Elon Musk, chief executive of electric carmaker Tesla, hit out at MBAs last year, saying that too many holders of these business degrees are now in charge of companies. This, he argued, was stifling innovation, because MBA graduates spend too much time on financials — and too little on improving products or services.
And it seems Andrew Chan, senior programme manager for charging and energy services at Tesla in Hong Kong, has already taken his boss’s advice to heart. He has ignored the traditional full-time MBA as a route to get ahead in business. “I did not think Tesla would give me leave to study, and I did not want to choose between my education or my job,” he explains.
Instead, back In 2019, Chan enrolled in Quantic School of Business and Technology, a tech start-up in Washington DC offering courses that cover the traditional MBA curriculum, but delivered largely on smartphones. It is one of a new breed of digital education companies seeking to challenge the supremacy — and business model — of established academic institutions.
Not only can it avoid overhead costs such as teaching facilities, Quantic can also earn additional revenues from companies willing to pay to access its recruitment network. That enables it to offer its programmes for a fraction of the price of most business school degrees. For example, Quantic’s executive MBA costs $9,600, compared with $125,589 for an online MBA at the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School.
Chan credits Quantic with helping him secure his current role at Tesla shortly after he graduated from his EMBA in 2020. “For me, the business knowledge was more important than the bragging rights of a traditional MBA,” he argues.
Although no market-disrupting “Uber for education” has so far emerged, Tom Adams, Quantic’s chair and chief executive, says the coronavirus pandemic has given upstart institutions fresh impetus. Quantic received 60,000 applications in 2020 — three times more than the year before — for its 6,000 places. “We are having a good crisis,” he says. “Covid-19 put us on the map.”
Adams believes that Quantic, founded in 2016, is stealing market share from full-time MBAs, judging by the petitions for fee refunds from students at top schools who feel short-changed by campus closures and Zoom classes.
“It’s crazy that people are paying full price for streaming,” he says.
Another area where coronavirus has hit traditional schools hard is executive education. Last year, income streams from thee programmes shrank as locked-down corporate clients reassessed their training needs — and in some cases diverted their budgets towards digital providers.
One of the beneficiaries has been Abilitie, a Texas-based company offering online mini-MBAs for $1,850. “The majority of our business comes from corporations such as Dell or Coca-Cola,” says Bjorn Billhardt, its chief executive.
Founded in 2015, Abilitie added 5,000 new learners between 2019 and 2020. Billhardt says technology has democratised the market, enabling his company to reach smaller businesses priced out of “luxury learning” on campus.
Billhardt believes he is primarily competing with lower-tier schools. Online learning start-ups, he admits, are unlikely to worry top schools such as Harvard, his alma mater, because of the “signalling value” of an established degree, which attracts big employers.
See the full 2021 Financial Times Online MBA directory as well as the whole report on Monday March 22
Even so, Keith Bevans, head of global consultant recruiting at Bain & Company, believes alt-MBAs could help the consultancy tap new employee markets — such as people with technical backgrounds who need to acquire business knowledge quickly. “If someone has demonstrated interest and invested in themselves, that is something we would look favourably on,” he says.
However, Bain mostly hires from established business schools, because the “alt-MBAs don’t have the track record yet of producing talent at scale”, Bevans adds. “It will take time for their graduates to come into the firm, excel and advocate for recruiting their peers.”
A taste of tomorrow?
To Jonathan Briggs, though — co-founder of course provider Hyper Island — alt-MBAs have a fresh relevance in this new era of remote or hybrid work. “Employment has fundamentally changed, with managers leading globally distributed teams,” he says. “Our courses mirror the future of work.”
Hyper Island offers a range of online and in-person programmes — but in most of the markets it serves, there are no lectures or professors. Instead,
students work on live cases set by executives at companies such as Unilever or Adidas. Founded in 1996 in Sweden, the company has expanded globally, growing student numbers by 55 per cent between 2019 and 2020.
Still, Briggs says that, in a pandemic, the need for human connections is high, and that is harder to facilitate online. “Tools that allow people to connect and collaborate effectively online — that’s where the big market opportunities are for start-ups,” he suggests.
But Anne Trumbore, executive director of digital for executive education and life-long learning at the University of Virginia’s Darden School of Business, believes that some aspects of business school will prove “impervious to disruption”. She cites incumbent schools’ career services, high entrance standards and global alumni networks. “It’s an exclusive club,” she says. “That’s our special sauce.”