business models, higher education, and the cio - sponsored by wowza media systems (242312136)

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Higher Education Business

Model, Disruption, and the CIO

Eric Denna, PhD

CIO, University of MarylandEducause 2014 - Orlando, Florida

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Clayton Christensen:Disruptive

Innovation and the

Future of HigherEducation

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Is higher

education’s

business model

ripe fordisruption?

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We are not a %*!#$@ business!

It’s those %*!#$@ legislators!!

Taxpayers are so short sited!!!

…

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August 11, 2014 – “Some American university leaders

will try to navigate these fraught times with a few

tweaks here, a few layoffs there, and perhaps extra

PowerPoint classes for the faculty. They will fail. Somewill make concessions, using new technology for add-

on services, while trying to build a moat around the

traditional business model. They will also court failure.

The ones who succeed truly will have learned the

lessons of survivors in the consumer electronic,

newspaper, and other industries facing the existential

threat of disruptive innovation.” 

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53% of recent collegegraduates are either

unemployed, or working in a job that

doesn't require a bachelor's degree...”By

region, the MountainWest was most likely to

have young college

graduates jobless orunderemployed --

roughly 3 in 5…”

8

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Washington Post Wonkblog - Tuition's

Too Damn High (Aug/Sep 2013)

Part 1 Why is college so

damn expensive?

Part 2 Why college is still

worth itPart 3 The three stories of

rising tuition

Part 4 How important are

state higher ed cuts?Part 5 Is the economy

forcing colleges to spend

more?

Part 6 Why there's no

reason for big

universities to rein in

spending

Part 7 Is government aid

actually making college

more expensive?

Part 8 Are rich kids ruining

college for everybody

else?

Part 9 Can MOOCs solve

the college cost crisis?

Part 10 How can we fix

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Health care and education are messed up

for the same reason

By Ezra Klein, Updated: August 26, 2013 at 12:18 pm

Health care and education pose the same basic threat to

the economy: How do you keep costs down for a product

when consumers can't say "no"?Saying “no,” after all, is how consumers typically restrain

costs. If Sony wants to charge you too much for a television,

you can walk out. You might want a television, but you

don’t actually need one. That gives you the upper hand.

When push comes to shove, producers need to meet the

demands of consumers… 

© The Washington Post Company12

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THE WHITE HOUSE

Office of the Press Secretary

FOR IMMEDIATE RELEASE

 August 22, 2013

FACT SHEET on the President’s

Plan to Make College More

 Affordable: A Better Bargain for the

Middle Class 13

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14

Between 2002 and 2011 nearly

$2B invested in ed-tech startups

About the same higher ed

invested – right?

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The Disruptors…so far  

15

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Colleges are headed for a reckoningAugust 26, 2013

President Obama deserves credit for using his bully pulpit to address the crisis in

college affordability.

Especially admirable is his insistence that institutions must control their costs,

instead of jacking up tuition and passing the expense on to students, as they have for

decades.It’s a message courageously directed at a portion of Obama’s own political base: the

progressive types who run most campuses and who would much prefer some sort of

state and federal bailout to painful budget-cutting.

I wish the president’s higher-ed speech in Buffalo last week had specifically cited the

bloated ranks of highly paid campus administrators, but he did forthrightly say that “not

enough colleges have been working to figure out how do we control costs, how do we cutback on costs.” 

Unfortunately, Obama’s policy prescriptions — more aid and loans to students,

coupled with pay-for-performance bonuses for schools — range from tepid to

counterproductive.

His headline idea was to have the Education Department rank institutions by “value”

and, eventually, to link schools’ share of federal student aid to the rankings…  16

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“HIGHER education is one of the great successes of the welfare state.

What was once the privilege of a few has become a middle-class

entitlement, thanks mainly to government support. Some 3.5m

“Americans and 5m Europeans will graduate this summer. In theemerging world universities are booming: China has added nearly 30m

places in 20 years. Yet the business has changed little since Aristotle

taught at the Athenian Lyceum: young students still gather at an

appointed time and place to listen to the wisdom of scholars.

Now a revolution has begun (see article), thanks to three forces: risingcosts, changing demand and disruptive technology. The result will be

the reinvention of the university… 

“Rather than propping up the old model, governments

should make the new one work better.” 

Higher Education: Creative

Destruction

June 28, 2104

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“In 15 years fromnow half of US

universities may bein bankruptcy”

(interview with Mark

Suster,

http://tiny.cc/m2jym

x)

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What is the business

model at yourinstitution?

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36

6

48, 400

10,659

107,421 5,470

“higher education business model”

search results

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Preciselanguage Precisemodels Progress

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Kinectics

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What is a business model?

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UNIVERSITE DE LAUSANNE

ECOLE DES HAUTES ESTUDES

COMMERICIALES

THE BUSINESS MODEL ONTOLOGYA PROPOSITION IN A DESIGN SCIENCE

APPROACH

Alexander OSTERWALDER

2004

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OK, what does higher

education’s businessmodel look like?

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“The options for traditional institutions of

higher education, however, are arguably

more constrained, as most schoolsmanage even more complicated

business models than a typical

company. Colleges and universitiesgenerally house what should be three

different business models within one

overarching business model” (Weise and Christensen, Hire

Education, 2014)

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Traditional brick-and-mortar

university

Solution ShopDiagnoses and

solves

unstructured

problems (e.g.,knowledge

creation or

research)

Value-adding

processbusiness

Adds value to

something that is

incomplete orbroken (e.g.,

knowledge

proliferation or

teaching)

Facilitated user

networkEnables exchange

amongparticipants (e.g.,

social growth)

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StudentDegree

Social

Network

?????

Tuition

Appropriat

ions

Grants

Donations

Accreditation

Learning

Experience

People Places

Content

FacultyJob

?????

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Complimentary,

Co-dependent,or Competitive?

Student

Family

PublicEmployer

Faculty

Those we

serve

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Strategyzer.com

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Bottom Line

Cross subsidies hide

cost of services

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What does higher

education’s businessmodel look like?

It’s complicated, andvulnerable

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Competencies,

Unbundling, and

Personalization

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LearningObjective

Learning

Resource

Learning

Experience

Learning Assessment

The Learning Ecosystem

47

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Learning

Experience

Learning

 Assessment

The market will expect data to

support decision making aboutwhere to go to school

48

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"Mark Hopkins

on one end of alog and a

student on theother” (President James A.

Garfield describing theideal college)

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A iti l l iti

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Face-to-face < Online < Hybrid

 Always?Why?

Does time and place matter?What if its individualized?

Evaluation of Evidence-Based Practices in Online Learning: A Meta-Analysis and Review of Online Learning Studies

by the US Department of Education - see http://www.distance-education.org/Articles/Online-Education--Better-Than-

Traditional-School--194.html.

A critical value proposition

question for higher education?

52

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Faculty Subject Matter Expertise ≠ Instructional Design, Delivery, or

 Assessment Expertise

Peer Review in Research vs. Peer Review

in Instruction

We are NOT a business!!!!

Some Fundamental Challenges 

53

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Degree

Discovery

ProductiveCitizen

Employee

Job

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Complementary,

Co-dependent,or Competitive?

Degree

Discovery

Productive Citizen

Employee

Job

k d

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www.knod.net

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57

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How can the CIO help highereducation respond?

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"In a time of drastic change it

is the learners who inheritthe future. The learned

usually find themselvesbeautifully equipped to live

in a world that no longerexists.” Eric Hoffer

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Learn a new language

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I hear you say

"Why?" Always"Why?" You see

things; and yousay "Why?" But I

dream things that

never were; and Isay "Why not?"

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Learn a new language