A Modern MBA Guide

Here is a guest post by Emma Collins - a writer and researcher for MBAOnline.com. When she's not writing she enjoys kayaking and hiking with her collie Roxy.

A Modern MBA Guide...

Most of us can agree that it’s pretty easy for entrepreneurs to make mistakes. Are there some sectors or growth areas where success is more likely, though? The next article suggests that there might be -- and that the blossoming ed-tech sector may be at least part of the answer. Emma Collins, who studies and profiles the top MBA academic programs in 2012, joins the blog today to introduce and explore some of the newest ways in which technology is being leveraged for higher education.

Using a Masters of Business Education to Disrupt School Systems

With tuition at most public and private colleges continuing to surge and state governments around the US slashing education funding, many educators and university officials have been concerned about the future of education in the US. Yet, while traditional education institutions fret, many Silicon Valley entrepreneurs and venture capitalists have seen an opportunity to revolutionize education.

From 2002 to 2011, investments in education-technology companies nationwide tripled, from $146 million to $429 million. Since 2009, the investment boom has only increased, with a year-to-year $150 million increase in investments, even as the economy as a whole was mired in the recession. While a similar wave of “ed-tech” funding hit the market in the late 90s, the vast majority of those companies were never able to reach profitability, and most disappeared in the boom-bust cycle that followed early euphoria regarding internet-based companies. Analysts tend to agree, though, that most of the late 90s companies were either more ambitious than the technology of the time could sustain, or simply had never developed an effective business model.

Since then, massive advances in computing power at colleges have allowed technology companies to flourish. Near-universal wireless internet access, high-speed connections and cloud-based software have greatly enhanced the capabilities of tech companies, and private investors seem to agree the time has come for technology-based education companies to find significant growth and profitability.

Much of the confidence investors feel towards ed-tech companies is due to the exceptional rise of online education enrollment over the past decade. A study from the Babson Survey Research Group finds that the number of college students enrolled in at least one online course increased every year from 2002 to 2011. In the fall of 2010, more than 6.1 million students took at least one online class, a 10.1% increase over the previous year.

In lieu of the surge in online course enrollment, a backlash against the medium has formed among many educators and university officials. The Babson Research Group reports that 66% of faculty members say that the learning outcomes of online courses are inferior to traditional courses. Many assert that the collegiate atmosphere, connections among students and meaningful dialogue with professors is all but impossible through online learning venues. The high costs of courses at many popular for-profit online schools and questionable quality of some programs have also been cited as detractors to online education. The negative publicity has even lead to the first drop in enrollment at for-profit colleges in over a decade, with a dip of 2.8% among students entering in the 2011-2012 school year.

However, many of today's entrepreneurs counter that their education-technology startups operate in entirely different ways than do the vast majority of established online colleges. Ed-tech companies like Coursera and EdX don't actually compete with traditional universities, but in fact supplement them. Leading universities including MIT, Harvard, Stanford and Princeton are bringing their courses to users around the world, usually for free or at most a minor fee. The sites could soon represent a true revolution in both how students receive information, and who is able to utilize university resources. Stanford president John Hennessy asserts he sees “a tsunami coming,” due to the capabilities of these sites.

Coursera, founded by two Stanford computer science professors, has already enrolled 1.35 million students in its free online courses since it premiered in May of 2012. EdX, perhaps the company's chief competitor, was founded by Harvard University and MIT with the University of California-Berkeley coming on board shortly after debuting, offers its learning platform as open-source software, allowing anyone around the world to adopt and improve its resources.

Recently, the companies were granted a significant boost by the American Council on Education, which has agreed to review some of the free online courses offered and recommend that other colleges grant credit for them. The move is a significant step towards education availability for nearly anyone online, regardless of income. If education-technology entrepreneurs and universities are able to continue working in the mutually beneficial partnerships illustrated by Coursera and EdX, today's higher education crisis could very well pave the way towards a viable business model for education as well as a true democratization of academic resources.