Clayton Christensen |

The ASU Skysong Education Innovation Summit has become the can’t-miss education innovation event of the year in just the three years since it was founded—and this year came as close to living up to the hype as anything could (full disclosure: I am a member of the advisory board).

Held at Arizona State University’s Skysong campus from April 16 to April 18, roughly 800 people—from educators to entrepreneurs to investors, thought leaders, and policymakers—crowded this year’s education’s “Davos in the Desert” conference.

As usual, there was a great mix of thoughtful panels and keynotes about how to use innovation to drive educational improvements for all students—not just in the U.S. but in the world—as well as a number of education companies showcasing their wares for investors (with disruptive start-up PresenceLearning winning this year’s pitch contest).

But this year’s conference also occurred in a different context. The climate in the “edtech” world has heated up dramatically and become even frothier than it was a year ago at this time.

Coursera has been only the latest in a string of education start-ups to announce their debuts with significant investment and investors behind them. In Coursera’s case, it brought heavy-hitting VC Kleiner Perkins Caufield & Byers to the party.

In an industry long noted for its lack of innovation and investment, things are changing fast.

The Minerva Project, for example, caught several people’s eyes recently when it announced its presence to the world to the tune of the largest seed investment Benchmark Capital has ever made in a company—a cool $25 million. Billing itself as the first elite American university to be launched in a century, Minerva enters the market as an online university aiming to overhaul students’ experience in some serious ways—from an actual emphasis on learning and student creation to what promises to be a low price point (likely well under $20,000 annual tuition) for everyone.

Although up-start innovations aimed at the high end of a market and designed to leapfrog the competition tend not to be successful, CEO and founder Ben Nelson—former CEO of Snapfish—appears to have an interesting insight into this market, which is that elite universities are really a different beast from the rest of the higher education industry. And in that particular segment, there is a lot of nonconsumption, as there is plenty of demand for elite higher education but a very limited supply (in that way, his insight isn’t all that different from Chris Whittle’s vision for Avenues: The World School, in the K-12 private school world). It’s a bold bet worth watching.

Turning more eyes at this year’s Education Innovation Summit were the number of announcements that companies made during the week, which turned it into an International CES-like atmosphere in some respects. Sophia, an online social learning company, turned some heads when it announced that its original incubator, Capella University, had acquired it—and then alluded to bigger plans to come as it seeks to address spiraling college costs. With UniversityNow’s recent exciting launch of the low-cost, competency-based New Charter University, making college fundamentally affordable to students and society looks like it might not be a pipe dream for much longer.

The most exciting announcement in my opinion at the actual summit came from Altius Education and its founder and CEO, Paul Freedman. The announcement was the public launch of its new Helix platform.

According to Freedman, despite online learning’s continued growth and studies from the Department of Education that show online learning can be as good as if not often better than traditional face-to-face learning experiences, the results on the ground in online higher education show that all-too-often online learning still fails to engage students.

As Altius looked at the problem, Freedman said the team saw that there were three critical parts of the learning system: what you teach, how you teach it, and the learning environment. But these three pieces were all fragmented—or modular in our language—and, given the immaturity of the online learning industry, still not good enough to do the jobs for which it was being hired. As a result, Altius is now adopting The Innovator’s Solution playbook to integrate all three to control for the different interdependencies between them and create an experience that is good enough.

First, Altius Education has been using cognitive science grounded in decades of research—from Carol Dweck’s work on growth mindset to cognitive load theory—to redesign all of its courses over the last few years.

What Helix will now do is take the learning environment to the next level, according to Freedman. It will make online learning social for the student and the teacher. It will simplify teachers’ administrative tasks and allow them to focus on teaching. It will create a competency-based, adaptive learning environment—good buzz words, but that’s not all.

Helix will engage students through storytelling, as Freedman asserted that the human brain is wired to understand stories. The stories will be based on personal interest and will adapt based on a student’s competencies and goals. Helix will also allow students to set goals around when they want to complete things and why (not everyone has to shoot for a “4.0” for example), and then Altius Education will set the schedule with firm deadlines based on the students’ individual needs (as a side note, in my opinion this is big; if I had been able to have a schedule based upon my needs and my personal objectives but also still have deadlines, I probably would not have become a Udacity dropout after my third week in its seven-week CS101 course—but that’s a story for a different blog). Everything a student learns will be geared in a larger context around why he or she is learning it with different content formats based on what instructional designers think is the best way to learn.

There is more, but the last thing worth highlighting here is that the system will not only return information around academic competencies, but also around communication, critical thinking, quantitative reasoning, and information literacy. The idea is to returns some control to universities to allow them to think about these horizontal competencies that they are supposed to do.

The first Helix courses will launch in August 2012, so it’s certainly in the early innings to see what the reality will be, but the sneak peak gave good reasons for some cautious optimism.

As the overall ASU conference showed, that’s not a bad way to think about the overall state of education innovation either.

Many of my friends in the education world are fond of talking about how the University of Phoenix is not in fact a disruptive innovation.

They don’t just stop this statement with the University of Phoenix of course. I’m using the University of Phoenix as shorthand. What they mean are many of the distinctly online universities that have emerged over the last couple of decades—everyone from Kaplan University to DeVry to Bridgepoint.

They are wrong. These online universities are disruptive innovations relative to traditional universities. They are now on their own sustaining innovation track, which every disruptive innovation moves to as it grows, expands, improves, and marches up market. It’s also true that not all of them will succeed in these endeavors.

The fact that I’m saying they are disruptive innovations in the face of many saying they aren’t strikes me as ironic, given that I often find my job is to correct people who want to declare nearly everything disruptive and misapply the term. I also readily admit that online learning isn’t inherently disruptive; when it’s used in a hybrid format to complement or extend traditional brick-and-mortar learning, chances are it’s being used as a sustaining innovation. No technology is inherently a disruptive innovation, as all technologies can be applied to sustain or disrupt the industry’s incumbents.

I’ll explain though why online universities are disruptive in a moment, but one more word. Just because these universities are disruptive relative to the traditional universities doesn’t mean that what they do is for the common good per se. For a variety of reasons, I personally tend to think that is often the case, but disruptive innovation isn’t a normative term; it doesn’t imply that something is morally good or bad.

Nor does the term imply that these universities are the end-all be-all of disruption in the higher education space. Over the last couple of years—and in a flurry in the last few months—we’ve seen another wave of disruptive innovations launched in higher education that I suspect may disrupt the first disruptors. Combined with continued up-market movement by some in the first wave, I suspect this new wave will have far reaching consequences for the higher education sector over the next decade.

But let me first explain why the University of Phoenix and its peers are disruptive relative to traditional institutions.

A disruptive innovation is one that transforms a sector by introducing a product or service that is more convenient, simple to use, and/or affordable than the existing products or services in a market. Disruptions tend to start as not as good as the existing products or services as judged by their historical measures of performance, and then, over time, they are able to march up market such that they are able to handle more complicated tasks. Many people flock to the disruptive innovation over time as it becomes good enough, as the customers are delighted by something that carries this new value proposition around convenience, simplicity, and/or affordability. As a result of these dynamics, disruptive innovations first serve nonconsumers (people who previously could not participate in the market) or people who have been overshot by the incumbents in the market. A critical thing to keep in mind is that this process does not occur over night; sometimes it occurs over several decades. And not every incumbent or traditional institution will be wiped away. Some will continue to perform important jobs for which a, relatively speaking, small set of customers are willing to pay.

Lastly, for something to be a disruptive innovation, it has to have two components: a technology enabler and a business model that together allow it to extend a low-cost value proposition up market.

In Disrupting College, we discussed that this is why land-grant universities and community colleges have not in fact been disruptive innovations. Although they have many of the characteristics of disruptive innovations—entities more affordable than their higher education predecessors that extended access to populations previously unable to participate in higher education—they didn’t have a technology core that allowed them to take a low-cost value proposition up-market. To move up market and serve students at the higher end, these institutions instead had to replicate the costs of the existing institutions—research faculty, buildings, and so forth—which meant they ended up taking on the same business model as the incumbents and, as they went up market, ultimately offered the same value proposition.

We asserted that online universities, however, had this technological core that allowed them to extend their new value proposition around, in this case, the disruptive attributes of convenience and accessibility, up-market.

Many have been quick to take a swipe at this assertion. Kevin Carey, who authored an insightful piece in the New Republic recently about the next wave of disruptive innovation, said that because these online universities were still offering degrees, they were ultimately offering the same value proposition.

I don’t think this is true.

When minimills disrupted integrated steel mills, for example, they were still offering steel ultimately. It was simply at a lower cost.

“Aha!” skeptics claim. That’s just it. Look at the prices that the University of Phoenix and others charge, and you see that it’s not all that different—and sometimes it is even a bit higher—than their traditional competitors. Doesn’t that mean they are not disruptive?

Not necessarily. When the minimills were disrupting the integrated steel mills, prices only really fell in a given tier of the market each time the minimills succeeded in chasing out all of their higher-cost competitors. So long as there are high-cost competitors in the market, there is little incentive in place to price significantly lower. Once the integrated mills were gone, for example, prices collapsed by 20 percent in the market—which represented the cost advantage that the minimills held over the integrated players.

A typical traditional university today incurs operating deficits of 10 percent of revenues, even as the disruptive online players report operating profit as a percentage of sales to be roughly 30 percent. In other words, these online players have a cost advantage of roughly 40 percentage points. Western Governors University—one of the few disruptive institutions that truly prices its offering lower—shows how much room the leading online institutions likely have to price lower if they had to (although Western Governors University likely actually costs less than many of the other online universities because of its innovative teaching model that leverages technology in some more purposeful and innovative ways).

Stay tuned in other words—although it is important to acknowledge that this picture is complicated by the role that the government (at the state and federal level) plays in propping up costs and prices in the market through its subsidies, grants, and loans. Carey also does an excellent job of capturing this dynamic in an article he authored in the New Republic. In the case of the online players, because of the existence of Pell Grants and because institutions are unable to limit the amount of loans students may take out, the government has in essence created a price floor below which it hasn’t historically made much sense to price oneself (although some of the newer disruptive players like New Charter University, which will not take any federal funding, will change that). In addition, the picture has been complicated because traditional universities receive a significant amount of funds from these and other sources, which means they have historically been able to keep tuition prices relatively low, even as their costs have increased rapidly. As the fast-rising tuition prices in California and elsewhere suggest, however, that game is nearing its end, particularly as government sources of financing continue to dry up in the years ahead.

Indeed, when disruptive innovation takes hold in a market, as Clayton Christensen wrote in The Innovator’s Dilemma, often the basis of competition goes through several phases—from first competing on functionality, then to reliability, then to convenience, and then finally to price. Today’s dominant online universities do seem to compete much more heavily on convenience than anything else, which signals that the price competition is still to come.

Furthermore, there is one other critical difference in the value proposition that many of the online universities offer compared to their traditional university peers. For the traditional colleges and universities, the way they go up market is by climbing the Carnegie Classification “ladder” to gain prestige—and more money. How do they climb the ladder? By looking more and more like Harvard. Becoming a research institution is a good jump for many. As a result, a critical—one might even say overriding, as judged based on what faculty tend to prioritize—value proposition traditional institutions offer is around knowledge creation.

For the online universities, however, this isn’t their path to greater returns and more money because adding a research mission would in fact cause their margins to decline. As we identified in Disrupting College, one of the critical reasons for climbing administrative costs in traditional universities is the complexity of managing the fundamentally different business models of research and teaching under one umbrella. Taking on this complexity for focused online universities therefore makes no sense, which ensures that their value proposition will continue to be built around proliferating knowledge and learning—not research.

Even though both traditional and online colleges and universities offer “degrees,” they have different value propositions in some critical respects.

I do tend to agree with Carey, however, that the disruption that will, in many cases, have more weight across the entire sector when all is said and done is from the entities that are starting to offer certificates—and are modularizing the university and eating away at the monopoly on credentials that the market has historically valued. As any industry becomes more modular, the brand that is valued in a market tends to shift to the component level—so those institutions offering courses (like an MITx) will begin to be what is valued. The parallel will be similar to what happened in the computer industry where there was a transition period in which people swore by the power of their Silicon Graphics server and just couldn’t imagine a Dell server ever being good enough. And then all of a sudden Silicon Graphics filed for bankruptcy protection, but what mattered in the server market wasn’t the fact that what replaced it was a Dell, but rather the Nvidia processor inside.

Indeed, there are a substantial number of students today for whom a degree doesn’t matter, which is why the focus out of Washington, D.C. and other quarters on bolstering the percentage of Americans with degrees is somewhat worrisome. More than that, the “job to be done” that many students hire education institutions to do today isn’t even to get a credential per se, but to help them get access to a better or different job, get promoted—or hang on to the job that they have now. A credential is merely a key attribute of the solution for many, but not all.

But that doesn’t mean that the University of Phoenix and its brethren aren’t in their own right disruptive—and won’t necessarily have something to say about all of the exciting entrepreneurial action taking place in the market now either. Stay tuned because the disruption in higher education is heating up.

Back in January, my friend Bror Saxberg, chief learning officer of Kaplan, published an eye-popping blog about a meta-analysis that Kurt VanLehn published recently about nearly 100 well-constructed papers about computers used to tutor learners.

A couple of headlines from the meta-analysis are worth spotlighting here.

First, the work shines some questions on Benjamin Bloom’s analysis from a couple decades ago that suggested that well-designed human tutoring could deliver around a whopping 2 standard deviations worth of learning performance. VanLehn’s paper suggests that the effect size seems to be more around 0.79 than 2 standard deviations—still, nothing at which to scoff.

Second, as Saxberg details, VanLehn does some important work in splitting up the types of tutoring research by “grain size”: answer-based tutors, step-based tutors, substep-based tutors, and human tutoring, as well as by the type of student behavior, which ranges from passive to active to constructive and finally interactive.  Stunningly, the typical answer-based tutoring systems average an effect size of around 0.35 standard deviations, and all three of the step-based, substep-based, and human tutoring cluster around an effect size of 0.75 standard deviations. In other words, some machine-based tutoring is approaching the effect size of real human tutoring—and there is less variation than one might expect as the grain size of tutoring becomes finer. This finding is a startling observation.

Saxberg makes some great points on the cautions and potential of this research, as well as the questions we should be continuing to ask. I just want to talk briefly about this from the angle of disruptive innovation and think about how we might implement these tutoring solutions at scale.

As Saxberg writes, great human tutoring is wonderful if you can get it, but simply isn’t practical at scale. We know that the vast majority of learners that could benefit from tutoring simply don’t have access to any at all (some have suggested this number approaches 80 percent of students). This means that there is a lot of nonconsumption in the tutoring space to launch disruptive innovations that utilize the power of machine tutoring at a much lower price point in a manner far more accessible and convenient than are human tutors to millions or even billions around the world. The wrong tactic for entrepreneurs debuting these solutions is to compete head on against existing solutions where the performance won’t be as good. They should instead focus on where the advantages of convenience, accessibility, simplicity, and affordability are valued and more important than absolute efficacy.

By competing against nonconsumption where this is the case, for those who suggest that the machine-based tutoring isn’t as good as the best that’s out there, that will be the answer to the wrong question, as it will be way better than the alternative—nothing at all. And as the research illustrates, it’s a good deal better than that even at this point.

What’s predictable about technology is that it improves constantly year over year, so what at one point isn’t good enough for most, over time will actually overshoot what many need from it. The lessons from disruptive innovation suggest that these technologies may never be as good as the absolute best human tutor (for example, the raw capacity of vacuum tubes still outpaces that of transistors, which disrupted the vacuum tubes in the consumer electronics market), but they will be plenty close. And as they improve, the machine-based tutoring technologies will become good enough for those who could or would have paid full price or changed up their schedule to connect with a human tutor, such that machine-based tutoring may well be the norm for many of us as a prime mode of learning in the future.

In some ways, the Khan Academy and other start-ups are packing in some elements of these machine-based tutoring systems as they evolve and grow, such that this revolution is really already under way.

When I was writing Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns, I often wondered whether the subtitle should be “For every child, a tutor.” As the research shows, that vision may not be so far-fetched.

I coauthored this piece with Gunnar Counselman, the founder and CEO of Fidelis, a venture-backed technology company that partners with leading colleges, veterans’ organizations, and companies to solve the military-to-career transition for the nation’s service members. He has also been a colleague of mine for the past several years as an adjunct fellow at Innosight Institute.

Although long overdue, there was finally a debate this past winter over how the federal government should address rapidly

rising college tuition. Even as President Obama accompanied his State of the Union attack on rapidly increasing tuition with proposals to try and curb the trend, Senator Richard Durbin (D-IL) proposed the kind of action that can move the dial.

Judging by the media headlines, however, that debate seems to have faded into the background. That’s unfortunate.

Durbin suggested changing the so-called “90-10 rule”—wherein for-profit and career colleges must earn at least 10 percent of their revenue from sources other than federal student aid to be eligible to receive any federal aid—in two key ways.

First, he proposed that the required revenue split be shifted to 85-15, which means that these colleges would have to earn more revenue through non-federal aid sources. And more important, he proposed that revenue earned from military benefits such as the GI Bill be included in the 90 (or 85) percent, in recognition of the reality that military benefits are de facto federal aid.

Today’s 90-10 rule creates a powerful incentive for for-profit and career colleges to recruit aggressively anyone eligible for military benefits—but not for the right reasons.  Indeed, because military benefits count as part of the 10 percent of “non-federal money,” for every one military student a college signs up, it can acquire nine non-military students paying full tuition with federal loans.

Durbin’s proposal to include military benefits in the 90 percent is common sense; after all, these are federal funds. And if passed, at least nine of the publicly traded for-profit colleges would have to scramble to find new sources of revenue or else they would lose their ability to receive federal student aid. Given that the markets didn’t respond to the proposed bill though meant that no one thought it would pass—and that seems to have been borne out by the debate fading into the background.

That’s a shame on the one hand, but on the other, it may open an opportunity to improve the legislation both for the short term and long term.

In the short term, Durbin should modify the language of the proposed bill in three ways. First, drop the idea of moving the policy to 85-15.  But second, put more teeth into 90-10, by requiring that at least 10 percent of a college’s students should have to pay full tuition out of pocket for the college to be eligible for federal aid. This is how the rule was written for the GI Bill shortly after World War II. The idea is that if 10 percent of students have the means to pay and choose to endorse the school’s value proposition by paying full tuition, then the school must be OK.

Lastly, the 90-10 rule should apply to all colleges regardless of tax status, not just for-profit and career schools.  To our knowledge there are few if any non-profit schools that are close to the 90-10 limits, but their inclusion gives a reasonable nod to the role that companies can and should play in reducing costs and driving educational quality.

These quick fixes will eliminate the perverse incentives to recruit veterans regardless of program quality or fit, but they don’t address the persistent problem of massive annual tuition increases. Doing that requires a substantial realignment of federal financial aid with a longer-term view that leaves the 90-10 rule and its permutations behind.

Given the amount of money the federal government provides to higher education, it’s perfectly reasonable for it to use those dollars to promote affordable, high-quality options.

Entering 2012, the state of Virginia was coping with the effects of a faulty funding formula, which did not provide equity for all students statewide, that the existence of full-time virtual schools had exposed.

Senate Bill 598 was introduced in January to fix the problem by insuring fair funding for public school students who wanted access to full-time, statewide virtual schools that had been approved by during a rigorous review process by the Virginia Department of Education. The fixes—themselves worked through in a lengthy and rigorous process—insured fair funding not only for the students, but also in a way that could work for the districts.

In the last week of February, however, changes were introduced to the bill that struck out all of the well-balanced language in the bill designed to fix the faulty funding formula.

What was left was a bill that exacerbates current inequalities in the system, as it is designed explicitly to limit student access to online learning programs based on geography. In essence, as the bill is now written, districts would have veto power over students’ ability to enroll—or stay enrolled—in an online program that meets their needs if the program is housed outside of the district.

What a ruse. A bill introduced to fix the state’s funding problems of online learning in a way that would strengthen students’ ability to tailor an education for their unique needs will now do the exact opposite.

Legislators should scuttle this immediately. If nothing comes out of this legislative session, those playing games with the bill will have gotten that for which they asked—at least another year of a faulty funding formula that works for practically no one.

As the United States attempts to march forward toward a student-centric education system powered by digital learning, creating geographic barriers to confine a medium—the Internet—that inherently knows none, is absurd. That’s part of the wisdom behind Florida Virtual School’s motto of “Any time, any place, any path, any pace.”

Policymakers ought to embrace it and allow online learning to fulfill its promise. In Virginia, fixing the funding formula to level the playing field for all students would be a good start.

A month has passed since the first-ever national Digital Learning Day. Given the excitement generated from teachers and others tuning in to the National Town Hall meeting and given today’s National Leadership Summit on Online Learning up on Capitol Hill in Washington, D.C. that iNACOL sponsored, I thought it was worth noting some great examples that weren’t highlighted during the day’s festivities. To our friends in the field, these examples are familiar, but they remind us that what is so exciting about technology is the power that it holds to move our education system toward a student-centric model of learning where students can move at their own path and pace to boost student outcomes.

KIPP Empower Academy is a Los Angeles-based elementary school that opened in 2010. It currently serves kindergarteners and 1st graders, and it plans to grow by one grade each year up to 4th grade. A blended-learning school, students rotate between individualized online-learning, and small-group stations within each classroom. In the school’s first year, its now 1st-grade students experienced some notable results. As reported on its website, “Though many students at KIPP Empower Academy entered kindergarten without basic letter and number recognition skills, by the end of the year, 98 percent were reading and performing math at or above the national average.” Not only that, but many students were also reading at a “2.5” grade level and performing math almost at the 3rd-grade level. And reported teacher satisfaction at the school was sky high.

KIPP Empower

Carpe Diem is a blended school based in Yuma, Ariz., which will be expanding beyond the state into Indiana in the next school year. The school, which serves grades 6 through 12, uses an individual-rotation model. In 35-minute increments students rotate from online learning for concept introduction and instruction to face-to-face for reinforcement and application. In 2010, Carpe Diem ranked first in its county in student performance in math and reading and ranked among the top 10 percent of Arizona charter schools.

Carpe Diem

The Los Altos School District began using the Khan Academy last year in a handful of 5th-grade and two 7th-grade classrooms to blend its math learning. This year the district has incorporated Khan Academy into its math curriculum for all 5th- through 8th-grade students—about 1,000 in all. With Khan Academy, teachers are able to individualize learning for each child based on real-time data. The blended-learning environment in Los Altos schools allows for seamless targeted intervention and flexible groupings, as well as real collaboration among students—all of which allows them to exercise their own student voice and choice.

Los Altos

Quakertown Community School District (QCS) is a traditional school district in Pennsylvania that has embraced the power of online learning to create a “self-blend” learning environment for students. All students in grades 6 through 12 have the option to take one or more online courses, and district teachers teach all the courses with the exception of those, like Mandarin, where there is no certified teacher available within the district. Two district teachers are responsible for only online courses, and roughly 75 percent of all QCS teachers are responsible for at least one online course. Courses are asynchronous; students can work on their assignments at any time during the day. Many students take advantage of this option in order to work around vocational programs, work schedules, and extracurricular interests. Some take these classes at home, and others work on them during free periods during the school day. There are designated areas in the high schools and middle schools, called cyber lounges, where students can work comfortably in a cafe setting between their face-to-face classes. The online courses allow students to move at their own pace and complete courses based on competency rather than being tethered to the traditional semester timeline.

Most powerfully, students in the district have produced a number of videos that speak to the power of the district’s approach, from the advantages of online learning from students’ point of view to the perspective of a face-to-face and online teacher, as well as a video that summarizes the district’s positive and improving student outcomes.

* * *

For more video viewing of blended-learning schools, I also recommend checking out the Alliance College-Ready Public Schools BLAST school, which is turning heads in Los Angeles.

An article on Yahoo! News caught my eye a little while back because of what it says about the potential—and perhaps likelihood—of India leapfrogging the U.S. education system. Titled “In India, the challenge of building 50,000 colleges,” the article also provides a window into the theories of disruptive innovation, as it details the government’s goal of building 1,000 universities and 50,000 colleges (or so it says) within the next decade to cope with the wave of young people that will increase the country’s labor pool by 100 million workers by 2020.

For sake of comparison, the United States has roughly 4,200 accredited higher education institutions today.

The first thing that pops out from the article is the vast nonconsumption of higher education that exists in India. There is literally no educational option for millions of students to prepare them for the workforce and life. That provides a green-field opportunity to introduce disruptive innovations that rethink education by offering a service that is far more affordable, accessible, and convenient than the existing options. And because the alternative is literally nothing at all, there is plenty of room to offer something that is infinitely better than that—and will improve from there.

This opportunity raises a challenge for India though. Arvind Panagariya, an economics professor at Columbia University in New York, is quoted in the article as saying that currently Indian higher education isn’t growing capacity fast enough to handle its goals, which he says might mean that the “transformation of India into a more modern country will be much slower than one might think.”

The article compares the growth of higher education in China versus India to make the point: “In 2000, 8 percent of China’s youth went on to college, compared with 10 percent in India. By 2007, China’s enrollment rate had risen to 23 percent versus 12 percent in India.”

And Panagariya concludes that the reason for this is, “The Chinese don’t worry so much about these issues of quality. [They just say] we need to provide some education.”

In other words the Chinese have been more willing to embrace disruption, as they have truly understood that that’s the way they will scale affordable and accessible models to serve their population. The alternative—nothing at all—is a non-starter.

Of course, India increasingly is looking to embrace disruptive innovations to scale education—and developed countries with more established education systems should take note.

As the article says: “And yet—as in other sectors of rapidly developing countries—India isn’t looking just to mimic the West in education. It is hoping to leapfrog it. In some ways, the country has no choice. ‘The way education is today in the global market is not scalable,’ says Sam Pitroda, an education adviser to the government. ‘The cost of education has really increased substantially, mainly because IT has not been used effectively the world over in education.’”

What this points to is disruption using the technology enabler of online learning. As the article says, “This means that India is not just trying to build thousands of American-style campuses with neat quads. Many of its new schools will be virtual, for-profit, and integrated closely with workplaces. It may, in fact, end up pushing the concept of online education further than any other country. As a result, what India comes up with will not only affect its economic competitiveness in the 21st century. It may become a petri dish for how to build an educational system in the Information Age.”

There is another dynamic pushing India to innovate in and improve online learning in some dramatic ways. According to the article, new schools face shortages of land and instructors. As a result of the first, constructing big campuses to fill the education gap is likely a non-starter. Online learning is critical. As for the second—the system is short roughly 1 million teachers the article says—this means that the country will almost certainly have to push the bounds of today’s online learning systems so that it can scale the impact of great teachers and built robust digital learning systems that embrace adaptive learning and other such advances. Given these pressures, the innovations that emerge from India could be stunning.

What happens though if India doesn’t seize the power of disruptive innovation to expand its institutions of higher education fast enough? The answer is that employers may have to expand into offering education themselves. In fact, they already are—but they are doing because the current (and more traditional looking) institutions aren’t delivering the goods.

According to the article, a recent study by the McKinsey Global Institute reported that, “less than 17 percent of India’s graduates were immediately employable. As a result, top Indian firms often have to put new hires through months of in-house schooling to train them for jobs for which they were supposed to be qualified.”

This is the textbook response. What we’ve learned from our work on innovation is that whenever an adjacent step in a value chain isn’t being delivered—or what’s out there isn’t good enough—even if that step doesn’t appear to be an entity’s “core competency,” the entity must nevertheless integrate into that step if it hopes to deliver on its ultimate mission. When quality isn’t good enough, proprietary, integrated solutions reign.

Industries rarely remain in their integrated state though. As they overshoot what users and customers need, they become modular—which leads to more customization. How this might happen in India is anyone’s guess, and the time frame is open to debate. But one nugget in the article suggests that it might not come from the places that people expect.

An obsession for many upstart and innovative institutions in higher education—around the world—is how to get accredited by the formal accrediting agencies so that they gain legitimacy. Our lessons from disruptive innovation though suggest that disruptions often go around existing regulations and regulatory bodies, gain market share, and as a result the debates around whether these upstarts and disruptive innovations are deserving of accreditation tend to fade away as the world naturally provides the answer—and the regulatory bodies and regulations either fade away or change to match the fait accompli.

This seems to be happening in Indian higher education. The article reads: “Until recently, new colleges wanting to offer degrees were required to be affiliated with a state- or central-government university. That’s a heavy yoke because powerful—but stagnant—university regulatory boards control everything from curricula and exams to teachers’ salaries. …

“The decade-old Indian School of Business (ISB), found the accreditation process so burdensome that the nonprofit school skipped it entirely. Ironically, the ISB is one of the few world-class institutions of higher education in India. No Indian school made this year’s Times Higher Education ranking of the world’s top 200 universities. But the ISB took No. 13 on a Financial Times list of global MBA programs. Yet it cannot grant MBA degrees—instead it awards certificates—as a penalty for its independence.”

Clearly it would seem that maybe a degree in and of itself isn’t so important. A certificate can be just fine.

One person in the article voices his frustration with this state of affairs by arguing that Indian regulators have the system backward, saying, “What [other] governments do the world over is they monitor the quality—they monitor the output. … So they don’t make it difficult for you to enter the sector, but they do make it quite strict that whatever you provide is adequately rated.”

To that I can only say if only that was true. The accreditation system in the United States is based highly on inputs over outputs and outcomes—and the result is quite similar to the situation in India. Of course, the answer may just lie in taking the counter-intuitive path by being disruptive, going around the regulations, and scaling a more accessible, affordable, and customizable service from there. Don’t be surprised to see dramatic innovations in education happen in India first.

One would expect a book by the CEO of a for-profit university to mount a vigorous defense of the much-maligned for-profit higher education sector. But what one might not expect is that the same book would do so in a thoughtful, well-researched manner that discusses not just the place of for-profit universities in education, but also offers a compelling narrative on the state of American higher education across the board—from its elite institutions to its community colleges—and addresses the far larger challenges the country’s colleges and universities must tackle for America to maintain—or even regain—its competitive edge.

Yet that’s exactly what Andy Rosen, CEO of Kaplan, Inc., accomplishes in “Change.edu: Rebooting for the new talent economy,” which whirls through the history of higher education in the United States and into its uncertain future in a refreshingly enjoyable and brief but comprehensive 200 pages.

Framed against the backdrop of America’s need to educate more of its citizens far better, Change.edu is divided into four broad themes. The first is a discussion of “Harvard Envy” and “Club College,” which explains why colleges strive to become bigger and better along dimensions that often don’t line up with improving student learning and causes greater investment in the “educational haves” as opposed to the “educational have nots.” Next, Rosen explores how community colleges are meant to help the educational have nots but have a broken funding model that limits their reach. Rosen then examines the complementary role the for-profit colleges play and concludes with a discussion of how learning should guide government policy for colleges and universities of all stripes in the future.

At times Rosen is intensely critical of many colleges’ and universities’ excesses and limitations. To illustrate the points, he documents everything from a sadly amusing competition to house the tallest climbing wall in Texas to the fact that as state budgets are tightening and unemployment is rising, many institutions are unable to serve more students—as evidenced by California pairing back its public college enrollment by 165,000 in the 2009-10 school year even as the for-profit sector added capacity.

Despite these critiques, his empathy for the different circumstances and missions of all colleges emerges throughout the volume. His love for colleges—not just those that are for-profit—is evident, which makes the book all the more credible. Of course Rosen isn’t an unbiased observer, but he also isn’t criticizing the existence of climbing walls and opulent dorms in and of themselves, but more so the government’s financing of them at the expense of serving more students.

As he writes, “universities receive huge funding and subsidies from U.S. and state taxpayers… via government grants… [and] via government subsidized financial aid or the tax deductions offered to colleges by their nonprofit status and the charitable donations they receive. These subsidies and grants amount to some $15,540 per student at four-year public institutions. Colleges tend to sequester some forms of spending so alumni donors pay 100 percent of the bill, particularly if the expenditure involves a new football stadium. But money is fungible, and allocation of funds to one project frees up money for another. And the tax system is still subsidizing the donors writing the checks and the universities that are cashing them. The $1 million donation from a generous alum in the highest tax bracket is costing the federal government as much as $350,000 in foregone federal income tax revenue—money the government could have spent on something else or returned to taxpayers (or that might have been donated to another cause).”

It’s not that Rosen argues against government support for higher education—there’s a clear economic case for it, he writes. But it’s considerably less clear that taxpayer funds are well spent on a French restaurant because it happens to be inside a college’s student union or on “Michigan’s quest to defeat Ohio State’s football team.”

Indeed, his argument points to a need to recalibrate the funding mechanisms at work in higher education to reward institutions that give students and taxpayers the best return for their money. Rosen makes the case that for-profit schools are in prime position to deliver on this mission—as well as to innovate in the fields of online learning, for example, but here his absolute statements miss the mark.

Although Rosen is correct that, on average, non-profit colleges have convoluted business models that create lots of perverse incentives—and the business model of many for-profits is far simpler (leading to his correct conclusion that it’s not that the “for-profit way of doing education is not so much better or worse than the non-profit way; it is just a different approach”), it doesn’t have to be this way. There are non-profit institutions that have similar and simple business models that operate for far less money than their peers—like Western Governor’s University, for example.

But broadly speaking, Rosen’s larger point on the role of government is on target.

I have recommended creating a “QV Index” to guide the federal government’s spending to accomplish Rosen’s aim, whereby institutions that performed better on measures of student satisfaction and quality—defined as helping students get to where they want to go and improving their earnings—relative to cost and relative to other institutions, would have access to more government financing than would others.

Rosen argues for the government to do this based on four areas: learning outcomes, access, low costs and innovation. I worry, however, about the government rewarding institutions based on tightly prescriptive ways, such as how students do on learning assessments, given that students attend college for a wide variety of reasons—from the culinary to the academic. My hunch is that the QV Index would go a long way toward incorporating implicitly all four of Rosen’s suggested measures without the heavy intrusion of the government that might accidentally suppress innovation—the very thing Rosen wants to encourage and so poignantly writes about throughout.

But this is for policymakers to debate in the years ahead. What Rosen’s book does in the short term is reset the conversation on higher education. He provides needed perspective and ends on a note of optimism and hope that suggests there’s a bright path ahead, as change comes to education.

With the arrival on February 1, 2012 of the first-ever national Digital Learning Day, the disruptive innovation of K-12 online learning—from in blended-learning environments to remote ones—seems to be taking yet another step toward the mainstream.

For over a couple decades, supporters of technology in education have talked of its potential benefits in transforming education. But beyond a set of enthusiastic early adopters, the use of technology in formal education remained largely stalled. Its talked-about benefits remained unrealized at best, as the cramming of computers produced few notable results that scaled.

With the rise of online learning, that began to change. Its growth is rapid and undeniable. Increasingly we’re seeing online learning stretch beyond areas of nonconsumption—where the alternative is nothing at all and where disruptive innovations first take root.

The shift from print to digital, as Tom Vander Ark so succinctly puts it, is upon us. Singapore for some time has had an e-learning week.

Now we have our first Digital Learning Day.

As we approach this day, and as district schools, charter schools, and states around the country participate, we must make sure that this doesn’t become a day that is all about technology for technology’s sake.

The critical thing is to fashion a student-centric system powered by digital learning that allows each child to realize his or her fullest human potential. Technology in this vision becomes the backbone that helps us to customize an education for each child’s unique learning needs, not the gadget that’s just there because it’s cool or because we simply think learning through or with technology is the way we should do it now.

To do this right, it’s important to bear in mind the definition of digital learning from Digital Learning Now’s Roadmap for Reform: “Digital learning is learning facilitated by technology that gives students some element of control over time, place, path, and/or pace.” The document defines each of these elements and offers the following line: “Digital learning is more than just providing students with a laptop.”

As our formal education systems move into the digital age, we should do so with the student and his or her learning at the center, not technology.

As online learning gains share and transforms our education system, for some time I have argued that foundations and philanthropists would be wise to spend their dollars in moving public policy, creating proof points, and the like to create smarter demand and not invest on the supply side in the technology products and solutions themselves.

The market is plenty motivated to create disruptive products and services to serve the public education system, but today’s policies and regulations don’t incentivize and reward those products and services that best serve students. As a result, philanthropic dollars are critical to help create the correct conditions such that those products that are efficacious and serve a higher end—student learning—are the ones that gain share.

As we’ve argued, public policy should reward those providers that best deliver student outcomes—and punish those providers that do not serve the public good.

There is one area, however, where I think philanthropic dollars should probably fund products and services, which is in the category of assessments. If we’re going to have a system that pays providers on how students do on outcome measures, we need robust assessments that are authentic and that people trust. The political incentives—for a variety of reasons—to create high-quality assessments aren’t particularly strong, so having philanthropists invest dollars to create these assessments and continue to push innovation is critical.

This is why yesterday’s announcement that The William and Flora Hewlett Foundation will award a $100,000 prize to the designers of software that can reliably automate essay grading for state tests to drive testing of deeper learning is so important. Open Education Solutions and The Common Pool designed and will be managing the competition.

The Hewlett Foundation’s leadership in creating better assessments to measure critical reasoning and writing is a big step forward—and its use of Kaggle, a platform for predictive modeling competitions, to host the competition is clever.

According to the press release, “The automated scoring competition intends to solve the longstanding problem of high cost and low turnaround of current testing deeper learning such as student essays. The goal is to shift testing away from standardized bubble tests to tests that evaluate critical thinking, problem solving and other 21st century skills.”

In addition, the competition is being conducted with the support of the two state testing consortia that are currently designing the next-generation assessments for the Common Core. Having this buy-in and collaboration gives the competition serious validity and the potential to have real impact.