Why Did Harvard Go Outside to Go Online?

Charles Darwin, teleported from 19th-century Cambridge, could enter any classroom at Harvard today and, without the least hesitation, stride directly to the lectern and deliver his lecture on evolution as if not a thing had changed in 150 years. (To keep up with the times, however, Darwin would need to learn how to display images of his finches on PowerPoint slides.)

But a professor who retired 20 years ago, clicking open her computer, would find digital education nearly unrecognizable. In just a couple of decades, MOOCs, flipped classrooms, video streaming, digital exercises, remote labs and other developments have transformed online instruction with new technologies and innovative pedagogies. Bewildered about how to respond to market forces compelling them to move online, most universities and colleges are mystified as to how to proceed.

“Universities have gone from the Pony Express to jet aircraft in one fell swoop,” observed Dominic Brewer, dean of New York University’s Steinhardt School of Culture, Education and Human Development, in a phone conversation. “Enrollment management is from the 19th century, with spreadsheets and file cabinets.”

To move ahead online, most senior college faculty and administrators must make decisions for which they are largely unprepared. With sufficient resources, they’re fairly comfortable going over blueprints with starchitects to erect new glass-and-steel academic structures, but when it comes to virtual education, most are as befuddled as Fred MacMurray in the Disney movie The Absent-Minded Professor.

Commonly elevated to academic leadership at a time before the internet invaded, few senior faculty members have taken an online class, let alone taught one. In an earlier essay in Inside Higher Ed, I noted that data showed that “older and higher-ranking faculty members exhibit the least support for online education.” It’s no wonder that schools, squeezed by shrinking budgets, often leave online learning on the cutting-room floor.

Take Harvard, for example. While a handful of selective schools have ventured into digital education as part of their basic curricula, Harvard does not offer a single completely online degree. So why, with all its firepower -- at $37.1 billion, Harvard’s endowment is the richest in the world, and its partnership with MIT is the second biggest MOOC provider, edX -- did Harvard turn to an outside online program management company (OPM) to help launch its new online business data analytics certificate? The new agreement calls for 2U, an OPM, remarkably valued at $3.025 billion, with top-brand university clients like Yale, NYU and the University of California, Berkeley, to work jointly with Harvard faculty to make it happen.

“We don’t have the resources to support a marketing effort of that magnitude nor provide individual user support of that intensity,” claimed Peter Bol, Harvard’s vice provost for advances in learning, in a telephone interview. Bol is admitting, in effect, that despite its cavernous deep pockets, Harvard was asleep at the virtual wheel while online learning was taking off across the nation.

Commenting on the conundrum in Inside Higher Ed, AnnaLee Saxenian, dean of Berkeley’s School of Information, observed, “Even universities with substantial endowments lack the technology and marketing expertise to bring high-quality online programs to scale.”

Over the last couple of decades since online learning was first introduced, universities have invested hundreds of millions in campus facilities -- laboratories, maker spaces, football stadiums and so on. In contrast, while online learning (both in revenues and students) was expanding at double-digit growth and with the residential population flattening or declining, only a few schools recognized the strategic retreat of investing in the past as higher education starved its future.

Years ago, Harvard Business School, among others, accurately predicted that we were headed for a totally immersive digital economy, cautioning industry that it would enter a life-and-death struggle unless institutions accommodated themselves to new digital facts.

“The digitization of the economy is one of the most critical issues of our time. Digital technologies are rapidly transforming both business practices and societies, and they are integral to the innovation-driven economies of the future,” proclaimed Harvard Business Review. Curiously, most academic leaders paid no attention to business-school wisdom, imagining somehow that higher education would be given a pass.

Worried about conservative faculty pushback and fearing the damage to their reputations if they delivered what many academics considered an inferior product, many schools backed away from entering the online market during the past 20 years. I participated in interminably tedious deliberations over digital education as years slipped by while senior faculty and administrators scratched their eggheads and dithered, issuing grandiose reports on an online utopia yet to come.

Pretending to support online learning, some schools invested in “technology-enhanced” education, a sprinkling of digital gadgets around campus, mainly for residential students. In consequence, schools left a wide-open gap in the campus gates for OPMs to waltz in. Taking a lesson from Darwin's Galápagos birds, OPMs occupied a rich commercial niche, feasting on swelling virtual enrollments as many in higher education sniffed at digital growth.

Schools that depend largely on tuition for their financial stability find themselves in a tight spot. As the traditional college-age population levels off, on-campus enrollments follow, often declining. Under stress, institutions are looking for alternative revenue streams. With the online national upward curve looking more like a smile than a frown, digital education might be a good bet. Playing catch-up, it looks like Harvard and other schools now have three principal choices to get them out of their present fix -- go it alone, pay as you go or sign on with an OPM.

Going It Alone

Since most schools didn’t prepare for the digital future, going it alone like I did 20 years ago doesn’t look too promising now. In the early days, with little or no training, faculty members were nudged into cyberspace with a laptop and a passcode. "Go for it," we encouraged, with a hesitant smile and a pat on the back, crossing our fingers that they'd get it right.

Twenty years ago, I opened an online learning unit at a small technical school in New Jersey, with a knock-your-socks-off skyscraper view of Manhattan and a modest investment of $350,000 to launch a half dozen online master's programs. As amateurs, we didn't do too badly, generating 20,000 virtual enrollments in a dozen years, ultimately delivering healthy surpluses, too -- not too shabby.

But if you’re looking to generate big wads of cash to compensate for losses on campus or to speed your virtual entry into a competitive market, you’d better hurry up and launch some revenue-generating online programs pretty fast. Schools looking to move ahead are likely to be impatient. Waiting a dozen years for your payoff is a creepingly slow-to-market strategy.

For those not in such a hurry and happy with modest enrollments of dozens, rather than hundreds, going online on your own may be right for your school. Stepping away from grandiose plans, you can literally get off the ground with a moderate investment in technology and a small skilled staff.

Pay as You Go

While Harvard and others opted for an OPM, it’s not the only option. Companies such as ExtensionEngine, Noodle, Learning House and others will step in to do pieces of the online puzzle for you, relieving you and your staff of tasks you may not be skilled at, especially recruitment and instructional design. While OPMs offer a turnkey service, with many of the moving parts cranked by the company, if you pay as you go, you’ll need to coordinate everything on your own. If you fail, you’ll assume all the risk -- out-of-pocket fees you paid vendors will have gone down the drain. But if you succeed, you won’t be sharing your online tuition earnings with an OPM partner.

OPM in Charge

In financial circles, OPM refers to “other people’s money,” but while OPM in higher education clearly means something else, one of the big attractions for universities from the $1.5 billion marketplace is that OPMs in education -- in addition to providing instructional design, student support, recruitment and advanced digital techniques -- also act as investment firms, financing virtual programs for colleges and universities in exchange for a big bite of tuition revenue, with many contracts sharing online income 50-50. (An aside: saying “OPM” quickly can sound like “opium.”)

“The revenue share is outrageous,” comments NYU Steinhardt’s Brewer, who partnered with 2U and HotChalk to launch several degrees. “But, of course, we couldn’t have done it ourselves.”

Ilan Jacobsohn, senior director of distributed education at the New School, says, “OPMs assume the risk. If your program fails, your school might look bad, but it’s the OPM that loses the money.”

OPMs provide services that on-campus higher education has largely ignored, chief among them web-savvy marketing and recruitment. “For many traditional colleges starting online programs these days, the solution has been to outsource as much of the business operations as possible (including marketing and advertising) by using companies like 2U,” reports senior editor Jeffrey R. Young in EdSurge News. When it went public in 2014, 2U reported in its filing that it had increased its marketing costs from $32.1 million in 2011 to $45.4 million in 2012.

Meanwhile, OPMs emerge as villains, accused by the Century Foundation and The Atlantic of fleecing university treasuries with outrageous terms and poor value for the money. Not that OPMs are blameless, but the real offenders are skittish universities that failed to invest in their own digital future. Compared with business elite, academic leaders are thought of as far more sensible and risk averse, but their heads-in-the-sand virtual education policies turned out to be irresponsible.

To pay for their inattention to the relentless digital economy -- if they partner with OPMs -- some universities must now split the take.