The Innovative University: Changing the DNA of Higher Education from the Inside Out

by Clayton M. Christensen

The mandate was to move up quickly. Among other things, that meant becoming more selective in admissions; placing more students in higher-paying jobs; and bolstering the faculty's research and publication quality and quantity in order to enhance the program's reputation in the eyes of other academic leaders. These were crucial initiatives—and expensive ones.

On a higher education landscape where the general goal is to move up notwithstanding the high cost of doing so, here was an institution focused on a relatively lowly niche.

He admitted the difficulty of simultaneously raising the school's quality, decreasing its costs, and serving more students.

“BYU-Idaho has different DNA.”

selling simple products to less demanding customers and then improving from that foothold, drive the prior leaders into a disruptive demise.

True, most entrants have indeed entered into the “low end” or “new market” of higher education, often as community colleges. And they have almost uniformly driven up-market to offer bachelor's and advanced degrees in more and more fields—just as the theory would predict. But the demise of the incumbents that characterizes most industries in the late stages of disruption has rarely occurred among colleges and universities. We have had entry, but not exit.

First, teaching. In the past, teaching was difficult to disrupt because its human qualities couldn't be replicated. In the future, though, teaching will be disruptable as online technology improves and shifts the competitive focus from a teacher's credentials or an institution's prestige to what students actually learn.

Second, we observed two distinct groups of college students who have different “jobs-to-be-done.” In one group, the campus experience is central to the college experience. For members of this group, the campus experience is hard to disrupt.

And the third reason why higher education has seen many new entrants but few exits is alumni and state legislators, who are “customers” of their institutions. Their support is typically driven not only by public spiritedness but also by deep personal relationships with faculty members and coaches who profoundly molded their lives. Alumni and state support gives traditional universities and colleges staying power unique to higher education.

learning occurs best when it involves a blend of online and face-to-face learning, with the latter providing essential intangibles best obtained on a traditional college campus.

The physical campuses and full-time faculty members of traditional universities and colleges can embrace online learning as a sustaining innovation—technology could make them stronger than ever. This is a different situation than the more straightforward dilemma that the newspapers and video rental stores faced when online technology knocked on their doors.

the November 2010 release of a study called Winning by Degrees: The Strategies of Highly Effective Higher Education Institutions3

In 2010, the Academic Ranking of World Universities, which measures achievements such as Nobel Prize awards and scholarly publications, listed seventeen U.S. institutions among the top twenty globally; of the top fifty universities,

thirty-six were American.3

tuition is not raised to pay the faculty more—your salary is rising much more slowly than overall institutional costs and tuition prices.5

in large measure it is an obsession with attracting students that drives up the institution's cost.

What is most different about today's colleges and universities is not the price of the professoriate and administration but the cost of scholarships and financial aid, physical facilities, Internet access, and intercollegiate athletic teams—all things that matter to students as they choose one school over another.

To a significant degree, colleges and universities have become expensive as a result of attempting to attract the most capable and discerning student-customers, not because of trying to accommodate employees.

Seen through the lens of disruptive innovation theory, universities are at a critical crossroad. They are both at great risk of competitive disruption and potentially poised for an innovation-fueled renaissance.

Mastering the challenges and opportunities presented by a fast-paced, global society requires more than just basic technical skill and cognitive competence.

Though for-profit educators can play important, complementary roles in higher education, the ideal of the

traditional university, with its mix of intellectual breadth and depth, its diverse campus social milieu, and its potentially life-changing professors, is needed now more than ever.

it is no longer as important to evidence educational capacity via brick-and-mortar facilities and Ph.D.-trained faculty as to demonstrate student learning.

The combination of disruptive technology and increased focus on educational outcomes opens the door to new forms of competition, particularly from the private sector.

The first type, sustaining innovation, makes something bigger or better.

A disruptive innovation, by contrast, disrupts the bigger-and-better cycle by bringing to market a product or service that is not as good as the best traditional offerings but is more affordable and easier to use.

Online learning is an example.

But as the disruptive innovation improves—by its own sustaining innovations—it becomes a threat to traditional providers.

Because the underlying technology offers advantages in cost and ease of use, these quality innovations gradually improve the product to the point that even students at traditional institutions find it appealing.

Our duty is to wholly reinvent ourselves. We are

America's future—intellectually, socially, culturally.11 —Gordon Gee, president of Ohio State University

the standard model has become unsustainable.

Most universities cannot afford to offer so many subjects to such diverse types of students or to require their professors to compete in a world of research scholarship that is becoming increasingly expensive and conceptually narrow.

Winning by Degrees: The Strategies of Highly Productive Higher Education Institutions.15

And to speak of universities and colleges as having market share is to imply disregard for higher education's noneconomic role in creating knowledge and promoting social well-being.

the desire to attract and satisfy students as though they are mere customers leads to academic coddling, in the form of easy grades and expensive facilities and entertainments, such as intercollegiate athletic teams.

Changing direction requires…leadership that views the university idealistically, as something more than a business and something better than a slave to the logic of economic competition.

In 2010 McKinsey & Company found that DeVry was 50 percent more efficient in administrative functions than typical universities, thanks to a high degree of process automation and operations management training—for example, the person responsible for financial aid was a Six Sigma Black Belt, the highest level of certification in a business management system designed to improve the quality of process by identifying and removing the causes of defects and minimizing process variability.

The strategy of most schools is one of imitation, not innovation.

The inclination to become more Harvard-like has been reinforced for the past four decades by something colloquially known as “the Carnegie ladder.”

“Carnegie climbing.”

In the ten years after 1997, the inflation-adjusted cost of a year of college at the average public university rose by 30 percent, while the earning power of a bachelor's degree remained roughly the same.

As a result, the cost of higher education grows faster than faculty salaries or other instruction-related costs.24

Working from this generous assumption allowed Christensen to make the counterintuitive discovery that the sustaining innovation made by established companies on behalf of their best customers can set institutions up for disruption.

Much of what universities are doing is standard management practice: improve the product; give customers more of what they want; watch the competition. But it leads even great enterprises to fail, as detailed in The Innovator's Dilemma. Inevitably, while the industry leaders focus on better serving their most prized customers and matching their toughest competitors, they overlook what is happening beneath them. Two things are likely to be occurring there. One is growth in the number of would-be consumers who cannot afford the continuously enhanced offerings and thus become nonconsumers. The other is the emergence of technologies that will, in the right hands, allow new competitors to serve this disenfranchised group of nonconsumers, as shown in Figure 1.2.

Historically, higher education has avoided such competitive disruption. There are several reasons for this past immunity. One is the power of prestige in the higher education marketplace, where the quality of the product is hard to measure. In the absence of comparable measures of what universities produce for their students, the well-respected institutions have a natural advantage; because they have been admired in the past, they are presumed to be the best choice for the future. A related stabilizing force is the barrier to disruptive innovation created by accreditation, a process by which representatives of established universities periodically participate in judging the fitness of established institutions and would-be newcomers. In doing so, they tended to apply the standards of practice in their own institutions. Thus, conformance to tradition became the price of continued accreditation and of entry to the industry. Another reason for the lack of disruption in higher education has been the absence of a disruptive technology. Since the time that universities first gathered students into classrooms, the learning technologies—lectures, textbooks, oral and written examinations—have remained largely the same. Even when computers were introduced into the classroom, they were used to enhance the existing instructional approaches rather than to supplant them. Lectures, for example, were augmented with computer graphics, but the lecture itself persisted in its fundamental form...

Costs have risen to unprecedented heights, and new competitors are emerging. A disruptive technology, online learning, is at work in higher education, allowing both for-profit and traditional not-for-profit institutions to rethink the entire traditional higher education model.

With rare institutional exceptions, quantity and quality in the academy continually grow.

They are obsessed with bigger and better, and all but paralyzed from moving toward simpler and more affordable.

the institution's goal is to decrease tuition relative to inflation, rather than increase it.