University Teaching as E-Business?
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Case Study: UNext/Cardean University

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CSHE > Research > University Teaching as E-Business > Case Studies > UNext/Cardean University

NB: These draft case studies, compiled by Shannon Lawrence, are an internal resource for the University Teaching as E-business? research project. Originally released in October 2001, they were updated in March 2002. They were gathered from numerous sources, including news articles, press releases, scholarly reports, and company websites. In many cases, information presented herein was taken directly from The Chronicle of Higher Education's longitudinal series of articles on Information Technology and Distance Education, which represents the single best source for information about this evolving universe.

UNext was founded in 1997 as a privately held corporation by Andrew M. Rosenfeld, a lawyer, entrepreneur, and former professor at the University of Chicago. UNext is partnered with an elite group of academic institutions including Carnegie Mellon, Columbia, and Stanford Universities, as well as the University of Chicago and the London School of Economics and Political Science. It aims to provide training and development solutions to corporations globally, and to provide educational opportunities for people around the world. Cardean University, an online degree-granting university for business education, is a wholly owned subsidiary of UNext, which provides the managerial support and infrastructure for Cardean's operations. During its first year of operation, UNext enrolled about 2,000 students in nearly 100 courses through Cardean University, and employed nearly 400 people.

Products/Services

UNext offers two basic types of business courses through its subsidiary, Cardean University: degree-based courses, and noncredit professional development courses. Both types of courses are grouped into "suites" of four courses each. A master's-degree course takes about six weeks to complete (25-30 hours in total) and is based on a problem-centered approach, in which students are confronted with real-world business scenarios. They cost about $500 each. Shorter courses, called "Quantum" courses provide focused overviews of specific business topics and take less than two hours to complete within a two-week period. Quantum courses are offered in a package of five for $380. All Cardean courses are broken into a series of tasks, each with a specific objective for the student. Courses are interactive, using e-mail messages and discussion boards as well as multimedia features such as animations. The Cardean University Student Center offers a variety of resources for business professionals, including links to leading business publications, key business resources on the web, tools, and calculators.

Cardean University is accredited by the Accrediting Commission of the Distance Education and Training Council. Cardean University is the first online university to receive degree authorization from the Illinois Board of Higher Education and currently offers an accredited M.B.A. degree as well as certification and continuing education units in certain subject areas. Cardean intends to broaden its offerings over time.

The quality of content provided by partner institutions has helped the company win some major deals, including a new multimillion-dollar contract to offer courses to General Motors employees. The business model depends on making a huge up-front investment rather than a business-to-consumer model of selling individual courses. UNext has an unusually extensive system for evaluating its offerings. Almost every day, the company pays people to come to its offices and test its courses. As they progress through them, UNext officials watch the testers via dozens of television screens.

The company’s biggest expense is course development, which can reach $700,000 for a single full-semester course. The largest expenses in the course-development process are labor and payments to UNext's partner universities. UNext has hired teams of editors, cognitive scientists, and technicians to assemble the courses. Several professors at UNext's partner institutions say their involvement in the development process has been primarily at the outline level. Teaching is broken down into disaggregated duties. Senior faculty, who work with experts at partner universities, are involved in all aspects of curriculum planning, student assessment, and institutional academic evaluation. Adjunct faculty interact directly with students in the learning environment by assessing student work, evaluating assignments, and providing informed and useful feedback. Advisory faculty mentor new faculty members, support and evaluate adjunct faculty, advise students, and ensure the quality of instruction in delivering Cardean courses.

Financing/Strategy

Intitial funding for UNext was provided by Knowledge Universe, an organization of financier Michael Milken, though he has no voting rights in the company. Additional funding of undisclosed amounts was provided by other outside investors. UNext has raised a total of $180 million, including the Thomson Corporation’s March 2001 $38 million investment and $18 million in credit, and has spent about $120 million to date. None of the partner universities have invested in UNext, although they do have the opportunity to convert part of their compensation into an equity stake in the company after it goes public, collectively about 20 percent. Administrators at the universities estimate that their individual contracts with UNext are each worth about $20 million, although each is structured slightly differently. The professors who help develop the courses do not have contracts with UNext, but instead make individual arrangements with their institutions about compensation for their participation. As recently as August 2001, UNext had asked its partners to restructure their agreements with the company.

UNext's original plan of selling blocks of courses to large corporations has not been as successful as its leaders had hoped. While UNext has made several major sales to companies such as General Motors, Barclay’s Capital, AOL Time Warner, and Singapore Technologies, they were surprised that that investment-banking companies were not more interested in the UNext courses. Though the slowing economy did not affect investments, UNext has had difficulty becoming profitable. As a result, UNext has shifted its focus to develop shorter courses to better meet the demands of the corporate marketplace. In May 2001, UNext laid off 52 of its nearly 400 employees.

UNext has also expanded beyond its initial model of selling business courses to corporations by including universities, organizations and individuals in its target market strategy. UNext plans to start a program called Get To Work, through which college students approaching the end of their undergraduate careers could take a course introducing them to basic business concepts. The program, which would cost students about $1,000, would be aimed at liberal-arts students unfamiliar with the job-search process in business. UNext plans to work with a career site on the Web to market Get To Work, and to send mailings to college career centers. Some university officials talk about eventually paying to use UNext's team of course graders, or purchasing just one segment of the company's services. UNext has already started to offer broader consulting services to some corporations, advising them on their employee-training practices.

Update (February 2002)

In January 2002, UNext signed marketing deals with Thomas Learning and Knowledge Universe to bolster lagging sales. Thomas Learning will target large businesses while Knowledge Universe will be responsible for smaller companies, both of which will be selling courses aimed at business executives. This new arrangement threatens even more of UNext's employees, 70 of whom have been warned that their jobs could be cut this year.

References

• Blumenstyk, Goldie. "UNext Seeks to Restructure Its Relationships with Universities." The Chronicle of Higher Education, 7 August 2001. http://chronicle.com/daily/2001/08/2001080701u.htm
  
• Carr, Sarah. "Closely Watched UNext Rolls Out Its First Courses." The Chronicle of Higher Education, 12 May 2000. http://chronicle.com/weekly/v46/i36/36a05002.htm
  
• Carr, Sarah. "Rich in Cash and Prestige, UNext Struggles in Its Search for Sales." The Chronicle of Higher Education, 4 May 2001. http://chronicle.com/weekly/v47/i34/34a03301.htm
  
• Carr, Sarah. "With National e-University, Britain Gets in the Online-Education Game." The Chronicle of Higher Education, 17 August 2001. http://chronicle.com/weekly/v47/i49/49a02701.htm
  
• Katz, Stanley N. "In Information Technology, Don't Mistake a Tool for a Goal." The Chronicle of Higher Education, 15 June 2001. http://chronicle.com/weekly/v47/i40/40b00701.htm
  
• Mangan, Katherine S. "UNext Signs 2 Marketing Deals." The Chronicle of Higher Education, 25 January 2002. http://chronicle.com/weekly/v48/i20/20a03204.htm
  
• "A Virtual Revolution: Trends in the Expansion of Distance Education." May 2001. New York: American Federation of Teachers.