What Does SuperText Mean for Business Schools?

In the recently published ‘Will Video Kill the Classroom Star?’, Wharton School professors Christian Terwiesch and Karl Ulrich predicted that the technology behind MOOCs (massive open online courses), namely something called ‘SuperText’, poses a threat to the way business schools currently operate.  

In theory, short video segments could be used in lieu of lectures, freeing up time for classroom discussion (this ‘flipped classroom’ is already used in some business schools), but also potentially meaning that fewer faculty members would be required overall.

We caught up with Professor Terwiesch (pictured) to discuss MOOCs, the ramifications of SuperText and the controversial cost of research. 

Is there a question of losing something from the MBA experience if SuperText replaces lectures  – you use the metaphor, “Why go and see a local clown in the town square if you can watch one of the best in the world on the big screen?” But isn’t there something to be said for the intimate experience of seeing a local clown?

Absolutely, going from the classroom to online, you have to cut certain things – interactive discussions, games, role plays, simulations, exercises. These are really hard to replicate on the internet. To go back to the clown metaphor, there’s something charming and inspiring about going to a theatre and seeing a clown. However, the other half of classroom time is waste and inefficiency; there’s a productivity gain in moving this online, not just in terms of faculty as a resource but in terms of using the students’ time in the most productive manner.

Will we see top-tier schools embracing this technology or do you think it will be more the next-tier down, making use of the best clowns on the big screen? Will top-tier faculty come to be something of premium product?

From an economic perspective, this is the default assumption. We’ve seen this in other industries, including entertainment. To the detriment of local culture, we’re all listening to the same American pop stars – whether you’re in the UK, Germany, all the way up to Asia, they’re listening to Lady Gaga. SuperText facilitates this same globalization of education. I would add some nuances to this. Second-tier schools can benefit a lot from SuperText, having lectures from top-tier professors, freeing up resources, allowing for a lot more handholding and care that they can’t afford to give right now.

The thing that works in favor of these schools, especially the stronger ones, is that they are risk taking and innovative; the big name business schools, well, we tend to be a little in love with ourselves, which can make us risk averse and slow to change. At Wharton we’ve been good at embracing the MOOC, but this is more the entrepreneurial mindset of some members of faculty than anything. We are very reluctant on the institutional side to make any big changes. But the likes of UNC and Drexel down the road, they don’t have much to lose in the MBA market – so they think, let’s shuffle the cards, the two-year MBA is outdated. That’s their advantage; disruption is always good for the ones who are not disrupted.

This technology is cost-cutting – will we see savings trickling down to the student or will money be redirected towards research, or somewhere else entirely?

We talk in the report about research – we were criticized for this. Nobody wants to say anything bad about research! But if you think about the productivity gain, my forecast is that it will go to the student, but not as lower tuition, but rather improved amenities. My argument is based on an empirical observation. MBA programs right now at top schools have unlimited demand at the US$120,000 price tag. There’s very little pressure to bring it down. A different story at college level, at the second-tier. We can use the saving to bring more of a ‘wow’ experience to the students, making it even more special. We have global modular courses, and these could become more integral to the course – students travel and work all over the world. This is where the productivity gain is going to go, in my opinion.

With the possible outcomes you mention in your report, there is a suggestion of a widening of access, a greater flexibility, affording more options that mean that people who can’t do a full-time two-year program can now gain some form of business education. But is there a risk here of a dilution of the experience?

Through MOOCs we have dramatically increased access – over a million people take the Wharton foundation course, around a quarter of million have taken my operations course. This is much more than I could teach in my lifetime in just one year. This increase in access is a wonderful thing; it fits our social mission of disseminating knowledge. We are not a for-profit organization, so we can feel good about this. There has been a little bit of backlash from our enrolled students, who paid their tuition: You’re giving it away for free, and we pay lots of money for it. But when you explain the rationale behind it, people very quickly see the benefit.

But apart from doing social good, educating people in countries where there’s no way most people could ever come to Wharton, offering these courses increases the overall reputation of the school in another way. Initially, while someone might say, 'why pay if you can get something for free?', those who pay get the real thing. I like to compare it to what Harvard Business School did close to hundred years ago when they launched the Harvard Business Review. Everyone could have a little Harvard at home for 10 bucks. People said, 'why are you giving away this knowledge so cheaply?', but when you think about it, this is part of what created the amazing brand of the school, giving away small pieces of the experience. I think that’s what we’re doing now with the MOOC. We’re not giving the Wharton MBA away for free, just tiny parts of the experience. As well as the altruistic side of it, the MOOCs serve a role in marketing and brand building.

Will MOOCs come to be taken more seriously as qualifications? Talking about increasing access is one thing, but it doesn’t mean too much if there’s no credential. Of course, you’re increasing your own knowledge, but shouldn’t there be something to prove you’ve done this? Do we see people putting MOOCs on their résumés, and, more importantly, people looking at that and saying, this person is qualified?

This is one of the possibilities we discuss in the report. Credentialing may stop happening at degree level, but at a smaller level instead. Maybe you could take a course at Wharton, a course at Harvard, a course at EdX, and maybe you get a little bit of qualification from everywhere. This has the potential to lead to what we call the unbundling of the business school. Instead of having all these courses bundled together for two years, with career management  and certification, maybe you go for a three-week vacation at Club Med, you meet some people, do a MOOC at Harvard, you do a MOOC at Wharton, then you’re going to get a qualification from  Kaplan – that’s quite a unpleasant scenario, right? There are plenty of value propositions to having students under one roof; we think that SuperText has the potential to break up this architecture and have the individual components delivered separately – I don’t think this would be a good thing.

Now – you also say we might see fewer faculty members as a result of SuperText. Would this be a bad thing or do you maybe think there are too many; another inefficiency?

Throughout higher education, we have witnessed a decrease in tenured faculty due to cost pressure. We’ve resisted at top business schools – we have enough of a presence in the market that we’ve not been as subject to cost pressure. So long as we provide a meaningful experience, with the 'wow' factor, I think we can keep charging what we’re currently charging, and escape cost pressure for a while. That being said, I think we’re very spoilt in terms of the faculty-student ratio. I can see this shrinking slightly over the next 10-20 years – not dramatically, but a little bit. If you’re in the second or third-tier, it will shrink dramatically.

One of the most eye-catching figures in the report was the cost of research (US$400,000 per article), which is one the main things picked up the media. Do you think the indignation expressed by people was perhaps a little naïve – research needs to cost that much, or should we be scandalized by this?

I think you can only answer that question if you can separate research articles and research articles which impact managerial practice. As expensive as you might think the figure is, I’m less concerned with that number than with the number of readers each article has. I think a serious discussion needs to happen regarding the business school research community. We have been shielded from any kind of feedback. We publish to each other, it’s peer-reviewed, we all clap, and applaud how smart we are.

But the research itself is not what our customer is paying for so there’s no market feedback. The number of readers each article gets can be extremely low, many if not most of these articles are so focused that they might be read by 20 or 30 people in the world. These aren’t Harvard Business Review articles that 10,000 people might read. Over the past 20-30 years, we’ve managed to cover all aspects of business and management research, every stone has been turned over. So we’re now digging deeper and deeper, and often, it just becomes an exercise in mathematical methodology and technical excellence, without really asking the ‘why’ question, or contributing anything to the practice of management.

For US$400,000, if you give me a paper that’s rigorous and relevant, I’ll take it. I think we’ve become a bit biased towards the rigor side of things. Think of a return on investment – you can either get the investment down or you increase the return. I’m more concerned with the return – it’s too low. There is a need for good rigor – that’s what sets us aside from consultants who produce work that’s relevant, but totally flawed. But we’ve gotten sloppy on the relevance side. I started at INSEAD in the 90s – there was a very strong emphasis on relevance. Over the years, all schools have started focusing on getting into the good academic – mostly US – journals. If they ask for more rigor, it doesn’t matter if it’s at the cost of relevance. It doesn’t matter where you are, Kellogg, Wharton, they all play this game. We’ve lost the relevance somewhere by the wayside.