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.
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.