Commercial upstarts tap desire for flexibility with cheaper virtual MBAs

A new cohort of digital education providers is seeking to challenge the supremacy of conventional MBA programmes by offering students more flexible, accessible and affordable options to advance their careers. 

Traditional, full-time residential MBAs often require a significant investment of time and money. At the top end of the market, a two-year on-campus MBA can cost more than $150,000 in fees alone. 

By contrast, Madrid-based digital education platform thePower Education offers its fully online MBA course for $999, delivered via 15-minute daily classes that aim to fit into learners’ busy schedules. Launched in 2017, it is among a wave of education providers that are springing up to offer an alternative to traditional business school programmes.

“The reality is that few individuals can afford to halt their professional and personal lives for two years to pursue education, not only from a financial standpoint but also considering career momentum, opportunity costs, and familial responsibilities,” explains Hugo Arévalo Álvarez-Arenas, co-founder and executive chair of thePower Education.

He says demand for its courses rose 50 per cent year-on-year in 2023. More than 120,000 students from over 100 countries have enrolled in thePowerMBA, as the organisation expanded its portfolio of business school programmes. It also runs a technology school, focused on artificial intelligence. Learning is self-paced and the average completion time for its MBA is 14 months.

Many traditional business schools already offer digital programmes, from online MBA degrees to professional certificates and executive education courses. But a range of alternatives has emerged. 

Abilitie, founded in 2015, delivers a 12-week MBA online and also offers virtual leadership development programmes. The Texas-based edtech added 35,000 learners last year, taking the total to 100,000 worldwide. Corporate subscriptions have accounted for 95 per cent of the growth, in revenue terms, with companies such as Coca-Cola, Marriott and Southwest Airlines incorporating parts of Abilitie’s MBA into their own training programmes. 

By contrast, the number of individuals signing up directly remains lower. “There’s still a lack of understanding about what an alternative MBA really is,” says chief executive Bjorn Billhardt. “We’re at the beginning of clarifying that.” Nevertheless, he says there is a need for these programmes, given that traditional MBAs cater to only a small pool of managers with significant resources — leaving a vast gap in the provision of training for the rest. 

For this reason, Billhardt believes new entrants such as Abilitie pose little threat to traditional business schools. “I don’t think we’re the barbarians at the gates,” he says. “There are 16mn managers in the US alone and only 2.8mn with business degrees,” he points out, citing census data from 2021. “It’s a completely underserved market that we’re targeting: people who would not even consider a traditional MBA.” 

One of the key drivers behind the popularity of these alternative, virtual MBAs is the shift towards “life-long learning” — which is challenging the notion of business education as a one-time event. These days, professionals are expected to update and expand their skills throughout their careers.

Online courses provide a convenient and efficient way carry out this upskilling, or reskilling, without the time and financial commitment of a traditional degree. Last year, CarringtonCrisp, an education consultant in the UK, asked 1,100 global employers which providers they would use for life-long and executive education. Business schools came in sixth place, behind online learning providers, professional training companies, and consulting firms. 

“For some employers, business schools are perceived as too expensive, but more significant is the group that think they are too theoretical and not sufficiently abreast of real-world business challenges,” says Andrew Crisp, owner of CarringtonCrisp. “Yet business schools have advantages that the private online providers lack — assets like academic research and a breadth of knowledge.” 

Business schools are not overly concerned. Carolyn Goerner, faculty chair of executive education for Kelley School of Business at Indiana University, stresses the distinction between acquiring knowledge and developing skills, suggesting that traditional academic institutions focus more on critical thinking skills rather than just rote learning. 

“There is a use case for these non-academic programmes, but students do not necessarily learn how to think through the problems they are encountering,” she argues. 

Goerner acknowledges a need to be aware of other market offerings, but insists that Kelley’s programme development is primarily driven by student needs, rather than competition from digital upstarts. The school is developing “stackable” online programmes in business analytics and finance that enable students to start with an online qualification and apply the academic credit towards a full masters degree if desired, giving them greater flexibility.

Martín Rodríguez Jugo, general manager of life-long digital learning at IE Business School and IE University, also notes a growing interest in shorter online programmes that offer specific skills, as professionals seek to adapt to the digital age.

IE has responded by launching shorter business programmes with fewer synchronous or “live” components, designed to provide targeted and practical skills that professionals can immediately apply in their jobs. The school leverages learning analytics, simulations, multimedia cases and personalised feedback to enhance the learning experience. 

But, ultimately, Rodríguez Jugo sees the rivalry with new online platforms as a source of inspiration for improvement. “Competition drives innovation,” he says. “The more competition we have, the better the offering becomes for students.”