4 ways universities can survive extinction
"I think higher education is just on the edge of the crevasse. Generally, universities are doing very well financially, so they don’t feel from the data that their world is going to collapse. But I think even five years from now these enterprises are going to be in real trouble."
— Clayton Christensen, Harvard Business School professor and father of the theory of disruptive innovation, in a 2013 interview with Wired
The traditional, campus-based university model is facing extinction. As we noted earlier this month, the reasons are clear: outsized costs, skyrocketing tuition, poor strategic planning and the advent of more economical, more accessible alternative models, which are driving universities to the brink. So, the question now becomes, what can universities do to survive?
The good news is that higher ed does have some options in a rapidly changing landscape. Here are four options that universities should embrace:
1. DRIVE THE DISRUPTIVE INNOVATION
If you're not familiar with the theory of disruptive innovation, the Center for American Progress' report "Disrupting College: How Disruptive Innovation Can Deliver Quality and Affordability to Postsecondary Education" gives a pretty good primer:
"Disruptive innovation is the process by which a sector that has previously served only a limited few because its products and services were complicated, expensive, and inaccessible, is transformed into one whose products and services are simple, affordable, and convenient and serves many no matter their wealth or expertise. The new innovation does so by redefining quality in a simple and often disparaged application at first and then gradually improves such that it takes more and more market share over time as it becomes able to tackle more complicated problems."
Whether we like it or not, the higher ed landscape is changing due, in no small part, to disruptive innovation. Massive open online courses (MOOCs) may not be a silver bullet, but they are primed to flip the traditional, campus-based higher education model on its head. Although MOOCs bring an Ivy League-level education to a potentially infinite amount of students at an all-time low price of zero dollars, they are still in a nascent phase, meaning they have yet to solve fundamental problems such as monetization, accreditation and low completion rates. If MOOC providers figure out how to solve those problems, however, MOOCs may redefine higher education as we know it. If universities want to survive, they need to adapt.
The Center for American Progress report highlights the following point:
"Some institutions have this opportunity [to drive the disruptive innovation], but to do so, they need to set up an autonomous business model unencumbered by their existing processes and priorities. They can leverage their existing fixed resources in this autonomous model to give themselves a cost advantage over what to this point have been the low-cost disruptive innovators."
The report adds that universities should "frame online learning as a sustaining innovation. Institutions can use this new technology to disrupt the existing classroom model to extend convenience to many more students as well as provide a better learning experience."
Which leads us to one of the other things universities can do to drive innovation.
2. FLIP THE CLASSROOM
For what seems like forever, the formula for the traditional higher education classroom model has remained constant: a professor stands in front of a lecture hall and communicates knowledge to students. However, with the advent and widespread implementation of new technologies such as iPads and MOOCs, that is rapidly changing.
As a result, a relatively new movement has emerged in education called the "flipped classroom." The concept is based on the premise that, in traditional classroom models, educators dispense knowledge in the classroom and, for homework, students practice on their own. However, in a flipped classroom, students consume foundational knowledge outside of the class (increasingly in more interactive forms thanks to MOOCs and other new technologies) and come to class to apply their knowledge. The professor can then clarify, demonstrate and engage students in already familiar terms.
As Clayton Christensen said about universities facing extinction:
"Some will survive. Most will evolve hybrid models, in which universities license some courses from an online provider like Coursera but then provide more specialized courses in person. Hybrids are actually a principle regardless of industry. If you want to use a new technology in a mainstream existing market, it has to be a hybrid.
It’s like the electric car. If you want to have a viable electric car, you have to ask if there is a market where the customers want a car that won’t go far or fast. The answer is, parents of teenagers would love to put their teens in a car that won’t go far or fast. Little by little, the technology will emerge to take it on longer trips. But if you want to have this new technology employed on the California freeways right now, it has to be a hybrid like a Prius, where you take the best of the old with the best of the new."
Universities should take note. Some of the name-brand institutions are already doing this: for example, Stanford University is currently piloting a flipped model as part of a mission to redefine medical school education at U.S. institutions. Universities can take the best of the old methods (a professor's vast knowledge and experience) and the new ones (interactive technology such as MOOCs and iPads) to create a hybrid model where student engagement is key.
3. PROVIDE AND DEMONSTRATE VALUE
Why would any prospective student pay $200,000-plus to attend university? That's the question facing U.S. universities today. With today's students looking at cheaper alternatives such as online learning and lower-cost competitors in other countries, U.S. universities no longer have a monopoly on higher education. More than ever, universities need to show prospective students what return they will get on their investment.
To that end, the job market should be a university's best friend. Ultimately, a college degree's value is based on the job it can help students get. Universities should focus on providing its students with the skills needed for the jobs of the present and future. For example, big data is projected to be the next big market. But there's one big problem: a critical shortage of skilled workers. If they're smart, universities will start (or already are) piloting data-focused programs. By focusing on a practical, skills-oriented education, universities can stay relevant and, perhaps more importantly, remain financially viable secondary education options for students.
Beyond adding more value, universities can also do a better job of demonstrating the value they already provide. Although some may be harder to quantify in financial terms, universities provide unique value propositions, including the college experience research opportunities, high-quality facilities, networking with alumni, professors and students, and hands-on or discussion-based learning.
4. EVOLVE THE BUSINESS MODEL
This is, perhaps, the overarching problem facing universities today: The current business model is no longer working.
The Center for American Progress report identifies universities as incompatible "conflations of the three generic types of business models—solution shops, value-adding process businesses, and facilitated user networks. This has resulted in extraordinarily complex—some might say confused—institutions where there are significant coordinative overhead costs that take resources away from research and teaching."
Universities no longer have the luxury of simply targeting the "high school graduate" demographic or, perhaps worse, trying to mimic the Harvard model of being good at everything. The top tier schools will remain name-brand institutions, regardless of disruption, but that does not mean a successful model for all who follow it. After all, chasing after high-achieving students (who can pay!) is inherently a very limited market. But there are opportunities to be found for institutions of all shapes and sizes.
Universities must understand the value they provide students and how they are going to provide that value economically. Despite the overarching problems facing universities today, each school must define its own goals and, as a result, its own response to the problems.
In order to adapt to this ongoing disruption, the Center for American Progress report written by Clayton M. Christensen, Michael B. Horn, Louis Caldera and Louis Soares, says that universities need to "develop a strategy of focus" through, for example, "[...] tightly structured programs that do not offer students the ability to chart their own paths but are laser focused on preparing students for a career will often be beneficial both for mitigating costs and improving student outcomes for those historically poorly served by college."
The report suggests:
"using online learning in a new business model focused exclusively on teaching and learning, not research—and focused on highly structured programs targeted at preparation for careers—has [...] given several organizations a significant cost advantage and allowed them to grow rapidly.
[...] Online learning courses can easily embed actionable assessments and allow students to accelerate past concepts and skills they understand and have mastered and instead focus their time where they most need help at the level most appropriate for them. Time is naturally a variable in online learning, so these courses can instead hold outcomes constant—and outcomes will be a more appropriate measure for judging students and institutions. Shifting policy to focus on outcomes rather than the build up of ancillary services for their own sake will encourage these services to wrap around and support each institution’s core value proposition and its students’ core jobs to be done."
Universities once had a monopoly on higher education but, with the emergence of the Internet and new technologies like MOOCs, that is no longer the case. Universities need to define their mission, adapt their models to the economies of scale and provide their customers with good value for their investment. If they cannot do this, some of these universities may not be around for much longer.
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