Sunday, May 22, 2011

The next wave of innovation in higher ed.

"An organization simply cannot disrupt itself," asserts Clayton Christensen and the authors of Disrupting Class---->. If you're going to innovate, really innovate in the way that iPods or PC's or online day-trading innovated, you're going to have to do it outside the usual boundaries. This, of course, is what the online for-profit universities did, working outside the traditional ivory infrastructure to reach a huge customer base that was absolutely not going to stop working, move near campus, and go back to school full time for that next degree. The traditionals didn't want those students, and so the for-profits went after them with online classes and office-park classrooms. The classic disruptive innovation cycle began. That cycle continued on its normal trajectory until last summer when the traditionals, with their governmental power base, turned on the for-profits with punitive regulations, most notably the "gainful employment" clause. If you can't beat 'em, regulate 'em out of existence.

That punitive effort, as has been stated here before, seems bound to crater. It's always felt a bit last-ditch to me, and now The Hill reports that it's in serious bipartisan trouble. It seems you can't take away from millions of Americans the best path to a better life that they have ever known, without creating an uproar. So the classic cycle of disruptive innovation rolls on, right? The innovators target a new market that the old guard doesn't want, provide it with a product that changes the landscape, then the old guard eventually embraces it or pays the consequences.

Except that something odd is happening in higher education. The for-profits have stopped innovating.

Reeling from the regulatory crack-down, many have spent their time, money, and energy fighting back with lawsuits and other legal maneuvering. But what is the basis of their legal arguments? If you pull back the covers, you find this: You're treating us unfairly, singling us out, and really, we're not any different from them. And what this means is that behind the scenes, the one-time innovators are scrambling to distance themselves from their innovative roots, straightening out any wrinkles that may make them look, well, unseemly (Innovation? Us? No, no, we're just like them!). Now you have former-innovators working hard to fit in, and to become organizations just like their peers. At least one for-profit that was actively fighting the "gainful employment" rule went full circle and converted to non-profit status earlier this year. If they can't beat you, join 'em.

So if an organization simply cannot disrupt itself, what does that mean for higher ed? It means opportunity for some new innovators.

Did you know that Compaq invented the iPod? Or rather, the first palm-sized digital "jukebox" with enormous storage capacity? I just learned that, thanks to an article I stumbled across in C-NET Reviews. Compaq beat Apple by 3 years and still lost in the marketplace. Compaq was simply not prepared to make their own innovation a centerpiece of their business strategy. Apple, fully familiar with the idea of making the most out of someone else's invention by perfecting it, and its business model, was well prepared to launch into a business that was not originally theirs.

So who will the new innovators in higher education be? Who are those who are watching all this unfold, and are ready to take what has been done so far to the next level? I had lunch once at a conference with two of the product people who worked on Apple's iTunes/iPod system. "We couldn't believe Sony wasn't already doing this," one of them said. "We were in a hurry," the other chimed in, "because we thought that before we could get our product to market, one of the big entertainment/technology companies would already be there." Apple couldn't have been more right about their product, or more wrong about their competition. Not only was Sony not there, the media giant and one-time innovator (remember the Walk-Man?) would line up on the other side, working to protect their portfolio of artists from the revenue squeeze that the mp3 revolution brought about.

The new innovators in higher education are not in the spotlight right now, but they are not on the sidelines, either. They are working hard as all this plays out. They have accreditation. They understand in ways that most of the original, big-name for-profits never did that quality is key--educational quality, product quality, business quality, and academic rigor. Like Apple, they understand that perfecting the business plan and the product means huge opportunity. Blackboard and streaming lectures are 1990's technologies. The future is differentiated learning, using the power of technology to mass customize education and prove outcomes beyond a shadow of a doubt.

They're waiting. But knowing how innovators tend to think, you can bet they won't wait for long.


  1. You are one smart cookie, however I believe you pointed out the obvious, the schools may be regulated out of existence before they have the opportunity to
    show their stuff. Politics in the USA as usual.

  2. I take strong issue with the first part of your comment, where you say that I'm one smart cookie (Although I do not take offense!) And of course you're right about politics, you never know what may happen. But the bipartisan support for blocking these regs happening right now in the House tells me that it is harder than anticipated to draw any meaningful line between the for-profits and not-for-profits, other than their 501C3 status. Which is to my main point... there is not so much difference between them now as once there was. Thanks for the comment!