Why Clay Christensen and Michael Porter Could Both be Wrong About the Future of Higher-Ed

The Real Higher-Ed Challenge
The Real Higher-Ed ChallengeThe Stand-Off:

The Stand Off:

There has been a lot of buzz around Harvard Business School starting their own version of MOOC, HBX, and the debates and arguments between two of the best minds in strategy in the world today – Clay Christensen & Michael Porter.

By creating HBX, Harvard finally decided to bet on Porter’s strategy, that the core business strategy of a firm should remain unchanged and every part of the business need to reinforce this core strategy.

There has been a lot of debate about who among the titans has got this right.

Both could be wrong

In my opinion, both of them could prove to have missed a beat here.

I believe so because, all the debate around the higher education challenge has been thought from the point-of-view of the university or the service provider and what is right for them.

In my opinion, we also should look at the entire challenge from the point-of-view of the customer (Student) and the end-consumer (businesses where these students will seek employment).

Student’s Point-of-View

If you look at the entire higher education challenge from the point-of-view of the students, you shall find that they core challenges are as below:

  • Higher education as structured today is skewed towards scarcity model.
  • This pushes the cost at some of these universities high, high enough to create a student debt of more than a trillion dollars worldwide. 
  • Despite all of this, higher education doesn’t guarantee a good job to every student.

Employers Point-of-View

Now, look at this same challenge from the perspective of the employers:

  • In order to get the best employees, they need to go to the best universities (which again is operational under the scarcity mindset). If they want students from the best schools join them, they need to compete with a lot of other employers and hence end up paying a high salary to a fresher.
  • Despite paying this high salary, they find that these students still need to be trained in order to get productive.
  • With the ever-changing business environment, they need to continuously train their employees.

University’s perspective:

Now, if you look at this from a University’s perspective, they bring in a lot of benefits to the students and employers apart from the course material:

  • Network of Alumni who can help current students get placed in businesses
  • Ability for students to connect with each other and create their own network
  • Good research opportunities
  • A good pool of resources, which can be invested for the future.

My solution to the Higher Education Challenge:

In my opinion, if i were a university and would want to remain relevant to the students and the employers, I would consider the following:

  • Adopt the Gym membership model for higher education.
  • Instead of a very high upfront fee, opt for a smaller monthly fee model (10, 15, 20 year contracts with fee increasing every month by x%)
  • After 1 year in school covering basics, allow them to go out and intern full time at businesses
  • Offer a life-long membership for them to come back and do one course every year. This will allow their students to continue to pursue their passions of the moment and stay relevant. You could use MOOC’s to offer these courses, wherever it makes sense.
  • Allow organizations to include the monthly membership fee to the university in the pay package of their employees or offer this as a benefit.

This model can address all the flaws that currently plague the higher education industry and in the mid to long term, will be financially much better returns for the university, as you are creating a stream of income that will grow exponentially every year.

Now the question is will the existing universities like Harvard be open to such an idea or will it take a lesser know University that faces extinction or bankruptcy try this out. My bet would be the university that faces bankruptcy would be more open to such a business model innovation.

I had written about this earlier in a blog post as well. You can find the older post here.

What’s Your Opinion

What do you think? If you or your son or daughter had an option to join a university like the one I am proposing, would you consider the offer? What else would need to be in place for you to be excited about the new kind of university?

Do share your thoughts and lets continue the discussion. This is a matter of significance for each and one of us as this will affect all of us when we or our children get to this situation.

I am looking forward to ideas, criticisms and thoughts on the idea proposed here.

The Real Higher Education Challenge

Recently, there has been a lot of discussion around Higher education and how this is creating student debt at an alarming rate. There are estimates which out student debt in US alone at more than a trillion dollars. The common thinking seems to be to look at ways to reduce the overall cost of delivery of education. MOOC’s seem to be the flavor of the season as they can obviously reduce the cost of delivery by leveraging technology.

However, in my opinion, we are trying to address a symptom and not the root cause. I think that the root cause of the education problem is the reducing relevancy of the education provided in this course, that leads to lack of employment to all.

So, if we really want to disrupt the higher education industry and solve the challenge, we need to find a way to address this issue of relevance to businesses, that without burdening the students with debt and at the same time leverage the current institutions.

My suggestion to solve this would be following:

Higher education needs to be offered in two streams:

  • Full time courses as offered now but with a slight change. Instead of just offering the course, the universities help set up businesses that are being run by the students. The businesses get passed on to every batch of students as the current set of students graduate. This coupled with the classes that they attend in the university can not only prepare them well for their subsequent future in corporates and at the same time provide them an option and experience of starting and running their own businesses. The students can then choose their path as per their individual choices.
  • Offer life long memberships to students, who instead of paying their annual fee and studying, agree to pay a small amount monthly or annually in return of being able to come and attend a short term course (4 to 6 weeks) whenever they want to. This way, the college will continue to get funds to run the university and at the same time people will get to learn whatever is relevant and whenever they need it. This solves all the current set of challenges: Student debt (which will not pile on as the students pay a small fee over long periods of time), funds for universities (as the universities will be able to get the fee from a lot of students who are still not in the college) and the students get to learn what they want to, when they want to, so that their learning is relevant.

Once universities are able to do both of these options in place, they will start to become relevant again. Of course, they can continue to work on reducing the cost of delivery of the courses by using MOOC’s and other technologies as well. These will improve the efficiency of the universities thereby allowing them to survive with lower cash flow than otherwise.

Of course, these are just a couple of ideas. I am sure that if we agree that the most critical area where disruption is sorely needed in the current higher education is in its relevance, then we can come up with a lot more ideas which could be used to solve this challenge.

Whatever we do, we must hurry as I think that time is running out and we need to find a way to address this at the earliest or we might risk loosing some of the most important institutions in the world.

What do you think? Please do share your opinions so that we can continue the discussion.

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PS: Dr. Clayton Christensen discusses disruption in higher education