Can’t get away with … Benjy mutilated my blog post…
Author: kattuman12
Prediction is hard, especially about the future …
But that never stops us, does it? Here goes:
In five years time, top business schools will make their programmes far more demanding, engaged, intensive and expensive!
Not just business schools, but all “elite” universities. And this will be driven by MOOCs.
Here is a story line: MOOCs have near zero marginal cost (though high set up costs) in reaching new students. Competition between MOOCs will turn on quality – the reputation and on-camera charm, the graphics, the widgets, the general student experience etc… It wll be winner-take-all. As with films and music, few super-stars will dominate. More and more students will be tempted sign up at the low cost, and many will drop out. Nothing new so far…
How might elite universities respond?
The first principle in the face of fierce competiton: differentiate! In this, another subtle economic principle will certainly come into play. Universities will find it worthwhile to increase the ability of students to “signal”!
In the early 1970s, Michael Spence published an influential paper that won him a Nobel prize (in 2001 – a thirty year lag isn’t much for Nobels): when people do not share the same information – jargon: when information is not symmetric – they will try to overcome the information gap. Students try to ‘signal’ their high ability to potential employers — who if they had no reliable information will have to gamble in their hiring if they hire at all. Signalling to overcome information asymmetry is very common and not limited to education – it holds true even in biology.
Back to university… though teachers might like to believe that students come to learn, we know that they come mainly to signal ! But for signals of capability sent through their education (a demanding degree from a demanding university) investment to work, it is necessary that the less productive are not able to send the same signal as the more productive at the same cost. Taking all types of costs into account — not just fees, but effort and time — the more productive must be able to signal more cheaply. Signals are only useful if they are correlated with the (unobserved) capability of the potential employee, and for this it must be the case that the cost of getting an elite degree is lower for those who will turn out to be “good” hires. Employers can then rely on the signal that our students send through their MBAs from a top school.
Of course, the signalling theory does not work all the time or perfectly! Not everyone is out there signalling relentlessly. Not all capable people go to elite universities, and there is a full range of capabilities in these universities. But this is a story, so let us suspend disbelief and go with the flow a little….
So what will happen in five years? As MOOC based education becomes cheap all around, there will be even greater demand from students for the wherewithal to signal. As the value of signalling increases, we should expect the top business schools to make their programmes more demanding, more intensive, more expensive. Only very capable students will find the “costs” of such education not excessive, and then the “signals” will be more credible. Doesn’t this suggest that top business schools will be forced to push the “deep-engagement” route — to survive?
It will all be more nuanced than this little blog post parable of course 🙂
What will MOOCs do to the education industry?
The future of Business Schools?
A recent debate between Michael Porter and Clayton Christensen in NYT about online education has strong positions held and defended.
If people invest in education, to a large extent to signal (and Michael Spence got a Nobel prize for that insight) then elite institutions will surely divide the market with even more expensive, engaged, demanding in-house provision, to make signalling really worthwhile. There should always be willing and keen takers.
This post was written in the introductory session of the SMDL course
noisysignals 