Disrupting College How Disruptive Innovation Can Deliver Quality

Disrupting College How Disruptive Innovation Can Deliver Quality and Affordability to Postsecondary Education Michael B. Horn | mhorn@christenseninstitute. org | Twitter: @christenseninst

The struggles facing colleges & universities @christenseninst Clayton christensen institute

Chorus questioning higher ed’s quality What 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 @christenseninst Clayton christensen institute

America’s degree edge is slipping Percentage of students with postsecondary degrees by age group 55 -64 45 -54 35 -44 25 -34 @christenseninst All (25 -64) Clayton christensen institute

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 # christenseninst CLAYTON CHRISTENSEN INSTITUTE

Traditional college business model is breaking E<T+G+I+C+M @christenseninst Clayton christensen institute

What is disruptive innovation? @christenseninst Clayton christensen institute

Sustaining vs. Disruptive Innovation Performance Incumbents dominate sustaining battles ions t a v o g inn ainin Sust l ogica l o n ch of te nt e c a e P ovem impr 60% margin on $500, 000 Customer ability to use improvements 45% margin on $250, 000 Performance Time Disrup ons ovati n n I e tiv 40% margin 20% margin on $2, 000 Time Entrants typically win at disruption @christenseninst Clayton christensen institute

Disruption = affordability, accessibility Past and present examples Yesterday • • • GM Dept. Stores Digital Equipment Delta JP Morgan Xerox IBM Cullinet AT&T Sony Disk. Man @christenseninst Today • • • Toyota Wal-Mart Dell Southwest Airlines Fidelity Canon Microsoft Oracle Cingular Apple i. Pod Clayton christensen institute

Disruption of Toyota From hyundaiusa. com May 5, 2013 @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Disruption = affordability, accessibility Past, present, and future examples Yesterday • • • GM Dept. Stores Digital Equipment Delta JP Morgan Xerox IBM Cullinet AT&T Sony Disk. Man @christenseninst Today • • • Tomorrow Toyota • Chery Wal-Mart • Internet retail Dell • Smart phones Southwest Airlines • Air taxis Fidelity • ETFs Canon • Zink Microsoft • Linux Oracle • Salesforce. com Cingular • Skype Apple i. Pod • Smart phones CLAYTON CHRISTENSEN INSTITUTE

How to identify a disruptive innovation Disruption is a relative phenomenon • • • 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? @christenseninst Clayton christensen institute

How does disruptive innovation relate to education? @christenseninst Clayton christensen institute

Where does disruption not apply? Industries without an upwardly scalable technology are not disrupted @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Disruption in higher ed is just beginning @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Substitution follows the S-curve pattern Linear S-curve logarithms indicate growing online learning adoption Percentage of college students taking at least one online course, divided by students who did not take an online course 50% all students take at least 1 course online by 2015 1 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0. 1 0. 01 @christenseninst CLAYTON CHRISTENSEN INSTITUTE

What are online learning’s potential new value propositions? @christenseninst Clayton christensen institute

Potential benefits of online learning Personalization @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Learning environments modeled upon factories Current system was built to standardize @christenseninst CLAYTON CHRISTENSEN INSTITUTE

The “Swiss-cheese problem” in education Students develop holes in their learning @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Different learning needs at different times Long-term Memory Procedural Declarative Episodic @christenseninst Semantic Skills Habits CLAYTON CHRISTENSEN INSTITUTE

Benefits of online and blended learning Personalization through modularity @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Sound learning design boosts student outcomes Student achievement in online courses when administered by focused online faculty Student achievement in traditional classes taught by faculty in core Student achievement in online courses when administered by faculty in core 4. 6 # christenseninst 5. 7 5. 6 CLAYTON CHRISTENSEN INSTITUTE

Potential benefits of online learning Personalization @christenseninst Data and Feedback CLAYTON CHRISTENSEN INSTITUTE

Fixed-time, variable learning Deliver content to students Testing & assessment Progress to next grade, subject, or body of material Receive results @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Competency-based learning Learning is fixed and time is variable Offer learning experiences to students Testing & assessment Receive real-time interactive feedback Progress to next body of material @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Potential benefits of online learning Individualization Teacher Effectiveness Data and Feedback @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Disaggregated staffing models Teacher Rigor Faculty Relationship Faculty Relevance Faculty Discipline Faculty New opportunities: • Teacher specialization • Extend the reach of best teachers • Career growth opportunities @christenseninst CLAYTON CHRISTENSEN INSTITUTE

Benefits of online and blended learning Individualization Data and Feedback @christenseninst Teacher Effectiveness Cost Control CLAYTON CHRISTENSEN INSTITUTE

How do existing organizations survive disruption? @christenseninst Clayton christensen institute

Disruption is not a technology problem Different Measure of Performance Tabletop Radios, Floor -standing TVs Time Path taken by vacuum tube manufacturers Portable TVs Pocket radios Hearing aids Time @christenseninst CLAYTON CHRISTENSEN INSTITUTE

What is a business model? And why does it lock us in? THE VALUE PROPOSITION: A product that helps customers do more effectively, conveniently & affordably a job they’ve been trying to do REVENUE FORMULA: Assets & fixed cost structure, and the margins & velocity required to cover them # christenseninst RESOURCES: People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition to the targeted customers PROCESSES: Ways of working together to address recurrent tasks in a consistent way: training, development, manufacturing, budgeting, planning, etc. CLAYTON CHRISTENSEN INSTITUTE

What is a business model? And why does it lock us in? THE VALUE PROPOSITION: A product that helps customers do more effectively, conveniently & affordably a job Business they’ve been trying to do units RESOURCES: People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition to don’t evolve. the targeted customers Corporations do. REVENUE FORMULA: Assets & fixed cost structure, and the margins & velocity required to cover them # christenseninst PROCESSES: Ways of working together to address recurrent tasks in a consistent way: training, development, manufacturing, budgeting, planning, etc. CLAYTON CHRISTENSEN INSTITUTE

Much amuck about MOOCs Are MOOCs a disruptive innovation? • • • 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? @christenseninst Clayton christensen institute

Disrupting College How Disruptive Innovation Can Deliver Quality and Affordability to Postsecondary Education Michael B. Horn mhorn@christenseninstitute. org Twitter: @christenseninst

How do existing organizations survive disruption? @christenseninst Clayton christensen institute

Understanding how users experience life “The customer rarely buys what the company thinks it is selling him. ” Peter Drucker # christenseninst CLAYTON CHRISTENSEN INSTITUTE

Three levels in the architecture of a Job What and how to integrate? What experiences in purchase & use must we provide to do the job perfectly? What’s the job-to-be-done? (Each job has functional, emotional & social dimensions) # christenseninst CLAYTON CHRISTENSEN INSTITUTE

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” # christenseninst CLAYTON CHRISTENSEN INSTITUTE

The danger of trying to be all things to all people @christenseninst Clayton christensen institute

3 different kinds of business models Solution Shops • Diagnose and solve unstructured problems • Fee for service # christenseninst Value-Adding Process Businesses Facilitated User Network • Add value to something that is incomplete or broken • Enable exchange among participants • Fee for outcome • Fee for transaction or membership; adsupported CLAYTON CHRISTENSEN INSTITUTE

Turning machines Cut-off saws Boring machines B starts here # christenseninst Storage Shipping Department A starts here Annealing furnace Path taken by product B Hobbing department Tapping equipment Pa by th t pr ake od n uc t. A Polishing Dept. CLAYTON CHRISTENSEN INSTITUTE

The Maysville plant # christenseninst CLAYTON CHRISTENSEN INSTITUTE

The danger of trying to be all things to all people @christenseninst Clayton christensen institute

Performance Different Measure of Performance General purpose products disrupted job-by-job Craig’s List Auto. Trader. com Realtor. com Monster. com Metro; Blackberry CNN. com Unwind at the end of the day Major 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 Time • Unwind at the end of the day Time # christenseninst CLAYTON CHRISTENSEN INSTITUTE

Harvard Business School is being disrupted Performance Different Measure of Performance $150, 000 !! MBA r a e y 2 BA M e t-timthis problem Help me Parsolve ge” a b r Ga “ e n Teach me what I need to know to become i Onl a great manager Time ies: t i s r e v Uni gainst e t a r Corpo mpeting a ption Co sum n o c n no Time # christenseninst Give me the credentials I need to get the next, more lucrative job Help me switch careers Help me join a prestigious network • Brand • Connections CLAYTON CHRISTENSEN INSTITUTE

The rise of unbundling @christenseninst Clayton christensen institute

The right product architecture? It depends… IBM Mainframes, Microsoft Windows Performance Compete by improving functionality & reliability e pri Pro tar ep d r te res u t ec de en n y, i nt hit c r a it res u t ec n pe ro h arc ula d o M Compete by improving speed, responsiveness and customization Dell PCs, Linux Time # christenseninst CLAYTON CHRISTENSEN INSTITUTE

Integration: Rise of the corporate university @christenseninst Clayton christensen institute

Modularity and targeted partnerships @christenseninst Clayton christensen institute

Integration shifts impact on computer industry 1960 - 1980 - 1990 - 2000 Equipment Teradyne, Nikon, Canon, Applied Materials, Millipore, etc. Materials Monsanto, Sumitomo Metals, Shipley, etc. Assembly Applications software Field service # christenseninst IBM Sales & distribution Control Data Operating system Digital Equipment Product design Apple Computer Intel, Micron, Quantum, Komag, etc. Components Compaq, Dell, Gateway, Packard Bell Compaq Contract assemblers Microsoft Word Perfect, Lotus, Borland, etc. Comp. USA Micro. Center Independent contractors Dell CLAYTON CHRISTENSEN INSTITUTE

Modularity of the university # christenseninst CLAYTON CHRISTENSEN INSTITUTE

How future universities may be built Unit of accreditation: The institution @christenseninst Standards: Unit of accreditation: thru course acceptance the course A different type of university CLAYTON CHRISTENSEN INSTITUTE

Outsourcing can set disruption in motion Dell Asus. Tek Brand Product design Supply chain & logistics Computer assembly Mother boards Simple circuit boards @christenseninst Clayton christensen institute

The new kids on the block @christenseninst Clayton christensen institute

Benefits of blended learning for teachers 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Eager students Better information Team teaching Extended time with students Individualized PD plans Motivate hard to reach kids More leadership roles More earning power Focus on deeper learning New options to teach at home Source: Digital Learning Now! @christenseninst CLAYTON CHRISTENSEN INSTITUTE

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! @christenseninst CLAYTON CHRISTENSEN INSTITUTE

How to identify a disruptive innovation Disruption is a relative phenomenon • • • 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? @christenseninst Clayton christensen institute