Monday, May 28, 2012

Google overturning the higher eductation business model

Similar to when Apple introduced the iPod to the world, leveraging hardware / software / and advanced service, which formed a new business model and turned competitors' strategies on their ear, Sebastian Thrun, of Stanford and Google, recently underwent an experiment at Stanford that tested the boundaries of established brick-and-mortar universities.
"Thrun told the story of his Introduction to Artificial Intelligence class, which ran from October to December last year. It started as a way of putting his Stanford course online — he was going to teach the whole thing, for free, to anybody in the world who wanted it. With quizzes and grades and a final certificate, in parallel with the in-person course he was giving his Stanford undergrad students. He sent out one email to announce the class, and from that one email there was ultimately an enrollment of 160,000 students. Thrun scrambled to put together a website which could scale and support that enrollment, and succeeded spectacularly well."
So, what's so groundbreaking? For the last 8-10 years, established universities have offered their courses online. Well, the "material" is online. The difference, Thrun's lectures were streaming over the Internet AND students were graded (taking tests, asking questions, etc..) as if they were physically in the class room.
“The physical class at Stanford, which dwindled from 200 students to 30 students because the online course was more intimate and better at teaching than the real-world course on which it was based”
From the assigned reading (Johnson, Christensen, and Kagermann, 2008), an opportunity to reinvent a new business model exists when the niche addresses the needs of large groups who find existing solutions too expensive / complicated, or to leverage existing technologies in new markets, or brings a job-to-done focus where it doesn't exist.

The new model identified by Thrun is uniquely diverse to span all three said requirements to reinvent the business model.

The big question, do you feel that the business model of all current and future universities is going to be impacted by Thrun's findings?

In my opinion, yes. I suspect that over the next 2-5 years, universities are going to be confronted with the same strategic decisions and businesses model questions that physical newspapers and publishing houses are faced with today, unsustainable funding that is locked into the legacy big-industry mentality of commoditizing everything (in this case, degrees).

As Google, Thron, and others work through the Customer Value Proposition, Profit Formula, Key Resources, and Key Processes, the delivery platform for universities and students will be forever impacted by this groundbreaking study.

Identified Article:

Assigned Reading:
Reinventing Your Business Model (Johnson, Christensen, and Kagermann, Harvard Business Review, December 2008) BLOG SUBMISSION

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