We are beginning to see the disruption of traditional higher education. This seems to be the path that many institutions are on, as their businesses are in the process of being re-engineered by – you guessed it – the Internet.
Just as instant access and peer to peer communication and worldwide communication systems disrupted the music industry, and just as blogs and services like Craig’s List have disrupted the newspaper industry – we are now seeing MOOCs, distance learning, new services like the Kahn Academy and the rise of the rock-star professor disrupt the business models of our beloved colleges and universities. It is inevitable that they will change if they are to survive.
Mark Cuban, the Dallas Mavericks owner who sold his Broadcast.com company to Yahoo for $1 Billion before anyone even knew what digital videos were – recently wrote a great piece entitled Is your college going out of business? Here is an excerpt:
“College is where you find out about yourself. It’s where you learn how to learn. It’s where you get exposure to new ideas. For those into business, it’s where you learn the languages of business, accounting, finance, marketing and sales.
The question is not whether or not you should go to school, the question for the class of 2014 is what is your college plan and what is the likelihood that the college or university you attend will still be in business by the time you want to graduate.
Still in business? Yep. When I look at the university and college systems around the country I see the newspaper industry.
The newspaper industry was once deemed indestructable. Then this thing called the internet came along and took away their classified business. The problem wasn’t really that their classifieds disappeared. It was more that they had accumulated a ton of debt and had over invested in physical plant and assets that could not adapt to the new digital world.
When revenue fell, the debt was still there — as were all the big buildings they had purchased, all those presses they had bought and the declining-in-value acquisitions. But the debt accumulated to pay for them never went away.
They were stuck with no easy way out.
The exact same thing is happening to our 4 year schools. You can’t go to a big state university and not see construction. Why?”
That is a great question. Who in there right mind would be investing heavily in brick and mortar facilities to house and teach students when world class education is available online and a few keystrokes away? As a college president, would you mortgage your institution’s future to build an edifice to the past – or would you embrace the realities of the marketplace and design a new future model that lets you survive? For many the definition of denial is “a river in Egypt”.
Cuban writes “Why in the world are schools building new buildings? What is required in a business school classroom that is any different than the classroom for psychology or sociology or english or any other number of classes? A new library, seriously? What is worse is that schools are taking on debt to pay for this new construction. A fools game. Uninformed.
Think about this from the public’s perspective. Schools are seeing state and federal funding decline, as they should. Why should taxpayers be paying for another building?
Schools are seeing their primary revenue source — tuition, once a number that was never really questioned — becoming a value decision by prospective students. As they should.
Unless your parents are wealthy or you quality for a full ride or something close, the days of picking a school because that is the school you always wanted to go to are gone.
The class of 2014 and beyond now has to prepare a college value plan. What classes are you going to take online that enable you to get the most credits for the least cost. What classes are you going to take at a local, low-cost school so you can get additional credits at the lowest cost.
For the smart student who cares about getting their money’s worth from college, the days of one school for four years are over. The days of taking on big debt (to the tune of $1 TRILLION as I write this) are gone. Going to a four-year school is supposed to be the foundation from which you create a future, not the transaction that crushes everything you had hoped to do because you have more debt than you could possibly pay off in 10 years. It makes no sense.
Which in turn means that four-year schools that refuse to LOWER their tuition are going to see their enrollment numbers decline. It just doesn’t make sense to pay top dollar for Introduction to Accounting , Pyschology 101, etc.
Of course, the big schools are going to argue this all day long. They want and need your money. They want to tell you how beautiful their campus is. The social aspects of going away to college. The amazing professors they have. The opportunities they create. The access to alumni and sports. All were great arguments in 2001 when tuitions were still somewhat reasonable. They no longer hold water.”
New ways of Thinking and Acting
The saving grace may come in the form of creative partnerships between for-profit entities and traditional universities. Apple was a pioneer in this area (like music) with its iTunes U a decade ago. Now we see companies like Coursera and Udemy rising up to pick off the best-in-class professors and make an entirely new experience and opportunity for students across the globe.
Linda Lorimer writes that these partnerships… “will erode the seeming chasm in recent decades between for-profit educational enterprises and traditional universities to create “win-win-win” scenarios: a win for the university’s promulgation of its educational programs, a win for the business objectives of the corporation—but most importantly, a win for new student populations that will access outstanding courses and educational content for the first time.
We will inevitably see more porous geographic “boundaries” for a university. As just one example, a noted faculty member at Yale (USA) taught his course for credit last year from Beijing while conducting research. His “class” included students on the home Yale campus, but also students in Varanasi, India and Shanghai. Also, many countries eager to develop further their system of tertiary education may be able to avoid some of the capital intensive investments of building new “bricks and mortar” facilities by leap-frogging to online instruction that can be widely deployed across a country—or farther. Those of us who have had first-hand experiences with the magical opportunities of residential collegiate communities where education extends far outside the classroom should not be anxious about the continuing calling of our type of university, even as we can welcome new online “entrants”.”
Having witnessed first hand the devastation wrought on the music industry by the transformative nature of the global internet and the shift in power to the consumer and in this case student, I can tell you that a huge change is afoot and parents and students will be carefully weighing their options in the coming years. Online schools are already delivering outcomes as good or in some case better than their brick and mortar counterparts. And we are just now seeing new creative partnerships that blend online instruction with on-campus experiences that very well could hold the key to the successful business models of the future.
How do businesses go bankrupt? Slowly then all of a sudden. Colleges and Universities – take the time you have now to disrupt your own business before someone else does it for you.