HBX: A winner who doesn’t want to win?

Harvard Business School’s online learning initiative is a winner, but at what expense?

Started in 2014, HBX became HBS’ entry into the growing market for digital education. Made successful by universities all over the world, Massive Open Online Courses or MOOCs represent a digital shift that has affected the entire higher education industry.

Creating and Capturing Value

Traditional universities rely on a business model that is in today’s view, limited. The reason is, in order to grow revenues, universities have to add additional students. With additional students, comes costs from additional faculty and living/studying space. These factors make the marginal cost of growth very high. It also means that traditional universities don’t scale.

Compare this to an online course. Where with an initial investment of just a camera and a website, a single professor can reach billions of students world-wide. The ability to scale is immense. Even at fractions of revenue per student compared to the traditional model, the online business is lucrative because of the reach, and ability to attract students who would have otherwise not even considered higher education. Online education grows the pie.

HBX stands out amongst other MOOCs for a few reasons. For one, it’s the price tag. Whereas many MOOCs are free, the cost of HBX’s CORe is $1,500. While still a bargain compared to the traditional MBA or Executive program, CORe is an expensive proposition. To justify this, HBX provides a different curriculum, one that is meant to help the student gain credibility with employers. The material is more comprehensive and the requirements for completion are intense. The program is also created by one of the top institutions in the world, giving it more credibility. The name alone, may be enough to attract students to its platform.

Limitations

There is without a doubt, some concerns with this business model. Because of lower costs and high revenue potential, competition is inevitable. HBX doesn’t have a monopoly on content. In fact, any university professor who is motivated to go online can do so. The opportunity to scale oneself is a strong proposition for other universities or professors who want to increase their influence. However, at the moment, this will likely do more to lift the entire industry, rather than hurt HBX’s growth because of how undeserved the education market is.

There is also the obvious risk of HBX disrupting the very school that created it. The debate is ongoing. Advocates claim the platform is a strong supplement to the HBS classroom and opponents see it as a dilution of the HBS brand. Questions are also raised about why HBS would purposely choose to disrupt itself. Disruptive Strategy believers would say this is the only way. If HBS doesn’t do it, someone else will. Regardless, HBX has proven it can be successful. New courses are being added and students are enrolling. Maybe one day, students will engage in case debates using virtual reality. If so, HBX is on the right track to take advantage.

Business School, Disrupted

The disruption to come

 

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3 thoughts on “HBX: A winner who doesn’t want to win?

  1. Love the article! Great read.

    I wonder especially about your last point: whether they are doing this to disrupt themselves. Maybe they are doing this more as a defense move – because they want to be ready to respond if needed. So not so much a value proposition on itself, but a way to monetize some extra value (low, but nice addition) and simultaneously make sure that this space is heavily competitive (so that less people see value in it). At the same time, if this space does take off, then they are in the right place to capture the value.

    I heard they are now also moving this into a digital classroom environment (where you basically have a classroom discussion with your webcam). I found that particularly interesting because it seems to suggest they are looking for ways to increase the performance of HBX (and thus further disrupt themselves).

  2. Great post, Yi. While any professor can create content online, I think another resource available to HBS is its brand name. I am not sure if people will pay $1500 for a course by a “random” professor, and whether employers will acknowledge the completion of such a course. And as a former HBX student, I can attest to the fact that the HBX quality lives up to the brand name and pedigree of HBS products. HBX showcases well orchestrated and well-produced content, which leverages pre-existing pools of knowledge and expertise at the school. In some ways HBS is like Apple – the king of interdependent products in its industry. I think HBX will be a huge success, and it could be differentiated such that it compliments the classroom experience. Perhaps, HBS could get some efficiencies out of it – teach certain sections of the RC curriculum that are purely technical through the online platform.

  3. Interesting post Yi. Personally, having taking 3 HBX courses. I remain skeptical about the value add compared to more cost effective course platforms such as Coursera, EdX & MIT Opencourseware. The HBX course set does not compare to a HBS MBA or an MBA from a top program. At the same time, the course is a few times more expensive than Coursera or similar certificate programs. HBX can be perceived as a ‘fast follower’ and disruption prevention response to outfits such as Coursera and their offerings. I don’t see any unique differentiators of the HBX course system when compared to other open online course systems and accordingly I see minimal long term impact.

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