Do MBA Programs Face “The Innovator’s Dilemma”?
The verdict of those responding to the column on the threat of the "disruptive technology" represented by online distance learning for in-class, onsite MBA programs is in. In your opinion, the trend represents an opportunity, not a threat. The greatest opportunity is for those to whom the traditional in-residence MBA might not otherwise be accessible. But it extends also, in the eyes of respondents, to those onsite programs with the foresight to take advantage of the unique capabilities inherent in their online counterparts.
First, a number of you argued that the two are not directly competitive. They offer different products that provide different results for different markets. Alan Carswell points out that online programs are ideal for adult learners with "less need for the social role of college," but that "there will always be a place for in-situ MBA education that has socialization as a pedagogical function." His view is seconded by a respondent who currently is in the last semester of an online graduate program and says that "virtual education is one more way to eliminate the great divide between those who have and those who do not." As Joshua Doherty puts it, online programs "offer convenience, but not unique knowledge or opportunities to network." Isn't 'adapting to change' almost a synonym for learning? —Jed Bullard
Second, distance learning offers a great opportunity to purveyors of more traditional forms of education. This is particularly true of those with "strong brands." Describing the new virtual schools as "intermediaries," Ilyas Naibov-Aylisli suggests that schools with highly regarded and recognized names (or "trustmarks") "create a wealth of their own content ... [with] aggregation and interpretation of knowledge [as] ... their core competency," all of which gives them significant competitive advantages in the educational market.
However, this doesn't mean that onsite programs can ignore their online counterparts. In fact, several of you argued that the emergence of the latter offers a great learning opportunity. For example, Jed Bullard maintains that "[onsite] MBA programs MUST study, embrace, and implement their own versions of e-learning programs, if only to remain current in their curriculum offerings to their 'traditional' students." In his words, this behavior should characterize well-respected programs. He asks, "Isn't 'adapting to change' almost a synonym for learning?"
Little attention was given to the influence of alumni in shaping current educational strategies. Alone in his concern about the brand "dilution" resulting from the introduction of an online MBA by a highly regarded onsite program, Joshua Doherty questioned the futures of top-tier schools that may lose their ability "to exploit the market power of exclusivity." How would alumni react? What effect would it have on sources of support, both financial and nonfinancial, for such institutions? And aren't these some of the very dilemmas faced by organizations encountering the "innovator's dilemma"? What do you think?
There are few thought leaders in business today who are unfamiliar with colleague Clay Christensen's research of what he calls "the innovator's dilemma." At the risk of doing great damage to a carefully executed piece of research, I'll paraphrase it this way: Christensen maintains that large, complex, successful organizations that succeeded by responding to what important groups of customers say they need in the way of products and services of increasing capability (as well as prices and margins) expose themselves to competition from innovators who create alternatives with limited capability at very low cost. Such alternatives are more attractive to the mass of customers who are not "leading edge" users, and thus preempt large shares of the existing market. Further, Christensen maintains that precisely because of their size and success, organizations with "household names" are uniquely incapable of responding to competition from "disruptive technologies," thus becoming sitting ducks for smaller, more innovative competitors. One potential antidote that he recommends is for larger firms to create or partner with organizations that can literally put certain of their product- or service-producing subsidiaries out of business.
Christensen cites IBM and Merrill Lynch as examples of companies exposed to disruptive technologies. The disruptive technology for IBM is Dell's use of direct marketing and distribution, particularly over the Internet. For broker Merrill Lynch, it is online trading fostered by organizations like Ameritrade and Charles Schwab. Although not mentioned in his book, The Innovator's Dilemma, one has to ask the question of whether leading business schools, including the Harvard Business School, fall into the category of organizations ripe for plucking by an organization with a disruptive technology such as online learning.
The fastest-growing segment of education, of course starting from a small base, is that delivered online. Increasingly, anything, anywhere, anytime is becoming possible for those desiring education of all kinds. It is particularly attractive to those for whom time demands preclude a commitment to learning and teaching performed at the convenience of an instructor. Increasingly, employers are competing with educational institutions for students' time, and in many cases employers appear to be winning. Increasingly, the disruptive technologies are being implemented by a new breed of educator, one that has had little to do with the traditional halls of ivy or institutions such as academic tenure.
The Christensen defense to this educational competitive threat might be for traditional purveyors of management education to create new organizations staffed predominantly by nontraditional academics and administrators and given the latitude to put traditional programs "out of business" if they can. The model appears particularly fruitful for non-degree, executive education. But inevitably, it will increasingly be applied to degree programs as well, including the MBA.
Ultimately, the question may be raised about whether business schools such as Wharton, Kellogg, Harvard, or Stanford should offer MBAs online as a response to the innovator's dilemma. What do you think?