Monday, May 26, 2008

Disruption in Higher Education

Clayton Christensen, author of The Innovator's Dilemma, has written some of the most interesting things I've seen about innovation and how it affects organizations of all types. I'd like to draw on a couple of points from a book he co-authored, called Seeing What's Next. It includes a chapter called Disruptive Diplomas that addresses how innovation might create threats for higher education. Although the authors do not speak directly to branch campuses, the threats they identify could apply across the board.

A key concept in Christensen's work is the distinction between sustaining and disruptive technologies. I won't try to get into details about the distinction here, but suffice it to say that existing organizations tend to make good adjustments to developments in sustaining technology, but have trouble adjusting to disruptive technologies. One reason is that disruptive technologies may not be recognized for their potential to develop into a dominant technology, and during their early development, they generally have little to contribute to the bottom line of the existing organization.

To make an abrupt transition here, one could look at online education as a disruptive technology for existing institutions. A large residential campus has systems, services, and staffing intended to support historical delivery forms. Such a campus might well employ new technology to enhance learning in traditional classes and might even develop some online courses and programs for specific purposes, but it probably won't become a leader in serving the markets that are outside of their usual recruitment populations.

On the contrary, the reaction at a residential campus is likely to include arguments that online education will never replace the traditional classroom, that online programs do not measure up on quality or conflict with institutional mission, and that most students will prefer traditional delivery. On the support office side, the reaction is likely to be that staff don't have the time and resources to take on these new activities. All of these reactions actually have merit, but they also mean that the institution may not see how online programs are overcoming obstacles, until it is too late to participate meaningfully in the emerging market.

Two examples illustrate the dilemma. First, consider all the infrastructure and services provided by a residential campus. Lots of expense to buildings and grounds, a significant program in athletics, various services that many students rarely take advantage of, and relatively low teaching loads to allow time for research, all are part of what is built in to higher education, as we know it. The result may be an annual budget of hundreds of millions of dollars that must be supported by tuition, fees, endowments and state subsidies. The fact that all of this drives institutional decision making is consistent with the fact that it has worked for traditional audiences.

Branch campuses often cut out a lot of these expenses, and some (like ours at Ohio) pass most of those savings on to students in the form of lower tuition. But, if the branch is what has been called a "full service" branch, it still has significant plant expenses, faculty and staff salaries, and a range of services or student life opportunities that require funding.

In Christensen's terms, these institutions may well be overshooting their students. That is, they may be providing things that many or most students don't especially value or want. That's okay, if competition is limited. Residential education certainly provides an opportunity that many people value for reasons that extend beyond the classroom learning experience. I'd suggest that many--although certainly not all--branch students place a relatively low value on much of what a traditional campus provides. Like it or not, adult learners, especially, may be asked to pay for services they may never use.

The surveys I've seen of branch campus students suggest that students put heavy emphasis on price, convenience, location, the availability of certain academic programs, and maybe the perceived value of the particular diploma. They may not value most aspects of student life, in part because of commitments they already have to job, family and community. And, of course, they might have interest in delivery forms that add to convenience, especially if someone found a way to deliver programs at a lower price. Again, the population I am writing about primarily are adult learners, not necessarily recent high school graduates who are attending a branch campus.

The second point is that the significant market for growing enrollment lies in current nonconsumers. Demographics are working against institutions that depend on students of traditional age. Economic development interests seem to require that we find a way to engage more people in higher education, and so we have a need to understand why nonconsumers are choosing not to enroll. Although people have written on this subject, two major issues are surely perceived cost and other activities that put a claim on their time. Many branch campuses need to attract current nonconsumers, if they are going to maintain, never mind build, enrollment.

There are interesting examples of for-profit institutions, small privates, and large publics that in one way or another have developed successful online or hybrid programs to create flexibility. However, in many cases, these programs are at least as expensive to attend as traditional programs. Because many online providers are not well known in branch communities and tend to offer programs at premium prices, the branches I know of have competed effectively so far. What will happen, however, when an institution appears that can significantly underprice existing options, largely by eliminating costs from services that are not of value to some consumers and to most nonconsumers and from the elimination of heavy infrastructure costs?

The problem for branches and main campuses, alike, is to address competition for the nonconsumer, and that will be about providing the right program, at the right price, but without overshooting what students really want. Because branches come in such a variety of forms, some can thrive in this environment, whereas others will have too much of the costs of a main campus to respond effectively. That leads me to a prediction: I think that the "business model" for higher education, especially regarding adult learners, is about to change profoundly. Those branches that are thoughtful about how they add value, in comparison to a fully online, out of town provider will thrive, provided they are competitive on price, but those who believe they can compete by tweaking old practices or simply adding online to current delivery methods are going to struggle.


haze4rob said...

Hello there
I am back from your wonderful land and reviewing my notes and thoughts at this moment. Charlie, I agree with your analysis and I want to take it a little further. You are looking at this from the perspective of branch campus development and I agree altogether that branches (and the university administrators charged with minding them - on or off the branch) need to be mindful of what the demands are from their students and need to be ready to adapt their offerings and delivery to their "market".
But you know Charlie, I think it goes further if we follow the ideas of the distributed university eloquently put by Don Norris and Larry Czarda at the Conference this year. A clever distributed university will be learning on its home campus from the operation of its branches, not just telling those branches what's what. It will use some of these learnings as a litmus for development in all its operations. And its planning and other business processes will show that it is across its operation in more than one site. And I think this applies whatever the model of main and branch in operation.
Will you chuckle that it's that sassy voice from down here in Australia saying all this? Hmmm, I wonder if Uni of Wollongong where I work can do all this?? We are giving it a go I think. But, change as you have observed before, is a process that inches along.
Cheers and thanks for everything,
I had a ball visiting
Robbie Collins
Shoalhaven Campus
University of Wollongong
NSW Australia

Dr. Charles Bird said...

Robbie: Your visit and participation in our conference was one of the highlights this year. I could hear your voice in your comment!

I agree with you, and it is a good point. Although some institutions do take advantage of what they can learn from branches, most have a hard time recognizing the opportunity.

My own bigger concern is that both main campuses and branches may be challenged to deal with what I believe is coming in distance education. My next post may speak to that a bit more directly.