Alternative Pathways: A Complex Upheaval Is Unfolding But Not a 50 Percent Failure Rate
When I first heard Clayton Christiansen’s prediction that, via disruption, 50 percent of all colleges and universities would go out of business by 2030, I understood the dynamic forces to which he was referring. Though I believe deeply in his theory of disruption, I thought the prediction was a bit over the top.
Having lived with it for a while, and having accrued much more experience with the forces and sources of disruption in higher education during that time, I have come to believe that, while Christiansen is not literally correct, his estimation of the dynamics driven by disruptive forces and their consequences actually underestimates the changes we will see over the next decade and a half.
Christiansen’s prediction implies a binary result—either institutions stay in business or they go out of business. Upon reflection, I think the upheaval will affect more than 50 percent of current institutions, but that there will be multiple consequences of disruption, including going out of business. I would argue that far more than 50 percent of existing institutions will be affected, with some going out of business and others going through significant changes and adaptations to adjust to the emerging ecosystem in the postsecondary universe. These will be two of the several consequences of disruption.
Let me elaborate on this more nuanced view of the disruption that lies ahead, which says we will see several different consequences of disruption affecting more than 50 percent of all existing institutions by 2030. The affected will fall roughly into the following categories:
First, it’s important to note that yes, the numbers of institutions going out of business will continue to grow. Especially hard hit will be small (less than 2000 students), rural and private schools. There are at least two reasons for their vulnerability. The first is that their costs to operate will simply become too onerous for the perceived return in value. As such, their traditional sources of students—attracted by lower costs and more accessible institutions—will erode to the point of insufficiency.
Equally problematic, however, will be their rural locations. In order to adapt to the forces of disruption, an institution needs to be able to tap into new sources of learners with new types of services. Doing this in a more isolated and rural environment will be very difficult, in my estimation. So, even if a small rural college understands and attempts to respond to the disruption, its location will make it far more difficult to achieve the new agenda effectively and successfully.
Second, institutions will partner with venture capital firms such as University Ventures and Entangled Solutions to create new and different programs and services. In some cases, the new services will be housed in a separate entity, either non-profit or proprietary. In others, they will simply exist in a new department or division. But if we take a step back and survey the situation, we see the magnitude of the change.
Such transformations were frankly unimaginable 20 years ago. However, establishing public-private partnerships to expand and diversify college offerings in non-traditional settings with new types of learners is now an option being exercised by traditional institutions. Their purpose is clear: to generate significant revenue over expenses (profit) that creates significant financial relief and stability for the institution while developing new models of service.
Third, we will see the growth of a new form of institution that I call networked institutions. Rather than the vertical organizations with which we have grown up, networked institutions will be more horizontal in nature: a series of linked services delivered by qualified partners who can serve more learners at lower costs in a cooperative business and learning model than they can by themselves. As services and products are unbundled, they will be “re-bundled” in voluntary networks as the need and perceived opportunities arise.
In the “old” world, colleges were structured to control and provide the full cohort of services, from living quarters to libraries to laboratories. However, in the post-disruption world the need for, format for, and availability of many services will change. With those changes, institutions will have to decide what they want to excel at and what they will partner to get. For example, if I am an accredited institution with deep abilities in assessment of learning, I might partner with a boot camp to offer credit instead of creating my own curriculum. An online college might partner with an employment service to connect work and academic competencies for employers and employees in a new service arrangement. This is happening today and the potential for replication is enormous. Networked postsecondary services are already beginning to occur and are likely here to stay.
Fourth, a select number of institutions will successfully complete a full pivot, transforming their “historic” model into an entirely different learning model featuring 21st century customer services (think Amazon), competency-based assessments fueled by sophisticated data analytics, “gamified” services, and content amplified by open education resources.
The University of Maryland University College is involved in exactly this type of re-conceptualization and we are not alone. The message here is that being online is not sufficient for survival.
And, yes, there will also be new institutions in new forms which arise, driven by visionary founders and largely private capital.
Looking to the Future
This is by no means a comprehensive list. But these examples suggest a few of the alternative futures for existing institutions, other than outright failure. The deeper reality that is the essence of disruption is the emergence of a new ecology of learning, an ecology which both requires and encourages a significant re-ordering of the traditional academic marketplace. As surely as some institutions will fail and others will be created, however, there are multiple other possibilities for consequential change between now and 2030 fueled and enabled by this new ecology.
Author Perspective: Analyst