How Technology is Bringing Business Education
There aren’t many reality-based television shows I can tolerate for very long, but one of them is “Shark Tank.” As someone who finds business and capitalism fascinating, fun and helpful to the world, seeing others who share that view chase their dreams by pitching a business idea to investor—the “sharks”—is a wonderful experience. I began watching with my daughter when she was quite young and I’m proud to say that she has gotten pretty good at judging valuations based on revenue growth, expenses and strategic direction. Unfortunately, that can’t be said of all the dreamers who ask the sharks to pony up some cash for a stake in their enterprise.
This blind spot with respect to valuation could be written off as founder hubris, but often I think it’s something more. Many of the entrepreneurs say things that indicate they are lacking some fundamentals with respect to running a (hopefully) profit-making venture. Interestingly, many never consider that the size of the business has no bearing on the things that matter. Whether you are the industrial conglomerate General Electric or you run a local, small business, you must worry about the same things: liabilities relative to assets, cash flow, pricing and data analysis, just to name a few. As most of us know, all companies go out of business for the same reason. In fact, it’s the only reason: they run out of cash. Knowing how to keep that from happening is like learning how to keep the engines running on an airplane in flight. Without that basic skill, you might glide for a while, but eventually the laws of physics take hold and you’ll experience what, in the aviation world, would be called a “controlled flight into terrain.” In business, it’s more directly and dramatically called “crashing and burning.” I happen to like the business terminology better.
But just like becoming a pilot, learning business fundamentals is something that is best not left to trial and error. Fortunately, the FAA forces aspiring aviators to go through pilot training that includes ground school and in-flight hours before it allows you to get behind the controls alone. In the business world, that is not the case, nor should it be. There are plenty of people who are wildly successful despite no formal business education (although all of them would say they got plenty of informal education along the way). But, just because it’s not necessary doesn’t mean it’s not useful.
Ten years ago, the problem with trying to secure business skills through a formal educational program as a business owner was that the opportunity cost could be significant. Taking a class or a degree program that required commuting to or living at a “bricks and mortar” campus could be a big strain when there were sales to make, investment choices to ponder and books to close. Not only was there the time commitment to the program, but there was also the fact that the time was being spent on something other than your business. This opportunity cost is not insignificant. Pile on obligations to family and (in some cases) another job while you try to nurture your fledgling P&L, and it’s clear to see why taking the time to learn the basics can become secondary.
But with the advent of the internet and the development of online options, that is rapidly changing. According to the National Center for Education Statistics, more than 5 million students have enrolled in at least one post-secondary distance-learning program. To put that into perspective, that means that more than one quarter of all students enrolled in a college level course have taken a distance-learning class.
At HBX, Harvard Business School’s digital education initiative, we sought to capitalize on the ubiquity of technology to extend the reach of the school in an effort to further its mission of “educating leaders that make a difference in the world.” The first foray into broadening this reach led to the creation of a credential program that teaches the fundamentals of economics, business analytics and accounting. Called CORe (Credential of Readiness), it was originally intended for undergraduate liberal arts majors seeking some business skills as they entered the workforce and as a primer for young professionals looking to go on to MBA programs. While those two markets have seen rapid adoption of the credential, the big surprise to us is how many adult learners, particularly entrepreneurs and small/medium-sized business owners, have taken the program (to date, more than 8,000 participants have enrolled in CORe). In discussions with colleagues from other schools’ business programs, they have noted a similar phenomenon: more seasoned business founders and operators are enrolling to give themselves that edge that makes it more likely that they and their firms will stay aloft rather than glide the proverbial aircraft into the ground.
We believe based on some anecdotal evidence that one thing that appeals to those business owners who take CORe is the use of case studies to teach concepts that can be applied in so many situations. More importantly, many of the case studies are focused on small/medium-sized businesses. Highlighted in the accounting module, for example, is Cardullo’s specialty gourmet shop in Harvard Square and Bikram Yoga of Natick (a suburb of Boston). In the economics portion of the program, customer willingnessto- pay is explored through a fictional food truck on a boardwalk. Yes, there are cases with Amazon and Danaher Corporation, two very large enterprises. But the use of business cases across the revenue-size spectrum help to drive home the point that the business issues are always the same, it’s just the number of zeroes after the numbers that change.
Many might ask, “What is the case method?” Pioneered at Harvard Business School about one hundred years ago, it teaches by having students read a story about a real or imagined business. Usually a protagonist in the story is facing an issue that requires a decision. The student puts himself or herself in the shoes of the protagonist, takes a position, and then interacts in conversations with classmates to refine that position. In other words, students do exactly what they would do in a company of more than one person — they would bounce ideas off of coworkers, challenge assumptions (at least in a healthy culture), and answer queries from others who may not understand a position taken and ask for clarification. In order for this real-world back-and-forth to happen in a meaningful way, the technology at HBX had to facilitate peer interaction. That technology and the ensuing interplay between students have proved to be the lynchpins of HBX courses. Perhaps most fascinating (but, in retrospect, not surprising), the connections made in wrestling with a difficult concept or business problem spilled over into the social realm, where students use various social media tools and live meet-ups to deepen their networks. I liken it to my boot camp experience in the military — facing a common challenge forges deep bonds.
The future of online education will see more of this, I believe. Humans long to belong no matter the context. Courses offered though the internet will have to find ways to foster this sense of belonging if they are to drive engagement and, most importantly, facilitate learning. We believe that when people talk about the uniqueness of in-person programs this is what they are referring to — the very tangible benefits they think they get from sitting in a room with others who have common interests, challenges, and uniquely personal experiences to enrich the learning of others. Technology is quickly catching up to this reality, and while it may never quite get all the way there (we still get on planes in record numbers to fly for business after all, despite hundreds of ways to connect remotely), it can get a lot of the way there and have enormous impact.
It’s also likely that virtual reality (VR) will play a role in making online business education become even more helpful. Imagine using VR goggles to practice negotiating with somebody in China while you “sit” in a boardroom on the 50th floor of a high rise in Shanghai (but you are really sitting at your desk in your bedroom). VR could also use animation to illustrate concepts in new, unique and impactful ways. Imagine being able to “grab” (in the literal sense) numbers off of balance sheets and income statements and move them around to show what happens when a given transaction occurs. For example, picture a virtual world where you are selling some virtual widgets to a customer at your virtual retail counter. You could take the cash from the customer and turn around and “place” it on the balance sheet. Likewise, you could grab the widget from the inventory line on the balance sheet and hand it to the customer. Would this sort of technology-enabled accounting tool help students grasp (pun intended) accounting concepts better? For many, I think it might.
For small business owners, online education offers a huge advantage in that it helps minimize the opportunity costs discussed earlier. But it’s not enough to say that you reduce the time commitment vis-à-vis other options. The education itself has to be meaningful and useful. Having run a medium-sized manufacturing company before returning to Harvard Business School, I was accustomed, as any business leader is, to various vendors trying to sell me their wares. Some of those wares were training and educational in nature. Often the pitch fell flat. One reason for this was that I could never tell how rigorous and engaging the programs were. This is something the people who were at HBX before me considered and acted upon when designing CORe. More than 85 percent of those that enroll in CORe finish the course. And “finishing” means showing up for an in-person final exam at one of many testing centers around the world. When compared to the completion rates of other online offerings (often in the single digits), this number suggests significant engagement.
And more importantly, those that finish the course are clearly mastering new concepts. How do we know this? If you separate students into groups based on their previous formal education, the difference in average final exam score between those who had already studied a subject and those who hadn’t ranges from just two to four percent, depending on the discipline (economics, accounting and analytics/statistics). The near parity in final exam performance is a sign that those who came in with little background in the subject areas elevated themselves to the level of those that had significant background.
One mantra often repeated by my parents was this: “Education is never wasted.” The older I get, the more obvious this becomes. After more than 20 years as a general manager and owner in businesses of all types, it’s clear that keeping abreast of current trends and enhancing basic skills isn’t just a “nice-to-have.” Rather, it’s what often separates the winners in the market from the losers. New technologies are not only helping small businesses compete but are also giving owners and operators the wherewithal to learn more while growing their businesses, minimizing opportunity costs.
I’ll close by returning to aviation analogies and repeating one of my favorite flying mantras:
There are three things that are useless to you as a pilot: runway behind you, altitude above you, and one second ago.
With the advent of online business education, business owners have the opportunity put more runway in front of them, more altitude below them, and more time ahead of them by learning critical, fundamental skills. The future belongs to those individuals who take advantage of such opportunities.