Defying Disruption with Differentiation

Rich Lyons of UC Berkeley reviews today’s disruptors to higher education—and tomorrow’s strategies to keep business schools relevant.

Defying Disruption

WHAT FORCES ARE DISRUPTING the management education industry? How can business schools remain relevant when new technology and new competitors pose challenges from all sides? We asked those questions of Rich Lyons, who has been in an ideal position to observe changes in the education market during the 11 years that he has served as dean of the Haas School of Business at the University of California, Berkeley. Lyons, who plans to step down later this year to return to the faculty at Haas, acknowledges that to stay relevant in the future, schools will need to take advantage of the innovations offered by the latest edtech. But he’s also convinced that only the schools that differentiate themselves—by the products they offer and the cultures they create—will continue to thrive in the face of all the forces that threaten to disrupt higher education.

What’s one of the first things you think of when you consider disruptors to business education over the past ten years?

The emphasis on experiential learning has brought a fundamental shift to almost every business school, and much of the experiential learning has been brought about by the flipped classroom. Here’s a thought experiment. If we forced every classroom to be flipped, if students in every class had already seen the professor’s lecture, what would those classrooms look like? How would those courses be taught? What applied exercise or case study would be most useful? A thought experiment like that pushes faculty into a mindset of looking even further downstream in terms of teaching in the flipped classroom.

How is experiential learning incorporated into the curriculum at Haas?

About eight years ago, we decided that every student in the MBA program had to make at least one selection from a certain category of experiential learning courses. One is our Clean Tech to Market class, or C2M, in which MBA students work with PhD students in chemistry, engineering, and other fields to do commercialization analysis on the basic science being created at the nearby Lawrence Berkeley National Laboratory. But many other types of courses would qualify. Suppose a school ran a leadership lab in which students were required to practice ten of the actions that every leader must master. For instance, the lab would include a simulation in which students have to lay off employees—a task that is always difficult and that is ever-present in dynamic markets—while mentors observe and give them feedback. The mentor would make comments like, “You lost eye contact. You didn’t sound earnest. When you said one thing, it was understood a different way.”

There are so many possibilities that can be included in the category called experiential learning.

In many ways, the flipped classroom has been made possible by another disruptor—the digitization of content.

Lectures have become durable goods, and that shift has changed the very product we’re offering. We’re entering the era of “education-as-a-service,” which parallels the “software-as-a-service” era in business.

In the “education-as-a-service” model, students can reconnect with their schools virtually to take advantage of ongoing educational opportunities. But does the ease of attending a virtual campus disrupt the value proposition of the brick-and-mortar university?

I think the flexibility that digital delivery gives people is really valuable, especially for working professionals who are already at the limit of what they can juggle in their lives. But it’s always valuable to have people come to campus. That’s one of the things we’ve learned. It’s hard for a 100 percent digital educational experience to capture some of the important relational elements. Many of the schools that offer online MBAs still bring people together at the beginning to build relational capital on the front end, and that capital is useful throughout the program.

The digitization of content also has the potential to be a huge disruptor for schools that draw primarily from local markets. How can these regional schools continue to compete with top schools that use online programs to attract students from anywhere in the world?

Regional schools need to get even sharper in their own value propositions. They can make it clear that they have decades of relationships with all the firms in the area and that they can provide job opportunities that other schools would have trouble delivering. But I think that sort of competitive response by local schools needs to be better articulated, and it will still be an upward battle for some of the players.

One way these schools can achieve competitive separation is by creating deeply integrated programs that feature real synergies and new content. They can start by assessing the assets they have. For instance, Berkeley is strong in STEM fields and it’s in Silicon Valley, so our opportunities were staring us in the face.

Highly integrated joint degree programs are disruptors in the education market because they allow one school to offer a product other schools can’t match. What has been your strategy for creating such programs at Berkeley Haas?

We’ve been asking, “How do we create deeper connections between business and STEM fields in ways that bring more benefits to society?” We just launched a dual degree program for undergraduates called Management Entrepreneurship & Technology, or M.E.T. It’s a fully integrated program in which we’re coding engineering and business into the brains of 19-year-olds at the same time.

We built in all kinds of synergies and launched brand-new classes specifically for this program. For instance, a senior executive at Google suggested a course on product management because he said that product managers—people who can drive a business and understand how it’s going to evolve technically—are the scarcest human capital they have at Google. One of our alums suggested a course simply called “Lean,” which integrates the concepts of lean engineering with the methodology of lean entrepreneurship.

What other fields would work well for these kinds of joint business degrees?

We’re considering how we might create something like the M.E.T. program in fields like chemistry, life science, data science, and health science. We could offer one suite of programs at the undergraduate level, and one at the MBA level.

I recently worked with the dean of the College of Chemistry to create a short video on my iPhone that we sent to all the chemistry freshmen, letting them know what courses they should take in the next two years if they wanted to graduate with degrees in both chemistry and business. In the past, we’ve had one or two people pursuing dual chemistry and business degrees, but we think we should have 15 or 20. We’re already thinking about what kinds of courses we could develop for this subset of people and what kinds of connections we need to make with companies who would want their specific talents.

How can schools use these intensive joint degree programs to differentiate their offerings?

When we launched the M.E.T. program, one of our alums, Tim Campos, suggested we revise our admission letter to say, “Congratulations! You’ve just been admitted to Haas, and your M.E.T. mentor is Tim Campos, CIO of Facebook.” We’d been talking about our admissions letter because many of the people we’re trying to attract have also gotten into other terrific universities. By dialing them into the mentoring network right from the beginning, we can develop the M.E.T. brand and differentiate our product.

"I SEE A TREND COMING TO BUSINESS SCHOOLS WHERE WE SEPARATE OURSELVES COMPETITIVELY BASED ON OUR CULTURE AND OUR VALUE PROPOSITIONS."

So one way business schools can survive the current disruptors is to differentiate themselves by the products they offer. How else can schools set themselves part in today’s market?

I think they can do it by taking a stand on values. How can a school make its values distinctive in ways that its competition can’t? Can it become distinguished by its culture? If you ask CEOs how much time they spend managing the culture of their organizations, you’d have a hard time finding one who would say less than 20 percent. If you ask deans and presidents of universities the same question, very few would say 20 percent or more.

I see a trend coming to business schools where we separate ourselves competitively based on our culture—where we put our value propositions forward in an intentional way. I think business schools increasingly will say, “We stand for this. Other schools stand for that.” As soon as we’ve done that, we will have true values-based differentiation.

In the business school industry, we can consider the admissions process as roughly analogous to the hiring process at big companies. If you ask the leaders at big companies how they attract talent, many would say, “We create a culture where people want to work.” They’re also willing to say to applicants, “This isn’t a good fit. We’re not the right company for you.” A school has to be willing to turn down applicants with 790 GMAT scores and 3.8 GPAs because they don’t fit with the school’s values.

At some level, I think this differentiation will be forced on schools because competitive conditions will become so intense. In a world where flexible, digital programs allow students to attend any institution, students will choose the institutions that stand for what they stand for and that instill in them a sense of purpose.

This article originally appeared in BizEd's March/April 2018 print issue. Please send questions, comments, or letters to the editor to bized.editors@aacsb.edu.