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February 7 - April 22, 2018
The theory of disruptive innovation asserts that in industries from computers to cars to steel those entrants that start at the bottom of their markets, selling simple products to less demanding customers and then improving from that foothold, drive the prior leaders into a disruptive demise. I was wrestling to explain the same issues in higher education, a natural next step after writing a book about disruptive innovation in public education. So when Henry invited me to join him in studying the past and future of higher education, I jumped at the chance.
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.
In one group, the campus experience is central to the college experience. For members of this group, the campus experience is hard to disrupt. Because of family and work responsibilities, however, students in the other group don't want to spend time on campus to earn a degree. They want to learn when they have time to learn—often after work, when their children are asleep. New entrants to higher education that focus on these potential students are indeed classic disruptors.
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
If you are the parent of a college student, this disturbing picture finds some support in your personal experience. Notwithstanding all the talk of growing federal financial aid, you may have stretched to the breaking point to send your child to a well-regarded school. Then you receive reports of unavailable courses, inadequate academic counseling, and hard-to-access professors. The learning experience, though it carries a much higher price tag, sounds reminiscent of your own college days, dominated by textbooks, lectures, and multiple choice exams. Other than the increased cost, the only
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Nor are students' preferences ignored. In fact, 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. Rankings measure other things of importance to students: student–teacher ratios; graduation rates; student and alumni satisfaction;
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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.
In the spirit of honoring tradition, universities hang on to past practices to the point of imperiling their futures. When reduced budgets force them to cut costs, they trim but rarely make hard
Yet to play its indispensable function in the new competitive environment, the typical university must change more quickly and more fundamentally than it has been doing. Invaluable strengths notwithstanding, the way it has historically operated has become too expensive.
For the first time since the introduction of the printed textbook, there is a new, much less expensive technology for educating students: online learning. Simultaneously,
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. Examples of sustaining innovations include airplanes that fly farther, computers that process faster, cell
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. Particularly in its infancy, when Internet speeds were low and many online courses were simply computer-based versions of traditional lectures and exams, the quality of online learning fell far below that of face-to-face instruction.
Disruptive innovation is thus initially a boon to nonconsumers of a product or service. Traditional providers ignore it, assuming that their current clientele won't be interested.
For example, online course developers not only add features such as video conferencing that make the online course more like a classroom setting, they also create online tutorials and student discussion forums that the traditional face-to-face course doesn't provide. 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
Now, though, the standard model has become unsustainable. To avoid disruption, institutions of higher education must develop strategies that transcend imitation. They must also master the disruptive technology of online learning and make other innovations. Strategies for doing so are the focus of this book.
We'll see that to survive, established universities will have to break with tradition. But we'll also find that to thrive they must build on what they have always done best. We'll look at more than a dozen institutions that are doing that. Look to your roots, in order to reclaim your future.13 —Ghanaian proverb, quoted by Mary Sue Coleman, president of University of Michigan
A particularly important audience, though, is faculty and administrators; they have the power to lead traditional universities and colleges from within, which is the only way it can be done well.
The burden of these choices, adopted by Harvard emulators lacking the financial resources necessary to bear them, have made most American-style universities vulnerable to competitive disruption.
Yet BYU-Idaho provides a useful case study because it is a fresh experiment that demonstrates the potential for traditional universities to harness the power of disruptive innovation.
BYU-Idaho is representative of institutions that are pursuing models that blend the traditional, Harvard-inspired model and the disruptive approach of the purely online educators. In addition to our in-depth study of Harvard and BYU-Idaho, we'll also look at more than a dozen other innovative schools, many profiled in a 2010 McKinsey & Company report, Winning by Degrees: The Strategies of Highly Productive Higher Education Institutions.15
Threat of Danger, Reasons for Hope No one could doubt that U.S. Education Secretary Margaret Spellings meant business. In upbraiding the nation's universities and colleges, the 2006 report of her commission on the future of higher education used the language and metaphors of business:
What we have learned over the last year makes clear that American higher education has become what, in the business world, would be called a mature enterprise: increasingly risk-averse, at times self-satisfied, and unduly expensive. It is an enterprise that has yet to address the fundamental issues of how academic programs and institutions must be transformed to serve the changing educational needs of a knowledge economy.
To be sure, professors and academic leaders must keep proper perspective. It is especially important to bear in mind all the purposes universities serve and to resist efforts to turn them into instruments preoccupied primarily with helping the economy grow. But resisting commercialization cannot become an excuse for resisting change. Rather, universities need to recognize the risks of complacency and use the emerging worldwide challenge as an occasion for a candid reappraisal to discover whether there are ways to lift the performance of our institutions of higher learning to higher levels.6
Despite the favorable opinions of undergraduates and alumni, a closer look at the record…shows that colleges and universities, for all the benefits they bring, accomplish far less for their students than they should. Many seniors graduate without being able to write well enough to satisfy their employers. Many cannot reason clearly or perform competently in analyzing
complex, non-technical problems, even though faculties rank critical thinking as the primary goal of a college education.7
In particular, he noted how scholarly activity tends to distance professors from the undergraduate teaching and learning process. At the same time, he argued, 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. In the process, Lewis concluded:
Universities have forgotten their larger role for college students…. Rarely will you hear more than bromides about personal strength, integrity, kindness, cooperation, compassion, and how to leave the world a better place than you found it. The greater the university, the more intent it is on competitive success in the marketplace of faculty, students, and research money. And the less likely it is to talk seriously to students about their development into people of good character who will know that they owe something to society for the privileged education they
Lewis's prescription for solving this problem was for universities to be less businesslike: 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.9
Depression. By 2009, the universities and colleges that the Spellings Commission had characterized as self-satisfied were struggling to fill budget gaps left by dramatic drops in their endowments and state appropriations. Even mighty Harvard was forced to suspend a major
Unfortunately, few of these schools enjoyed Harvard's financial clout. Endowment losses and decreases in state funding led inevitably to budget cuts and tuition increases.
The enrollments of these two-year colleges swelled, as did those of rapidly proliferating for-profit higher education companies.12 Many of the for-profits in particular applied the power of online learning technology. Online courses offer the benefits of greater convenience and also lower total cost, as much of a student's expense in getting a traditional higher education is not in tuition but in leaving the workplace and relocating to a residential campus.
The University of Phoenix, for example, recognized revenues of $2.5 billion in 2007; by the end of 2009 that figure had risen to nearly $3.8 billion.13 In that year it enrolled 355,800 new students, roughly 150,000 more than the total enrollment of the ten campuses of the University of California.14
Investigations of student-recruiting abuses and proposals to tighten regulatory standards slowed the for-profits, but it would be unwise to dismiss the disruptive power of their educational model, especially the use of online learning technology.
Economists teach that disruptive innovation by newcomers and creative destruction of entrenched incumbents leads to better products and services.19
When a century-old auto company, airline, investment bank, or newspaper files for bankruptcy or disappears altogether, we regret the attendant human suffering but count the loss as the price of progress, knowing that without competitive innovation and destruction we would enjoy a standard of living no better than our great-grandparents did.
The most innovative would-be competitors, for-profit education companies, find great success among working adults, many of whom care more about the content and convenience of their education than the label on it.
But many young college students still seek the assurance of traditional university names and the benefits of campus life. Because of loyal support from this large group of higher education customers, the incumbents have felt little pressure from the for-profits' use of potentially disruptive online technology.
The strategy of most schools is one of imitation, not innovation.20
They are stuck in a dangerous competitive middle ground, neither highest in quality nor lowest in cost. The great schools, rather than being discomfited by the imitation, seem all the more desirable because of it.
The first Apple computer was such a game-changing technology. Before the Apple, only university professors and graduate students at large universities had access to the bulky mainframe or minicomputers operated by specialists to whom computational requests, such as statistical analyses of data, were submitted. The high cost of these computers meant that they had to be shared by hundreds or even thousands of users. A data request could take days to be filled. If the output data revealed a flaw in the original request or an intriguing outcome calling for follow-up analysis, the user had to
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A related stabilizing force is the barrier to disruptive innovation created by accreditation, a process
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.
But for the elite, well-endowed private schools, a bit of budget tightening sufficed until the financial markets recovered.
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.
Private universities without national recognition and large endowments are at great financial risk. So are public universities, even prestigious ones such as the University of California at Berkeley.
For the vast majority of universities change is inevitable.
