Gales of Creative Destruction

HBS professor Clayton Christensen has written about disruptive technologies sweeping away incumbents; and that's what many suggest is happening in education at the moment. The Internet has changed the cost of information delivery and the breadth of content to which we now have access. I noted a few weeks ago that we are in an era of ferment, and as Michael Tushman (also at HBS) pointed out, that could mean that technological change either obsoletes or complements prevailing academic technologies - technology here used in its broadest sense.

What makes higher education slightly different from Christensen's model is that there appears, oddly, to be less constraint, particularly in public institutions, than in business (though plenty of inertia). Christensen noted that incumbents were hamstrung by the need to meet the demands of their existing customers who would vote with their feet (not to mention their wallets) if those firms failed to deliver improvements in their current product set. Since their customers were themselves generally pursuing incremental improvements, they weren't  interested in more radical, though initially lower performing, alternatives. It was new product categories that were driving suppliers to change, and new entrant suppliers were better able to meet those needs than incumbent suppliers.

Does this model fit education? Not that well, actually, for two reasons. First, what is being asked for hasn't really changed. Students still want what they've always wanted; a good eduction. Whether educators and students share a view on what "a good education" means is another matter, to which I'll return in a moment. The second is that educational institutions, particularly those that are state assisted, can afford, ironically, to be less responsive to demand than business firms, first because they are accountable to tax payers who are generally disinterested in education (except when the bill falls due), as well as to fee paying students, and second because students, for the moment, really have no where else to go. Of course that's changing, but in the mean time, state assisted institutions of higher education are less constrained than Christensen's disk drive makers.

This means schools are in a position to undertake bold and potentially risky new experiments, something that commercial organizations generally find it hard to do; or they could do nothing. If they take the latter option, the future will shape them rather than the other way round.

What seems evident in the debate over the future of higher education is a conspicuous lack of clarity as to what higher education is actually supposed to be doing. Universities fulfill three roles; they create new knowledge, they pass current knowledge on to students (often toward somewhat unspecified ends) and they confer credentials.

While we take for granted that this is what universities do, it is not the only institutional arrangement by which these tasks might be achieved in society. Nor need they necessarily all be done by a single kind of institution: the current model is up for grabs. Before the printing press, universities, and in particular the lecture, were a key element of information transmission from those with knowledge to whose who needed it. (It's worth remembering however, that apprenticeship was another means by which knowledge was transmitted).

The in-person lecture has persisted despite the fact that technology has for some time offered alternatives; the Open University in Britain started broadcasting lectures in the early 1960s, and today the YouTube video has the potential could make university lecturing a thing of the past. Local universities may be condemned to the same fate as repertory theater, overwhelmed by the Hollywood star system, huge production budgets, and the most talented and photogenic silver screen personalities. Clearly, if lecturing was what made an for a quality education, all but a few brand name institution are doomed.

But that's not what I believe university should be; and here's where my views as an educator and those of my students may differ. I want everyone to come out of their college experience as independent thinkers, as motivated, curious learners. But what many students want, and for good reason, is the piece of paper that will get them the higher paying job that in turn will allow them to pay back their oppressive student loans. The return on investment to careful inquisitive thinking may be years down the road, while a set of tools and a marketable skill have big near-term returns.

Which brings me finally to the question of what society more broadly wants from higher education. I disagree with Margaret Thatcher's free market notion that 'there is no such thing as society'. We have ample evidence, for example in the 2008 financial crisis, that  free markets don't always generate outcomes that are broadly beneficial. As a society, we collectively agree on certain things we would like to see that may not be outcomes the free market would generate, and enact laws to make those things a reality. We allocate resources to provide public goods like a universal mail service that the market under-provides. We have for a long time accepted as a society we should provide resources to do the fundamental research that the market does not provide.The question we are now dealing with is how much should education, the 'forming of young minds' be left to the market and how much should it be something we provide collectively as a society.

Left to the market we will likely get bifurcation into a small number of elite institutions with well known brands like Harvard, Stanford and Yale, and then a MOOC based model  that looks a little like the University of Phoenix. The elite schools will continue to provide the highly personal service to very wealthy families, the "wealth management" end of the business to use a banking analogy. These not so fortunate, will get a much cheaper but highly standardized mass produced product with off-shore call centers, and not a person in sight. I'm exaggerating somewhat but the general point I think is sound.

Two market segments, a handful of highly differentiated, expensive providers, and the cost leaders. It's likely that the elite schools, while not necessarily getting into the cost leadership segment directly—not because they couldn't, but because of the potential impact on their brand—will nevertheless want to monopolize the supply of content to those public institutions or private firms that do cater to the 'mass market'. The educational outcomes, the student 'product' that emerges from each of these segments will be very different.

The question that we collectively need to consider is will this market driven outcome best serve our cultural and economic needs in the longer term? Do we want higher education to go the same way as retail banking? The choices were make now are important because once the current institutions are dismantled, and the young academic they currently train are no longer produced, putting the system back together will be much harder than taking it apart.