Wednesday, November 27, 2013

Should Carnegie Mellon Stubbornly Stay the Course?

By Andrew Yenchik

In Seven Ways to Fail Big, Carroll and Mui discuss the mistake that many firms make by failing to react, or delaying reaction, to possible trends or opportunities. [1] How have global, competent firms made seemingly stupid decisions that caused bankruptcy and demise?  Some firms wait until it is too late to notice and prepare for innovations and opportunities that could wipeout their business.  This point in Carroll and Mui’s article reminded me of a similar idea posited be another Harvard professor ten years earlier.  This parallel idea comes from Clay Christensen’s disruptive innovation research, in which Christensen develops a framework around the question:  why good companies fail to thrive in fast-moving industries. [2] Christensen points out that companies miss seemingly obvious innovations and forces because they are focused on doing what they do best and serving their current best customers.  Many firms that were eventually disrupted were just focused on doing what they always do and what they were always good at. 

Furthermore, Christensen points out that “it’s important to remember that disruption is a positive force. Disruptive innovations are not breakthrough technologies that make good products better; rather they are innovations that transform sectors to make products affordable and convenient, thereby making them available to a much larger population.” [3]  Established firms almost always loose the battle with attacking firms who are armed with disruptive innovations. [4] These disruptive innovations usually introduce and bring new value because they create new markets or reshape existing markets. [5]

After reviewing these parallel ideas, my mind turned to Higher Education, specifically top-tier colleges like Carnegie Mellon and Harvard.  For decades, these institutions have had almost unchanging business models and have only slightly adapted to industry and technology trends.  Could these top-tier school be missing out on the very type of disruption and preparation they are preaching about?  Online classrooms, commonly known as Massive Online Open Classrooms (MOOCs) appear to be primed to takeover if higher education doesn’t realize their existence and begin to prepare and adapt.  Are Coursera, Udacity, EdX, and others the answer?  Or can top-tier universities stay their course and remain money making machines?

Controversial and popular writer Clay Shirky weighed his opinion regarding this topic in a now famous blog post on his website.  Shirky argues that, just like the music industry, the university system of classes can be unbound like a music album.  Music artists now sell single songs on iTunes, not physical albums.  Moreover, musical artists now sell digital music to promote concert sales, a flip-flop from just 10 years ago.  Shirky, and others, argue that the higher education system in America is on the same crash course, as the middle class is held hostage by the need for a college education. [6] The crux of their argument:  why go into debt when the same training is available online for free?  Sounds like a disruptive innovation to me.

These arguments in favor of imminent disruption of higher education focus on the masses – saving students money, avoiding debt, giving high quality training, utilizing cutting-edge technology, and doing it better and faster than anyone else.  MOOCs improve productivity, empower people, and develop skills and knowledge.

But the more I though about Shirky’s argument, and the hundreds of similar arguments, the more holes I found I could poke in his arguments.  I don’t think top universities, such as Carnegie Mellon and Harvard, are stubbornly staying a bad course.  Here’s why:

First:  Top universities have a different goal that mid-tier schools, community colleges, and MOOCs.  For example, Carnegie Mellon wants to create, preserve, and disseminate knowledge, serve the world, education people to lead, and create an academic experience. [7] This is different than the approach of a MOOC or community college – they want students to develop skills, be more productive, and have a degree on their resume. 

Second:  Coursera, Udacity, and other MOOC providers are funded by venture capital firms.  And these investors demand a return on investment.  Eventually, these MOOC providers will have to find a way to make money, either through advertising or charging users.  A free or “freemium” business model can only last so long.

Third:  Carnegie Mellon, Harvard, and other top universities are the institutions most prepared for innovations and change.  Why?  They are the places where innovations and change are invented.  Stanford produced the guys who started Google.  Carnegie Mellon created the Andrew File System.  UC Berkeley invented TurnItIn.com.  That’s an embarrassingly short list to prove this point: if anyone will be a disruptor or will be prepared for disruption, it will be the top-tier schools.

Fourth:  When asked what the future holds for our greatest universities, Clayton Christensen remarked, ““Some will survive. Most will evolve hybrid models, in which universities license some courses from an online provider like Coursera but then provide more-specialized courses in person. If you want to use a new technology in a mainstream existing market, it has to be a hybrid.” [8] This is the type of model that Carnegie Mellon is using – a hybrid.  With the standard of “no dilution of rigor, no dilution of profit,” Carnegie has already established a profitable hybrid model of integrating MOOCs into their business model. [9] Open Learning, Acatar, iCarnegie, Clearmodel, and Panopto are all examples of Carnegie Mellon startup companies that are inventing and using technology, just like MOOCs, to deliver classroom content via the Internet. [9] Coupled with onsite learning worldwide, Carnegie Mellon is in this hybrid position.

Do you share my same views?  Or do you agree with Clay Shirky?  Is higher education stubbornly staying a course that will be disrupted?

References: 
[1] “Seven Ways to Fail Big,” Carroll and Mui, HBR September 2008.
[2] “The Innovators Dilema,” Clayton M. Christensen, HBS Press 1997.
[3] Innosight Institute, Jobs to Be Done: Breakthrough Customer Insights, 2013.  http://www.innosight.com/services-expertise/expertise/jobs-to-be-done.cfm
[4] F. Kohlbacher and C. C. Hang, Disruptive Innovations and the Greying Market, German Institute for Japanese Studies, Tokyo, Japan & Division of Engineering & Technology Management, National University of Singapore, Singapore.  http://www.dijtokyo.org/doc/387_733.pdf. 
[5] Clayton M. Christensen Institute for Disruptive Innovation, Disruptive Innovation. http://www.christenseninstitute.org/key-concepts/disruptive-innovation-2/

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