Reference no: EM134568

CASE STUDY: ONLINE EDUCATION

INTRODUCTION

As the Internet had become yet another arrow in the quiver of educational institutions and in industries as diverse as elevator manufacturing and financial services, the above quote by Peter Drucker sounded, in January 2012 on the snowy campus of Ivey University, like a relic of thedot-com days. Erica Wagner, dean of the School of Infor- mation Management, recalled the quote while scanning a recent article in Mashable.

The Internet, the new technology that only ten years before had administrators like Dr. Wagner worrying about the future of the institution they had been entrusted to lead, now seemed to have had minimal incremental effect on prestigious research universities such as Ivey. Enroll- ment in undergraduate programs was more selective than ever, due to rising demand. Campuses were teeming with construction workers developing new buildings, adding to existing ones, remodeling teaching and office space,equipping ever more sophisticated labs, and, most impor- tantly it seemed, developing more parking space!

While the number of students in executive education programs had been declining steadily over the last decade, forcing the School to shorten some of its programs from five to three-days, many blamed the recent recession for these results. However, as she pondered the future she recalled a passage from an article in The Economist that she had seen a few years before. The memory brought back some of Dr. Wagner's own uneasiness:

The innate conservatism of the academic profession does not help. The modern university was born in a very different world from the current one, a world where only a tiny minority of the population went into higher education, yet many academics have been reluctant to make any allowances for massification.18

Was everyone missing the forest for the trees? Was the Internet a disruptive technology in the education industry, simply brewing under the surface to soon blindside slow-to-react incumbents?

EDUCATION AND RESEARCH AT IVEY

Like its peers, Ivey University had a complex mission and a large community of stakeholders, ranging from students and faculty to alumni and the local and global community. At the highest level of analysis, Ivey performed two main activities: the creation of new knowledge (i.e., research) and the dissemination of knowledge (i.e., education).

As a prestigious Research I institution, Ivey spent a considerable amount of resources supporting the development of new knowledge by hiring some of the brightest young faculty members and accomplished researchers. Among its faculty it counted 12 Nobel Prize winners, and boasted many world-class research centers.

While the research mission was pursued in basement labs and offices throughout campus, the most evident manifestation of Ivey's contribution to society was its teaching mission. A large school like the School of Information Management at Ivey University had truly global reach.

Its largest population was about 2,200 undergraduate students. The School also trained Master's students, leaving the workforce for one or two years (a substantial opportunity cost on top of the direct costs of going back to school) to gain an advanced degree and the skills to accelerate their career. Ivey had a medium size, but very selective, Master's program with about 300 students enrolled. Finally, the School educated the next generation of faculty and researchers by way of its Ph.D. program.

A very recognized brand in the business world, Ivey also offered a number of executive education and profes- sional education programs. These were typically highly condensed courses, held on Ivey's own campus or satel- lite locations, designed to serve the needs of corporations seeking to update the skills of their workforce or to offer working students a chance to access the wealth of knowl- edge that the School's faculty had to offer without having to resign their job.

GLOBAL EXPANSIONS

Because of its brand recognition around the world, the School of Information Management and a number of other schools at Ivey had been focused on global expansion through partnerships and the opening of satellite cam- puses. The School had partners in Asia and Europe and was currently evaluating whether to enter the South Amer- ican market.

The reason for global expansion was simple: With the skyrocketing demand for high-quality education in emerg- ing markets around the globe, there was great opportunity to extend the Ivey brand. Expansion was not without chal- lenges, with revenue models being at times challenged and a myriad of logistics and quality assurance hurdles to be overcome. However, with almost every other recognized education brand entering the new markets, a wait-and-see attitude could be extremely risky.

ONLINE PLAYERS: A REAL THREAT OR A NUISANCE?

Since Peter Drucker's prediction, there had been a sig- nificant amount of development in online educational offerings. University of Phoenix, the largest for-profit institution, had about 300,000 students. While quality concerns lingered, not just on prestigious university cam- puses, online universities seemed to be gaining traction.

Perhaps even more interesting, and threatening, were open source content creation and delivery entities. The best example was offered by Khanacademy, the not- for-profit the brainchild of Salman Khan who started by uploading tutorial videos for his distant cousin to YouTube. Khanacademy, now supported by the Bill and Melinda Gates foundation and many other grants, had come a long way making 2,100 videos and 100 self-paced exercised available to interested students from all over the world and a running count of over 52 million lessons delivered to about 1 million students active on the site per month. Khanacademy was focused on introductory mate- rial in topics ranging from math to science, to history to the humanities, and it was originally geared to studentsin from elementary to high school. However, its grow- ing library of content was now including fairly advanced material. More importantly, Khanacademy had shown that bite-sized, focused content could capture the interest of students who could learn individually, at their own pace, and practice the skills they had acquired. As the Chroni- cle of Higher Education put it: "This could be the DNA for a physical school where students spend 20% of their day watching videos and doing self-paced exercises and the rest of the day building robots or painting pictures or composing music or whatever."19

Not all online educational offerings were by upstarts. Indeed, traditional universities had their own offerings, and Ivey itself had launched its own online education effort during the late 1990s: iIvey. While the number of courses offered at iIvey had slowly but steadily increased, and some of the School's programs required them as pre- requisites, the iIvey effort seemed to have lost steam after the bursting of the dot-com bubble. Yet with about forty courses available, a price tag between $1,000 and $1,500 per course, and a global reach, iIvey still offered quite a bit of potential, if nothing else, for revenue.

THE FUTURE

As Dr. Wagner watched the snow drop a fresh dusting of white powder on the roof of the gothic buildings across the quad, she pondered some of the words of the article:

"Other industries next in line for disruption like education and health care would be wise to payattention. Most of what they do depends on the control of information that will soon no longer be scarce. Education reformers have long predicted a world where top professors spread their knowl- edge across the globe through electronic tools. But the knowledge students need is not only located in those few professors' minds. Once we digitize not just the distribution of knowledge but the produc- tion of it, the existing university system loses its raison d'etre. Why would people come to a single physical location at higher and higher costs when the knowledge it houses is no longer scarce?"20

Would this really happen? And how would it affect a top university like Ivey? As the dean of the School of Information Management, Dr. Wagner was not only entrusted with the future of the School she led, but she also felt a responsibility to help the university community at large thrive in the network economy. Could Ivey miss the wave of the future? "Not on my watch!" Dr. Wagner told herself while getting ready for the first of many of the day's meetings.

DISCUSSION QUESTIONS

1. Do you agree with Peter Drucker's opening quote?

2. Is the Internet a disruptive technology in the education industry in general? And for Ivey's School of Information Management in particular?