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How Your University Can Benefit from MOOCs

Online course offerings are becoming a standard component of many universities' activities. Yet universities have to decide what objectives they are pursuing with their online course offerings and how to build a viable financial business model around the online education component.

We have analyzed the US MOOC environment and the higher profile online education platforms available. The result: a 4-square matrix based on prioritized goals (see figure 1 below). Our chart uses a number of MOOC players as examples and does not include every institution, investor, vendor, etc. that has entered the field. The list of players grows longer each month.

The strategy matrix below distinguishes two major broadly defined strategic directions:

  • The X axis displays the traditional focus on generating tuition or other revenue
  • the Y axis displays a more complex set of goals such as reaching larger scale student groups or building a strong online education brand. (Ultimately, building brand and improving reach should generate revenue as you scale).

All of these goals are legitimate on their own and combined together. They each require different institutional mindsets, investment levels and time horizons to be potentially successful. Let's describe a few real live examples from the chart and how we assess the strategic position without being privy to their internal deliberations and goals.

The high profile investment by MIT and Harvard--$60 million into EdX--created one of the largest scale and highest profile MOOCs. The stated goals are research and disseminating high quality education content around the world. Secondary goals appear to be identifying talented students and generating a return on investment. The president of EdX has stated that he views the $60 million in funding as investment not a donation.

Coursera, the venture funded West Coast MOOC, is certainly interested in research to improve the quality and delivery of online education. But the main goals are creating critical mass and massive reach and developing a powerful online brand to create a viable business model and a profitable company. They plan is to deliver long-term financial return for investors. Think of Coursera like other large education companies such as McGraw Hill, Pearson, and Phoenix University.

In addition to traditional education companies, we could envision a company like LinkedIn buying Coursera and adding an online education business to leverage their incredible reach to professionals. As a result of such strategic options, venture investors will be willing to fund companies such as Coursera, Udacity and Udemy.

Notice the different strategic direction and potential of these for-profit exit strategies as compared to large scale philanthropic investments like EdX. And consider the remaining strategic options clustered in the lower right hand quadrant of the chart. Just to be clear, we don't see any negative stigma positioning yourself in that quadrant and focusing on smaller reach and brand goals while pushing for revenue generation. In our view, this will be the competitive position for the large majority of traditional non-profit and public universities. In fact, we see tremendous online opportunity for many universities owning extremely strong brand awareness in a highly specialized academic areas. We envision specific schools developing an online course that can differentiate their institution globally as among the best programs in the world for, let's say, hotel and restaurant management, or urban architecture.

Before we leave the left hand top quadrant of our strategy matrix, pay attention to the Northeastern University example of a philanthropic oriented MOOC in collaboration with Warren Buffet. This highly targeted MOOC presented for the first time in 2013 teaches students how to focus their charitable intentions strategically. This MOOC drew 10,000 students from around the world. Consider: you don't need to create an online course for Economics 101. Others are far ahead of you there. Given where we see MOOCs going, our recommendation is that you figure out what unique offerings you can develop from the academic talent you have and pursue that. The field is still open for making a dramatic global impression before others claim that title.

Let's take two examples with similar strategic goals. Cornell University launched eCornell as an online program, leveraging their brand, faculty and content. Marketing slogan: "Ivy League Meets Real World." We're not sure what that means for the on campus education. Joking aside, it's a traditional course delivery at premium tuition levels via online delivery, marketed all year long to a worldwide student audience as well as corporate clients similar to executive education. eCornell content courses are also offered for $99 via Udemy. We're wondering if that's a distribution channel to create leads for the main courses or to experiment with content?

Northeastern University in Boston has an even more mature online program offering with a regular tuition model. They clearly target the fast growing, non-traditional students outside the on-campus student population. The for-profit universities, such as Phoenix or Walden University (owned by Laureate Education) and the non-profit universities such as Cornell and Northeastern are competitors in the same space with similar content offerings. They are competing on brand and reach.

We added a company such as 2U in this strategy matrix as a proxy for universities with specific online education programs at traditional tuition levels, but using a third party to support content creation, technology platform and possibly distribution. The list of 2U customers includes Brandeis, Boston College, Washington University and many other highly branded, higher ed institutions.

We have excluded public institutions from this matrix, not because we don't think they won't be active. Please see our Intead Insight Our Best Test Environment for Scaling Online Teaching. Because public higher education institutions have other public policy education objectives as a strategic priority, their goals exceeded this simple 2-dimensional strategy perspective of our chart.

Bottom Line: you have to decide what your institution's strategic objectives are in combination with the available resources and investment horizon to determine how to invest in the online education space. MOOCs give every higher education institution in the world the opportunity to stand out for something they do very well. This is a new opportunity to "go viral" as it were and let the world know what makes your institution special, unlike all the others. It certainly requires some level of investment to capitalize on the opportunity. There are many decisions to make about the business model and operational model best suited to your institution. Our Chief Operating Officer Ben Waxman will be presenting at the EAIE Conference in Istanbul this week on this topic and all of the MOOC experimentation going on in the US today.

There's plenty to learn as all of this moves forward.

Topics: Insights