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The Virtual MBA: A Work in Progress

Online business schools may be long on convenience, but they don't measure up to conventional ones when it comes to prestige

Eric Dash, Business Week
October 2, 2000

Anthony Leonard, a 28-year-old management consultant with PricewaterhouseCoopers in Philadelphia, always knew he'd have to go back to school for an MBA if he wanted to rise in his profession. But somehow he could never find the right time to take two years off from work or to sandwich classes into his schedule at night. ''The fact that you have to be there at certain times--I just can't do it,'' he says. Now he doesn't have to. By spring 2002, he'll have his degree, thanks to Capella University School of Business, a for-profit, accredited, online MBA program.

If you believe the cyber-prophets, the future of online MBAs has arrived. InterEd, an Eagle (Idaho)-based research firm that studies the use of technology in higher education, projects that enrollment in virtual MBA programs will jump from 5,000 this year to more than 50,000 in two years.

Maybe so, but don't rush off for that e-degree just yet if you're expecting the kind of salaries and job offers a traditional MBA can bring. What these programs offer instead is maximum flexibility. In cyberspace, students can schedule ''classes'' at their own convenience and take up to three or four years to finish their degrees, making them attractive to mostly middle-aged, globe-trotting consultants and multitasking career women who want to build skills for their current jobs. Though most programs cost up to 20% more than part-time, on-site B-schools, that may be a bargain given the ability to work around a demanding job.

DABBLING ONLINE. The drawbacks, however, can be significant. Though some traditional B-schools are dabbling in online education, most programs are administered by for-profit universities with little in the way of a track record or recognizable brand name. While the quality of the faculty varies, even the best online professors can't compete with the immediacy and team-building of a traditional classroom. And if you're looking to vault ahead at a new firm after graduation, flashing an e-MBA may not mean much. A BUSINESS WEEK survey of corporate recruiters found that an overwhelming majority haven't even considered applicants who earned their MBAs online. Of the 247 companies who answered our survey, all but a handful said they hadn't considered hiring an MBA with an online degree. And most, skeptical of online B-school graduates' skills, don't plan to start looking.

BUILDING E-BRANDS. Not surprisingly, the few companies open to considering job candidates with dot-com credentials tend to be established tech companies such as IBM ( IBM) and Xerox Corp. ( XRX), which use online education programs as part of their in-house training programs. ''If we are taking advantage of the technology ourselves, why wouldn't we consider a person who is doing it?'' says Xerox Director of Resource Planning and Staffing Douglas W. Pellino.

Still, the e-MBA companies are determined to build their brands. More are coming online all the time, and many are testing new ways to make a name for themselves. Kaplan Inc. hopes to leverage its reputation as a test-prep powerhouse with Kaplancollege.com, a sister company that will launch its MBA program next year. Other contenders, like Jones International University, are trying to attract non-U.S. students. Their strategy is to use the Web to deliver a highly-coveted American MBA to students overseas. To overcome the lack of brand-name recognition, some online B-schools are establishing career centers to woo recruiters and advise students.

Those initiatives are a start, but good marketing will only take these new players so far. ''We're in this for the long haul,'' says Kaplan COO Andrew Rosen, who's set on building his brand online. ''It won't be through Superbowl advertising or full-page ads in The Wall Street Journal. It will be through turning out well-educated students who do well for employers.'' That, however, could be a tough test to pass in cyberspace.