Can An Online MBA Meet the Prestige Test?

When the dean of the University of North Carolina’s Kenan-Flagler Business School first broached the idea of launching an online MBA program, his faculty and students were highly skeptical. “Many of our full-time MBA students are not convinced this is a good idea,” says Dean James W. Dean. “They underestimate the challenge of what it is for people to remain in their jobs and work and study for the degree.”

Even Dean concedes that he had doubts. “To be honest, I was initially skeptical,” he says. “I wondered: Can you really do an MBA online that you could be proud of? I came around to the idea that this was a great opportunity for us and could change the nature of business education at the top schools.”

The upshot: This July, Kenan-Flagler will be the highest ranked business school in the U.S. to offer an online MBA program. In the initial class, the school expects to enroll 50 students at a cost of $89,000 each, a price tag that includes up to four weekend residencies at different locations around the world. UNC is partnering with 2tor Inc., a company that provides the technology platform and instructional design to deliver courses online.

The two-year program, dubbed MBA@UNC, will feature pre-arranged live sessions that employ live streaming video as well as archived lectures and interactive simulations that can be accessed 24/7. Case study and lecture discussions also will be in both real time and via forum boards. “The level of intimacy will be at least as high or higher than in the classroom because there are fewer people involved,” says Dean. “You can hide in the back row in a classroom, but if you are one of ten on a computer screen you can’t.”


Online MBA degrees, of course, are nothing new. About 11,000 MBA students are currently studying for online MBAs at some 90 schools accredited by the Association to Advance Collegiate Schools, the same accrediting body that gives approval to the Harvard’s and Stanford’s of the B-school world.  Accredited institutions with online MBA programs include the University of Florida, Arizona State, and Penn State. The largest for-profit player, the University of Phoenix, has been offering an online MBA since 1989. More than half of its 66,000 graduate students are enrolled as MBA candidates, and Phoenix now buys more case studies from the Harvard Business School than any other institution.

But very few of the online players boast the prestige of the Kenan-Flagler Business School, which typically ranks among the top 20 U.S. MBA programs. “If you look at the trend, it started out that the only providers were low quality and low reputation,” Dean says. “Over the last few years, there’s been a gradual migration toward the top so you see lots of reputable schools offering these programs. It follows the pattern of disruptive innovation, which starts from the outside and then makes its way inside.”

Some believe that high quality MBA degrees are likely to follow the pattern of how socially acceptable online dating has become.“Ten or 12 years ago, online dating seemed to have some scary edge to it,” says Ian Van Tuyl, who as vice president of production at 2tor is working with UNC faculty to build the curriculum. “Today even your grandmother is urging you to go online and find someone. My sense is that online degrees will become as accepted as online dating is today.”

IE Business School in Spain arguably has the high status global online program available today. The 15-month program has four 32-student cohorts a year, three in English and one in Spanish. With the exception of two one-week residencies at its main campus in Madrid, the entire program is online (see story on IE’s Global MBA Online). The cost: about $50,000 for an MBA. Since the launch of the program in 2001, IE has turned out about 1,000 MBAs, a number that includes grads in its specialized business master’s programs in sports, digital marketing and biotech. “We’re looking at our peer competitors and we can’t believe they are not getting into this,” says David Bach, associate dean of MBA programs at IE. “There is going to be a lot more of these programs at top schools. Companies haven’t cut back on training and development as much as they have cut back on travel. So if you can provide high quality instruction anywhere in the world without people having to get on a plane, that is a competitive advantage.”


In the U.S., the pioneering top-rated institution so far has been Indiana University’s Kelley School of Business. Now ten years old, Kelley Direct boasts 1,500 current students on five continents, with roughly 40% of them in graduate business programs in partnership with such firms as John Deere, United Technologies, and Cummins. Indiana’s program also requires two one-week residencies at its main campus in Bloomington. The total cost: $57,000. Most students complete the MBA in 27 months though the coursework can be spread over five years.

Duke University’s Fuqua School of Business boasts a pricey $146,600 hybrid program, with five short, in-person residency sessions at its campus in Durham, N.C. as well as London, St. Petersburg, Dubai, New Delhi, Shanghai and Singapore. In between each residency, there’s about two months of learning from home via online classroom sessions, team projects and exams. Some 116 students from 105 countries are enrolled this 15-month-long Global Executive MBA program.

Not everyone is convinced that online instruction is a quality substitute for an MBA program that brings together faculty and students on a campus for two years. Dave Wilson, CEO of the Graduate Management Admission Council, which administers the GMAT exam, says he believes online education is best suited for “rudimentary” courses in basic accounting or finance. “I’m not convinced you can use technology for deeper Socratic inquiries between a professor and the students,” says Wilson.

For those who want an MBA, however, and don’t want to leave their jobs or incur a huge pile of debt, an online program can be a good option. That’s why Tony Hodson, a consultant with Accenture in Washington, D.C., chose the IE Business School program. “The job I have is too good to give up from an opportunity cost perspective,” says Hodson, who graduated with his MBA last month.

He says the experience, which included two one-week residencies in Spain, exceeded his expectations—but was hardly a walk in the park. “In the last 18 months,” he says, “I haven’t shopped for groceries, cleaned the house or done the laundry. My wife has done all that. It’s a huge commitment.”

Instead of raising a hand in a 90-minute class, students are posting comments on online forums for several days. “The depth and quality of the posts is surprisingly good, better than in regular classes, because students have more time to think about what they want to say,” explains Terrill Cosgray, executive director of Kelley Direct.

Cosgray also counters criticism that online students sacrifice the camaraderie and outside of class activity that results in deep and enduring relationships with classmates that can help them throughout their careers. “That’s a common myth,” he says. “In fact, you can network with people across the country and across the globe. You may be on a team with someone in China, California and New York.”


Any early misgivings that Dean harbored are long gone. He now goes so far as to argue that online education has some significant advantages over in-person, on-campus learning. “As anyone who has ever taught knows, in a classroom environment, you have only one opportunity to teach and you have to decide which level to teach at,” he says. “In this environment, we can equalize the starting point by asking people to do more work on the front end. We also know that people in general have different learning styles. In the classroom, you only have one shot and you basically teach something one way. With this program, we have multiples ways of teaching that will appeal to people who have different learning styles.”

And even though an online student’s classmates will be scattered in apartments and homes around the world, Dean believes the online environment will so closely mimic a classroom that it will rival or exceed what currently occurs on campus. “The level of intimacy will be at least as high or higher than in the classroom because there are fewer people involved,” he says. “You can hide in the back row in a classroom, but if you are one of ten on a computer screen you can’t. Rather than simply tape lectures, we will have the opportunity to infuse the lectures with additional videos and examples so it becomes more of a documentary film.”


By partnering with 2tor, UNC is hoping to take advantage of next generation technology and design to create a more dynamic online program than has been available thus far. The company, created in 2008 by John Katzman, the former founder of Princeton Review, has developed online degree programs for the University of Southern California’s School of Social Work and is also working with Georgetown University’s School of Nursing. “What we’re doing in general is pretty far from a point-and-click degree,” says Van Tuyl of 2tor. “And it’s not just dumping content on a website that you can read.”

In one pilot test, for example, the 2tor vice president had sat in a class with a UNC professor to mock up a week’s worth of content on giving and receiving positive and negative feedback. “We presented the content in a fairly predictable way, incorporating comics in the professor’s Powerpoint,” he says. “But the students also had an assignment before they came into the class: they had to be ready to discuss what they would do if a classmate in their study group was slacking off. “

Typically, the professor would only have time to call two or three students in the class to present their views. “When we talked about it afterward, I said, ‘Don’t you wish you could have every single student in the class do it?’ So we cooked up an assignment together where all the students would do it on the technology platform,” adds Van Tuyl. “We paired up students, connected them via video chat and recorded the results. We posted them to a forum, and then each student had to comment on three other students’ post so a dialogue could take place before the class even met. During the live class time, the professor could then pick the best and worst examples and use them as the basis for a much more interesting discussion. There are ideas that professors have had marinating in their heads for a long time and now they can finally get them done.”


Van Tuyl believes the technology platform can also be used to make Harvard Business School case studies, a staple of nearly every B-school curriculum, look “fresher, livelier and richer” through dramatizations with actors, among other things. “We may even get to the point where we would develop a long form case that could be used across the arc of a course,” says Van Tuyl. “The professor can introduced an entrepreneur with a new idea and as the semester progresses, you might encounter the same character in another stage of the story. It’s a way to take the case method and lift it a bit.”

He also will be working with one of the Dean’s Fellows–current MBA students who take on projects to help Kenan-Flagler–to help online MBAs learn more about the culture of the school without actually being there. “We left with the idea to find a way to bring current live-on-the-ground students into contact with the online students,” says Van Tuyl. “We’re talking about brown bag lunches via video cameras to bring the two together and we’re looking for other ways to foster positive interaction between those two worlds.”

Meantime, UNC has received nearly 750 inquiries about its new program and some 80 have started filling out the formal application which only went live on Jan. 13th. Several active-duty military officers who want an MBA from a top school but can’t attend in person have expressed interest in the program (about 10% of Indiana’s online MBA students also are in the military). UNC also has spoken with an ex executive vice president in a scientific field who has both a master’s and PhD, and a North Carolina native who lives near Chicago and always hoped he would attend UNC but didn’t want to leave his company. “These conversations are showing that there is a vital part of the prospective student market who want to earn MBAs but love their careers and companies and don’t want to leave them,” says a Kenan-Flagler spokesperson.

Dean believes that the coming years will see an explosion in the very best business schools getting into the online arena. As soon as word got out about UNC’s launch, he says, four other top 25 U.S. schools contacted the school’s partner, 2tor Inc., to explore similar programs. What they didn’t know is that UNC has an exclusive deal with 2tor that prevents the firm from working with other business schools.


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