Disruption, Delivery and Degrees

Author who popularized idea that technological innovation disrupts industries' established powers applies theory to higher education -- with warning to traditional colleges.
February 9, 2011

WASHINGTON -- Many college professors and administrators shudder at comparisons between what they do and what, say, computer or automobile makers do. (And just watch how they bristle if you dare call higher education an "industry.") But in a new report, the man who examined how technology has "disrupted" and reshaped those and other manufacturing industries has turned his gaze to higher education, arguing that it faces peril if it does not change to meet the challenge.

The report, "Disrupting College," was also the subject of a panel discussion Tuesday at the Center for American Progress, which released the report along with the Innosight Institute. (A video recording of the event is available here.)

Clayton M. Christensen, the Robert and Jane Cizik Professor of Business Administration at Harvard Business School, coined the term "disruptive innovation" in a series of books (among them The Innovator's Dilemma and The Innovator's Solution) that examined how technological changes altered existing markets for key products and services, usually by lowering prices or making them available to a different (and usually broader) audience. While Christensen's early work focused on manufacturing industries and commercial services like restaurants, he and his colleagues, in their more recent studies, have turned to key social enterprises such as K-12 education and health care.

America's constellation of higher education institutions is ripe for such an analysis, Michael B. Horn, executive director of education at the Innosight Institute and a co-author of the report, said during Tuesday's event. (In addition to Christensen and Horn, the other authors are Louis Soares of the Center for American Progress and Louis Caldera of the Jack Kent Cooke Foundation.)

Traditional institutions have "done so much for our country for so many decades and have played such an illustrious part in the country's success," said Horn. And while the complex and multifaceted higher education "system" has grown and expanded its role over time, the authors argue, it has done so largely without any major disruption to the pattern in which colleges and universities are rewarded largely based on selectivity, research and wealth. Given that definition of "quality," reinforced by rankings and other proxy measures, most institutions join the chase up that ladder.

Though those circumstances have "rendered higher education impossible to disrupt in the past," the situation is changing, the authors write. Policy makers are demanding that they enroll and successfully educate many more students at a time when their "economic model is already broken" -- with public pressure mounting against increasing tuitions and their ability to use "government dollars, ... endowments and gifts ... to paper over cost increases" waning, Horn said.

That environment creates an opening for the "disruptive innovation" that has unfolded in so many other industries, from airlines to health care, the authors write. "It is the process by which products and services, which at one point were so expensive, complicated, and inconvenient that only a small fraction of people could access them, become transformed into ones that are simpler, more convenient, lower in cost, and far more accessible." This is typically accomplished through what the authors call an "upwardly scalable technology driver."

A set of institutions -- many, but not all, of them for-profit -- have grown significantly over the years by embracing online education more than their peers. Online learning, the authors write, "constitutes such a technology driver" and is essential, they say, as policy makers shift their focus away from "how we can enable more students to afford higher education no matter the cost" and toward "how we can make a quality postsecondary education affordable."

The key question the authors pose is whether traditional institutions can adapt themselves enough to fill this role or "whether community colleges, for-profit universities and other entrant organizations aggressively using online learning will do it instead -- and ultimately grow to replace many of today's traditional institutions."

The authors lay out ways in which both new and traditional institutions can step into the breach the authors envision.

Changing will not be easy for, say, Harvard and the University of Texas; just ask General Motors and America's steel companies, the authors suggest. Altering an institution's educational model (by delivering courses only online, for instance) does not in and of itself transform an institution unless new business models are embraced, too, that allow for lower prices and the shedding of research and other functions that aren't central to teaching and learning.

Public universities will find it difficult to change, so state systems are more likely to take steps like Indiana's has in turning to Western Governors University to fill the online learning gap in its offerings, the authors write. And if private nonprofit institutions "are able to navigate this disruptive transition," they say, "they will have to do so by creating autonomous business units."

The authors also encourage policy makers to free up the "low-cost disruptions" -- like WGU Indiana as well as for-profit innovators -- by lowering the accreditation "barrier" and by shifting away from policies that limit flexibility, such as overdependence on the credit hour to measure student learning.

Yet the report acknowledges (though it does so far less forcefully than many skeptics of online and/or for-profit education are likely to prefer) that the expansion-through-disruption they envision will be meaningful and productive only if students receive an education that is both affordable and of high quality "that delivers on a student's given job."

One possible way to do so, the authors write, would be to create a new index that would allow innovative institutions to gain access to federal student aid not through accreditation, but by meeting a new set of metrics.

The "quality-value index formula," as they call it, would rate an institution on four measures:

  • Its 90-day job-placement or school-placement rate.
  • A ratio determined through dividing the increase in its students' salaries over a period of time after leaving the college by a measure of students' cost (such as the total cost of attendance or revenue per student).
  • An alumni satisfaction rating ("would you repeat your experience at X university?").
  • Its cohort default rate.

"This has significant advantages over measuring the quality of postsecondary institutions in tightly managed prescriptive ways -- by creating assessments to measure learning and competencies for example -- because students attend postsecondary institutions to gain a myriad of skills from culinary to academic," the report states. "The overriding incentive here for students from this is to choose schools that are likely to deliver a lot of value at low cost because that’s where the money is. And schools looking to take advantage of financial aid will have to innovate to improve outcomes relative to costs."

It continues: "Both the not-for-profit and for-profit incumbents have been successful so far at warding off policies that seek to regulate quality.... [T]he goal of policy should be to unleash innovation by setting the conditions for good actors that improve access, quality, and value -- be they for-profit, nonprofit, or public -- to succeed. And if those institutions deliver, the landscape will shift over time, as it has in every other highly regulated market that was disrupted."


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