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 / Winter 2012 / Issue 69(originally published by Booz & Company)


The University’s Dilemma

Clayton Christensen and Henry J. Eyring have articulated a view of this potential disruption in The Innovative University (Jossey-Bass, 2011). “Until the relatively recent emergence of the Internet and online learning, the higher education industry enjoyed an anomalously long run of disruption-free growth,” they write. “The demand for the prestige the elite schools confer far exceeds the supply, allowing them to cover rising costs with tuition increases and fundraising campaigns.”

Although those few elite institutions may be buffered from disruptive forces, the vast majority of institutions of higher education face disintermediation in their existing relationships among employers and students. Pressure from new entrants as well as the leaders among existing players could squeeze out weaker institutions, repeating the pattern of so many other industries.

To navigate through these forces, universities need to follow the example of their business counterparts and fundamentally rethink what they do. They need to foster new capabilities, reconsider their means of attracting revenues, and allocate costs more closely to their value proposition. In short, using the language of strategy, it’s time for a new business model.

Know Your Potential Rivals

Sun Tzu, one of the earliest writers on the art of strategy, implored his readers, “Know your enemies and know yourself.” Faced with a competitive threat, businesses seek to benchmark their rival (and potential rival) innovators, not just in their own industry but across industries. Like most businesses over the past decade, higher education should focus on the disruptive implications of Internet-enabled innovation.

The most obvious place to start would be the for-profit, online universities — such as Phoenix, DeVry, and Kaplan — which currently serve 9 percent of all college and graduate students. But, as with the early Internet businesses of the 1990s, more may be learned by their failures than their successes. Graduation rates are a dismal 14 percent, and loan defaults run rampant as graduates fail to find employment. None of the online universities seem to have developed any breakthrough technology for delivering education; they have simply avoided the capital investment in facilities while extending their reach to a larger target market. That’s a classic “virtual model.” Although profitable for some investors and executives, these institutions seem to have exploited a niche but have not truly innovated.

There are also sources of innovation within universities themselves. Some neurologists, cognitive psychologists, and education researchers have just recently begun to collaborate in a multidisciplinary field dubbed “mind, brain, and education.” They are employing increasingly sophisticated equipment to examine the neurobiological responses within the brain and applying those insights to the classroom. For example, a cross-disciplinary research team from the University of Bristol, including faculty of the Graduate School of Education, the Department of Computer Science, and the Department of Experimental Psychology, examined the role of dopamine release in response to uncertain rewards in a computer-based learning activity.

But just as with businesses that ignore innovative ideas that bubble up from within, these innovations often fail to interest the broader organization. In his presidential address to the International Mind, Brain, and Education Society conference in 2009, Kurt Fischer of Harvard University acknowledged the prevalent skepticism about building a bridge between research scientists and education practitioners. But he countered by highlighting the integration of scientists, doctors, and nurses in major teaching hospitals. He also invoked the private-sector example: “Almost every major modern business grounds itself solidly in research that is shaped by practical questions about how products function and how they can be used effectively in context. What happened to education?”

One innovative company, Carnegie Learning Inc., has demonstrated the practical value of this integration in computer-aided learning. Founded in 1998 by cognitive psychologists Steven Ritter and John Anderson, the company continuously tests and refines its products — such as its MATHia software, developed for primary school students and teachers — in response to constant feedback from field experience and new research on such areas as intrinsic motivation and academic alienation. MATHia monitors student performance to adjust problems dynamically to the appropriate degree of difficulty and also customizes word problems to reflect student interests, even including names of friends. Although it is focused on primary education, Carnegie Learning’s successful science-based approach offers an excellent model for multidisciplinary efforts targeting adult learners in higher education.

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