MOOCs and the Tricky Business of Succeeding in the Cloud

May 29, 2014 Ray Rivera


Post-secondary education in the United States could not demonstrate more clearly that the same business model that drove its ascendancy in the 20th century is suffocating it in the 21st. In exchange for paying greater tuition, enduring longer time to completion, and assuming nearly all the risk, consumers of education receive end products that are increasingly unlikely to return positively on their investments.

Unsurprisingly, such consumers are turning to the market for feasible alternatives, and are becoming attracted to massive open online courses, or MOOCs. Using innovative combinations of cloud, mobile, and collaborative technologies, MOOCs are able to deliver entire curricula at little or no cost to education consumers, and in the same environment where they game, tweet, blog, email, IM, share, and stream.

Yet simply coupling an enterprise with enormous computing power does not guarantee success. In order to deliver effective cloud solutions we must know our customers well, and our customers’ customers even better.

For MOOCs, the customers’ customers are the very learners that are demanding a better educational product. Yet most cloud businesses remain ill-equipped to understand, much less deliver value to multiple layers of customers.

Addressing the wrong specifications

MOOCs provide one of the clearest examples of how cloud solutions can go wrong. In delivering online education, it is easier to address specifications directed by a learning management system (the customer) than to meet the needs of the learners who actually consume the content (the customer’s customers). Consequently, our customers become alienated from their customers, neglecting learners’ needs and ultimately failing to deliver value to them.

To make matters worse, vendors routinely confuse efficiency and effectiveness when reporting the merits of their products. The majority of online learning metrics describe efficiency, of which the most common are reach and reuse, two areas where efficiency gains are readily demonstrable and thereby create value for the customer. Yet the same content delivery technology does not necessarily enable regular content production or even effective learning, both of which represent value for the learners, the customer’s customer.

Three paths to unlocking the value of MOOCs

It is easy to see how realizing the value of education delivered on the cloud can become a tricky business. Education is one of the most complex economic goods, and therefore requires much astuteness of what learners really come away with. Let’s look at three value propositions for MOOC consumers, using business education students as examples, although the three value propositions apply equally well to post-secondary learners in general.

1. The things you know

Human capital delivers value to learners by an accumulation of knowledge, skills, and capabilities that enable greater market competitiveness, and consequently higher wages or greater returns from venture opportunities. Although some human capital can be acquired through self-study, amounts sufficient to generate high returns on investment often cannot be readily acquired outside of an educational program.

A common criticism is business education is preoccupied with reinforcing orthodoxy in strategy, finance, and governance, while truly valuable human capital is developed on the job. By imparting superficial knowledge, business educators fail to increase human capital, which instead should be developed by offering experiences in managing in authentic contexts.

2. The flag you fly

Such criticism of human capital leads to a second view: value is realized not by anything learned in a business education program, but rather successful completion of the program, which confers the learner a valuable signal to the market.

To illustrate, consider most MBA students: their education is often self-financed, and opportunity costs are substantial. Completing an MBA program informs the market, venture partners, or investors that the degree holder enjoyed earlier business success that yielded sufficient earnings to pay for the signal.

But perhaps more important, completing an MBA can indicate superior quantities of confidence, diligence, and good business judgment by virtue of earning the degree, thereby separating the degree holder from those unable to purchase the signal. Therefore it is the signal, and not human capital, that enables greater market competitiveness for the learner.

3. The company you keep

In this view, business activity is driven primarily by networks of relationships, not knowledge or information. Value is therefore realized not by acquiring human capital or a signal, but rather social capital. As the name suggests, social capital arises from socialization activities embedded into business education coursework, which later develop into strong-tie business contacts and relationships.

Socialization according to collaborative experiences is also important. By mastering the same business cases and even work mannerisms, business students are initiated into a powerful guild, one which creates a network of mutual trust sufficient to reduce transaction costs in future exchanges.

The lack of in-person collaboration afforded by an online education environment is regarded as a major weakness. However, MOOCs can simulate a remote work environment, thereby providing collaboration opportunities for business learners anticipating managing distributed teams.

Two major takeaways

The big message is that an effective cloud services business needs to address multiple layers of customer experience in addition to delivering the end product, which in the case of MOOCs will likely reside on a separate platform. An integrated platform containing both CRM and HCM, for example, provides much deeper insight, and assures alignment between the customer layers. In the business education example, an integrated platform aligns learning delivery (efficiency, effectiveness) with learning outcomes (human capital, signaling, social capital).

There is also a subtler message: content delivery technology powered by the cloud is unlikely to change the DNA of higher education. However, MOOCs show great potential for serving a market to which higher education is slow to adapt. Cloud solutions would do well to focus less on trying to disrupt institutions and more on addressing disrupted markets.

An earlier version of this blog was published on SAP Business Trends.

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