Director Steven Spielberg recently received his diploma from California State University-Long Beach after dropping out in 1968 to conquer Hollywood. A great exa icon

Director Steven Spielberg recently received his diploma from California State University-Long Beach after dropping out in 1968 to conquer Hollywood. A great exa


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Director Steven Spielberg recently received his diploma from California State University-Long Beach after dropping out in 1968 to conquer Hollywood. A great example to dropouts everywhere–though, unlike Spielberg, most students probably couldn't get their natural sciences professor to visit them at work. At least not in person. Through E-learning, however, college students can have instructors visit them via the Internet. They can download video and audio of lectures and attend class discussions through chat rooms and message boards.

Whatever the quality of these E-courses, more and more people are taking advantage of their convenience. Online-learning enrollments are growing 33 percent a year and are expected to hit 2.2 million by 2004, according to International Data Corp. And a study by Bear Stearns found that 150 institutions offer undergraduate degrees online and that nearly 200 offer online graduate degrees.

But can companies and institutions make a profit from E-learning? People are still reluctant to pay for online content generally–one study found that 70 percent of adult surfers didn't see why anyone would pay. Yet the University of Phoenix Online, a division of distance-learning company Apollo Group that trades as a separate tracking stock, made $31.8 million in fiscal 2001 and $23.6 million in the first six months of fiscal 2002. Rivals like DeVry and Strayer Education don't break out online results, but "they are either already profitable or soon will be," says Greg Capelli, education analyst with Credit Suisse First Boston. And while shares of most E-stocks have tanked, E-learning stocks are up an average of 14.5 percent this year.

Apollo Group President and CEO Todd Nelson says that he agrees with "new economy" prophets who call E-learning the "next great application of the Internet." Still, it is hardly a can't-miss business. Academic institutions have found E-profits elusive. New York University, the University of Maryland, and Temple University have shuttered their for-profit ventures. Columbia University's Fathom has yet to make a profit and is shifting its strategy. So what's the key to making E-learning make money?

^ Keep it useful. Columbia University's Fathom was born from a vision of having millions of Internet users sign up for semester-length liberal arts courses like Greek and Roman Mythologyfor $414. But Anne Rollow, Fathom's head of strategic alliances, admits the firm overestimated the willingness of so-called lifelong learners to "experiment"–especially at several hundred bucks a pop. So now Fathom has added free, quickie intro seminars, 10-week courses for $50, and longer career-development coursessuch as Define Your Core Business. "It helps when you offer classes that students actually care about," says Lehman Brothers analyst Gary Bisbee.

Keep it real.An E-firm with an established offline presence has the marketing advantage of a brand name. Indeed, a poll of human resource managers found that 77 percent thought online degrees from offline institutions were more credible than those from pure E-learning firms. "It helps to be both bricks and clicks," says Bear Stearns analyst Jennifer Childe. She points out that pure E-learning firm Jones International University has only 6,000 students, while the University of Phoenix Online has 37,569. Helping power that growth has been the 26-year-old University of Phoenix, with 78,700 students, 38 campuses, and 78 learning centers in the United States, Canada, and Puerto Rico.

^ Keep it simple. Many academic efforts, says Bisbee, had "lots of whiz-bang features like video and high-end graphics, even though not everyone could use them." And while sticking a camera in the back of a lecture hall is the simplest way to do E-teaching, most college students will attest that lectures are the least important part of the educational experience. "A lot of the people who rushed into this business were refugees from cable television and thought you did this the way you do a talk or cooking show," says Andrew Rosenfeld, CEO of Cardean University, which offers business courses online, including a full M.B.A.

Creating a profitable little business may be a comedown for bold entrepreneurs looking to build the Amazon.com of education. Then again, Amazon would have been profitable long ago if it had stuck to selling just plain books.

So where's the beef?
There's high quality online, but it takes real work to find it

^ BY RACHEL HARTIGAN SHEA AND ULRICH BOSER

A decade ago, if you wanted to further your education and keep your job and continue to live in the same house and send your children to the same school, your only decent choices were the universities and community colleges within commuting distance. Never mind which institutions nationwide had the best programs and top professors in your field. You couldn't even consider them. Oh, how times have changed. These days, you can still choose between State U. and the local community college, but add to the mix the 2,000-plus institutions, some of the very best in the world, that offer online courses and degrees accessible from anywhere with a computer and a modem. Suddenly, getting ahead in life is a lot easier–and a whole lot more complicated.

It's easier because the Internet has kicked learning out of the classroom and into cyberspace, making education available anywhere, anytime, even "just in time." Students in Turkey sign up for business degrees from American universities. Working mothers in Denver can squeeze in statistics courses from Lehigh University in Pennsylvania between the workday and family responsibilities. Overachieving high schoolers add college calculus to their secondary-school schedules. Itinerant travelers log in to virtual classrooms whenever and wherever they please. More than 2 million people have taken online courses so far.

But the vastness of offerings only makes E-learning more complicated. In the past few years, 70 percent of American universities have put at least one course online, and by 2005 that may grow to 90 percent. The range of schools posting their intellectual wares on the Web is already staggering: from modest Chattanooga State Technical Community College and its 30 courses, to Rochester Institute of Technology's five bachelor of science degrees, to the University of Illinois's 10 different master's programs encompassing 220 courses. The range of fields covered is almost as astounding: While most curricula lean toward business and technology–at last count, 600 marketing courses were available online–students can still choose among psychology, engineering, and education programs, to name just a few.

Pitfalls. For anyone thinking of jumping into this new education world, the questions present themselves quickly: how to find the right courses or the appropriate programs–and how to find quality. The answers lie in understanding a number of issues: How has online education developed, and is it here to stay? What are the pitfalls in signing up for a course? Who does this kind of education work best for? What are the signs of engaging, enriching, and career-building coursework? (Helpful answers to these questions can be found in this and the following stories, and in the accompanying U.S. News tables.)

It seems fair to say that distance education has had a checkered past. The correspondence courses at the turn of the 20th century promised the equivalent of "anytime, anywhere" education but instead delivered shoddy lessons and slapdash instruction, driving dropout rates through the roof. But people still wanted to learn from a distance. Indeed, in the early 1960s, two DC-6 airplanes flew over Indiana beaming lessons by satellite into Midwestern classrooms. With each new technological innovation–telephone, film, radio, audiotapes, and television–distance education rebounded. By the 1980s, many colleges were offering courses and programs that taught through correspondence, teleconferencing, videotaped lectures, or some combination of all three. But by the late 1990s, most schools had moved to take the entire experience online.

Schools rushed to the Web for a slew of reasons: Some found the possibility of reaching thousands of new students intoxicating, while others wanted to take the lead in developing new educational technology. More than a few thought the dotcom mirage would become a pool of cold, hard cash. Some universities set up their online operations in separate, hoped-for, profit centers. Many were just afraid of being left behind.

Still, throughout the history of distance education, critics have questioned whether students could really be taught well from far away. Those concerns have been revived with online education. Detractors worry that online courses sacrifice intellectual sophistication for convenience, that they foster isolation among students, and that they dehumanize the process of learning. E-learning may "inhibit rather than promote good education," charges the American Federation of Teachers. Faculty fret that online education forces them to surrender control of their academic work to administrators and business people, who will warp it into something profitable. And with the continuing shakeout among E-learning companies and universities (story, Page 58), students could be left in the untenable position of paying for classes at a school that no longer exists.

Despite such worries, online education is here to stay. For some students, it's their only option. As a service manager with Komatsu Mining Systems, Steve Huff heads off to remote areas for a month at a time. Yet, at 55, Huff was ready to finish his undergraduate degree. He signed up for the University of Phoenix's online baccalaureate completion program. For Huff, maintaining a 3.9 grade-point average while logging in from places as far away as Aikhal, Siberia, a mining town near the Arctic Circle, hasn't been that difficult. Finding the right program to begin with was the challenge. "There are hundreds out there," he says.

For-profit University of Phoenix, the largest private university in the United States, is an interesting case in point. With campuses in 21 states, the school currently enrolls over 90,000 students. But roughly 25,000 of them have opted for one of the school's 18 online degrees. At the University of Maryland-University College, the biggest provider of distance education in the nation, students signed up for 44,000 courses last year. The university expects enrollment to triple in the next decade. As if those weren't enough options, several giant companies, like General Motors, are setting up their own online learning centers for their workers. And a host of other for-profit companies have sprung up to capitalize on what is already a multibillion-dollar market worldwide. Businesses such as NETg, Click2learn, Quisic, and SmartForce formed to sell to individuals and corporations discrete modules that instruct students in business practices–subjects ranging from laying off employees to developing software. (Indeed, for some E-learning companies the how-to-fire modules turned out to be prescient: UNext has laid off 52 workers, and two months ago, Pensare went under.)

Yet despite the economic tumult, E-learning remains a sturdy industry. "Anybody that says online education is just another promise is ignoring what online education is already doing," says Bob Kerrey, president of the New School in New York City and former senator from Nebraska. "It's allowing people to learn in ways that were impossible before." The models vary greatly. The U.S. Army War College's two-year program in strategic studies requires book reading, paper writing, and thoughtful Internet discussions among its 300 participants. Meanwhile, Harvard Business Online uses spreadsheets, case studies, and video clips to teach a quick course on finance for managers. With programs like Harvard's, students can move at their own pace and take time to review lessons. Students don't just receive information online, say advocates, they wrestle with knowledge and make it their own.

Studies indicate that online learning can be effective. Thomas Russell of North Carolina State University reviewed research on all types of distance learning and concluded that there was "no significant difference" between inside- and outside-classroom education. The Alfred P. Sloan Foundation, which funds the development of university online courses, came to the same conclusion. Says program director Frank Mayadas, "If the same professor is offering the same course and has offered it online and on campus, the results are equivalent and even tend to favor off-campus learning." Arizona State University compared test results of its online M.B.A. students with those enrolled in the traditional program and found that the online students scored higher.

Gold rush. Still, while the formula can be effective, many online courses are not. Some providers, including universities, bypassed educational quality in their rush toward Internet gold. "Much of corporate E-learning is underwhelming," admits Sam Herring, executive vice president at Lguide, a company that evaluates online education. Indeed, the company reviewed 70 providers for an unnamed consulting company and found only two that it could recommend. Others promise a high degree of interactivity with the instructor and other students, but few frequent the class chat rooms and the professor doesn't return E-mails. Even big-name schools don't guarantee quality. Brian Dalton, 26, complains that the professor of the biochemistry course he took through the University of California-Berkeley sometimes didn't answer all the queries in his E-mails. When he did, the response would be cursory. "He didn't want to be bothered with questions," says Dalton. "I had the feeling that there were lower standards [than at the traditional university] for the professor's involvement in the material, answering questions, and grading." Dalton received an A+.

Successfully venturing into online education, therefore, requires some serious thought. One question worth considering is whether an online program will give you the full breadth of education you seek. While at least 35 institutions offer bachelor's degrees online, it's worth noting that much of the four-year college experience at a brick-and-mortar institution cannot be replicated over the Internet. (Some places are trying, though: Kentucky Virtual University, for instance, offers virtual college sports and "music to study by" to online students.) And at the graduate level, skeptics ask whether E-learning can be the proper mode for educating nurses, for instance, or teachers.

Real time. The next thing to examine is how you learn best. Because the Internet is so flexible, courses can be created in a variety of shapes and sizes, from streaming-video lectures in real time to instructorless simulations to E-mail-heavy university courses that require students to read books. Students can pick the format that best suits them. "Without question, adjusting to differentiated learning styles is one of the greatest benefits of online learning," says Carol Vallone, chief executive officer of WebCT, a company that provides the technical backbone for hundreds of universities' online courses. The company has even developed a program that modifies how content is delivered to different students in the same class based on their learning styles.

Students who thrive on discussion and interaction with peers should consider programs that emphasize communication among instructor, student, and classmates. Indeed, some proponents of online education argue that its ability to foster thoughtful discussion–through E-mail, chat rooms, and discussion boards–may be the technology's greatest strength. At the well-regarded Walden University, which has been offering Ph.D.'s online since 1993 to students some of whom have gone on to teach at Yale University, serve in the Bush administration, and head up companies, faculty prepare weekly discussion topics for chat rooms and participate in extensive E-mail conversations with students. Other schools, like the University of Baltimore, ensure student-professor interaction by requiring students to log on at least three times a week and grading them on their contributions to the discussion boards. At the end of such courses, there can be over 3,000 postings on group discussion boards. For Wendy Sahli, 30, an undergraduate student at the University of Maryland-University College, getting gobs of individual attention from a professor via E-mail was one of the best aspects of her online coursework: "In traditional classrooms, class time is precious. [With E-mail] I feel like I can ask the instructor questions without distracting the other students."

Play hard. Other schools promote student and professorial camaraderie by requiring on-campus visits. Ohio University's M.B.A. Without Boundaries program mandates four-day weekend visits to the school every three months as well as two-week stints twice in the summer. During these residencies, students complete group projects, take overview classes with professors, and generally get to know one another. "We work hard, play hard, and learn a lot," says Tom Hammann, a second-year student and full-time business unit manager at General Mills in Lodi, Calif.

While communication-based classes can be either synchronous (students meet at a specific time online for discussions or lectures) or asynchronous (students can "attend" class to read notes or participate in conversations anytime they please), courses that revolve around solving real-world problems are primarily asynchronous, and often instructorless. Companies like UNext and Cognitive Arts, which provides courses for corporate clients and universities, have worked with psychologists to develop sophisticated exercises that students work through at their own pace. Their mantra is "learn by doing." For a Columbia University course in C++ programming developed by Cognitive Arts, students assume the role of entry-level programmers working on a project at a software company. Memos from the "team leader" outline each assignment. As students complete the assignments, they send them to a "personal tutor," who grades and returns them. There is no teaching in the traditional sense.

Unfortunately, courses with little instructor interaction have high dropout rates–sometimes over 60 percent. Clark Bryant, 19, gave up on his online technical writing class at Chattanooga State Technical Community College after less than two weeks. It was boring, he says. "If it just sits there, I won't do it." This fall, he enrolled in the same course on campus. Not everyone is disciplined enough to finish a course without instructor prodding, says Paula Moreira, vice president for integrated learning at New Horizons, a company that provides information-technology training. She admits that only 50 percent of the students who start New Horizons' self-paced Web courses finish them. However, 90 percent of the students who sign up for video or webcast courses–where teachers broadcast lectures and hold discussions in real time–complete them, about the same rate as the classroom-based courses.

All-stars. One thing hasn't changed from traditional education: It's still up to the teacher to produce a stimulating educational experience. But online instructors are rarely the academic all-stars that some universities brag about. Providers have taken to "unbundling" the professorial role–enlisting high-profile professors to design courses while part-time instructors actually "facilitate" the course. "All-star cast" is how Glenn Jones, founder of Jones International University, refers to his school's faculty. "We bifurcate the teaching process," Jones says, so that professors from top-notch schools set up the class and decide the syllabus while "teaching faculty," only about two thirds of whom have Ph.D.'s, regularly interact with students. Even schools with their own batch of high-quality academics, like Cornell, resort to this method for their online courses. While the teachers could be talented instructors–and often have real-world experience in the field they're teaching–students hoping to learn from their discipline's top theorists might be disappointed. Even courses taught by well-meaning professors face problems if there are too many students in the class because the instructors can't keep up with E-mail traffic. When Walt Coker, who teaches education courses for Northern Arizona University Online, has more than 40 students in a class, he'll often receive more than 300 E-mails each day. "I will try to have a response within 48 hours," he says, but sometimes he just can't do it.

As with on-campus education, students need to ensure that they'll have enough institutional support to finish their degree. Indeed, online providers are only slowly realizing the importance of student services. "People take it for granted on a campus that they can ask someone for help," says Carol Twigg, executive director of the Center for Academic Transformation at Rensselaer Polytechnic Institute in Troy, N.Y. Experienced, good-quality schools, she says, offer mentoring, librarians, and technical help online, not only at 3 in the afternoon but at 3 a.m. as well. Rio Salado Community College in Tempe, Ariz., offers a service called "beep a tutor": Students can E-mail academic questions to a pager-toting tutor who will call them back within a few hours. The school's tutoring center and library also host live chat rooms on the Web.

Luckily, there are some shortcuts to finding a good online program. One way to find the best is to limit your search to providers approved by one of the six regional accrediting bodies, the association of the specific field you plan to study, or a state agency. Accreditation assures you that the institution has qualified faculty, sophisticated instructional materials, and a well-stocked library. However, as with all things Internet, the situation is more complicated than it appears: A lack of accreditation doesn't necessarily mean a lack of quality. For example, the University of Phoenix mainly employs adjunct teachers. That means the Association to Advance Collegiate Schools of Business won't give the stamp of approval to its M.B.A. program, but the National League for Nursing passed its nursing program because that organization does not require a staff of tenured, full-time faculty.

But can an online education truly compare to learning in the classroom? Even some online boosters say no. "The closer you are to Socrates," says Bob Scales, CEO of Walden University, "the farther you should be from distance learning." Carol Twigg of the Center for Academic Transformation disagrees: It's the classroom that's inadequate, she argues. "That's where one size fits all."

Translation troubles
Some E-learning businesses have successfully converted ideas into profits while others founder

^ BY KATHERINE HOBSON

But there's been good news along with the bad. Many staid, ivy-walled universities have set up enviable E-learning centers. The University of Maryland-University College enrolls 26,500 students. Another success story is the University of Phoenix Online. With more than 25,000 students, Phoenix is growing like a weed. Why? Founded in 1976, it has many more years of experience serving older, adult learners than Internet-era upstarts. Convenience has always been paramount, and it retained that focus when it began offering courses online in 1989.

Companies targeting corporations, like Redwood City, Calif.-based SmartForce, are also doing well. That's not surprising, since corporations see a tangible benefit from putting training online: lower costs. But there are motivation issues among corporate learners, too, especially those who know that, in past years, their company might have sent them to a resort for a week for their training.

^ Take it abroad. English-language training is another growth area, says Liam Donohue, a founding partner of DHM Arcadia Partners, a venture capital firm. U.S. universities also have a big opportunity to take their brands abroad, he says. Last August, Thomson Corp. said it would invest $25 million in Universitas 21 Global, an online university targeting Asia and Latin America. The venture will involve 16 universities, including the University of Virginia and New York University.

True believers say the outlook for online education is bright. More mergers and acquisitions are likely as big companies look for a chance to snap up start-ups on the cheap. But there's a new caution in the air. Practicality and profits matter. Call it back-to-basics education.

Want more from high school?
In many states, students can go online to broaden their choice of classes

^ BY BEN WILDAVSKY

The number of online high schools has grown quickly in the past few years. Most offer classes intended to supplement regular high school courses, though many plan to offer their own diplomas as well. (Online schools offering a full curriculum for grade school children–usually home-schoolers–are spreading, too, but at a much slower rate.) Online high schools–or individual Web-based AP classes offered by companies like Apex Learning–are now planned or underway in numerous states, including Massachusetts, Kentucky, Illinois, Nebraska, and Michigan.

Florida's E-school attracts many students who need flexible scheduling, from budding tennis stars and young musicians to brothers Tobias and Tyler Heeb, who take turns working on the computer while helping out with their family's clam-farming business on Pine Island, off Florida's southwest coast. Home-schoolers also are well represented. Most students live in Florida, but 55 hail from West Virginia, where a severe teacher shortage makes it hard for many students to take advanced classes. Seven kids from Texas and four from Shanghai round out the student body.

The great majority of Florida Virtual Schoolers–80 percent–are enrolled in regular Florida public or private high schools. Some are busy overachievers like Sarah Hackney, 17, student government president at DeSoto County High School in rural Arcadia, whose 1,050-student school offers no AP classes. She took AP American government last year and is signed up for AP microeconomics and HTML programming this semester. "I don't want to be left behind in the college rush," she says. Others are retaking classes they barely passed the first time. "I would prefer not to be in class with a bunch of sophomores," says 18-year-old Mark Miner, a senior at Bartram Trail High School in the suburbs of Jacksonville, who wants to raise the D he earned in 10th-grade English to match the A's he's earning now.

Personal touch. The school's biggest challenge is making sure that students aren't left to sink or swim on their own. After the school experienced a disappointing course completion rate of just 50 percent in its early years, Executive Director Julie Young made a priority out of what she calls "relationship-building," asking teachers to stay in frequent E-mail and phone contact with their students. That personal touch has helped: The completion rate is now 80 percent.

Critics of online classes say that while they may have a limited place, they are a poor substitute for the face-to-face contact and socialization that take place in brick-and-mortar classrooms. "The bulk of understanding is best acquired in a classroom–in a community of fellow learners," says Alan Warhaftig, a Los Angeles teacher who heads a nonprofit group that's critical of Internet education. Despite opportunities for online chats, some virtual students say they'd prefer to have more interaction with their peers. "The main thing that I miss in this online setting is class discussion," says Hackney.

Students and parents are quick to acknowledge that virtual schooling isn't for everyone. "If your child's not focused and motivated, I can only imagine it would be a nightmare," says Patricia Haygood of Orlando, whose two daughters are thriving at the Florida school. For those who have what it takes, however, virtual learning fills an important niche. "I can work at my own pace, on my own time," says Hackney. "It's the ultimate in student responsibility."

^ They're online and on the job
Managers and hamburger flippers are being E-trained at work

BY MARY LORD

Training and professional development are the corporate equivalent of spinach: essential for pumping up performance but hard for employees to swallow. Many recall the coffee and doughnuts served between sessions better than the content of the text or lectures. Thus, when Circuit City moved most of its training online over the past year, salesman Andre Harris, a reluctant reader, figured he'd skate through the tutorial on digital camcorders with a minimal amount of effort–until he saw colleagues who'd mastered the material ringing up all the commissions. Harris returned to the back-room computer lab and consumed every course offered. Today, he's the Sterling, Va., store's top salesman, able to counsel customers on each nifty feature of some 18 models that gleam atop his display counters, as well as the computers and TVs down the aisle. Not bad for someone who had been working in the warehouse only six months earlier.

Success stories like Harris's are selling employers from automakers and software firms to hospitals and pharmaceutical companies on the value of electronic training. From a flicker in 1998, corporate E-learning has flared into a $2.3 billion market, making it one of the fastest-growing segments of the education industry. That's still a mere sliver of the nearly $57 billion that Training magazine estimates companies now spend on employee instruction. But the concept is expanding swiftly to encompass everything from university-based online certificate programs for firefighters and M.B.A. programs for executives to computer CDs on managing diversity created by courseware companies like NETg of Naperville, Ill. The technology-research firm IDC in Framingham, Mass., sees the industry continuing to grow at a 50 percent annual clip, topping $18 billion in 2005. The U.S. Army alone will spend more than $450 million over that time to beam classes into bases and foxholes worldwide.

Behind the wild enthusiasm is the imperative to stay competitive in a fast-changing economy. Gone are the days of long product cycles, 12-week management courses, and hefty travel budgets to cover in-person training. The winner is often the one who zaps new information out to the sales force fastest. Rather than fly trainers to 7,000 dealerships, General Motors University now uses interactive satellite broadcasts to teach salespeople the best way to highlight features on the new Buick. Six months before rolling out a hot new pickup, GM used the broadcasts to teach mechanics how to repair it; at one point, 1,400 employees around North America were watching. "If we'd had to send everyone to a bricks-and-mortar class, we never would have got all of it done," says GM learning chief Donnee Ramelli.

^ Fast and cheap. E-training can also shave companies' costs and inconvenience while it saves them time. Pharmaceutical companies like Merck are conducting live, interactive classes over the Web, allowing sales reps to bone up on the latest product information at home rather than fly to a conference center. Intel employees out west can pursue an M.B.A. program designed exclusively for them from Babson College in Wellesley, Mass., via laptop, without having to take a sabbatical from work or decline out-of-town assignments. Recognizing the benefits, Motorola's admired corporate university already conducts 30 percent of its training online and aims to deliver half its courses electronically in the next few years. McDonald's trainees will get a taste of Web-based learning later this year by logging into Hamburger University and honing such skills as how to assemble a made-to-order burger or properly place the drink on a tray. Even before the September 11 terrorist attacks, which left many employees loath to travel, some experts predicted that 80 percent of corporate training would be delivered electronically in three years.

Lofty predictions about the dominance of computer-based training have been made before, however–and all have proved wrong, notes industry veteran Jim Howe, chief technology officer at Usertech/Canterbury, an East Norwalk, Conn., E-learning firm that creates customized programs to teach employees how to use new payroll and other systems. Why? Most computer-based training sessions are just flashier versions of classroom instruction, says Howe. They are full of text and "eye candy" graphics, and short on the engaging, interactive functions like search engines or instant messaging that make the medium so powerful. Think "PowerPoint on steroids," says corporate trainer Anita Rosen, cofounder and CEO of ReadyGo, a Mountain View, Calif., company that makes a Web-course "authoring tool," software that lets firms put their own material online. "No one wants to sit for seven hours watching page turn after page turn."

One obstacle to the spread of online training, say experts, is the mismatch between what employers really need–customized courses that are tailored to a firm's products and its unique corporate culture–and what they can afford. A British Telecom study found that 80 percent of companies prefer developing their own training courses in-house. But creating even one customized E-course can take months, involve armies of experts, and cost anywhere from $25,000 to $50,000. Thus, most companies either stick with classroom training or buy generic courses (how to do performance appraisals, basic business ethics) from dozens of firms whose off-the-shelf offerings account for about two thirds of corporate E-training content. The third of the market that is customized involves partnerships between companies like Intel or PricewaterhouseCoopers and universities that create M.B.A. programs for company executives, and deals like that of Circuit City with DigitalThink. The San Francisco-based E-learning systems provider offers soup-to-nuts service, from designing a course using in-house material and putting it online to tracking student performance.

For E-training to be effective, it has to both reach a wide audience quickly and deliver information in a way that allows the audience to actually absorb it. That means breaking lessons into short "chunks" and adding lots of pop quizzes, online discussion groups, or other interactive features that let students demonstrate what they've learned. It also usually involves some form of live instruction, whether delivered in person or electronically.

Circuit City's tutorial on digital camcorders, for example, consists of three 20-minute segments. Each contains audio demonstrations of how to handle customer queries (which cables are needed to E-mail video?), tests on terminology, and "try its" that propel trainees back onto the floor to practice what they've learned. Students with questions can E-mail experts and receive a response within 24 hours. Some companies are experimenting with "synchronous mentoring," where employees all log in at a set time and chat with the instructor. Webcasts, in which the teacher presents material, are becoming increasingly common, too, as are blended programs that combine online and classroom training. Last year, some 21 percent of firms with E-learning programs surveyed by IDC were combining online material with class time; today, 32 percent do.

Even in the hands-on world of medicine, where physicians in most states must take continuing medical education (CME) classes to maintain their licenses, the number of E-options has "exploded" to over 5,000, says retired psychiatrist Bernard Sklar, who maintains a list of offerings (www.netcan tina.com/bernardsklar/cmelist. html). One place to embrace Web-based CME is Detroit Receiving Hospital, which has put 150 interactive case studies on the Web so that doctors inside and outside the hospital can log on and learn about the latest diagnostic practices or drug therapies. As in conventional morning rounds, physicians take a virtual patient's history, view the MRIs and blood smears, make a diagnosis, and suggest treatment. Internist Lavoisier Cardozo, who oversees mdmorningreport.com., says that working through all 150 cases has "helped me become more versatile."

^ Offline, too. Preserving the human element was a key consideration when Intel joined forces with Babson Interactive, a for-profit spinoff of the college's Olin School of Business, to roll out a customized online M.B.A. for its employees. In fact, the program is evenly split between in-class lectures one weekend per month–delivered by Babson professors who travel to Intel facilities in Arizona, California, and Oregon–and online projects and case studies that focus closely on Intel practices and products. "When you're building teams, you really need the intense face to face," says Thomas Moore, dean of executive education and CEO of Babson Interactive, who believes that the online collaboration and real-time cases will make the hybrid stronger than the classroom or electronic experience alone.

PricewaterhouseCoopers's online M.B.A. program from the University of Georgia's Terry College of Business starts with on-campus classes to build camaraderie and foster teamwork among the consulting firm's road warriors, most of whom are information technology engineers. Says Sheri Shuey, who oversees the project at PWC: "We find that students who work in isolation don't benefit as much." One measure of the approach's success: Of the four dozen managers in each class, only one or two drop out–and three have gone on to make partner. Employers bear the cost of these customized M.B.A.'s, about $30,000 to $40,000 per student.

Stephanie Peacocke, an Intel project manager in the corporate quality network in Chandler, Ariz., appreciates the mix. "It's just good to touch base with everyone," she says of the six other local Intel students in her group. "There's a personality behind the name you're seeing on the screen." Moreover, the online work frees up class time for deeper discussions. "I feel like we optimize that face time," says Peacocke, who learned the value of voicing even half-baked ideas in brainstorming sessions, rather than holding back as usual, after doing improvisations and comedy sketches–part of Babson's "creativity" curriculum. Having Intel examples to study, and hearing from classmates representing departments like finance and human resources, also have given her "a more holistic picture" of how the company works.

If M.B.A.'s were looking for a case study on the positives of corporate E-learning, Circuit City would fill the bill. As recently as five years ago, every new full-time "sales counselor" would have traveled to the store's Richmond, Va., base for five days of classroom training. Today, with nearly 600 superstores, 50,000 employees, and a rapidly changing inventory of digital cameras, high-definition TVs, and other consumer electronics, the training needs are far more complex–and they're ongoing. So Circuit City executives spent three intensive days talking about how to create a learning culture and get the best results, and hooked up with DigitalThink to design and post customized courses. They thus avoided the common trap of simply uploading the old text-based lessons onto a new delivery system.

Because the company's core staff is made up of 18-to-30-year-olds with "point-and-click attention spans," says Jeff Wells, senior vice president for human resources, courses had to be short, fun, flexible, interactive, and instantly applicable on the job. "We were trying to create a direct link between learning and earning," explains Wells. In the year since the system debuted, the time needed to educate a new hire has fallen by half, and Circuit City has pared its training department from 83 people to 13. "Within a few hours, we reduced the training budget by 50 percent and improved effectiveness," says Wells. So far, at least, he has seen no downside. At outlets like the Sterling, Va., store, E-learning has translated into happier customers–and more sales. That's the kind of green that could get any employee salivating.

^ E-learn and earn
As dot coms mostly fade, online universities are proving that there's gold in them thar screens

By James M. Pethokoukis

Director Steven Spielberg recently received his diploma from California State University-Long Beach after dropping out in 1968 to conquer Hollywood. A great example to dropouts everywhere–though, unlike Spielberg, most students probably couldn't get their natural sciences professor to visit them at work. At least not in person. Through E-learning, however, college students can have instructors visit them via the Internet. They can download video and audio of lectures and attend class discussions through chat rooms and message boards.

Whatever the quality of these E-courses, more and more people are taking advantage of their convenience. Online-learning enrollments are growing 33 percent a year and are expected to hit 2.2 million by 2004, according to International Data Corp. And a study by Bear Stearns found that 150 institutions offer undergraduate degrees online and that nearly 200 offer online graduate degrees.

But can companies and institutions make a profit from E-learning? People are still reluctant to pay for online content generally–one study found that 70 percent of adult surfers didn't see why anyone would pay. Yet the University of Phoenix Online, a division of distance-learning company Apollo Group that trades as a separate tracking stock, made $31.8 million in fiscal 2001 and $23.6 million in the first six months of fiscal 2002. Rivals like DeVry and Strayer Education don't break out online results, but "they are either already profitable or soon will be," says Greg Capelli, education analyst with Credit Suisse First Boston. And while shares of most E-stocks have tanked, E-learning stocks are up an average of 14.5 percent this year.

Apollo Group President and CEO Todd Nelson says that he agrees with "new economy" prophets who call E-learning the "next great application of the Internet." Still, it is hardly a can't-miss business. Academic institutions have found E-profits elusive. New York University, the University of Maryland, and Temple University have shuttered their for-profit ventures. Columbia University's Fathom has yet to make a profit and is shifting its strategy. So what's the key to making E-learning make money?

^ Keep it useful. Columbia University's Fathom was born from a vision of having millions of Internet users sign up for semester-length liberal arts courses like Greek and Roman Mythologyfor $414. But Anne Rollow, Fathom's head of strategic alliances, admits the firm overestimated the willingness of so-called lifelong learners to "experiment"–especially at several hundred bucks a pop. So now Fathom has added free, quickie intro seminars, 10-week courses for $50, and longer career-development coursessuch as Define Your Core Business. "It helps when you offer classes that students actually care about," says Lehman Brothers analyst Gary Bisbee.

Keep it real.An E-firm with an established offline presence has the marketing advantage of a brand name. Indeed, a poll of human resource managers found that 77 percent thought online degrees from offline institutions were more credible than those from pure E-learning firms. "It helps to be both bricks and clicks," says Bear Stearns analyst Jennifer Childe. She points out that pure E-learning firm Jones International University has only 6,000 students, while the University of Phoenix Online has 37,569. Helping power that growth has been the 26-year-old University of Phoenix, with 78,700 students, 38 campuses, and 78 learning centers in the United States, Canada, and Puerto Rico.

^ Keep it simple. Many academic efforts, says Bisbee, had "lots of whiz-bang features like video and high-end graphics, even though not everyone could use them." And while sticking a camera in the back of a lecture hall is the simplest way to do E-teaching, most college students will attest that lectures are the least important part of the educational experience. "A lot of the people who rushed into this business were refugees from cable television and thought you did this the way you do a talk or cooking show," says Andrew Rosenfeld, CEO of Cardean University, which offers business courses online, including a full M.B.A.

Creating a profitable little business may be a comedown for bold entrepreneurs looking to build the Amazon.com of education. Then again, Amazon would have been profitable long ago if it had stuck to selling just plain books.


^ NAEP Scaled Scores***




 

 

 

4th Grade

8th Grade

State

Title I Schools Identified for Improvement*

Year**

1998 Reading

2000 Mathematics

1998 Reading

2000 Mathematics

Alabama

57

2001-2002

211

218

255

262

Alaska

11

2000-2001

 

 

 

 

Arizona

344

1999-2000

207

219

261

271

Arkansas

0

2000-2001

209

217

256

261

California

1009

2000-2001

202

214

253

262

Colorado

154

2001-2002

222

 

264

 

Connecticut

28

2000-2002

232

234

272

282

Delaware

20

2001-2002

212

 

256

 

District of Columbia

12

2000-2001

182

193

236

234

Florida

246

2000-2001

207

 

253

 

Georgia

625

2000-2001

210

220

257

266

Hawaii

85

2001-2002

200

216

250

263

Idaho

88

2001-2002

 

227

 

278

Illinois

435

2000-2001

 

225

 

277

Indiana

97

2000-2001

 

234

 

283

Iowa

26

2000-2001

223

233

 

 

Kansas

118

2000-2001

222

232

268

284

Kentucky

107

2000-2001

218

221

262

272

Louisiana

24

2000-2001

204

218

252

259

Maine

19

2000-2001

225

231

273

284

Maryland

118

2001-2002

215

222

262

276

Massachusetts

259

2000-2001

225

235

269

283

Michigan

1513

2000-2001

217

231

 

278

Minnesota

79

2000-2001

222

235

267

288

Mississippi

122

2000-2001

204

211

251

254

Missouri

63

2001-2002

216

229

263

274

Montana

68

2000-2001

226

230

270

287

Nebraska

105

2000-2001

 

226

 

281

Nevada

19

2000-2001

208

220

257

268

New Hampshire

4

2000-2001

226

 

 

 

New Jersey

274

2000-2001

 

 

 

 

New Mexico

63

2000-2001

206

214

258

260

New York

529

2000-2001

216

227

266

276

North Carolina

17

2001-2002

217

232

264

280

North Dakota

20

2000-2001

 

231

 

283

Ohio

760

2000-2001

 

231

 

283

Oklahoma

33

2000-2001

220

225

265

272

Oregon

9

2001-2002

214

227

266

281

Pennsylvania

256

2000-2001

 

 

 

 

Puerto Rico

234

2001-2002

 

 

 

 

Rhode Island

34

2000-2001

218

225

262

273

South Carolina

31

2000-2001

210

220

255

266

South Dakota

13

2000-2001

 

 

 

 

Tennessee

132

2001-2002

212

220

259

263

Texas

121

2000-2001

217

233

262

275

Utah

22

2001-2002

215

227

265

275

Vermont

28

2001-2002

 

232

 

283

Virginia

35

2000-2001

218

230

266

277

Washington

60

2001-2002

217

 

265

 

West Virginia

13

2001-2002

216

225

262

271

Wisconsin

113

2001-2002

224

 

266

 

Wyoming

0

2000-2001

219

229

262

277

US & Puerto Rico Total

8,652

 

215

226

261

274




Key to colors used above:

Above Nat'l Avg.

 

Below Nat'l Avg.

 

At Nat'l Avg.

 

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