carringtoncrisp CarringtonCrisp November 2014 All rights reserved. Reproduction in whole or part prohibited without prior permission of the authors.

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1 See the Future 2014 A study of the views of employers and senior academic and professional staff in business schools on key trends in business education.

2 carringtoncrisp CarringtonCrisp November 2014 All rights reserved. Reproduction in whole or part prohibited without prior permission of the authors. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without prior permission of CarringtonCrisp, ACCA and EFMD.

3 see the future Contents page 1 Report Introduction 6 2 Technology changes everything 9 3. A degree of change MOOC mania? Qualified for the job? Don t worry about the future, worry about tomorrow The future has already arrived 41 Appendix 1 About the authors 46 3

4 carringtoncrisp Introduction from ACCA What is the future of business education and training around the world? What does the future learning experience look like? What challenges lie ahead for business schools and universities? What do employers want from the graduates they recruit and how can the world of education ensure it delivers value for all stakeholders? These are just some of the questions See The Future asked for this online survey. See The Future sees a disruptive outlook for higher education, as illustrated by Professor Christensen s quote. Higher Education (HE) appears to be teetering on the edge of a precipice, so the big challenge is how it sees its own future. Competition, payment by results, university fees especially in the UK student satisfaction surveys and employability ratings are all changing how HE is delivered around the world. Business education has been a mainstay of the HE sector for over a century. The Master of Business Administration (MBA), born in the States and exported around the world, is often seen as a fast-track passport to the boardroom. But as this research shows, the university sector and the traditional business school are facing pressures from new tech-savvy players who have developed online delivery that meets end users needs for flexible delivery and learning. While this research has an underlying theme of change or die, it also offers solutions to futureproof business education. It is clear that hybrid offerings will be needed; blending online learning with face-to-face learning, while also ensuring experiential learning is part of the mix. Massive Open Online Courses (MOOCs) and Small Private Online Courses (SPOCs) are no doubt part of this mix. More than 80% of all managers/directors agree that I would like to see business schools better combining the use of technology with traditional learning. Ultimately, this is what the global HE sector, business schools and professional bodies like ACCA (the Association of Chartered Certified Accountants) need to counter. We need to ensure that business education, at whatever level, remains an important part of lifelong learning, that it remains relevant or business education will lose its currency and value. A standout verbatim from the research is this statement from an employer: Many business graduates that we interview are strong academically, but demonstrate little evidence of professional skills. What is clear from this research is that a professional qualification such as ACCA can bridge the gap between education and employment. So by working closely with the HE sector to offer streamlined routes to gain both academic and professional qualifications ACCA aims to maximise the employability of students. Alan Hatfield, Director of Learning ACCA I think higher education is just on the edge of the crevasse. Generally, universities are doing very well financially, so they don t feel from the data that their world is going to collapse. But I think even five years from now these enterprises are going to be in real trouble. Professor Clayton Christensen, Harvard Business School 4

5 see the future Introduction from EFMD For EFMD and its members, both business schools and corporates, there is nothing more important than the future of business education. It has been clear for many years that the pace of change in business education is accelerating. Through the See the Future study, EFMD aims to raise awareness of some of the changes taking place in business education, provide insights from its global membership and challenge members to think about how they might best respond to and drive change. As an organisation, our mission involves disseminating knowledge about management development and education, generating new ideas in the sector and creating activities that foster learning, sharing and networking among our members. The See the Future study provides an opportunity to meet these objectives. However, this report is not an end, but part of an on-going process. As an example, a growing number of our member business schools have become involved with MOOCs, more will follow and yet more will engage with digital learning in many different ways. Understanding the drivers of change in this field and the demands of those seeking to learn digitally are key to our member schools delivering effective solutions. Collaboration and partnership between schools, across universities and between business, professional bodies and education are familiar themes among our members. They understand the need not just for an academic experience, but one that bridges the worlds of business and learning that provides students with an applied experience of their subjects. More and more, they also recognise the need for business to be studied in a wider context, to see the impact it has on society. To this end, there is a growing need for business schools to work with other faculties, departments and experts throughout universities to ensure students receive a rounded education. The partnership with ACCA, and our on-going collaboration with CarringtonCrisp, to deliver the See the Future study are an indication of our determination to forge relationships that provide our members with both a deeper and broader understanding of the world in which they operate. The insights from this report will prove invaluable for our members as they seek to build strategies for the future of business education and for EFMD in its role as a catalyst to promote and enhance excellence in management development internationally. Eric Cornuel, Director General and CEO, EFMD 5

6 carringtoncrisp Report Introduction 1.1 Rarely a day passes without new theories about the future of business education. The economic crisis of recent years produced lurid headlines suggesting MBAs were to blame, causing some prospective students to question the degree. The cost of an MBA has increased significantly, but with fewer high paid jobs in the financial sector in recent years the value of the degree has also been questioned. 1.2 Beyond the MBA, the competition established business schools face has increased with many schools in emerging markets growing strong reputations together with a host of private entrants to the marketplace. Add in the growing influence of technology on the delivery of education and learning and traditional business education models are being disrupted. 1.3 The work of Professor Clayton Christensen at Harvard Business School is well known and he has said the following: I think higher education is just on the edge of the crevasse. Generally, universities are doing very well financially, so they don t feel from the data that their world is going to collapse. But I think even five years from now these enterprises are going to be in real trouble. Some (of the great universities) will survive. Most will evolve hybrid models, in which universities license some courses from an online provider like Coursera, but then provide morespecialized courses in person. Hybrids are actually a principle regardless of industry. If you want to use a new technology in a mainstream existing market, it has to be a hybrid. 1.4 Richard Lyons, dean of Berkeley s Haas School of Business at the University of California was quoted earlier in the year suggesting that half of the business schools in the country (USA) could close down within the next 10 or even five years. The UK has already seen the merger of Ashridge Business School with Hult International Business School, a school that has grown rapidly in the last decade following the renaming and take over of what had been the Arthur D Little School of Management. 6

7 see the future 1.5 Schools have also found the competition for highly qualified faculty intensifying, driving up salaries or forcing them to consider moving to a fly in, fly out model for some of their delivery. In some countries, funding has shifted away from the state towards the student with schools obliged to reconsider their income streams, growing alumni and corporate support. 1.6 With business education forced to consider the content of its degrees there is evidence of a growing shift to a multidisciplinary approach, drawing in expertise from other faculties to meet the demands of students and corporates. International partnerships between institutions, whether business schools or between business schools and other institutions have become common. Culturally Universities are not quick to respond to business need so for me Business Schools need to sit outside of the host Universities reporting systems. 1.7 Add to all of this a demand from different audiences and different demands from existing audiences. Undergraduates are no longer just 18 year olds, MBAs are younger and there is a growing demand for short, certificated courses from those with experience. 1.8 Data from UNESCO in 2009 showed that nearly one-third of the world s population (29.3%) was under 15. At the time there were 165 million people enrolled in tertiary education. Projections suggested that participation will peak at 263 million in Accommodating the additional 98 million students would require more than four major universities (30,000 students) to open every week for the next fifteen years. Clearly, new solutions will be required to ensure that the demand for higher education can be met. 1.9 At the same time student mobility has been rising and new patterns have emerged. In 2000, there were 1,825,000 internationally mobile students. By 2009, this figure nearly doubled to 3.3 million. While the USA remains the most popular destination for international students followed by the UK, there are growing regional flows with countries such as China and Singapore attracting a growing number of mobile students. 7

8 carringtoncrisp 1.10 Recent research by EY has added to this changing international picture. In Asia alone, 525 million people can already count themselves middle class more than the European Union s total population. Over the next two decades, the middle class is expected to expand by another three billion, coming almost exclusively from the emerging world By 2030, EY believe two-thirds of the global middle class will live in the Asia-Pacific region, up from just under one-third in Elsewhere, the number of households in Mexico with annual disposable incomes over US$50,000 is expected to reach 7.1 million by 2020, with 9.4 million in Brazil. For both countries this is an increase of over 50%. In Indonesia in 2015 and Bangladesh in 2029 average per capita income is forecast to reach $6,000, the point of entry to the middle class. It s not a perfect storm, but the Dean who sticks their head in the sand and fails to think about how best to position their school for the future, risks the school and its students being left behind. The future of business education will depend on its agility to gauge, engage and participate in the change With this set of circumstances, CarringtonCrisp worked with ACCA and EFMD to devise a survey to discover what those leading business schools and businesses were thinking about the future. The study is a follow-up to a similar study, See the Future, conducted by CarringtonCrisp in 2013 which asked prospective students, current students and alumni for their views on a number of key trends in business education Data collection for the study was carried out in July and August s were sent to the EFMD member database and to a sample of ACCA approved employers A total of 402 responses were received, of which 343 were from staff at business schools; included in this group were 182 who hold the position of Dean or Director. Of the business responses, 40 held the position of Senior Manager or above, including 8 at Chairman/CEO and 12 at Partner/Managing Partner. Responses were received from 63 countries All the quotes shown in this report are from respondents to the survey. 8

9 see the future 2 Technology changes everything 2.1 That technology will disrupt business education is beyond doubt. Around 90% of business school respondents agree or strongly agree that Technological innovation will bring new entrants to the business education market and just over 90% that Technology will promote the growth of new business models for business education. Flipped classrooms will become more normalised. Assessment strategies will need to change. Students will construct more of their own content around key themes/topics. The role of the academic in the classroom will change. 2.2 As of October last year Coursera alone had 4 million sign ups and raised another $43 million in venture capital. In February last year, Apple released data showing that there has been one billion downloads from their itunesu website. The two most downloaded institutions worldwide, with more than 60 million downloads each were Stanford University, USA and the Open University, UK. Figure 1. Potential developments in business education in the next five years from business school respondents 9

10 carringtoncrisp 2.3 Much of the disruption of business education may be demandled with just over 80% of business school respondents agreeing or strongly agreeing that Degree students will expect delivery of programmes in part to be delivered online. It really depends on the quality of the school. The major high quality schools will continue to be more face to face, while others will race to the bottom. 2.4 Asked how much delivery students would expect online, most respondents expected the figure to be just over a third of a degree programme. The figure is lowest among respondents from south east Asia at 32% and highest in Australia/New Zealand at 43%. This does not mean MOOCs. MOOCs may well be one part of this provision, but there are a host of other digital delivery tools that will be widely used across business education. Provision may be a part of a course, it may be a module in a programme or it could be an entire degree. Better known schools will provide on line learning through their best known professors. Individual professors will earn money outside the school salary as they come into great demand for excellent teaching. Dissertation committees will draw on faculty from several schools. 2.5 There is anecdotal evidence that this figure may turn out to be higher. Some schools have already introduced online programmes for students before the start of their formal course to help bring them up to speed on certain topics. CarringtonCrisp research among alumni suggests a strong demand for opportunities to continue learning through online programmes. Alumni find that they may not have been able to study everything that they wanted to do when students, they may have a need for CPD, they may as their career changes need new skills or they may just have a personal interest in a subject all of these might be delivered online. 10

11 see the future 2.6 The use of online delivery will not be restricted to traditional degree programmes. Around 40% of respondents believe that Executive education for middle managers will move to largely online delivery, although just under 30% disagree or strongly disagree. Among UK & Irish respondents only 25% agree that executive education for middle managers will move to largely online delivery. Increasingly employers are seeking quicker, cheaper and more substantial impact from training and development. Online learning offers opportunities for staff to learn at their place of work removing travel and accommodation costs, apply what they have learnt quickly and sharing their learning with colleagues. 2.7 However, some areas may be little impacted by online delivery. Almost 80% agree or strongly agree that Executive education for senior managers and directors will largely remain face-to-face. In the Asian context, employability and government policies, and professional associations still play a big role in the direction of the degree granting decision. In terms of accounting, technology will have a very important role in day-to-day performance, e.g., report writing, in data collection, etc. Figure 2. Potential developments in business education in the next five years from business school respondents in south east Asia 11

12 carringtoncrisp Figure 3. Potential developments in business education in the next five years from business school respondents in Australia and New Zealand Figure 4. Potential developments in business education in the next five years from business school respondents in western Europe 12

13 see the future Figure 5. Potential developments in business education in the next five years from business school respondents in the UK & Ireland Figure 6. Views of employer respondents on issues and developments in business education in the next five years 13

14 carringtoncrisp Figure 7. Percentage of degree provision that students will expect to be delivered online Figure 8. Percentage of degree provision that students will expect to be delivered online from business school respondents in south east Asia Figure 9. Percentage of degree provision that students will expect to be delivered online from business school respondents in Australia and New Zealand 14

15 see the future Figure 10. Percentage of degree provision that students will expect to be delivered online from business school respondents in the UK & Ireland Figure 11. Percentage of training and development employers believe will be delivered online in their organisation by 2020 Additionally, "hybrid" education models will increase in use where a course cannot be simply classified as "online" or "face-to-face". Rather, intensive face-to-face experiences (whether real or virtual) will be integrated with an expansion of asynchronous online learning tools for individuals and team requirements. 15

16 carringtoncrisp 2.8 Echoing the suggestions of Rich Lyons from Haas Business School, 80% of respondents agree or strongly agree that Some existing business schools will fail or need to merge to survive. A view shared by just over 2/3rds of employers. In the French market there have already been a number of mergers creating new schools such as Skema, Neoma and Kedge. In the UK the merger between Ashridge and the international business school, Hult, was announced earlier this year. While it may be premature to suggest these changes are the beginning of a trend, it would be surprising if they were the last mergers for the next few years. Technology provides great opportunities for improving teaching and learning. However, perhaps partly due to the demographics of faculty, ineffectual leadership, poor professionalism, and few incentives to keep up-to-date with pedagogy and educational technology - students miss out and traditional business schools are highly vulnerable to the risk of being left behind in a highly competitive tertiary business education environment. 2.9 In order to survive and prosper through this period of disruption, more than 90% of business school respondents agree or strongly agree that It will be increasingly important to demonstrate how we can increase employability. A study by Gallup in the US found a similar result earlier in the year with employers questioning whether graduates had the skills required by business today. Millenials who are unlikely to believe in a career for life, will want to know that their education provides them with an experience that helps them move careers and that as alumni they can acquire additional skills to support their development, perhaps from their old business school. 16

17 see the future 3 A degree of change 3.1 While opportunities for lifelong learning will remain important, it is lifestyle learning that will come to the fore with the opportunity that technology offers education. Increasingly the opportunity exists for anytime, anywhere learning, providing students with the flexibility to learn at their own pace and around their other commitments be they work, family or something else. 3.2 Almost 90% of respondents agree or strongly agree that Business schools will develop flexible degrees that allow students to mix study and work with completion over an extended period. Nearly three-quarters also agree or strongly agree that Business schools will develop new products to help younger and older workers who have no or only limited experience of higher education. An example might be the joint undergraduate accountancy degree that KPMG have developed with three UK universities, seeking to target those who might otherwise not have considered university and providing them with employment as students and beyond. Such an approach is backed by many Deans with just over 70% believing that Business schools will develop more joint degrees with employers. In the UK and Ireland, nearly 90% expect joint degrees with employers. 3.3 In a similar vein, around 60% agree or strongly agree that Business schools will develop more degrees which provide exemptions from professional qualifications. In south east Asia the percentage rises to around 70% and increases to almost 90% in the UK/Ireland. ACCA already accredits 1450 programmes in 624 institutions in 53 countries. In Russia we have seen co-operation between the railway industry and Moscow State Engineering University. The University developed a masters programme which embeds the ACCA syllabus and gives exemptions from ACCA papers. The exams introduce more business-based scenarios that require students to exercise judgement. Students continue learning in an experiential role in the railway industry (or with other companies) applying knowledge to different scenarios with guidance from a qualified mentor. 17

18 carringtoncrisp 3.4 In CarringtonCrisp s Tomorrow s MBA study carried out with prospective MBA students in 2014, around 60% of candidates indicated that they look for professional body accreditations at their preferred business school. 3.5 More than half the Deans responding to the survey also believe that Business schools will increasingly accredit other prior learning within a degree. Such a scenario raises the possibility of incorporating MOOC studies, employment experience and other learning within a traditional degree. 3.6 Respondents from business education were also given a series of statements about the future of the degree and asked whether they agreed or disagreed with each statement. Low cost providers are likely to target cash cow programs like the MBA in major centres offering intensives, flying faculty, limited assessment etc utilising existing infrastructure e.g hotels etc this will place significant pressure on most Universities competing at the low to mid level target sectors as they have significant overheads and large bureaucratic structures that have developed in recent years that is already putting pressure on income streams. Some of these may have to merge or drop out of these markets. Figure 12. Developments in degree provision over the next five years identified by business school respondents 18

19 see the future Figure 13. Developments in degree provision over the next five years from business school respondents in south east Asia Figure 14. Developments in degree provision over the next five years from business school respondents in Australia and New Zealand 19

20 carringtoncrisp 3.7 More than 80% agreed or strongly agreed with each of these statements: Degree students increasingly want a flexible approach to their studies, fitting learning around lifestyle and other commitments Degree students increasingly expect technology to support delivery of their studies Degree students increasingly expect a personalised approach to their experience, especially with career support One of the most important aspects of postgrad education will continue to be the networking opportunities that can't be substituted for digital delivery. As well postgraduates in particular will be seeking authentic engagement with industry as part of the learning experience and this can't be done online. 3.8 In south east Asia and western Europe, 85% and 90% of respondents respectively agree that Degree students increasingly expect international study as part of their programme compared with 60% of the total sample and only a third in the UK/Ireland and 40% in Australia/New Zealand. Figure 15. Perception of student expectations identified by business school respondents 20

21 see the future Figure 16. Perception of student expectations from business school respondents in south east Asia 3.9 In the UK and Ireland, 60% agree that Degree students increasingly want exemptions from professional qualifications as part of their studies compared with only 40% in the total sample In south east Asia nearly 80% agree that Degree students increasingly want a work placement as part of their studies compared with fewer than two-thirds in the total sample. Technology and flexibility will have been common themes in many discussions in business education in recent years, but a personalised approach to career support may not have been highlighted. Some business schools do assess students on arrival, developing individual plans to support their skill enhancement and career opportunities. However, such an approach tends to be limited to a few schools with high fees for their postgraduate programmes. Such an approach across all schools may be unaffordable, but if a school can effectively leverage its alumni to provide career advice this may offer an opportunity for the school to differentiate itself and deliver a value-added approach to careers for its current and future students. 21

22 carringtoncrisp 3.11 Of course, business education is not just about degrees. Much delivery is executive education or professional development for corporate clients. The two main priorities identified by employers when seeking customised executive education programmes from a business school are: Value for money Teachers with real world experience of our business sector Also important with more than 1 in 4 of the respondents are: Programme outcomes for participants and organisations Overall reputation and brand of the provider Face-to-face training will remain important and relevant for business education. Supplementary materials and guest lectures can be provided online. The marketing of education needs to be online to cover wider markets but the delivery of education mainly has to be in a physical environment. Students learning in terms of reading, memory and analytical work is not friendly online. Corporate learning and group exercises are important to deliver group projects and case analysis. In-class performance will provide constructive peer pressure to group learning and enhance listening ability which are critical to work and study. Figure 17. Perception of student expectations from business school respondents in Australia and New Zealand 22

23 see the future Figure 18. Perception of student expectations from business school respondents in western Europe Figure 19. Perception of student expectations from business school respondents in the UK & Ireland 23

24 carringtoncrisp Universities are like slow moving elephants. So much is going on in the applied world and educators are failing to pick up on these new trends. The main problem is that a lot of faculty in NZ have never worked in an applied setting Value for money has become increasingly important over the last five years. Employers have sought shorter courses, seeking to reduce the time that staff spend away from their place of work, driving improvements in value for money. Employers have also increasingly looked for providers where those teaching not only have an academic reputation, but also have work experience in their specific sector. Previous research by CarringtonCrisp suggested that employers were less prepared to pay for star name professors and off-the-shelf solutions than they may have used in the past. Instead, employers increasingly wanted tailored solutions, teachers with sector knowledge and collaboration between schools allowing organisations to benefit from strengths in different providers of executive education. The emphasis on relevance and practitioner engagement will get stronger. There will be closer links between relevant and high impact applied research and the content and delivery of the curriculum Despite the demand for specific experience, the brand and reputation of the provider are also important. Business schools seem to understand this with respondents later in this report identifying the need to differentiate their offer as one of their top three challenges. One of the big trends in K-12 has been disintermediation and I think this will become very prominent in higher education as well. B. Schools will increasingly be buying in content and expertise rather than developing it themselves. Changes in technology and the shift to flipped classrooms will enable this process because once content is digitised, its production and delivery can be separated. 24

25 see the future Figure 20. Priorities among employer respondents when seeking customised executive education programmes from a business school 25

26 carringtoncrisp 4 MOOC mania? 4.1 While MOOCs are part of the disruption, they are not everything. However, they appear to be everywhere. One of the most recent launches in this space was a joint MOOC between the University of Leeds and Marks & Spencer, prompting the comment that the company s tag line, Your M&S, stood for Your MOOC & sandwich, putting education available at the checkout queue. In my experience, MOOCs offer a great overview of a subject but can be superficial if that learning isn't then developed through some of the options presented by face to face learning (class discussion, tutorials with experts etc). I'd normally be recruiting for a specialist and I don't feel a MOOC currently gives that depth of training. 4.2 Although 60% agree or strongly agree that MOOCs will impact on the current provision of business education, less than 30% believe that MOOCs/free online education will threaten provision of traditional degrees. The percentage expecting MOOCs to impact on current provision rises to over 80% in south east Asia. In the UK and western Europe, only 15%-20% believe that MOOCs will threaten provision of traditional degrees. Figure 21. Impact of MOOCs over the next five years 26