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Transformation in the Business Education Marketplace: Experience as a Differentiator

The EvoLLLution | Transformation in the Business Education Marketplace: Experience as a Differentiator
Business schools need to fundamentally change the way they conduct their business in order to ensure they are meeting the needs and expectations of today’s highly discerning non-traditional students.

The business education marketplace is transforming rapidly. The expectations—and demographics—of students are shifting rapidly, as are the needs of the employers looking to hire them. More and more business schools are exploring what it will take for them to remain more than just relevant—but competitive and successful too—in the future. In the first installment, Philip Powell outlined why it is critical for business schools to evolve. In this second installment of a two-part interview, Powell discusses the critical importance of customization and the differentiating power of the student experience.

The EvoLLLution (Evo): What does it take to craft an exceptional experience for more discerning working adults?

Philip Powell (PP): To craft an experience that meets the expectations of adult students, we have to undergo a paradigm change. The traditional campus model requires students to meet us where we are: they have to come to campus, they have to take classes at the time we want them to, they have to meet their faculty at office hours, they have to go through a secretary, and they have to use a very user-unfriendly process to register for classes.

This doesn’t meet the expectations of today’s students. Why doesn’t the higher education experience mirror the experience of shopping on Amazon or doing online banking? Everything today is about convenience, but for some reason when you come on campus it’s not that way. You have to go through these byzantine processes of registering for classes and plans of study. In many ways, higher education is a bureaucratic dinosaur. Everything is designed to force the student to meet us where we are geographically, timewise and philosophically. This is annoying but not such a big deal for traditional students. They are 18 years old, they have unlimited time, they live on campus and their transaction costs are low so they can work in that environment.

However, in order to serve non-traditional students, you have to design the whole ecosystem to meet them where they are. That’s what we strive to do in our online school at the Kelley School; we want to meet them where they are now, which means their learning weaves into the fabric of their daily lives of family and career. We design courses that way so, for example, when I teach an online class, I give students my cell phone number. Not all of our faculty do that but the philosophy is that I want their class experience to be seamless and comparable to their online working experience. If you serve on a virtual team and your team members are all around the world, accessibility is key. That doesn’t mean you have to be on call 24/7, but you have to be willing to take a phone call at 9 PM and you have to be willing to take a conference call at 5:30 AM. I don’t give my phone number to students to be a nice guy. I do it because there’s a 24/7, continuous learning philosophy that we need to embed. In a traditional campus setting, all of your teaching and learning occurs between Monday and Thursday for 75 mins. This rigidity is not so important in the online modality. The channel of knowledge delivery and the channel of skill development is more diffuse, it’s more customized and while you have to start and finish the class within a 12-week period, it’s more flexible.

If we forced our students to “come to class” in our online program, that would be trying to recreate the traditional brick-and-mortar classroom. It doesn’t suit non-traditional students. Here’s a workplace analogy: The concept of coming to class at a certain time and being castigated for not attending mirrors the old-fashioned staff meeting. In this old-fashioned workplace model, everybody had an office, everybody was in the same building, and all collaboration occurred at a pre-scheduled staff meeting. Today’s reality is a far cry from that—you’re on a global team and standing staff meetings just don’t work anymore. Time zones don’t allow it. Business doesn’t work like that anymore. So why should higher education cling to these outdated models when the design they’re mimicking no longer exists? Why do we pretend that that’s the way we should deliver knowledge and education? It doesn’t make sense.

Our paradigms have to change at a fundamental level. The cool thing is that if you’re doing it the right way, crossing the chasm on these issues, it actually allows you to develop and deliver education at a lower cost.

Evo: How does the student experience help business schools to differentiate themselves from competitors?

PP: As a starting point, it’s critical that we in higher education see ourselves in a marketplace. This is the way we think in the business schools, and this is a very different mindset than you will find in schools of liberal arts, for example. There are people in academia that say no, education is not about human capital, it’s about human development and the development of critical thinking and life skills. They will argue that one shouldn’t pollute the concept of higher education with expected wages. So there lies a critical philosophical difference. So my bias here is the belief that we compete in a market. With that in mind, if we’re not going to deliver adequate benefit for the cost of higher education, students are going to find another way to gain the skills and knowledge they need to move up in the labor market.

What we teach in business education is that, when a marketplace is highly competitive and saturated, you must differentiate yourself. Differentiation comes through customization—you find a niche and you go narrow and deep instead of wide and shallow. Now if you’re a first-tier, elite university, that status differentiates you and that’s good. That brand creates its own market segment. For those institutions in the second tier, the way we compete is by differentiating through customization; customization of experience, customization of industry focus for the degree and customization of the type of skills students get. Take the University of Oklahoma, for example. They came into the online business education market but, unlike some of the other online programs that try to compete directly with us, they focused on energy. As a result, they carved out of a nice niche for themselves.

In the labor market, as technology advances and as jobs become more complex, the demand for more customized knowledge grows. That means that the customization and diversification of business school offerings needs to match what the market demands, and the market’s going to demand more narrow and deep types of opportunities to gain knowledge and skills.

The bottom line is that, in a competitive market where the traditional residential population is shrinking, you’re going to have schools that are innovating. All the business schools that are slow to innovate are going to be fighting for a smaller and smaller market. Those that cross the chasm and understand they need to move online, understand they need to differentiate their offerings—those business schools are going to have a more customized and more targeted portfolio. That portfolio is going to have to adapt over time, but it forces our business schools to become more responsive and to shorten the time frame between idea and implementation.

At its core, we simply need to be more innovative because, more and more, technology is commoditizing knowledge. That’s what the MOOCs do—they commoditize knowledge—which means that we have to boost our teaching game and we have to boost our program design game. All of those changes lead to better service for non-traditional students.

Evo: Is there anything you’d like to add about how the business and business education is changing to adapt to these radically different market conditions?

PP: Business schools need to up their game in terms of being responsive to the market, because they’re not responding fast enough. The footprint of that is the slow embrace of online education, which is disingenuous because we teach our business students to be innovative, we teach our business students to be first to market and to be first adopters—to take risks. Here you have an industry that has been too slow to do the things they teach their own students. Ironically, those that actually practice what they teach are ahead of the game and they’re doing better.

Clayton Christensen famously predicted that half of America’s colleges and universities would be out of business by 2028. Richard Lyons, the dean of the Haas School of Business at UC Berkeley, predicted that the growth of online education would lead to the closure of half of America’s business schools by 2020. For the first time in history, higher education institutions are threatened by becoming obsolete. We have got to make ourselves relevant, and we have to make ourselves relevant more quickly. It’s worth pointing out that while many institutions are relevant—they’re meeting the expectations of their students and teaching topics that relate to the labor market—they’re still losing ground in a lot of places.

The good news is that this type of change that I’m talking about means that non-traditional students will be better and better served by business schools. Market forces are creating an environment and incentives for business schools to better-serve non-traditional students and those that don’t will become less and less relevant to what the labor market demands.

This interview has been edited for length. It is the final installment in a two-part Q&A series with Philip Powell.

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