Why many universities will fail in online education

In light of an increase in online courses, how do colleges and universities update the traditional campus model to create a better value proposition for students?

By Jeff Denneen

Published on October 29, 2014
min read


This article originally appeared on LinkedIn. Every time I read about another massive open online course, or MOOC, project, I can’t help but hear the old Dr. Pepper jingle in my head: “I’m a Pepper, he’s a Pepper, she’s a Pepper ... wouldn’t you like to be a Pepper too?” It’s so bright and shiny! Who wouldn’t want to be like that? Online programs and MOOCs are generating a lot of buzz, for good reason. A recent Bain survey of 4,500 college students found that some 45% of respondents had taken an online course. The rise of technology combined with the decline in affordability of college has led many students to look for alternative ways to get their education. Traditionally the realm of for-profit education companies, online education has now become a playground for many non-profit institutions, whether through their own direct offerings or via MOOCs. These forms of education change the game in several areas: value proposition (flexibility for students); economics, marketing and recruiting (greater reach beyond the physical campus); and outcomes and assessment (better tracking and measurement). Most college presidents, provosts and deans are well aware of such disruptive innovations. Some perceive the online realm as a great revenue opportunity to be captured. Others view it as a massive threat to their core, campus-based system of learning. But many have been slow to move. Nearly two-thirds of the leaders at more than 2,500 institutions surveyed by the Babson Survey Research Group said that an online strategy is critical to the long-term success of their institution. Yet surprisingly, fewer than half of responding CEOs had included online programs in their campus strategic plan. In the absence of a real strategy for addressing the online world, most institutions are haphazardly joining the fray and putting courses and programs online as quickly as they can. Rushing online too rapidly to grow enrollment and create new revenue is just another “me-too” tactic. Too many schools have already joined the online market for an undifferentiated approach to succeed. Until schools have each defined their core strategy and identified the capital needed to invest in creating academic value, they will not survive in the online arena. The online threat raises another question: How do colleges and universities update the traditional campus model to create a better value proposition for students? Higher ed is one of the few industries that hasn't moved down the learning curve. It is actually more expensive now, adjusted for inflation, than it was decades ago to graduate a student. That runs counter to the experience of nearly every other industry, where the cost per unit of production decreases over time. Whether it’s a simple widget or a complex surgical procedure, the real cost has declined. So colleges and universities now face the critical issue of how to alter their model to deliver a better education at a lower cost. No doubt the answer will involve finding ways to use technology to raise faculty productivity. We’re on the cusp of an inflection point for higher ed. Boards of trustees and campus leaders need to decide by asking themselves, “Are we going to be a Pepper too? Or are we going to dig in and develop a real strategy that determines how our institution can chart its own path to deliver a better education at a lower cost—not just online, but on campus as well?”

This article originally appeared on LinkedIn.

Every time I read about another massive open online course, or MOOC, project, I can’t help but hear the old Dr. Pepper jingle in my head: “I’m a Pepper, he’s a Pepper, she’s a Pepper ... wouldn’t you like to be a Pepper too?” It’s so bright and shiny! Who wouldn’t want to be like that?

Online programs and MOOCs are generating a lot of buzz, for good reason. A recent Bain survey of 4,500 college students found that some 45% of respondents had taken an online course. The rise of technology combined with the decline in affordability of college has led many students to look for alternative ways to get their education.

Traditionally the realm of for-profit education companies, online education has now become a playground for many non-profit institutions, whether through their own direct offerings or via MOOCs. These forms of education change the game in several areas: value proposition (flexibility for students); economics, marketing and recruiting (greater reach beyond the physical campus); and outcomes and assessment (better tracking and measurement).

Most college presidents, provosts and deans are well aware of such disruptive innovations. Some perceive the online realm as a great revenue opportunity to be captured. Others view it as a massive threat to their core, campus-based system of learning. But many have been slow to move. Nearly two-thirds of the leaders at more than 2,500 institutions surveyed by the Babson Survey Research Group said that an online strategy is critical to the long-term success of their institution. Yet surprisingly, fewer than half of responding CEOs had included online programs in their campus strategic plan.

In the absence of a real strategy for addressing the online world, most institutions are haphazardly joining the fray and putting courses and programs online as quickly as they can. Rushing online too rapidly to grow enrollment and create new revenue is just another “me-too” tactic. Too many schools have already joined the online market for an undifferentiated approach to succeed. Until schools have each defined their core strategy and identified the capital needed to invest in creating academic value, they will not survive in the online arena.

The online threat raises another question: How do colleges and universities update the traditional campus model to create a better value proposition for students?

Higher ed is one of the few industries that hasn't moved down the learning curve. It is actually more expensive now, adjusted for inflation, than it was decades ago to graduate a student. That runs counter to the experience of nearly every other industry, where the cost per unit of production decreases over time. Whether it’s a simple widget or a complex surgical procedure, the real cost has declined.

So colleges and universities now face the critical issue of how to alter their model to deliver a better education at a lower cost. No doubt the answer will involve finding ways to use technology to raise faculty productivity.

We’re on the cusp of an inflection point for higher ed. Boards of trustees and campus leaders need to decide by asking themselves, “Are we going to be a Pepper too? Or are we going to dig in and develop a real strategy that determines how our institution can chart its own path to deliver a better education at a lower cost—not just online, but on campus as well?”