Disruptive Innovation:

A Different Way to View Higher Education Change

ACCTSymposium on Student Success

Generating A Policy Agenda October 11, 2011

Louis SoaresDirector - Postsecondary Education Program

Center for American Progress

What Students/Society Want from College?

Content

Skills

Socialization

Credentials

Do these deliverables need to be done in the same place at the same time?

Or Can they be unbundled?

Unbundling College: Service By Service

Instruction delivery

learning content publishing and library services

career and educational management services

tutoring/mentoring and test-prep services

academic and technical standards

assessment, and certification services

learning management

enterprise platform services

quality assurance services

Disruptive Innovation Process

Non-consumption

Functionality

Reliability

Simplicity

Cost Reduction

Process Of Disruptive Innovation

Sophisticated customers not

interested

New Customers, less complex

needs, expectations

Move up market without replicating

cost structure

Enablers of Disruptive Innovation

Technology Enabler

Business Model

Technology Enabler – Online Education

2003 – 10 %

2014 – 50 %

2009 37% of all courses

Business Models – How Value is Delivered

Three Basic Type of Business Models Solution Shops

• diagnose and solve unstructured problems

• consulting firms, advertising agencies, hospital diagnoses

• Deliver value through people they employ

• Revenue - fee for service

• Research in Universities

Value Adding Process businesses

• organize inputs that are incomplete and turn them into outputs of higher value

• Manufacturing, restaurants, retailing

• Revenue – outputs of their work

• Most Teaching in K12 and Universities

Facilitated user networks

• Enterprise in which participants exchange things with each other

• Mutual insurance companies, telecommunications

• Fee for membership, fee for use

Historical Business Models

Knowledge Creation (research)

Knowledge Proliferation (teaching)

Preparation for Life and Careers

Disruptive Innovation

Online Education

Focused on teaching and learning

Highly structured delivery

Learning Analytics

Target on prep for careers

Competency-based

Policy Makers Should Eliminate barriers that block disruptive innovations and partner with the

innovators to provide better educational opportunities

Remove barriers that judge institutions based on their inputs such as seat

time, credit hours, and student faculty ratios

Not focus on degree attainment as the sole measure of success

Fund higher education with aim of increasing quality and decreasing cost

Recognize the continued importance of research institutions

Existing Institutions

Apply the correct business model for the task

Drive the disruptive innovation

Develop a strategy of focus

Frame online learning as a sustaining innovation

Thank You!

Questions?

Disruption Across Industries

Industry Technology Disruptor Incumbent

Financial Services Web-based financial

transactions

Charles Schwab Merrill Lynch

Travel Web-based booking Expedia, Kayak Travel Agents

Telecommunications Cell phones Sprint, Nokia ATT, Ma Bell

Newspapers Web-enabled

markets

Craigslist, Google Most newspapers

(except NY Times)

Higher Education ? ? ?

Disruptive Innovation is the Process by which

A Sector That …….

with complicated products services…

that were expensive and inaccessible….

And served only a limited few sophisticated customers……

Is transformed into one which…

Offers products and services

that…

Are simple, affordable and

convenient serving….

Many…no matter their wealth and

expertise

How?

Redefines quality in a simple often disparaged application

Slowly improves taking for market share by taking on complicated problems

Without replicating cost structure