As Karl Kapp recently explored in The Higher Education Bubble Continues to Grow, most colleges are mimicking Wall Street's flawed strategy of self-serving financial schemes. Colleges cannot slow the runaway inflation which results in soaring costs, declining value and under-served students. These colleges are conforming to a single contaminated business model, much like the health care providers that Clayton Christensen has analyzed. The "significant" differences between colleges amount to mere superficial variations in course offerings, campus activities and financial aid resources. The financial crisis is shared by nearly all institutions of higher education. As I recently explored on my other blog, the reasons the costs are soaring out of sight are not even on their radars.
I expect four different business models will emerge from the widespread collapse of over-priced academic institutions. Each constitutes an exit strategy from the stampede headed for the precipice. Two exits develop sustaining innovations which maintain the use of college campuses and classroom contacts with students. The other two introduce disruptive innovations which change the game of "getting a college education". All four innovations make college more affordable while redefining and differentiating their value propositions. Each new business model will need to "circle its wagons" to defend itself against contamination by the other three innovations.
Academic credentials providers
Only one of the four new business models will continue to offer degrees and transcripts from accredited institutions. This exit strategy is the least affordable alternative, though cost reductions can be achieved. This sustaining innovation only serves the sciences, engineering programs and technical disciplines. This model views undergraduate education as a certification process for grad school. The credentials earned remain within academia. Every student is required to progress through the same obstacle courses, get over the same hurdles and exhibit the same competencies. The factory model for the production of uniform outputs can be better utilized to make the educational and matriculation processes more efficient and cost effective. Presentations by pricey faculty members can be archived for download as the open courseware movement has already initiated. Personal contact with undergrad students can be handled by low cost grad students who are "learning by teaching". The faculty will continue to be devoted to academic research, publishing and grant seeking. Much of the students' testing and lab work will migrate into game environments where learners proceed at their own pace, self-remediating flaws in their perception, understanding or execution. Cost savings will also be realized by the elimination of the "cruise ship" amenities and their accompanying layers of bureaucracy.
College experience providers
One other business model will sustain the use of college classrooms and campuses. It does not credential the advancement to grad school or support academic research. It values the quality of teaching and relating to students over subject matter expertise. It provides the enrollment with high quality college experiences and utilizes liberal arts and humanities curricula toward that end. It serves those college students looking to mature, separate from their family systems, find themselves, and/or get experience with mating -- while living on campus. It expects there will be no connection between what students study in college and their subsequent employment. There is no need for grades or other academic credentials. The subject matter gets used to cultivate their ability to critique, problem solve, change frames of reference, perceive subtleties and express themselves. The instructors function as mentors, coaches, guides and sounding boards for the students' personal development. There remains a parallel staff of RA's, counselors, activity sponsors etc. for the rich variety of "student life" offerings. Cost savings are realized by the elimination of academic tenure, committees, research, libraries and administration. This labor model can be delivered entirely by part time "adjuncts" who exude a passion for teaching and cultivating individual students. These faculty members will write recommendation letters for the students they know very well upon graduation and job seeking. These students will have also assembled portfolios, verified by faculty members -- that reveal abilities that could contribute to an employer's objectives.
Service learning providers
The first of the two disruptive innovations utilizes a service learning paradigm. This business model serves those going into service careers. The process of apprenticeship, on-the-job training and action learning cultivates the needed skills and awareness. This "game-changer" will evacuate most community college and 4-year classrooms that pretend to prepare students to serve others by listening to lectures and taking tests on textbooks. It delivers hands-on practice for subsequent work that will involves hands-on practices. While academia discredits this innovation as inferior "vocational training" or "trade school", it redefines quality in "unacademic ways". Much like business recruiting and promotion efforts, this model relies on role play, in-basket and other "immersion in simulated situations" to qualify individuals. It's not what they say they know, but rather how effectively they "walk the talk" that counts. This model will deliver students who can get the job done, handle the responsibility effectively and respond to unfamiliar situations impressively. This innovation will frame academia as merely preparing students to be hypocrites who only "talk the talk" and look good on paper. Cost savings will be realized by the elimination of classrooms, campuses, textbooks and the academic administration.
Peer learning providers
The other of the two disruptive innovations utilizes a peer learning paradigm. This business model serves those going into professions that initiate projects, work with clients, collaborate with colleagues and create new solutions together. Learning from interactions with peers cultivates the core skill sets for collaborating. Getting an education from peers provides of sense of getting along with others more easily, gaining trust in others, getting others to feel understood and getting common ground established at the beginning. Learners get accustomed to making a difference by listening, appreciating differences and relying on others. They will become clear about the value they offer others and many other dimensions of "entrepreneurial literacy". They will get a sense of "how and why it pays to know this" which will set them up to prosper in the world of free lancing on call and working with virtual teams. These educations can emerge from mutual investments in sweat equity. Very little, if any, money will change hands -- much like the transition from the Wall Street to Main Street playbook of the next generation global economy. The cost savings, compared to other three business models is staggering, like the growing abundance of free online content and freemium offerings that are disrupting newspapers, radio/ television broadcasters and conventional advertisers.
Disrupted college advising
At the center of these four exit strategies will be a new space. Instead of admissions advisers and college recruiters, we will find the likes of optometrists or travel agents for each seeker of a higher education. Students will come to get the equivalent of a new eyeglass prescription or a travel itinerary. They'll get help sorting out all these options to arrive that the best personal fit. Those that show signs of continuing dependency on authority figures, expert content and formal instruction -- will favor the sustaining innovations. Those revealing confidence, independence and self-direction will favor the disruptive alternatives. Those with no idea what they want to study will find the "college experience" emphasis will serve them best. Those with their sights set on grad school will favor the academic model that continues to issue diplomas and grade transcripts. Those who are inclined to make the same difference in different people's lives everyday will be advised to explore the service learning model. Those who expect to co-create new solutions with varieties of projects, collaborators and clientele will favor the peer learning model.