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


The University’s Dilemma

As the early days of the Internet demonstrated, attracting eyeballs is easier than monetizing them. Coursera seems bent on proving that axiom again, citing the societal benefits of spreading knowledge in emerging markets rather than addressing the current crisis in higher education. But can it create those benefits? A $10 fee for a computer class of 100,000 students would generate a windfall and postpone cost-cutting decisions at leading universities that have the reputation to attract such a following. Integrating activities that validate the accrued knowledge of those students through TopCoder-style competitions would increase the value of the courses.

Another path might be to leverage partnerships to create satellite campuses — not just internationally as many leading universities have done, but with second-tier or community colleges. Following the lead of the megachurches, this model would multiply the reach of “rock star” professors with local facilitators. Such a model would require partnerships with a broader reach, but it parallels the current model of professor lectures augmented by research assistants that is common in introductory courses on most campuses. Conceivably, this model could be delivered largely online, linking the center with the satellites through high-quality videoconferencing such as Cisco’s TelePresence.

Such paths would leverage the talent at top universities and defray the costs of their highly immersive offering, but what about second-tier schools? Aggressive players might leverage their physical assets and access to a local population but cut out all research as well as much of their faculty and administrative support. Others might specialize more narrowly in the needs of local businesses in fields requiring hands-on training. But attempting to be all things to all people will not be sustainable. The once-feared shortage of college professors may quickly become a glut — tenure or no tenure.

Forward to the Basics

Modern universities emerged in the fourth and fifth centuries A.D. as monastic schools in Europe, focusing on disseminating knowledge rather than creating it. The disruptions of the Internet may return education to those roots. Today, many academics invest their efforts in relatively narrow research, writing papers read only by other academics, with relatively little time spent teaching and training students. In some fields — such as the STEM disciplines — research advancements continue to fuel economic growth and societal prosperity. But in others, the research simply offers alternative perspectives on long-standing, foundational knowledge such as the writings of Aristotle. In light of declining performance and growing costs, institutions of higher education must invest their precious resources more consciously. They need not all follow a STEM-based model, but they will need a clearer, more explicit rationale for what they deliver, beyond “We teach what our faculty think is important,” or they may not survive.

Although the specific path forward for institutions of higher education may not be obvious, humanity can take pride in the legacy of value of its colleges and universities, which have been a primary mainspring of progressive knowledge and value for at least 1,500 years. Indeed, the source of their current disruption — the Internet — would not exist without them; it began as a way to exchange data among military and academic research computers. Institutions of higher education have the ability to solve the crisis they currently face, but resolve presents the greatest impediment. Will your alma mater or local source of new graduates leverage the disruptive technology of the Internet by applying the principles of business strategy…or will it be disintermediated by new entrants offering a better value proposition? 

Reprint No. 00147

Author Profile:

  • Tim Laseter serves as a professor of practice at the Darden School of Business at the University of Virginia. He is the author or coauthor of four books, including The Portable MBA (Wiley, 2010) and Internet Retail Operations: Integrating Theory and Practice for Managers (Taylor & Francis Group, 2012). Formerly a partner with Booz & Company, he has more than 25 years of business strategy experience.
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