Disrupting Higher Education

• By John K. Waters
• 04/16/15

"Disruption" is one of the most overused buzzwords in education today, according to education industry watcher Michelle R. Weise, and yet most people don't really know what it means.

"There is this tendency for pundits, policy makers and institutional leaders to take any kind of technological advancement, call it a 'disruptive innovation,' cram it into the classroom experience and then hope that somehow efficiencies are going to magically appear," Weise said during her keynote presentation at the recent CT Forum conference in Long Beach, CA. "Obviously, it's not that simple."

Weise said she thinks a lot about disruption. As a senior research fellow at the Clayton Christensen Institute for Disruptive Innovation, a San Francisco Bay Area-based nonprofit think tank, she specializes in disruptive innovation in higher education.

Weise used her time on the keynote stage to clarify the term and to explore its implications for the future of colleges and universities. She compared it first to what she called "sustaining innovations," which help drive up prices for the best customers. Disruptive innovations, on the other hand, drive prices down, transforming products and/or services that used to be complicated and expensive into something affordable and accessible to a new set of customers who don't really need to buy it. (She called them "non-consumers.")

She illustrated the concept with stories from non-higher-ed industries, including the story of Digital Equipment Corp. (DEC), or rather, its decline and fall. The company, which was once a very hot mini-computer maker, fell off the cliff in 1988, not because of bad management, but because of the disruptive innovation of the personal computer. DEC invested in expensive, high performing machines — what its best customers said they wanted — and more or less dismissed the "toy" personal computer. Meanwhile, IBM set up a separate business unit to figure out the PC and set up a new business model that succeeded.

True disruptive innovations can be identified by six shared characteristics that might at first seem counterintuitive, Weise said:

1. They target people who are non-consumers or who are over-served by existing products.

2. The innovation is not as good as existing products, as judged by historical measures of performance.

3. They're simpler to use, more convenient or affordable.

4. There is a technology enabler that can carry the new value proposition upmarket.

5. The technology is paired with a business model innovation that allows it to be sustainable.

6. Existing providers are motivated to ignore the new innovation and are not threatened at the outset.

Weise pointed to an example in higher education that checks all of these boxes: the for-profit University of Phoenix.

"People sometimes get upset when I say this," she said. "They say, that makes no sense, because they deliver a product that I find inferior, or that doesn't apply to students who attend my institution. If you're thinking that this product is not good, ask yourself, is it maybe just good enough for a whole new population of students? The University of Phoenix and places like Devry were able to deliver a higher education product and service that maybe looks different in terms of the basis of performance that we use to think about [traditional] institutions.... But consider it from the perspective of students who were working adults, who didn't want to give up their jobs to pursue their degrees. They were even willing to pay a high premium to attend the University of Phoenix because they offered that online option, so they could continue to work and get their degree at the same time. It enabled a whole new population of people to pursue their degrees."

A second wave of innovation arrived with only institutions like the American Public University and Grand Canyon University, which competed on price, she said. A long list of online, for-profit schools emerged and followed suit.

All this has been going on since 1989, and yet what Weise called incumbent organizations —  traditional colleges and universities — have done very little to evolve.

Why?

In part, it's because of their complicated business model, which involves teaching, research and the social growth of students. "It's almost like combining a McKinsey with a Jiffy Lube and a Facebook," Weise observed. She also pointed to a "delicate dynamic" in higher education, in which professors are both a resource and a locus of control.

That business model —  being many things to many people — leaves higher ed uniquely vulnerable to the kind of disruption that has affected the newspaper industry, she said.

"If you think about what happened to newspapers," she said, "they were unbundled piece by piece by providers like CNN.com, Monster.com, LinkedIn, and Craig's List. They were trying to do so many different jobs that these other entities were able to take them apart, bit by bit."

So, what should higher education be doing in the face of all this disruptive innovation?

It's not about the "what," Weise said, but the "why" and the "how." As American economist Theodore Levitt put it, "People don't want to buy a quarter-inch drill; they want a quarter-inch hole."

"People don't buy products or services," Weise said. "They hire them to do a job. So we have to think about why students hire higher education. They do it to grow up in life and transition into adulthood. They do it to launch a career or transition to a better career. I want to make my kids proud of me. If we think about this in terms of what's going on today, most of our colleges are trying to be everything to everyone. So it seems like the job someone is hiring a Harvard or a Princeton to do, is the same thing someone is hiring a community college or state university to do."

Also, traditional colleges and universities have turned away from the growing population of "non-consumers" who need workforce skills. Only one in five freshmen actually have that residential college experience that we tend to glorify, she said. Close to 71 percent of students are what we now call non-traditional students, but which are fast becoming the norm.

These kinds of students are "over served" by those bundled services of traditional brick-and-mortar institutions, she said. Many feel underprepared for the workforce, and they're looking for something different.

"Higher educational institutions are now competing with organizations they have never even heard of," Weise said. "These are organizations that are really getting at the inadequacies of the system.... Things like coding boot camps, where you can pay $10,000 to $20,000, spend six to 12 weeks learning to code, and get recruited by places like Google or Facebook and start earning about six figures.... Your shot at getting a job is better that if you went to law school."

"This is just to emphasize that it's not who you think you're competing with," she said.

A growing number of non-profit institutions are now looking at some of the practices of for-profit schools, Weise said, including the unbundled or disaggregated staffing model.

"In some of these models, we see that there is a subject matter expert who consults with an instructional design team, and they build a course," she explained. "That design team focuses only on building that online course. You have a whole set of people who are functioning as mentors and academic coaches, helping students stay on target and progress through the course. Then you have tutors who intervene at just the right moment, providing cost-effective interventions. And there's a whole different set of people who are assessing."

One way colleges and universities might be able to break out of their locked model and better respond to disruptions is to do what IBM did: Southern New Hampshire University, for example, created College for America, which is a separate educational enterprise. Arizona State University created ASU Online. "These are separate, autonomous units that can foster their own growth and take their own time to figure out what they're doing," she said.