Will ‘disruptive innovation’ spell the end of business schools as we know them?

The Changing Landscape of Higher Ed

By Carol Elliott | Fall 2014

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A few short years ago, universities were buying up virtual campuses with real money in Second Life (SL), a three-dimensional online platform that some educators believed promised a brave new world in higher education. 

Borrowing heavily from gaming culture, SL proponents envisioned students teleporting around campus “islands,” selecting from a virtual automat of classes, even socializing with fellow avatars on the campus quad. If you wanted to recreate your virtual self as a blue-skinned, three-eyed, mohawked avatar named Snark the Destroyer, fine. The point of SL was not to replace the traditional campus, but to offer possibilities for expanding higher education in ways that physical universities couldn’t by making learning flexible, accessible, global and cheap.

And then … none of that happened. Second Life still exists, but it’s a virtual ghost town, like one of those sprawling abandoned subdivisions disintegrating in the desert outside Vegas, where the reality never lived up to the hype. 

Today, the same media outlets that heralded Second Life as the Next Big Thing are talking about developments such as MOOCs (Massively Open Online Course), flipped classrooms and specialty degrees as the New Next Big Things in higher education.

In this age of disruptive innovation, where we’ve seen seismic changes in bedrock industries such as newspapers, publishing, music and telecommunications, just to name a very few, what is the future of the b-school?

Doomsday, but not for everyone

On September 17, John Byrne, founder of the highly popular website Poets & Quants, wrote a blog post about the future of the MBA degree that included the subtitle, “A Doomsday Scenario?” The post presented some informed musings about what the impact of innovations in technology might mean to the traditional MBA program.

Byrne will tell you up front that he’s a big believer in higher ed, especially business schools. In fact, as part of his long career as a journalist covering b-schools, he was the one who originally created the BusinessWeek ranking of MBA programs in 1988. He later introduced BW’s ranking of Executive MBA programs, and then undergraduate. His current site is devoted to profiling schools and in-depth analysis of industry trends, as well as publishing its own set of rankings. 

“It’s a rare week when I’m not on the phone or in person interviewing several deans of business schools, directors of MBA programs or several admissions people,” said Byrne. “And I’m asking them the questions that are on everyone’s mind. What impact ultimately will technology have on the field? Not only as a force for market destruction, but also as a force to improve the efficiency of the education and improve the learning outcome. 

“And you know there’s widespread fear, but little agreement over how all that will play out.”

And there are myriad factors in play. The Economist, which has published a series of articles in the past year that examine the future of universities, pointed to three major “disruptive waves” speeding to shore: a faltering business model, changing demands of the workplace and—looming over all—a technological revolution. 

None of these forces is discrete, with clear analytic frameworks attached that render bulleted action plans. It’s more accurate to think of them as intertwined and evolving. 

In his “doomsday” blog post, Byrne spins out perhaps the most dramatic of scenarios, where lectures, discussions and homework assignments are all delivered online; professors will be more like free-agent athletes seeking to capitalize on their personal brands rather than university affiliations; curricula will be unbundled so that students take classes from any number of providers (think automat); and degrees will be quaint notions instead of recognized and valued authentications of knowledge. 

Whew.

But for all of the end-of-higher-ed-as-we-know-it headlines and quotes regularly published on P&Q, Byrne himself has a fairly nuanced view. For starters, he doesn’t think that online education will cause traditional on-campus programs to go the way of Second Life—or at least not all. 

“My sense is that the best schools with the great brands, like Notre Dame, the Vanderbilts, the Emorys and the Georgetowns, and then further up the chain on the public education side—UNC, Michigan or Virginia—are going to be fine,” said Byrne. “First off, most of these schools have incredible tentacles into the business community, and those connections and relationships are going to work to protect those brands.”

Plus there’s a premium value to an on-campus educational experience, not the least of which is access to a loyal alumni network and the opportunity for internships. 

The Economist agreed with Byrne’s assessment that the disruptive innovations will not affect all schools—or even all programs—in the same ways. In a story published in June, the magazine looked at the potential impact of digital degree programs and concluded “the universities least likely to lose out to online competitors are elite institutions with established reputations and low student-to-tutor ratios.”

So where does doomsday come in?