Published on 2013/06/03

Commoditization Reduces Uniqueness But Increases Affordability

As higher education becomes more commoditized, what’s lost is the uniqueness and individuality of different programs. In return, however, the system gains greater efficiency in producing and disseminating content.

The following interview is with Paul LeBlanc, president of Southern New Hampshire University (SNHU). Widely recognized as one of higher education’s leading innovators, LeBlanc has been successful in guiding SNHU through a turbulent decade and has positioned the institution to succeed in the commoditized higher education marketplace. In this interview, LeBlanc shares his thoughts on what commoditization means for higher education, and how the industry’s hyper-competitiveness is pushing institutions to adapt.

1. What does commoditization mean in the higher education context?

I think that what we’re seeing is the question of cost and price, slightly two different things but they go together, has really risen to the top of the problem list, if you will, as people worry about how to make college education more affordable. So, what’s happening now in many ways is a kind of disaggregation of higher education where there are opportunities to drive costs down in certain areas through commoditization.

If you think about the most traditional model of residential higher education, almost everything was vertically integrated within a single institution. And, in fact, you could argue it was really vertically integrated in the form of an incredibly well-trained, expensively trained faculty member. So, at its core, faculty members in this very traditional model thought about courses, thought about programs, developed them, curated the learning content, developed a syllabus, shuffled it through governance processes and approvals, finally launched a program, taught the courses, worked with the students, created the pedagogy, intervened with those learning opportunities, assessed the learning, and you hoped you used those assessments to revise the courses and the programs. But everything sort of took place in the body of the faculty member. And today what we’re seeing with this disaggregation is that all of those functions are being parceled out to others.

So, courses may be developed by subject matter experts and instructional design teams, and that subject matter expert and that faculty member may never be the person who later on actually delivers that course. It might be an adjunct or a grad student or a full-time faculty member. Assessments are now often separated out. There are many, many content providers; I think MOOCs [Massive Open Online Courses] are a good example of a kind of commoditization of content in the form of a course. So, what’s happening with this aggregation is you have opportunities to commoditize and drive down expense in certain pieces of the educational ecosystem, if I can use that phrase.

The best example of that is in content, I think what we’re seeing after years and years of very high textbook costs are ways that textbook costs are being driven down through technology — so, e-books and rental books and all sorts of things — but, also, you could argue as a kind of commoditization that’s happened with many, many examples within a given field for a given kind of book. And many of those are now free; so we’re seeing prices drop down to free. And you could argue that MOOCs are a version of that. MOOCs got their initial traction because they were offered by elite brands and they were free.

2. What are the most significant changes commoditization brings about for colleges and universities?

It depends on what problems they’re trying to solve, and I think one of the things we have to be very careful about is talking about higher education monolithically.

There is a traditional, residential, coming-of-age higher education. Commoditization in that context will help at the margins but it won’t fundamentally change that very expensive delivery model.

And then there is the higher education that’s concerned with adult learners; the bulk of American college students today. These are people juggling work and family and education and they are increasingly choosing to get that education online. And, as there are more and more providers offering more and more degree choices, these people are really looking for a certificate, a degree and, I think, they are willing to make tradeoffs around price. And you could argue that there’s increasing commoditization of programming in the online space. So, there is a lot of downward pressure in online programming. Consumers are increasingly saying, “You know what, [program quality] doesn’t matter enough to me. Cost is going to send me to this other place where I need to get it for less money.”

You could argue that, programmatically, for the adult learner market, there is a kind of commoditization. I think across the board — I mentioned content — I think everyone is going to increase and take advantage of commoditization of content. So, in a coming-of-age residential college the [cost of] content doesn’t loom terribly large; that is, textbooks are expensive but, even in total with all of the expense, it’s nothing compared to tuition and fees. And it helps, right? If we can knock down the cost of accessing content, it helps students, particularly those who might have very, very meager resources. So, you’ll see it take effect there.

I think in online spaces it’s probably even more aggressively taking effect, although there are a couple of places where I think you’ll see commoditization. But where you can’t see it very well is in advising, for example, and other third-party advising services that one can contract with. But at the end of the day, it’s still a human being talking to a human being and you can only drive down so much cost, and I think commoditization is less applicable there as a notion.

3. What are a few of the major advantages for higher education institutions as the industry begins to commoditize?

Well, the part of what you tend to get is more standardization and if you use the example of a MOOC, a really well-designed MOOC that’s an intro to psychology probably is good enough for most places that offer intro to psychology, if they want to take advantage of that high-branded content. And, there’s an opportunity there to say, “Well, let’s use that and flip the classroom.” A good example of this is San Jose State [University] got a lot of attention for using one of the — or more than one, perhaps — of the Coursera computer science courses and they are reporting that students are performing better in those courses where the Coursera content is where people access their course, if you will, outside of class time and the flipped model, the teacher who used to teach that stuff is now spending his time going around and working with students as they work through exercises and assignments. Those students perform better. Now, one could ask, “Are they performing better because Cousera’s course is so good? Or are they performing so well because they flipped the classroom and the teacher’s spending his time on what’s most important and most difficult to commoditize, which is learning interventions?”

Commoditization has not only provided pretty good content as far as we know, but has allowed the instructor to shift his focus in this case to what he’s really good at and what’s really hard to commoditize, which are learning interventions. So, it allows you to rethink, in this case, your pedagogical model. And that’s pretty powerful.

4. Conversely, what are a few of the most significant disadvantages that are brought on by commoditization?

A critic could argue that part of the richness of American higher ed has been that there isn’t a single version of intro to psychology. That part of the richness of American higher ed is the diversity of institutions. And that diversity can shape the intellectual grounding of even most basic introductory courses. If I’m a denominational institution, I might have a different think or spin on intro to psychology than if I’m a polytechnical institution.

If I could use the analogy, just as beautiful pottery, handmade pottery, part of its beauty is in its difference and the flaws and the small imprints of the potter’s hand wherever that happens, good or bad. And, so, what people who collect pottery love about that is that sense that each one is different and beautiful in its own right. But, if you had to provide pottery for all of the population of India, it would be a pretty expensive way to produce pots. So, you can commoditize and mass manufacture pots, you serve a whole lot more people for a whole lot less money. But you get a less thrilling, standardized product; both in terms of its beauty and its flaws.

And if I think about courses that way, I could argue that the traditional model of the [United States] has produced very beautiful courses and programs in many instances and, in some cases, they have their flaws, but they are unique and interesting for their uniqueness. They are a lot more expensive because they’re not standard.

I struggle if that’s the right analogy, but it feels right to me. That’s fundamentally what’s going on here. So, there are things gained and there are things lost. And if you, I think, if you commoditize some courses and not others, I think it’s a challenge to the way academics think about programs. We tend not to think about courses in isolation; we tend to think about them as a part of a coherent whole. We call it the degree program. So, there’s more complexity and nuance to the question, than simply, “Oh, this is great. I can access this thing for less money.”

5. Is there anything you’d like to add about the impact of the hyper-competitiveness of the higher education industry on changes in particular institutions and changes to higher education as a whole, as a market?

Depending where you stand in terms of business philosophy, many would say increased competition is good because it sharpens everyone’s game and there is a kind of creative destruction in free market capitalism that many people would say has spurned new innovation, new growth, new ways of thinking about the world. I think some people see the hyper-competition in higher ed today as a good, through that lens.

What we would also remind ourselves: that there are winners and losers and, while new things may be gained, some things may be lost, and I think that’s part of what we’re seeing right now in so much of the debates of higher education is that you have a kind of insurgent rhetoric that wants to discuss all the old ways because they are antiquated and expensive and don’t work very well. But, in reality, they work really well for a lot of people and a lot of stakeholders — and that includes students. It may be time for a change. But I think there’s a kind of mourning for what’s being lost in the mix as well.

I think what we have is many stakeholders staking out positions as opposed to trying to more carefully understand what we should hold onto, what we should let go, what we should embrace and what we should hold at arm’s length. All we know is there’s a lot more need for higher education than our ability of the current system to provide it.

I think, at the end of the day, this is mostly a good phenomenon. I think it’s pretty exciting. I’m pretty optimistic about what’s to come, but change is hard and the transitions are often painful.

This interview has been edited for length.

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Readers Comments

Ian Richardson 2013/06/03 at 10:36 am

I don’t agree that institutions will necessarily lose their uniqueness because of commoditization. In fact, I believe that commoditization will create more opportunities for innovation as institutions seek to differentiate themselves from the competition.

Patricia Bowman 2013/06/03 at 1:50 pm

I am curious to know if LeBlanc thinks commoditization will happen more quickly in certain departments, such as continuing education, than in others. He hints at this in his discussion of expectations held by adult versus traditional-aged students. As a follow-up, I also wonder if there are some departments LeBlanc believes will never commoditize, or will not do so to the extent of other departments, and whether the degree to which a department commoditizes is based on its target demographic or on external factors.

Kristine Harris 2013/06/03 at 6:14 pm

What we’re seeing with greater commoditization is a significant change in the role of the instructor. As LeBlanc notes, instructors will no longer be the curators or distributors of content. It is unclear what their roles will become, which I believe is causing some anxiety. Perhaps it’s time for administrators, content designers or researchers of pedagogy to speak to what these new roles might be in order to assuage concerns

Earl Harewood 2013/06/21 at 9:20 am

A brand is a brand. It has history and it has meaning and if higher education loses that history is it still what is was in that history? The answer is No. A lost of the entity’s unique self makes less authentic and may even lead to failure or an identity-less institution. History is the foundation; build everything else on it and soar.

Deborah Cooke 2013/06/27 at 11:15 am

I don’t think they have to be mutually exclusive. One can pursue business efficiencies in such a way that it contributes to the uniqueness of the brand and reinforces market position. In other words, the business efficiencies themselves can also be unique.

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