell it to other universities and colleges
This approach hands in a great opportunity to the HBS. Like the HBS Case Study, with its elite brand
image and standards, HBS could become a pioneer for online education and sell/share its online
education content with other universities. We possibly could see an online version of Harvard
Publication Press, selling online learning content. It would certainly take some time, but there is no
other business school in better shape than HBS to take advantage of such an opportunity with its
current legacy, network and trust all around the world.
4.MOOC- Massive Open Online Courses
Online courses, like MOOCs, are challenging the foundations of traditional education institutions. With
the cost of college prohibitively high in the U.S. and nearly half of our nation’s youth unsure that their
college education has improved their chances of finding a job (McKinsey), access to free online courses
provides another avenue for students and the unemployed to acquire and/or upgrade their skills as they
look for employment.
The second advantage is adaptability. The very nature of online education allows it to quickly adjust to
the ever-changing needs of industry. Online-education companies like Udacity, have formed
partnerships not only with traditional education institutions, but also with businesses. For example,
Udacity recently formed a partnership with AT&T and Georgia Tech for a master’s degree in computer
science—for only $7,000. This ability to quickly bring new courses to students can help ensure that they
are being trained in the latest technologies that are required in the workplace.
Though, the bigger issue in MOOCs is how to make money? Till now there is no sustainable revenue
generation model that could be adopted into MOOCs offerings. Due to the fact that most of the MOOCs
courses are offered for free, there is not much money that could be made out of it to sustain the
operating costs alone.
The accreditation of MOOCs courses is another problem, which means the credits achieved online are
irrelevant to the universities. This puts a question mark on moocs credibility in general.
MOOCs really work?
A market research shows that 90% of the participants don’t complete the course. A survey of students
by the market-research company Qualtrics and the education technology provider Instructure seem to
confirm that trend. Seventy-five percent said the main reason they signed up for a MOOC was that it
didn’t cost them anything, while 29 percent of those who dropped out said they got too busy to
continue, and 20 percent said they lost interest (Source: http://nation.time.com/2013/09/12/all-hail-
Another important aspect is- Are MOOCs of any Help in Job Hunt? The answer isn’t the one many
students want to hear. Companies including Intel (INTC) and Dell (DELL) say they probably wouldn’t hire
someone who holds an online certificate rather than a degree. “Intel focuses on candidates with
traditional degrees,” Gail Dundas, spokeswoman for the Santa Clara (Calif.)-based company, writes in an
e-mail. A certificate could sweeten an applicant’s résumé, but only for those who already hold a four-
year degree, says Lisa Soto Hegner, a recruiter for Round Rock (Tex.)-based Dell. (Source:
More challenges emerge from problems of plagiarism and cheating, how to make sure students don’t
copy. Also, the assessment and evaluation of so many students is also a big problem. Yet, there have
been solution found to these problems, which will be discussed further.
Possible Business Models For MOOCs:
Selling Certificates: To add value to its certificate of completion, the company, Coursera, checks
the identities of its students and offer “verified certificates” of completion, for a fee. A key part
of that validation process will involve what Coursera officials call “keystroke biometrics”—
analyzing each user’s pattern and rhythm of typing to serve as a kind of fingerprint. (Source:
Collaboration with Employers for Hiring: Moocs collaboration with Employers, because they
have the data how well the candidate acted in the discussions can also help in assessing the
candidate in terms of company’s environment. Partnership with employers could be a new
opening for online education. (Source: http://www.evolllution.com/friday-links/finally-a-
business-model-for-moocs/). This would also mean more seriousness for MOOCs and will drive
higher completion rates. This could be a new partnership between moocs and hiring firms.
Selling learning data to researchers: Since MOOCs have a lot of learning data for their online
users, it’s sold to the researchers in the field of online (education) learning.
Partnership with private companies for Corporate education: . For example, Udacity recently
formed a partnership with AT&T and Georgia Tech for a master’s degree in computer science—
for only $7,000. This ability to quickly bring new courses to students can help ensure that they
are being trained in the latest technologies that are required in the workplace.
Key weaknesses and threats for HBS & their possible solutions:
Till now there has been an alarming signal of people who opted for traditional residential MBA program
showing deep desire for the online learning. It seems for the elite business schools such as HBS, Stanford
etc. the whole experience of on campus studies is more prominent than studying online completely. It’s
still a matter of choice for the candidates and what type of experience they want, like it was earlier for
all those years. There are still no significant signs of cannibalizing traditional class room offerings by
Verification of students taking the online courses, making sure they haven’t cheated: From the
beginning, online learning struggles with the issue of cheating. There are two solutions to given
1. Keystroke biometrics and typing pattern technology- Coursera, along with its partners such as
Duke, Wharton, checks the identities of its students using “keystroke biometrics”—analyzing
each user’s pattern and rhythm of typing to serve as a kind of fingerprint. It seems it’s working
fine for the Coursera. (Source: http://chronicle.com/blogs/wiredcampus/coursera-announces-
2. Proctor based evaluation: Proctor based evaluation adopted by EdX, both edX and Udacity
have partnered with Pearson to offer proctored final exams. But although Pearson has more
than 450 test centers in 110 countries, making students in an online class, many of whom live in
rural areas, go to a testing center for the final exam is an old-school solution. Yet, it’s something
which can be build upon.
Assessment and evaluation of so many online participants: Peer-to-peer evaluation seem to the option
of handling the problem of assessment of thousands of participants in the online learning programs.
Stanford adopted the same and received an overwhelming response from their online learning students.
Availability of faculty, beyond their research and teaching schedules: The constraint of availability of
faculty is a big challenge. One way of countering the problem would be to utilize the global network of
HBS’s partners. For example: Reaping the benefits of CPCL- the HBS sponsored Colloquium on
Participant-Centered Learning, which is a 10 day program targeted at top business schools in emerging
economies that trained faculty in case method teaching. HBS can introduce online learning training as
part of it, and engage the qualifying candidates in the online learning delivery as HBS Partners.
Conclusion: HBS should adopt the online learning
HBS should adopt the online learning, using the EdX platform. Edx is a moocs platform of Harvard
University in collaboration with MIT. It should also adopt the flipped classroom approach for its
residential class using the same material at EdX. HBS should focus on the employment credibility of the
MOOCs and partner with corporate for employability of online users (Collaboration with Employers for
Hiring as mentioned above). HBS would charge those hiring corporate for the services. In the long term,
HBS should try to publish and sell video content via Harvard Press as it would open new revenue stream.