Mastering the Online MBA

A top-ranked business school launches an online program in partnership with a for-profit business. Are we finally on the road to success?

• By Dian Schaffhauser
• 04/01/11

"We're charting new territory. Our faculty are being stretched to think differently about how to accomplish in a new medium what they do now," says UNC's Susan Cates. [Photo by Chris Hildreth]

If you were running a top-tier business school, how would you design an online-only MBA program that wouldn't tarnish your brand or ding your ranking? That's the dilemma faced by the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill, which plans to launch an online-only program this July. The school has a lot to lose: In 2010, it ranked No. 16 in Bloomberg Businessweek's popular "Business School Rankings and Profiles."

And let's face it, online MBA programs so far have been a lot like Rodney Dangerfield--they get no respect, even though most business school educators recognize that online represents the future. The problem for everyone who's tried to build an online program has been the same: How do you translate the teaching expertise of your faculty--the very asset that makes an MBA program worth its salt--into the online environment? The simple truth is that most faculty members don't have the time or the technical skills to make that transition successfully.

That's what makes the Kenan-Flagler approach so interesting. The school's not expecting its faculty to lead the charge. Instead, it's forged a unique partnership with 2tor, a for-profit company led by John Katzman, the same person who founded The Princeton Review. Katzman has become an educational reformer of sorts. With 2tor, he is attempting to change how institutions transfer their most rigorous academic programs to the virtual world.

The timing of the partnership certainly couldn't be better. Employment figures for MBAs from the class of 2010 are approaching the pre-recession levels of 2007, according to the Graduate Management Admission Council. Nearly nine out of 10 graduates reported having a job, which is 16 percent higher than the class of 2003 reported. And the median base salary hovered at $94,500 last year, comfortably above 2007's $89,000.

Four other universities have gone public with plans to launch new online-only MBA programs this year. These include private schools Crown College (MN) and New England College of Business and Finance (MA), as well as public institutions SUNY Oswego (NY) and North Carolina State University.

The desire to push forward with an online MBA program is understandable. Many of the people who are most likely to want a business degree are already embarked on their careers and established in their communities. For many of these potential applicants, the idea of uprooting themselves to attend a business school--no matter how acclaimed--somewhere else is not appealing, especially if an alternative exists.

"We are looking at folks who are in various points in their careers, who have found their way to industry and a company that they are committed to and that they don't want to leave," says Susan Cates, Kenan-Flagler's president and associate dean of executive development. "They could really benefit further from learning a great deal more about business; but for family reasons, for work reasons, for reasons of geography, going to a traditional executive program or going to a full-time program doesn't make sense for them."

Cates gives the example of one recent applicant, who already possesses a master's degree in biology and a Ph.D. in neuroendocrinology. "He's an executive in the healthcare industry and has every credential you could think of on the scientific side, but he feels as if he could really benefit from doing an MBA to accelerate his career on the business side," explains Cates. "Given where he is in his career and with his family life, he's certainly not the right candidate for any full-time MBA program. He also wouldn't be interested in doing a program that isn't at a top school. When we came out with this program, his response was, 'This is what I've been waiting for.'"

Mixing Private and Public DNA
Cates says Kenan-Flagler had been exploring what it should do online with its MBA program for years. The school is hardly a newbie at virtual courses. It started an online nondegree program several years ago, and it offers a multitude of hybrid services through its traditional brick-and-mortar classes. But moving from a position where online instruction is a small part of what's being offered to where it becomes the backbone of the entire program requires something far different.

Enter 2tor. Based in New York City with locations wherever its clients are situated, the company was founded in 2008 with the mission of supplying software, personnel, and capital to top-tier research universities to help them deliver their online programs. Ultimately, it's a highly specific service provider.

Its first customer was the University of Southern California Rossier School of Education, which started the country's first online master of arts in teaching that same year. In the two years since MAT@USC launched, enrollment has grown from fewer than 100 students to 1,550, according to Susan Metros, USC's associate vice provost and deputy CIO for technology-enhanced learning.

Each 2tor deal is exclusive. As long as the contract with USC is in place, for example, 2tor will never help another university launch an online master of arts in teaching. In the same way, now that 2tor has signed up Kenan-Flagler for the online MBA program, the company will work exclusively with UNC in this field. Cates declines to divulge how UNC's partnership with 2tor is structured, but if the USC deal is anything to go by, it probably involves a split of the tuition revenue and an infusion of capital up front. Under the USC program, 2tor handles student recruiting, technology development, funding, field placement, and 24-hour student and faculty support. The school takes care of admissions and curriculum development.

As Melora Sundt, associate dean of academic programs at the Rossier School, pointed out in a blog entry about the arrangement, "This type of relationship is suspect in higher education. It represents the merger of two traditionally oppositional cultures--that of a research university, a breed not known for generating profit or for speed of movement, and a for-profit organization. But it's working. 2tor's staff attends our curriculum design meetings, helps create partnerships with schools, and coordinates the recruitment and admissions processing, with faculty making all final decisions."

2tor also supplied substantial capital for marketing and recruiting to get the program successfully launched. As another USC participant expressed in a press release about that program, "When you put it together, it's got DNA from both of us."

But just because both parents are talented doesn't ensure that their offspring will be--particularly if the parents are too busy to pay attention. For any top-flight degree program to succeed online, it must involve its top faculty. And therein lies the challenge. Award-winning business, management, and accounting instructors probably have more compelling projects on hand than figuring out how to use the new course management system or push the right buttons to capture their latest lecture.

That's why UNC relies on 2tor's experts to do the heavy lifting. "They're able to take what our faculty do extremely well--which is think about how you convey complex concepts and drive discussion and learning--and help them think about translating that into a different medium," claims Cates. "That has been a critical part of getting our top faculty involved in this program. Nobody is requiring faculty to do this--they are an army of volunteers."

In the beginning, a number of instructors did question whether the online experience could be as good for participants. "Those people have turned around to thinking, 'Wow! This can be a richer experience on some levels than we could have in a classroom environment,'" notes Cates. "We're charting new territory. Our faculty are being stretched to think differently about how to accomplish in a new medium what they do now."

2tor's Technology Approach
2tor provides a technology platform that evolves to support the online initiatives of its client schools. At its most basic, the platform employs the open source course management system Moodle, along with open source video solution provider Kaltura, and Adobe Connect Pro. But according to James Kenigsberg, the company's chief technology officer, once 2tor's done with them, you'd hardly recognize the programs.

"Moodle doesn't have a social site, so we've built a social engine to facilitate the level of learning that we want," he says. "For example, when our students log in, what they see is more like Facebook and less like other leading learning management platforms out there. They see a news feed where other classmates are discussing things or sharing links, where professors are chatting. We've brought the best ideas and tools around social media and implemented them in a way that makes sense for education."

But such whiz-bang features are still unable to take all the interactions, activities, and energy that permeate a b-school classroom and replicate them on the computer display of an online student. That's where 2tor tries to surpass the standard approaches often offered by instructional technology teams.

"A great teacher has more than enough great ideas," says Ian Van Tuyl, 2tor's VP of production. "What we're there to do is to help those great ideas mesh nicely with available technologies and new tech that can be adapted for specific needs."

The development process begins by sitting down with the course lead--the faculty member designated by the university to design a given course--and having that person describe the course as it exists "on the ground," explains Van Tuyl. Then 2tor comes up with ways to translate that experience online.

One recent problem involved a faculty member who likes to pop a DVD into a player to watch it with the class, pause the DVD to ask questions and get class response, and then fast-forward the show to watch other parts. "That's hard to do online through streaming video," notes Kenigsberg. "Different people have different buffering speeds and different internet access."

So 2tor built a proprietary tool using an API from TokBox, a group videoconferencing application developer. Now, says Kenigsberg, an instructor can play video in synchronous sessions, stopping and starting the video as he wishes; and students can have voice over IP conversations as they watch the DVD, no matter what their connection speed is.

Another professor, who's well versed in Microsoft Excel, still insists for "philosophical reasons" that students prove their statistical problems by drawing something using their hands, rather than relying on a spreadsheet.

"That presented an interesting challenge for us," says Kenigsberg. "In our online environment, we're not accustomed to doing intake from students of hand-drawn materials--and we're not talking about taking a picture of something and e-mailing it. So, because of this particular professor's desire to run exams that way, we're developing tools to enable that."

In developing an online course, claims Kenigsberg, all the faculty member has to be able to do "is express to us how they teach a great class. We'll help them take it online. We'll train them to use the tools. We'll train them in the technology to make sure they know how to teach online."

Beyond Instruction
2tor presumably shares revenue with its partner schools, so it's not surprising that its focus extends beyond instructional technology and faculty development to marketing as well.

UNC's Cates declines to comment, but, according to 2tor's Kenigsberg, the company deploys Salesforce.com for constituent relationship management. As he puts it, "I not only know how we met the prospect, but I know also know how he did in school. Technically, I know every click."

As a result, if a university lacks a robust student life cycle system of its own, 2tor has it covered. "There are some benefits to having a system that tracks a person from being a prospect to post-graduation," Kenigsberg says. To augment that information, every time a student finishes a unit, the program asks two or three questions about how satisfied he is with the content and the instruction. This feedback goes into the database and helps 2tor improve the program.

Some students and administrators may balk at the idea of a third-party company being able to track every click, but Kenigsberg is quick to add that, legally speaking, all data still belongs to the university. "Everything we create as part of this relationship belongs to the university--all IT, all the content. We facilitate, but they own it."

It's that ownership arrangement that drives 2tor's decision to partner with only a single school in a given topic. "UNC has a wealth of knowledge of how to teach specific courses," notes Kenigsberg. "We want them to be all-in with us. We don't want them holding back the secrets that make them different from other MBA programs out there. We want them to teach us everything so we can unleash them online properly."