Tuesday, August 5, 2014

Will MOOCs kill off business schools?

Just ran across this fascinating discussion with two Wharton profs about the role MOOCs are likely to play in higher ed (kudos to Craig Newmark's blog, where I first saw the link to this transcript of the video).   Christian Terwiesch and Karl Ulrich have taught MOOCs on operations and innovation.  They estimate that the cost of producing a MOOC at Wharton is about $70k in upfront development and $7k in cost per section for delivery.  In contrast it costs about $50k to teach each section of a face-to-face course.  So development costs are covered by variable cost savings once once two sections are delivered!

Of course no one is going to pay Wharton $120k tuition to take their MOOCs, which they already are giving away.  Students will still value the networking and career resources of a top b-school, plus the brand reputation garnered by becoming a Wharton grad.  Terwiesch and Ulrich envision three scenarios on how what they call SuperText (the technology behind the MOOCs) will impact MBA programs: (1) technology enables enrollment growth (unlikely because it waters down the brand and there aren't that many $100k/year jobs for 26 year olds); (2) technology enables cost savings by reducing faculty lines (bound to happen in my view); and (3) business schools fall by the wayside as students can pick and choose from an array of MOOCs the chunks of knowledge they need when they need it (in other words, MOOCs become like iTunes where you grab the songs you like not the entire album).

The article also provides some great insights into the economics of a top five private business school.  Did you know that it costs $400k to produce an "A journal" article?

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