2019 Volume 22 Issue 1

The Digital Transformation of Management Education

The Digital Transformation of Management Education


New dynamics in online management education bring increased opportunities and challenges as well as broader competition. Should business schools invest in internal capabilities or partner with third parties to best take advantage of the future in digital education?

Management education has entered a seminal period that is being driven by increased competition, globalization, continued economic uncertainty, changing demographics, and a growing reliance on technology. Speed and agility, two key characteristics associated with today’s digital universe, are now being given considerable attention throughout academia as a template for the future. Online programs, the fastest-growing segment in management education, are illustrative of how digital technology is now being applied to deliver world-class knowhow at a time and place convenient to the student. However, this fundamental change in content delivery is not without its challenges.

Over the next few years an increasing percentage of MBA graduates will not experience a traditional face-to-face class nor meet their professors in person during their course of study. This should not come as a surprise since 79 percent of online students believe that web-based education is at least equivalent to the traditional residential model—word travels fast. This burgeoning phenomenon is not limited to graduate students; today, many freshman undergraduates are also taking online courses, which would have been seen by many educators as an anathema to educational orthodoxy merely a few years ago. The implications of these trends are profound for the future of management education. Initially, the online delivery model was viewed as a vehicle for maintaining enrollments in an increasingly competitive marketplace. However, with the disappearance of traditional geographical boundaries, these alternative delivery models are perceived as a mechanism to boost enrollments as well as to provide certificates in various management disciplines, such as analytics, on a global basis. Specifically, certificate programs could attract more corporate-sponsored tuition funding, which has dropped off dramatically over the past ten years, as a means of meeting industry’s growing digital requirements.

This “virtual university” model now challenges the need for the hundreds of business schools currently operating whose competitive advantage will be more difficult to communicate in this new zeitgeist. Harvard Business School’s recent announcement of HBS Online provides the component courses of the MBA program for a fee, which ultimately may create even more interest in a wide variety of management education programs. The Purdue Global Program is another example. These new modes of content delivery will rely heavily on the use of new digital technology, including telepresence, which provides the capability for a “classroom” of globally dispersed class members to meet in a traditional face-to-face environment. Three specific advantages of telepresence systems include: flexibility, costs, and extended student engagement.

In response to these new dynamics, the Association to Advance Collegiate Schools of Business (AACSB), the accrediting agency for management programs, is now calling for more flexible delivery formats, with students having more control over their curriculum, strengthening international partnerships, expanding internationalization within the curriculum, and connecting various global activities through a comprehensive collaboration strategy. Historically, most business schools have added an online delivery option after receiving AACSB accreditation. Today, new business schools are emerging that are offered exclusively online. How will the growth of these non-traditional institutions impact the AACSB accreditation process?

Higher student dropout rates, either administrative or self-selected, represents an ongoing challenge associated with online programs—with massive open online courses (MOOCs) representing the most extreme case. Recent data suggest that predictive analytics-based models can provide automatic and timely reports, allowing the pace and nature of content delivery to be modified to meet the specific needs of struggling students. In many instances departing students are not viewed as future candidates by the institution. This is an area where the administration and faculty need to re-think current policies and develop a more dynamic strategy for enhancing retention rates. Rehabilitating a current student is much more cost effective than having to recruit a replacement. Additionally, some success has been found in reducing dropouts by engaging students in online career planning early in the matriculation process and providing virtual office hours. This success can be further amplified by offering internships on an on-going basis. By reducing drop outs, through a combination of technical support, administrative initiatives (e.g., career planning), and reduced course loads, the economics associated with the recruitment and retention of online learners can be better optimized.

A core question facing the business school leadership in implementing an online digital strategy is whether to partner or develop an internal capability. On the one hand, the advantages of internalizing both program development and delivery include better product control and economic viability (no cost sharing). The upside of partnering, on the other hand, embodies minimized institutional startup costs, faster response times, and enhanced global marketing. The basic financial model with most online program managers (OPMs) is to share the revenue stream via a long-term contract. To that end, the ongoing growth of OPMs reflects an increasing number of schools’ responses by outsourcing segments of their digital programs.

Today, many business schools are beginning to develop digitization strategies for expanding outreach as well as delivering more customized programs. However, this should constitute only the first phase of the digitization process. Ultimately, the institution needs to embrace the enterprise resource planning (ERP) paradigm, which has found considerable success throughout the business community of practice. The digitization of management education need not be limited to simply webinars and podcasts but should encompass a much wider range of programs and services, such as, student recruiting.

Ironically, cases of business successes and failures in responding to digital transformation are a key theme in many management education strategy courses. The enduring question is when will this level of scrutiny be applied to the management education business model?

Thirty years from now big university campuses will be relics – Drucker (1997).

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Author of the article
Charles A. Morrissey, PhD
Charles A. Morrissey, PhD
Charles A. Morrissey, PhD is an emeritus professor of information systems technology management at the Pepperdine Graziadio Business School. Dr. Morrissey's 60-year career spans both the educational technology and management education fields. Shortly after college graduation from Colby College he joined the US Air Force as an officer assigned to a radar site that was part of the development of the SAGE System. SAGE was the foundation of ARPANET and eventually the Internet. He entered the Harvard Business School after his military tour and formed TimeShare Corporation in 1965 to commercialize Dartmouth's famous development of BASIC and computer time-sharing. TimeShare provided computer access; faculty training, and application sharing to the secondary school market. In 1970 they developed an alliance with Houghton Mifflin Publishing Company (HMCO) to support their customer base of secondary school faculty seeking to add computer resources to their curriculum. HMCO acquired TimeShare in 1978. His academic career started in 1985 as a guest lecturer in Technology Management at UCI's Graduate School of Management. He joined the Pepperdine Graziadio Business School full-time faculty in 1989 and was admitted to the Drucker PhD program in 1990. His research and dissertation focused on the impact of the Internet on management education. He made a number of presentations on this topic to AOM and AACSB national meetings until his retirement in 2014. He received the Graziadio Business School Outstanding Teacher award in 2008.
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