Harvard Business School’s online courses and programs are coming closer than ever to surpassing its revenue from traditional on-campus executive education programs.
In fiscal 2021, HBS Online narrowed the difference to a mere $5 million in revenue. At HBS Online, revenues reached a record $76 million in fiscal 2021, a 31% increase over the $58 million achieved a year earlier. Meantime, revenue from Harvard’s on-campus executive education offerings plunged by 45% to $81 million. Only two years earlier, Harvard Business School’s executive education revenue was $222 million, more than five times the revenue of its online unit which racked up only $43 million in fiscal 2019.
Harvard Business School said applications to its online courses rose by 112% last year as the school continued its expansion of a portfolio of online courses and more people took advantage of them. The number of learners in the school’s online courses last year was more than three times larger than those in its traditional Executive Education programs. An on-campus Connext event for online learners at Harvard Business School last May drew more than 3,000 learners, many of whom met each other for the first time in person.
The contrasting fortunes tell the story of the dramatic changes in business education fueled by both the pandemic and the business audience’s growing preference for online learning. Those trends led HBS to recently ask Patrick Mullane, who has headed up HBS Online for the past seven years as executive director, to take on the executive education group at the school so that it is all under one management umbrella.
“The world is getting blended in nature so it made a lot of sense to consolidate our certificate programs under one leadership team,” Mullane told a webinar on the future of online education last week. His new role: “How do we push the envelope in more blended things that make the best use of the on-campus experience with the online experience.”
“To be clear,” he added, “I think there will always be the two extremes, the on-campus learning experience where you come here and sit in case discussions in classrooms with the faculty and your peers and the completely online experiences where the faulty are not interacting with you live…In between those two extremes, there is a huge universe of things that can be done and that is where we are going to spend our time exploring in the next couple of years.”
A Record 39,566 Learners Took Online Courses At Harvard Business School In 2021
Mullane said that HBS Online will continue “to find topic areas that people in our audience tell us are valuable. We really want to make sure we are making stuff that people can use to make their professional lives and by extension the rest of their lives better. And to continue to push the boundaries of the technology to help make better things we have already designed and to create new things.”
The current course catalog for HBS Online ranges from Economics for Managers, an eight-week course priced at $1,600, to Sustainable Business Strategy, which runs for just three weeks and costs $1,400. Harvard offers online courses in business essentials, leadership and management, entrepreneurship and innovation, strategy, finance and accounting, and business in society.
The increase in Harvard’s online revenue was accompanied by an increase in enrollment that set a new record for HBS Online. Last year, 39,566 students took online courses and programs from Harvard Business School, up from 29,192 a year earlier (see chart below). Five years ago in 2017, HBS recorded only 9,142 students in its online programs and courses. In that year, HBS revealed it lost $11 million on its online operations which only moved into the black in fiscal 2019.
The 31% jump in HBS Online’s revenue significantly exceeded the school’s forecast and generated an operating surplus for the business for the third consecutive year, according to Richard P. Melnick, chief financial officer of HBS in the school’s recently released 2021 annual report. “Through an expanded range of course offerings, HBS Online reached more than 40,000 participants in fiscal 2021. The group has topped 122,000 participants since it began seven years ago.”
HBS Expected Zero Revenue From Exec Ed In 2021 Due To The Pandemic
COVID, of course, had a big impact on the results. “The pandemic forced Executive Education to pivot from its entirely in-person learning model to an all-virtual portfolio,” Melnick noted. “Designing and implementing such a portfolio from the ground up takes time. Given the complexity and time constraints of the task, the initial revenue projection for virtual Executive Education programming in fiscal 2021 was penciled in at what seemed like a realistic expectation: $0.”
That turned out to be a highly pessimistic forecast. “Although Executive Education revenue was down approximately 45%, fiscal 2021 was a strong year for the group,” claimed Melnick. “With all residential programs paused as a result of the pandemic, the group rapidly shifted gears to provide impactful programming in a virtual format. Over the course of the year, Executive Education designed and delivered 70 virtual Comprehensive Leadership and Topic-Focused Programs for more than 4,400 participants around the world. Of the 13,101 individuals who participated in programs in fiscal 2021, 32% were women—a significant increase from past years. Reflecting the focus of sustaining an engaged learning environment, participants rated the quality of the virtual Executive Education experience as high. Looking ahead, Executive Education plans to retain and enhance the best aspects of the virtual, blended, and on-campus experiences to drive sustainable growth across the portfolio.”
Despite the gains by HBS Online, Harvard’s online operations generated only 9% of the school’s $805 million in overall revenues in fiscal 2021. The largest single chunk of revenue came from the school’s publishing arm which accounted for 34% of revenue, followed by its $5.3 billion endowment, which brought in 30% of the revenue. Executive Education accounted for just 10%, below the 14% from MBA tuition and fees.
Harvard Business School On Why Online Learning Is Growing
In his talk on the future of online education, Mullane attributed the growing popularity of long-distance learning to convenience as well as greater acceptance from both a younger generation of students and corporate employers.
“For those not in degree programs, we hear from a lot of folks that it has much to do with convenience,” he said. “Obviously if you are in a job or have (need for) child care, it makes it a lot easier to get the learning you need for your career. The other is that non-degree programs have a lot of opportunities to focus on a particular area and, with a more rifle shot, get what you need now. I once heard a professor say that a lot of online learning is just-in-time learning whereas undergraduate education is just-in-case learning. (In college), you study a lot of things you may never use again in your professional life and part of that is just exposure to see what you like and part of it is to be a well-rounded person.”
The public perception of online learning also has changed over time, believes Mullane. “My children have grown up as digital natives so there are generations that are being born that are just more comfortable with many aspects of their life being done in a remote way.”
That is also true of employers, added Mullane. “Generally speaking it is fair to say that the old days of, ‘Well, that doesn’t count’ are gone. The online educational landscape has much higher quality offerings than it did. When hiring managers have taken online courses themselves and found them beneficial, when they interview people with online courses on their CV they (will recognize that those courses) have much more value. There is a lot more respect (for online learning) because people who now making decisions in companies have had exposure to online learning. I do think it’s becoming more true in the knowledge working space.”
Mullane also noted that more business professionals are investing in themselves than ever before and not waiting for their companies to subsidize their learning. “Nobody cares more about you than you,” Mullane said. “So if you want to make you better it’s kind of on you to make you better. In some ways, It has really changed the landscape of education. You don’t have to go begging to your employer to take a class.”
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