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…”
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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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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
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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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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
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Learning
Experience
Learning
Assessment
The market will expect data to
support decision making aboutwhere to go to school
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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?
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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
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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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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