Clayton Christensen |

Areas of nonconsumption are often the most promising places to look for disruptive innovations. What’s hard about looking for these places is that, by their definition, there is no market and no data yet. As I’ve written before, nowhere is there more nonconsumption in education than in the developing world. As such, starting education innovations abroad where the alternative is literally nothing at all represents promising ground—and a place to look to for innovations.

I’m sure many people out there have way more expertise than do I on this topic, but a few things have caught my eye in recent days.

First, an eCampus News article discusses Yale Law School’s Information Society Project’s teaming up with University of the People, which is pioneering a tuition-free online university, to study “how online higher education is perceived worldwide and document what it takes for Internet-based institutions to achieve accreditation.”

Given the potential of innovations like University of the People to make an impact for those who do not have access to or cannot afford higher education in the developing world, the findings could be very interesting. Equally interesting might be how do innovations like this get around the regulations until the regulations ultimately cave to them and the new reality.

Second, there is a start-up learning organization in Mexico that reportedly is booming. Called the Learning and Innovation Network, it runs hybrid centers with computers and in-person facilitators to offer learning for users in the community in a variety of topics at affordable prices. The first centers opened in May, and they already have around 30,000 people from all age groups using them. The leadership team expects to reach 80,000 people by the end of year one with only 500 computers in 10 centers. Apparently there is a high demand for English courses; LIN bought Rosetta Stone licenses to incorporate into its model as a result, which has been well received thus far.

I would bet that many of the models that target these huge pockets of nonconsumption ultimately will be the most successful in figuring out the next generation of learning models. I’d love to have a discussion here with others about what else is out there to inform us all.

There’s a great story about the future of higher education out in Fast Company. I’m sure many have read it by now, but if not, I recommend it highly. The article by Anya Kamenetz is titled “How Web-Savvy Edupunks Are Transforming American Higher Education.”

The piece focuses on how the Internet has the potential to be an enabling technology for a massive disruption in higher education that challenges many of our conventional assumptions. The Internet has been at the heart of the disruptive online universities for some time, but this article takes it further. One of the biggest insights is this: it’s not simply the technology, it’s the model in which it is used that matters. That’s true of all disruptions—they are enabled by a simplifying technology, a business model innovation (and this is perhaps more important), and wrapped in a new value network.

Some highlights:

- From David Wiley, a leading light in this space: “The challenge is not to bring technology into the classroom, he points out. The millennials, with their Facebook and their cell phones, have done that. The challenge is to capture the potential of technology to lower costs and improve learning for all.”

- And also from Wiley: “‘A sufficient infrastructure of freely available content is step one in a much longer endgame that transforms everything we know about higher education. … If you didn’t need human interaction and someone to answer your questions, then the library would never have evolved into the university,’ Wiley says. ‘We all realize that content is just the first step.’”

- “‘Open courseware is hard for the self-learner,’ agrees Neeru Paharia, a PhD student at Harvard Business School. Building a social network to make it easier is the goal of her newest project, Peer2Peer University. … She wants to address ‘all the other things that a university does for you: It provides you a clear path from A to B, provides social infrastructure of teachers and other students, and accreditation so you actually get credit for what you do. So the question becomes, Is there a way of hacking something like this together?’”

(This is something I’ve been talking about on the stump in the K12 space as well for some time.)

- Ultimately what interests Paharia is proving the model, demonstrating that there’s a way to provide education cheaply or even for free to all who are qualified.

- From Bob Mendenhall, head of Western Governor’s University: “‘We said, ‘Let’s create a university that actually measures learning, … We do not have credit hours, we do not have grades. We simply have a series of assessments that measure competencies, and on that basis, award the degree.’ … Most students, though, do the full coursework, working at their own pace through online course modules, playlists of prerecorded lectures, readings, projects, and quizzes. For every 80 students, a PhD faculty member, certified in the discipline, serves as a full-time mentor. ‘Our faculty are there to guide, direct, counsel, coach, encourage, motivate, keep on track, and that’s their whole job,’ Mendenhall says. Multiple-choice tests are scored by computer, while essays and in-person evaluations are judged by a separate cadre of graders. What WGU is doing is using the Internet to disaggregate the various functions of teaching: the ‘sage on the stage’ conveyor of information, the cheerleader and helpmate, and the evaluator.”

- “Mendenhall is impatient with those who argue that what he’s doing with education and technology is unworkable. ‘Technology has changed the productivity equation of every industry except education,’ he says. ‘We’re simply trying to demonstrate that it can do it in education — if you change the way you do education as opposed to just adding technology on top.’”

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In addition, subsequent to Kamenetz’s piece, Kevin Carey wrote a thought-provoking piece on higher education as well. Published in Washington Monthly, it talks about this same phenomenon by profiling the disruptive company StraighterLine. It’s called “College for $99 a month: The next generation of online education could be great for students—and catastrophic for universities.”

A new study from the Department of Education, titled Evaluation of Evidence-Based Practices in Online Learning: A Meta-Analysis and Review of Online Learning Studies, examined several studies comparing online learning to face-to-face learning and concluded that, “Students who took all or part of their class online performed better, on average, than those taking the same course through traditional face-to-face instruction.”

Other studies have reached similar conclusions in recent years, and what is also interesting about this study is that it found that blended learning—in which a course combines elements of online and face-to-face learning—is the most effective. This is significant as blended or hybrid learning appears to be the fastest growing form of online learning out there, which, as we’ve said before, does not surprise us at all.

The study focused mostly at levels above K-12—undergraduate, graduate, military, and so on. The report is available online at http://www.ed.gov/rschstat/eval/tech/evidence-based-practices/finalreport.pdf.

This study from the federal government is critical in its validation of the growing disruption of online learning. Online learning has proven itself by allowing people to access quality courses in places where they otherwise would not have had access to them—and in the post-secondary world by making education far more convenient and affordable for many people who otherwise would not be able to access it.

What’s important, however, is not to confuse the medium as the root cause for the results. Just because something is online does not automatically make it as good as or better than face-to-face. The medium and its accompanying new system do shift the platform of learning. This gives us the opportunity to give every student a quality experience and to customize for each individual in the way that he or she learns by making time variable and the learning constant; improving time on task as the report notes; offering students different paths; and so on. By doing this, we address some of the root causes of an individual’s struggles.

What we now need is better online programs that better customize to engage students by being intrinsically motivating and targeting specific needs—and thus take full advantage of this exciting medium.

Is owning content the future in education, or will it be more important to help people navigate through it and filter it to find useful learning that pertains to their needs and desires?

With the free resources increasingly on the Web—two of which we wrote about a few blog posts ago here—one can make the argument that content is becoming more of a commodity. Certainly there are many avenues to find free stuff to help you learn something, and Lifehacker has a post up that highlights several of these.

From resources to help you teach yourself a music instrument or to program code to helping you get a “Personal MBA” or similar formal learning objects that a liberal arts major would work with in getting a degree, there are tons of sites that Lifehacker gives some tips for finding—and then navigating.

There are some neat business models out there as well, such as TeachMate, which allows people to trade skills—the example Lifehacker gives is you can teach someone English and in exchange they teach you to cook.

What other free resources are out there on the Web that you are seeing and using to advance learning?

Days ago YouTube launched a new “channel” or sub-site—YouTube EDU. The site gathers thousands of free lectures from over a hundred universities across the country and offers them online for free. The site doesn’t just have scattered videos—it has hundreds of full courses, too.

As some have been quick to point out, this isn’t “as good” as actually paying thousands of dollars a year to go the universities so you can get interaction with the professors, have a human touch, ask questions and so forth. You also can’t get a certified degree through YouTube EDU.

But as many others have pointed out, you often cannot get that personal touch in many large lecture classes anyway, and what’s more, many people can’t pay the high tuition rates at these universities or gain admission to them. YouTube offers it all online for free—thereby bringing the opportunity to learn from the leading academics to anyone at any time nearly anywhere. It looks like disruption at its finest—and if someone like the University of the People, which is opening in just days, wraps this in a new business model and offers certification and a degree or perhaps a service like StraighterLine offers access to human beings to answer questions, who knows where this all could go and how it might improve over time to meet these initial shortcomings.

There are other players out here playing in this game as well, such as Academic Earth, which offers better navigation features to find the lecture in which you’re interested and so forth, but reportedly has fewer videos up at the moment.

Who knows how it will evolve, but here’s a guess that the disruption will improve in a myriad of unforeseen ways and will come to benefit the lives of many more people who couldn’t access the original expensive and inconvenient offering.

There is a great encapsulation of the potential of online learning on TV and the Internet right now in the form of this advertisement for Kaplan University. In it, James Avery (known to many as Uncle Phil from the Fresh Prince of Bel Air) stands before students in a conventional college classroom and apologizes for how the system has failed them—and suggests a brighter way forward.

One governor who seems to understand the potential of this disruption is Minnesota Governor Tim Pawlenty. In his State of the State address, he called for a firm cap on higher education tuition and challenged Minnesota’s colleges and universities to deliver 25 percent of their courses online by 2015.

As we’ve pointed out many times, it is a disruptive innovation that will solve the problem of affordability in higher education. The Department of Justice, for example, did not lower computer prices by busting IBM’s monopoly and pitting mainframe against mainframe. Affordability came through disruption in the form of the personal computer. The same is true in higher education. Asking colleges to hold down costs is unlikely to transform anything; giving more grants to students won’t transform the situation either. Teaching and online universities or other such disruptions are what will transform the landscape and deliver affordability.

A question, however, is if the existing universities and colleges will be capable of doing this. Although they may be able to port their courses to an online environment, truly transforming their business model and making it less costly will likely mean they have to set up an autonomous division with different resources, processes, and priorities from the existing organization. The challenge contained in Pawlenty’s speech—and the ask to require Minnesota high school students to take at least one course online before they graduate—moves the needle forward at least.

In his first address to a joint session of Congress on Tuesday, President Obama made education a cornerstone of his remarks—and properly so given the urgent need to improve education in this country. Obama also made a point of saying that it isn’t enough just to give education more resources; schools also need more reform. This echoes a piece that Clay and I authored last week. Obama elaborated that offering preschool options isn’t enough, for example. We have to continue to improve them, he said, as well as cut “education programs that don’t work.”

We hope that concrete action follows this encouraging rhetoric. One thing we remain worried about is that the money in the stimulus package targeted for schools will be used to fund a continuation of the status quo. This is borrowed money. Charging education isn’t the same thing as changing it. Budgetary crises sometimes compel us to adopt disruption—which can lead to wholesale transformation of a system to something that serves many more people far better and far more affordably.

A point that Obama also touched upon in the speech is the fact that the price of tuition for post-secondary education is higher than ever. This is a big problem. But as we’ve pointed out in many posts on this site (here and here, just to give two examples), the solution isn’t to subsidize tuition to expensive colleges through scholarships or loans. If we do that, all we’re doing once again is charging education, not changing it. We haven’t made the system any less expensive; someone is still paying for it.

Industries only become more affordable through disruption. We need teaching universities and online universities to take more market share with a more affordable model to bless the lives of many more people. Subsidies will only delay the transformation to models like Andrew Jackson University and StraighterLine.

An interesting question in higher education is could a series of established colleges ever lose enough volume of students to go out of business? Tamar Lewin talked about the phenomenon in a New York Times article that we blogged about last week.

Turns out, we don’t really need to debate the question. It’s happened.

According to the MSNBC article, “Could independent colleges be the next bubble?”,  157-year old Antioch College decided to “suspend operations” at its flagship campus this past June. The article says, “Home builders and banks aren’t the only ones facing economic headwinds these days. America’s undercapitalized independent colleges are staring at a spiral of major threats to solvency as penny-pinching students and parents consider cheaper options, and funding sources dry up. As a result, they could be the next bubble industry to pop.”

When we cite disruptions in the higher education space—such as teaching universities, community colleges, and online universities—a big question is do they have the room to continue to move up-market given the aid in donations and federal dollars established universities tend to receive? It’s a good question. Federal loans and grants, for example, allow families and students to avoid making quality-cost tradeoff decisions they would make ordinarily in a normal marketplace. This has the effect of propping up high-cost higher education institutions that otherwise might lose market share—and stifling lower-cost options.

This example suggests, however, that disruptive players can ultimately overcome this market distortion. Interestingly, just as we suspect that budget crunches in the years ahead will accelerate the adoption of online learning in high schools, so too will these same pressures likely exert a similar effect in the higher education market.

In my last post, I wrote about an article by Tamar Lewin of the New York Times that talked about the escalating costs of traditional universities in the U.S.

Lewin has written a string of these articles. Another one, also highlighting the escalating costs of traditional universities in the U.S., points to a different solution from my previous post. This one, “Going Off to College for Less (Passport Required)” shows students making a rational tradeoff for a different experience for less money—by going overseas.

In a third article, Lewin writes about how many private colleges are worrying about a dip in enrollment. For those universities whose budgets are driven by tuition dollars, this will have a significant negative impact. As of December, according to a survey by the National Association of Independent Colleges and Universities, roughly two-thirds of 371 private institutions said “they were greatly concerned about preventing a decline in enrollment.”

At a time of tightening budgets, applications to the more affordable state universities are higher, but states like California and Florida are having to cap enrollment numbers. I wrote about this earlier here.

A key takeaway? Many existing institutions will be hurt, but in the long run, let disruption take its course so we can find better, lower cost arrangements for these students.

A fourth article by Lewin is equally fascinating—and provides a possible hint of how this could unfold. Titled Israeli Entrepreneur Plans a Free Global University That Will Be Online Only, it talks about Shai Reshef’s plans to start the University of the People and to leverage open courses and social networking to offer a robust online university experience. I’ve speculated about this before (here for example)–saying open courses weren’t by themselves disruptive as offered by MIT and Yale, for example, but if an entrepreneur came along and patched them together into a degree with some other services around it, they could be quite an enabler for a monumental disruption. What do you think about this?

For those from the College Board and the like who want to see 55 percent of Americans attaining postsecondary credentials and realize affordability is important (see the report Coming to Our Senses), note that subsidies from third parties likely won’t help us in the long term because they won’t address the fundamental cost structures at play; allowing disruption to work and having lower cost options move in will.

A report from the National Center for Public Policy and Higher Education highlights the spiraling cost increases of traditional four-year universities compared to the rise in family incomes over the period from 1982 to 2007. The New York Times writes about the report in the article, “College May Become Unaffordable for Most in U.S.”

The authors of the report are understandably concerned that if the cost of college keeps rising at this pace even when accounting for financial aid, it will become unaffordable for most Americans, which will hurt them and the overall country severely.

“If we go on this way for another 25 years, we won’t have an affordable system of higher education,” the reporter quotes Patrick M. Callan, president of the center, a nonpartisan organization that promotes access to higher education, as saying.

The natural implication is that we need more subsidies so people can afford these traditional schools and presumably pressure to get colleges to beat down these costs.

I’ve written about this on this blog before (see this post for example). History shows that trying to make a product or service affordable by beating down on high-cost competitors won’t do the trick. In essence, this was the philosophy the Department of Justice took when it broke up the IBM monopoly in the 1970s. It turns out though that costs for computing fell not when a high-cost organization was told to reduce costs and become more competitive, but instead when disruptive competitors—most notably in the form of personal computer companies—entered the market. Disruption brings affordability.

There is a much sounder strategy in trying to reduce costs of higher education. Rather than giving more subsidies to prop up traditional universities, allow students and families to make more rational tradeoffs in their education. Allow them to choose disruptive options for higher education—like teaching universities, community colleges, and online universities instead of the traditional research universities—that both meet their specific needs and are more affordable. If we allow for this process to occur, despite the continuing cost trajectories of our leading universities, education won’t be unaffordable in 25 years.