Massively Popular, Massively Challenged? Coursera and the rise of MOOCs

Coursera is a pioneer in the Massive Open Online Course ("MOOC") space. While MOOCs appear poised to reshape higher education, the landscape is becoming increasingly crowded. Coursera sets itself apart by delivering a differentiated value proposition to student, universities, and employers.

Traditional colleges and their ivy-clad halls aren’t about to disappear, but massive open online course providers (“MOOCs”) are dramatically changing higher education. At the forefront is Coursera. Founded in late 2011 by two Stanford professors, Coursera has enrolled over 11 million students and raised $85 million in venture funding. While the company remains unprofitable and is far from a clear winner in a crowded space, it has closely aligned its operating model with its business model, positioning it for success. Based on an asset-lite, highly-scalable software platform, Coursera’s business model provides differentiated value to three constituencies: students, universities, and employers.

Students:  Coursera’s most obvious benefits to students are inherent to online learning; it enrolls far more students than any physical institution, it reaches students regardless of location, it affords students the flexibility to participate at the time and place of their choosing, and it allows participation for free or a fraction of the cost of a traditional university degree (more on that later.)

Coursera’s proprietary technology enhances the student experience beyond competing MOOCs. For example, Coursera can provide real-time feedback, using natural language parsing to engage students in topics where objective measurement has long proved difficult.[1] Coursera has begun developing adaptive learning courses, where the curriculum dynamically adjusts to a student’s mastery of the material. In the long-term, the granular data that Coursera collects on where students spend their time (e.g. at the lecture, page or even question level) and how that correlates with success will enable courses to “evolve” and become ever better.

One of students’ key frustrations with MOOCs has been the lack of widely-accepted credentials signaling successful course completion. Coursera has tackled credentialing through two innovative programs. In 2013, they launched SignatureTrack verification (~$50 on average), which uses keystroke pattern algorithms to verify students are doing their own coursework. SignatureTrack students have a SignatureTrack logo displayed next to their names in discussion forums, increasing the visibility of the program. Coursera has also partnered with ProctorU, which offers remotely proctored exams (via webcam), costing $60–90. These low-cost credentials provide a powerful signal that Coursera graduations “mean something,” making them more valuable than competing MOOCs as students seek new jobs.[2]

Coursera Diploma

Figure 1: Sample SignatureTrack Course Completion Certificate, showing both the Coursera and University names

Universities: Coursera’s strategic goal to provide the best courses across all fields means it must be a platform provider, rather than a content developer. Universities are Coursera’s key content providers, but they are also customers, using Coursera technology to develop their online courses. As a for-profit company with ample funding, Coursera had been able to invest heavily in platform development and marketing, which directly benefit its university partners. [3]  For example, Coursera offers a wide variety of user-friendly, pre-built “learning units” for authoring quizzes, readings, peer-graded assignments, discussion groups, etc. These enable professors with no programming experience to easily create the architecture of an interactive online curriculum. And the SignatureTrack program helps reduce fears of cheating, which could damage the brand of partner universities.

Coursera Dashboard

Figure 2: A dynamic dashboard for a Coursera instructor

As a for-profit company, Coursera can allay concerns of favoring certain partners’ courses – which has been a challenge for MOOCs backed by university consortiums (i.e EdX). Moreover, Coursera’s private funding has allowed it to offer “no cost” course launch to universities and a 20% share of gross profits, aligning the institutions’ financial incentives with Coursera. [4] As more students use Coursera, it offers more exposure to both Coursera and its partner universities, leading to more enrollment and increasing revenue to both parties – a virtuous cycle.

Employers: Coursera helps employers tap talent they would otherwise struggle to find. Approximately two-thirds of Coursera students live outside the United States, one-third of them come from the developing world, and many of them are looking to make a career change.[5] Employers need novel tools to connect with and evaluate such candidates.

Initially, Coursera allowed students to opt-in to Career Services, and sold employers access to students’ data for a flat fee.[6] But the data (demographic, high-level course performance) was undifferentiated vs. competitive headhunting services and the employer response was lukewarm. In 2013, Coursera pivoted; it ended Career Services and instead began to connect students with employers during their courses through its Specializations program.

Specializations are similar to university degrees – they require multiple classes, usually taken in sequence, and SignatureTrack verification (driving revenue to Coursera). In addition to courses, Specialization enrollees complete a Capstone project, which are often designed by employers. For example, Google designed the capstone project for Mobile Cloud Computing specialization and Instagram designed project for the Interaction Design specialization.[7] These projects provide employers direct exposure to students and data beyond letter grades to predict work performance. For example, data on student participation in discussion forums can be a good indicator of how helpful a candidate may be to future colleagues.

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The jury is still out on whether Coursera will become a leading education provider of the 21st century – or whether it will even turn a profit. But the company has made great strides adapting its operating model to provide a differentiated value proposition to all its core constituencies. In the long-term, balancing its focus between students, universities, and employers should set Coursera apart.

 

Sources:

[1] http://www.forbes.com/sites/quora/2013/12/05/what-is-it-like-to-take-a-coursera-course/

[2] https://blog.proctoru.com/?tag=coursera

[3] http://donaldclarkplanb.blogspot.co.uk/2014/04/moocs-coursera-moves-towards-massive.html

[4] http://chronicle.com/article/How-an-Upstart-Company-Might/133065/

[5] http://www.wired.com/2015/02/instagram-google-coursera/

[6] http://chronicle.com/article/Providers-of-Free-MOOCs-Now/136117/

[7] http://www.wired.com/2015/02/instagram-google-coursera/

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4 thoughts on “Massively Popular, Massively Challenged? Coursera and the rise of MOOCs

  1. This is very interesting Sam. I am particularly a huge fan of MOOCs and their potential to scale up education access worldwide (unfortunately connectivity remains an issue here). It was very insightful to learn how the three main stakeholders are benefited, how monetization conceptually works and how Coursera is being creative to work around differentiation challenges and provide some value-add to the same stakeholders. I am not very familiarized with educational gaming theory and other approaches, but I am interested to know if you have any views on how this interactive and iterative learning model will evolve to replicate more of a classroom dynamic experience (vs. the current blogging / assignments / video teaching models). Great post!

  2. Insightful and topical post. A key part of the value proposition of online learning platforms is the certification of course completion. Coursera developed an effective technological solution to this problem in a way that does not burden the student. It seems the more challenging proposition will be to convince employers or other academic institution that these credentials are meaningful.

    I find it interesting to compare coursera against other popular online learning platforms. Their operational model as a content platform yields a significant amount of variability in educational content. Contrast this with HBX Core, a carefully curated, online specific, and structurally consistent offering from HBS. Another competitor, MIT’s Open Courseware, offers science, engineering, and management content free of charge. Can coursera, or other MOOC’s compete with a product offered for free? In this case perhaps the credentialing service you mentioned is their most important contribution.

  3. Great post!!!

  4. Cool post Sam, I think the potential impact MOOCs can have on the world is incredible if they can solve the accreditation problem. Its wild to me that there hasn’t been more movement trying to solve accreditation since anybody in the world can have access to a top tier education at MIT (they provide all of their courses online for free). I am curious if the primary motivation for a lack of movement towards solve accreditation is because educational institutions want to protect their revenue streams. I don’t think going the route of specializations or certificates of completion will replace the value of a degree any time soon. I’m sure you are probably aware of it, but check out The Khan Academy if you’re not. Salman Khan (HBS grad) is doing incredible things with education, but he is less concerned with college level education. I think it would be interesting to develop MOOCs for lesser levels of education as substitutes for attending elementary, middle, and high school.

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