• Rethinking Higher Education

    Peter Smith's take on opportunity and access in higher education, the unmet challenges that remain, and the future that lies ahead for those willing to tackle it.

Lessons From Disruption

College leaders have much to learn from IBM's response in the 1990s.

November 6, 2019
 

I coined a phrase several years ago about change -- “if you want to surf, you’ve got to get ahead of the wave.” And that time is now for higher education, as its moment of truth approaches.

I want to acknowledge the current situation from the perspective of existing institutions. But I also want to get beyond the fact and the fear of disruption to focus on the potential that it brings; services and applications can change the face of opportunity in America -- economically, socially, civically and personally. Coincidentally, the forces driving disruptive change also contain solutions to the problems of access, persistence, success and the very quality of learning and assessment that have eluded us for decades. So, not only will higher education’s economic and organizational models be upset, but our ability to also achieve consistent quality across an ever-more diverse population of learners will be deepened.

First, let’s examine some important lessons regarding disruption. As he defined disruption, Clayton Christensen used the example of collapsing computer companies in the late 1990s. He identified one company that survived, IBM, and suggested the reason why. A decade or more before the collapse, IBM peeled off employees and money, sent them to a new location, and directed them to explore alternatives for the future that were fundamentally different from their existing business model. IBM’s leaders sensed that big change was coming, and they wanted to prepare for and adapt to it.

In so doing, they created an alternative business model and future, which saved IBM in the late '90s as its competitors went out of business. There are many generic lessons to be learned from Christensen’s analysis, but two stand out for me.

First, the companies that failed, Wang and Digital among them, failed to anticipate and recognize that their historic strengths, the very sources and drivers of their enormous success, would become lethal liabilities, the seeds of their failure, as the technology and marketplace changed. Their customers and stockholders were happy and life was good. Simultaneously, vastly cheaper, yet ultimately more powerful and adaptive products came upon the scene in the mid- to late '90s. And with them came the demand for different and new services and supports. By the time the established companies saw the threat, it was too late to adjust to the changing marketplace, and they failed.

IBM, by taking the long view, gave itself the time to analyze the changing marketplace, evaluate the new forms of competition, conceive new approaches and develop a new business model that would thrive in the changing world.

Second, by separating its developmental work from its core business, IBM gave itself the protection to continue its core business unimpeded while developing a new business model on a parallel track. So, the core business was protected from any problems generated by the invention. And the invention was not compromised by the mother ship’s way of doing business.

Understanding the extraordinary importance of these two lessons is a critical beginning point to charting the future for education and employment in America.

Aging academic traditions, long our sources of strength, are being challenged by emerging competitors, services and capacities. These newcomers have the potential to bring equal or greater quality, improved effectiveness, new solutions, a more responsive customer experience, and lower prices to the table. In short, the disruption has the potential to bring new and better solutions to the problems that colleges and universities have been working on since the GI Bill was passed.

Our historic strengths are becoming liabilities in a changing marketplace. And this situation is not coming soon. It is already under way in its early stages, a slow-motion train wreck of traditional practices and economics characterized by declining external support and a dwindling base of traditional customers within a societal context of innovation, change, increasing need (demand) and redefined services from new providers. And the time needed to prepare for the new environment is short while the consequences of inaction are extreme.

We must take stock and act quickly.

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