Disrupting CollegeHow Disruptive Innovation Can Deliver Quality and Affordability to Postsecondary Education
Michael B. Horn | [email protected] | Twitter: @christenseninst
Clayton christensen institute@christenseninst
The struggles facing colleges & universities
Clayton christensen institute@christenseninst
Chorus questioning higher ed’s qualityWhat do students learn?
• Study of 2,300 undergraduates at two dozen universities who took the Collegiate Learning Assessment
• 45% demonstrated no gains in critical thinking, analytical reasoning, & written communications during first two years
• 32% did not typically take courses with more than 40 pages of reading per week
• 50% did not take a single course in which they wrote more than 20 pages
Clayton christensen institute@christenseninst
America’s degree edge is slippingPercentage of students with postsecondary degrees by age group
55-64 45-54 35-4425-34 All (25-64)
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Job mismatch paradox
• 3.6 million job openings for which employers say they can’t find qualified employees
• 49% of US employers struggle to fill vacant jobs because of lack of talent, compared to 34% globally
Clayton christensen institute@christenseninst
E < T + G + I + C + MTraditional college business model is breaking
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
1979
-80
1981
-82
1983
-84
1985
-86
1987
-88
1989
-90
1991
-92
1993
-94
1995
-96
1997
-98
1999
-00
2001
-02
2003
-04
2005
-06
2007
-08
2009
-10
2011
-12
2013
-14
2015
-16
2017
-18
2019
-20
2021
-22
2023
-24
2025
-26
Private Four-Year Public Four-Year Public Two-Year
Clayton christensen institute@christenseninst
What is disruptive innovation?
Clayton christensen institute@christenseninst
Perf
orm
ance
Time
Disruptive Innovations
Time
Sustaining innovations
Incumbents dominate sustaining battles
Entrants typically win at disruption
Customer ability to use
improvements
Pace of technological
improvement
45% margin on$250,000
40% margin 20% margin on $2,000
60% margin on$500,000
Perf
orm
ance
Sustaining vs. Disruptive Innovation
Clayton christensen institute@christenseninst
Disruption = affordability, accessibilityPast and present examples
Yesterday• GM• Dept. Stores• Digital Equipment• Delta• JP Morgan• Xerox• IBM• Cullinet• AT&T• Sony DiskMan
Today• Toyota• Wal-Mart• Dell• Southwest Airlines• Fidelity• Canon• Microsoft• Oracle• Cingular• Apple iPod
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Disruption of Toyota
From hyundaiusa.com May 5, 2013
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Disruption = affordability, accessibility
Yesterday• GM• Dept. Stores• Digital Equipment• Delta• JP Morgan• Xerox• IBM• Cullinet• AT&T• Sony DiskMan
Past, present, and future examples
Today• Toyota• Wal-Mart• Dell• Southwest Airlines• Fidelity• Canon• Microsoft• Oracle• Cingular• Apple iPod
Tomorrow• Chery• Internet retail• Smart phones• Air taxis• ETFs• Zink• Linux• Salesforce.com• Skype• Smart phones
Clayton christensen institute@christenseninst
• Is the innovation targeting people who are nonconsumers or overserved by existing products?
• Is the innovation not as good as existing products as judged by historical measures of performance?
• Is the innovation simpler to use, more convenient, and more affordable?• Is there a technology enabler that can carry the new value proposition
up-market?• Is the technology paired with a business model innovation that allows it
to be sustainable?• Are existing providers motivated to ignore the new innovation and not
threatened at the outset?
How to identify a disruptive innovationDisruption is a relative phenomenon
Clayton christensen institute@christenseninst
How does disruptive innovation relate to education?
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Where does disruption not apply?Industries without an upwardly scalable technology are not disrupted
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Disruption in higher ed is just beginning
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Perc
enta
ge o
f col
lege
stud
ents
taki
ng a
t le
ast o
ne o
nlin
e co
urse
, div
ided
by
stud
ents
who
did
not
take
an
onlin
e co
urse
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190.01
0.1
1
10
Substitution follows the S-curve patternLinear S-curve logarithms indicate growing online learning adoption
50% all students take at least 1 course online
by 2015
Clayton christensen institute@christenseninst
What are online learning’s potential new value propositions?
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Potential benefits of online learning
Personalization
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Learning environments modeled upon factoriesCurrent system was built to standardize
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
The “Swiss-cheese problem” in educationStudents develop holes in their learning
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Different learning needs at different times
Long-term Memory
Declarative
Episodic Semantic
Procedural
Skills Habits
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Personalization through modularityBenefits of online and blended learning
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Sound learning design boosts student outcomes
Student achievement in online courses when administered by faculty in core
4.6
Student achievement in traditional classes taught by faculty in core
5.6
Student achievement in online courses when administered by focused online faculty
5.7
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Potential benefits of online learning
Personalization Data and Feedback
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Deliver content to students
Testing & assessment
Progress to next grade, subject, or body of
material
Receive results
Fixed-time, variable learning
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Offer learning experiences to
students
Testing & assessment
Receive real-time interactive feedback
Progress to next body of material
Learning is fixed and time is variableCompetency-based learning
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Potential benefits of online learning
Individualization Teacher Effectiveness
Data and Feedback
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Disaggregated staffing models
Teacher
Rigor Faculty
Relationship Faculty
Relevance Faculty
DisciplineFaculty
New opportunities:• Teacher specialization • Extend the reach of best teachers• Career growth opportunities
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Benefits of online and blended learning
Teacher EffectivenessIndividualization
Data and FeedbackCost Control
Clayton christensen institute@christenseninst
How do existing organizations survive disruption?
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Disruption is not a technology problem
Per
form
ance
Time
Time
Diff
eren
t Mea
sure
of P
erfo
rman
ce
Tabletop Radios, Floor-standing TVs
Path taken byvacuum tube
manufacturers
Pocket radios
Portable TVs
Hearing aids
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
What is a business model?And why does it lock us in?
PROCESSES:
Ways of working together to address recurrent tasks in a
consistent way: training, development, manufacturing,
budgeting, planning, etc.
REVENUE FORMULA:
Assets & fixed cost structure, and the margins & velocity
required to cover them
THE VALUE PROPOSITION:
A product that helps customers do more effectively,
conveniently & affordably a job they’ve been trying to do
RESOURCES:
People, technology, products, facilities, equipment, brands, and cash that are required to
deliver this value proposition to the targeted customers
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
What is a business model?And why does it lock us in?
PROCESSES:
Ways of working together to address recurrent tasks in a
consistent way: training, development, manufacturing,
budgeting, planning, etc.
REVENUE FORMULA:
Assets & fixed cost structure, and the margins & velocity
required to cover them
THE VALUE PROPOSITION:
A product that helps customers do more effectively,
conveniently & affordably a job they’ve been trying to do
RESOURCES:
People, technology, products, facilities, equipment, brands, and cash that are required to
deliver this value proposition to the targeted customers
Business units don’t evolve.Corporations do.
Clayton christensen institute@christenseninst
• Is the innovation targeting people who are nonconsumers or overserved by existing products?
• Is the innovation not as good as existing products as judged by historical measures of performance?
• Is the innovation simpler to use, more convenient, and more affordable?• Is there a technology enabler that can carry the new value proposition
up-market?• Is the technology paired with a business model innovation that allows it
to be sustainable?• Are existing providers motivated to ignore the new innovation and not
threatened at the outset?
Much amuck about MOOCsAre MOOCs a disruptive innovation?
@christenseninst
Disrupting CollegeHow Disruptive Innovation Can Deliver Quality and Affordability to Postsecondary EducationMichael B. [email protected]
Twitter: @christenseninst
Clayton christensen institute@christenseninst
How do existing organizations survive disruption?
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Understanding how users experience life
“The customer rarely buys what the company thinks it is selling him.” Peter Drucker
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Three levels in the architecture of a Job
What’s the job-to-be-done? (Each job has functional, emotional & social dimensions)
What experiences in purchase & use must we provide to do the job perfectly?
What and how to integrate?
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Recommendations for existing institutions
Strategic Focus 1 → Focus, differentiate→ Frame online learning as sustaining
innovation to disrupt class→ Apply correct business model for Job
Strategic Focus 2→ Discovery-driven approach
→ Test & learn→ Apply correct business model for Job→ “Capabilities exchange”
Clayton christensen institute@christenseninst
The danger of trying to be all things to all people
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
3 different kinds of business models
Solution Shops Value-Adding Process Businesses
Facilitated User Network
• Diagnose and solve unstructured problems
•Add value to something that is incomplete or broken
• Enable exchange among participants
• Fee for service • Fee for outcome • Fee for transaction or membership; ad-
supported
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Polishing Dept.Turning machines
Hobbing departmentTapping equipment
Boring machines
Annealing furnace
Shi
ppin
g D
epar
tmen
t
Cut-offsaws
Path
take
n
by p
rodu
ct A
A st
arts
her
e
Pat
h ta
ken
by p
rodu
ct
B
B starts here
Storage
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
The Maysville plant
Clayton christensen institute@christenseninst
The danger of trying to be all things to all people
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
General purpose products disrupted job-by-job
Per
form
ance
Time
Time
Diff
eren
t Mea
sure
of P
erfo
rman
ceMajor Metropolitan Newspapers Help me:• Unload this stuff• Find the right car• Sell or buy a home• Find the right job, or the right employees• Kill commuting time productively• Become well-informed• Unwind at the end of the day
Craig’s ListAutoTrader.comRealtor.comMonster.comMetro; Blackberry CNN.comUnwind at the end of the day
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Harvard Business School is being disrupted
Per
form
ance
Time
Time
Diff
eren
t Mea
sure
of P
erfo
rman
ce
$150,000 !!
Part-time MBA
Online “Garbage”
2-year MBA
Corporate Universities:
Competing against
nonconsumption
Help me solve this problemTeach me what I need to know to become a great managerGive me the credentials I need to get the next, more lucrative jobHelp me switch careersHelp me join a prestigious network• Brand• Connections
Clayton christensen institute@christenseninst
The rise of unbundling
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
The right product architecture? It depends…
Compete by improvingspeed, responsiveness and customizationP
erfo
rman
ce
Time
Compete by improvingfunctionality &
reliability
IBM Mainframes, Microsoft Windows
Proprietary, interdependent architectures
Dell PCs, LinuxModular open architectures
Clayton christensen institute@christenseninst
Integration: Rise of the corporate university
Clayton christensen institute@christenseninst
Modularity and targeted partnerships
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Integration shifts impact on computer industryEquipment
Materials
Components
Product design
Assembly
Operating system
Applications software
Sales & distribution
Field service
Intel, Micron, Quantum, Komag, etc.
Compaq, Dell, Gateway, Packard Bell
Compaq
Microsoft
Word Perfect, Lotus, Borland, etc.
CompUSA
Independent contractors
Microsoft
Contract assemblers
1960 - 1980 1980 - 1990 1990 - 2000
Dell
IBM
Con
trol D
ata
Dig
ital E
quip
men
t
Monsanto, Sumitomo Metals, Shipley, etc.
Teradyne, Nikon, Canon, Applied Materials, Millipore, etc.
App
le C
ompu
ter
Micro-Center
CLAYTON CHRISTENSEN INSTITUTE# christenseninst
Modularity of the university
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
How future universities may be built
Unit of accreditation: The institution
Unit of accreditation: the course
A different type of university
Standards:thru course acceptance
Clayton christensen institute@christenseninst
Dell AsusTek
Outsourcing can set disruption in motion
Mother boards
Computer assembly
Supply chain& logistics
Product design
Brand
Simple circuit boards
Mother boards
Computer assembly
Supply chain& logistics
Product design
Brand
Clayton christensen institute@christenseninst
The new kids on the block
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Benefits of blended learning for teachers
1. Eager students2. Better information3. Team teaching4. Extended time with
students5. Individualized PD plans6. Motivate hard to reach
kids7. More leadership roles8. More earning power9. Focus on deeper learning10. New options to teach at
home
Source: Digital Learning Now!
CLAYTON CHRISTENSEN INSTITUTE@christenseninst
Improved conditions• Reduced isolation and new
opportunities for collaboration
• Better student data• Time efficiency• Less grading and busy work• Role differentiation
Source: Digital Learning Now!
Clayton christensen institute@christenseninst
• Is the innovation targeting people who are nonconsumers or overserved by existing products?
• Is the innovation not as good as existing products as judged by historical measures of performance?
• Is the innovation simpler to use, more convenient, and more affordable?• Is there a technology enabler that can carry the new value proposition
up-market?• Is the technology paired with a business model innovation that allows it
to be sustainable?• Are existing providers motivated to ignore the new innovation and not
threatened at the outset?
How to identify a disruptive innovationDisruption is a relative phenomenon