Disruption + Innovation

I spent yesterday in New York City at the Disruption + Innovation event hosted by Colgate University. I was asked to attend by President Stanley and was excited about it given my long standing interest in disruption in higher education. It was also a great chance to hear Clayton Christiansen share his theories on disruption in general. While I have read “The Innovator’s Dilemma,” it is the core concepts of his more recent work, “Disrupting Class,” that I really wanted to hear him discuss. While at Penn State, I co-taught a graduate course for several years called, “Disruptive Technologies in Teaching and Learning” that was based in part on the work of Clay. So hearing him first hand was a real treat as I am currently redesigning my class to teach here at Stony Brook next year.

Clay’s talk was fantastic. He explained the notions of disruption using wonderfully built visuals and stories. As someone familiar with his work he had me from the start, but I could tell that people in the audience new to his work were able to quickly grasp the complexity of his theories due to his masterful storytelling. His primary theory of disruption “describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”

So what does that really mean? Take for example this simplified version of his story of Toyota. When Toyota really entered the US market, they did so with very low cost cars that provided little margins for existing US automakers. The US auto makers responded by eventually realizing that there was little reason to compete in the low margin world of subcompact, cheap cars when there were so many more profits “up market.” So, in essence, the US auto makers gave that low end market away. What then began to happen is that each new Toyota introduced took another slice of the down market until it squeezed the US auto makers out of each category. Eventually Toyota released the Lexus and the rest is automotive history.

What really happens in this model, according the Clay, is that “companies unwittingly open the door to ‘disruptive innovations’ at the bottom of the market. An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.” In the case of Toyota it meant every high school and college student in America could own a reliable and cheap car. It also meant that Toyota was given a chance to innovate around process and scale unlike the US auto makers. He was able to share those types of stories for other deeply rooted industries, each time with the same result — the incumbent being replaced by the upstart.

But while he spoke, I couldn’t help but focus on the fact that 300 of us (a very well attended event) were sitting in the Times Center — the home of the New York Times, which is clearly a company that has had to make major changes to deal with the disruption in the print news industry by internet “upstarts.” Some in the newspaper business paid attention to the disruption coming their way and innovated through it (and I do believe the Times is an example of this), yet many either didn’t believe it was happening or couldn’t figure out what to do and joined the ranks of folded incumbent daily newspapers all over the country. And as Clay said, we don’t know what is coming in the future, so the ending (and perhaps even the middle) of the news industry “story” is still not known.

While I was sitting in the home of the New York Times, I was particularly stunned when six University Presidents took the stage immediately following Clay’s talk and almost all of them said they weren’t worried by the disruption of higher education by both small and large upstarts. The only one who really expressed a concern was the President of Colgate University, Jeffrey Herbst. I was struck with the notion that we had an opportunity to really engage in a lively conversation based on the mounting evidence that we do need to rethink much of what we do to stay ultimately relevant, but it was really more of the same — “higher education has been around since the twelfth century and it cannot be disrupted.” That to me was disheartening. What I was left with was a feeling that by so outwardly dismissing Clay’s theories, many in the audience and panel were in fact bolstering his argument.

And I can almost guarantee that, at some conference or event ten years ago, there was a panel of newspaper editors who claimed that they weren’t worried about the future of their papers either. “People will always still want the ritual of holding their newspaper with a cup of coffee in the morning.” Right?

So how different is it in higher education when we say “People will always want the experience of going to college?” Or, “Those are just MOOCs and you can’t get credit and people want credit.” Or, “Phoenix Online is just going to take the people who didn’t want to come to a regular college anyway.” In short, doesn’t that lack of worry about disruption sort of sound like we are giving away what we perceive to be the bottom portion of our market?

When we sit at panels and say we aren’t worried about the future of higher education because people will always want to go to college, we ignore the other (many) reasons why people educate themselves. The 18-22 market may still prefer a physical experience, but there are thousands of other students at all of our institutions who might not care where they get educated (or how). They just want a good education that will help them advance in their lives and careers. And even many of those 18-22 olds may change their mind as tuition costs rise and the expense of four years or more of college becomes prohibitive. We ignore these factors — and “give away” these students — at our own peril.

Yes, education is never going away. That statement is true. But the education industry is changed forever because of Internet and social technology. And it didn’t even start with the internet — but that’s certainly the part of the story we are in now. Content is easily delivered via the Internet and with the rise of social computing, disrupters can finally begin to “move up market” and start to squeeze the incumbent. And, all the while, just like Toyota, the disruptors are in a position to perfect process and scale while they do it.

And to go back to my imaginary newspaper editors example, I believe they just had the wrong statement ten years ago. When they said that people will always want their newspaper, they should have said that “People will always want their NEWS.” The editors failed to see that customers of news, over the long run, don’t really mind how that news is delivered, as long as they get their news. And while some still like the nostalgic feel of a newspaper in their hands, that population is dwindling every day. Beyond, some start to realize that the affordances of the new delivery systems allow them to have more convenience, a greater selection of news outlets (you don’t just need to read your local paper or attend your local college anymore), and exposure to different mindsets.

So to go back to higher education, will the population of those who want a face to face college experience dwindle too? Perhaps.

And if that is the case, should we be sitting on panels declaring that we aren’t worried?

Maybe the problem is the term “worried.” However, by *correctly* saying that “education isn’t going away,” we fail to see the logical follow on: education isn’t going away, but our delivery model and sources might be. And if we put our heads in the sand and don’t think we are going to have to deal with major changes … well, I might like to sell you some classified ads in a newspaper in Brooklyn.

We don’t have to be worried, but we do have to be proactive. Our industry has already been disrupted and Clay clearly outlined how his theories could hold true for us in higher education. While I am not completely convinced that it is a 100% apt comparison, he is convincing in several areas. He described the rise of online delivery and how we are seeing technological innovations beginning to take root that can actually supplant the current incumbent of face to face higher education. Again, since I follow his work the leap is not as dramatic as it appears. His claim that as more and more traditional universities ignore the likes of Kahn Academy, the rise of online universities, for profit providers, and upstart innovations such as MOOCs, we will see many of what we consider traditional campuses fall into terrible economic times — culminating in some cases in bankruptcy.

Believe what you want, but the indicators are strong and suggest tough times for many strata of the higher education market. I can’t pretend to know what is to come, just as Clay remarked, “when God created the world he only made data available about the past” and not for the future. In the past we have been protected in many ways because there hasn’t been a technological core in higher education that could be disrupted by innovation. Those times have changed.

But as an aside, you wouldn’t have known it while sitting in the Disruption + Innovation event. The ironic lack of Internet connectivity in the room made things seem a bit off from the start. Here we were discussing the coming (I would argue, already here) wave of disruption on our campuses due to the growth and acceptance of the online delivery of content and you couldn’t connect to the very mechanism facilitating it all — the Internet. Typically at events like this, the room would be busy participating along with the actors on stage — taking photos, tweeting quotes, and engaging in an active backchannel conversation. None of that was doable and I can’t tell if it was intentional, an oversight, or a shortcoming of the venue. If the organizers wanted it to be an Internet free zone, maybe they were trying to prove that life is better lived in the moment then shared wildly across the network?

For me, and I’m sure for many others in the room, it limited the potential experience of the event to not have a back channel to continue to discuss the disruption we all face. A real, ongoing community could have evolved from the event with a simple Twitter hashtag and we lost out on that opportunity.

At the end of the day, I was thrilled to listen to Clay talk and take part in the overall discussion. I don’t want to sound negative about the event, because in many ways it exceeded my expectations. I was left feeling the way I feel after many events hoping to explore the future of higher education — excited by the future and encouraged by the discourse.

I do think we need to take some bigger next steps however. We need to address the realities of technological innovation, corporate competition, funding, tuition, and value head on and truly have an ongoing dialogue about what forces are acting against us. (And that conversation will occur in face to face and online settings, just like news and higher education, by the way.)

I remain bullish on Higher Education and think it is one of the greatest institutions in America. Yes, there are real challenges, but that doesn’t mean that we can’t face them and emerge stronger. Here at Stony Brook, we work every day to improve the lives of our faculty, staff, and students all while controlling costs and building a more operationally efficient University. We cannot continue to do that without both disruption and innovation. What I hope is that more institutions take this discussion seriously so we can all continue to provide the exceptional opportunities that have been the hallmark of attending college.

A huge thank you to Kristin Zeisloft Camplese for the thoughtful edits and contributions to this post via both real life conversation and collaborative writing. This post originally appeared at my Stony Brook You site.

3 Comments

  1. Hey old friend! In relative terms, the need to innovate seems to be new to institutions of higher education. If you use the basic assumption that the era of this need began 20 years ago (hey, I’m doing this for the easy math), then for only 2% of it’s existence has higher ed felt such pressure. So higher ed is barely a newborn in this arena. Your experience at this conference seems to illustrate that many are still relying on the model that was the norm for the other 98% of it’s existence. I’ve read a lot this past week about how there will “always be a place for brick and mortar institutions” and I agree with a major caveat: that brick and mortar experience cannot remain the same as it has always been. That experience needs to up it’s game to be competitive. Institutions that work hard to make the brick and mortar experience much more engaging will create market differentiation and separate themselves from the pack. Active classroom strategies, innovative learning spaces, flipped class approaches, etc. are all part of that mix. The Toyota example from Clay reminds me about another aspect of that story. While Toyota dedicated their focused strategy to capture market share (over profit), American automakers were focused on who was getting all that money they were making. And that meter didn’t budge until the ass-kicking was complete. Only then did they begin to think differently.

  2. Matt … this is the line in your comment that rings so true to me, “’ve read a lot this past week about how there will “always be a place for brick and mortar institutions” and I agree with a major caveat: that brick and mortar experience cannot remain the same as it has always been.” It grows tiresome to always hear about the extremes — this is not a black or white or a one or a zero issue. The need to evolve is ever present. It just seems that for some reason when technology and education are in the same sentence the notions of flight or fight seem to come forward. I don’t think anyone wants to replace the brick and mortar system, but we do need to continue to alter it.

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