Higher ed disruption: zig when others zag

It seems like every spring I write a posting about disruption facing higher education. It is a topic of interest to my coworkers and the many academics among my blog readers — and also an interesting strategy problem where I have a front row seat.

In the past year, one of the big surprises has been the large amount of private investment in tech startups targeting this market. They seem particularly concentrated in developing platforms to enable MOOCs, i.e. massively open online courses.

Stanford is front and center in the revolution. A friend (Chuck Eesley) has been leading the Venture Lab experiment at Stanford. Meanwhile, my previous employer (San Jose State) has been at the center of national controversy as faculty are attempting to fight an experiment with Udacity (another Stanford startup) because faculty (not unreasonably) feel it will someday put them out of a job. Meanwhile, Coursera (a 3rd Stanford spinoff) and edX (started by my alma mater) are also promoting MOOC efforts.

The MOOCs seem to tilt the scale on the longstanding efficiency vs. effectiveness argument. The US higher education is pretty effective for people who get in, who apply themselves and can afford to pay for it. However, it’s very expensive (and labor intensive): its efficiency (i.e. labor productivity) has shown few gains in 50 years.

Meanwhile politicians (esp. state legislators) see higher ed as a ripe opportunity to cut costs. There is a supreme irony that the pressures are coming from the leftwing legislators in California and rightwing legislators in Texas — who rarely agree on anything — who now agree they want to spend less on higher ed so they can spend the savings on something else (that presumably buys more votes).

However, my suspicion (without any hard data) is that the marginal college students (without a lot of motivation or support network) will tend to fail in such an impersonal high-volume, low-touch setting. These are exactly the students that the California State University (the parent of SJSU) targets: every CSU faculty member can tell heartwarming stories about students who succeeded despite being the first in their family to attend college.

A few months ago, I met the executives of a Bay Area startup taking a different approach. Instead of a large-scale impersonal MOOCs, the approach of the Minerva Project is to cut costs by 2x (rather than 10x or 100x) but offer a high-touch online alternative to higher education. In other words, if everyone else is zigging — pursuing low-touch massively online solutions — they want to zag with high-touch smaller scale online courses.

The company landed $25m in Series A funding and numerous headlines about its plans to “be an online Ivy League university.” To be more Ivy League, it hired a 64-year-old former Harvard and Stanford administrator to be its founding dean.

The reason I met these execs was announced this morning:

Minerva Project and KGI Partner to Launch the Minerva Schools at KGI
San Francisco, Calif. – July 24, 2013 – Minerva Project, reinventing the university experience to develop global leaders and innovators across disciplines, and Keck Graduate Institute (KGI), a member of The Claremont University Consortium, today announced an innovative new partnership in higher education. KGI, an institution accredited by the Western Association of Schools and Colleges (WASC), is partnering with Minerva Project to launch the Minerva Schools at KGI, with the first class matriculating in the fall of 2015. The Minerva Schools’ unique undergraduate program will complement KGI’s current graduate-level offerings, expanding its portfolio and providing opportunities for student, faculty and administrative collaboration. The KGI-Minerva relationship and new programs are pending WASC approval.
…
The Minerva Schools, like KGI’s graduate programs, will help high-performing students become mature, confident individuals and put them on a path to meaningful careers and fulfilling lives. The highly selective undergraduate program will offer students from around the world the opportunity to learn from accomplished faculty versed in the latest teaching methodologies to ensure positive student learning outcomes.

“Minerva Project is pleased to have found in KGI a forward-thinking university partner whose philosophy and values align closely with our own,” said Ben Nelson, founder and CEO of Minerva Project. “As the most recent member of the pioneering Claremont University Consortium, KGI proved to be a major innovator in higher education when it created the first-of-its-kind professional science master’s degree in 1997. Today, more than 130 institutions have established nearly 300 such programs. By partnering with KGI, Minerva is following one of the established paths to accreditation as set forth by the Western Association of Schools and Colleges and strives to have a similar impact on higher education as a whole.”

It’s an interesting experiment — both because it tries to preserve some of the best things about higher education, and also because it’s so contrary to the conventional wisdom about online education.

It also seems consistent with the most insightful comment I’ve ever read about the future of online education, written last year by my friend (and co-author) Michael Mace in response to my blog posting:

universities bundle several services in that thing called a degree:
--Teaching the students
--Credentialing (ensuring that the students have learned the material)
--Giving the students social connections (Yale, Stanford)
--Helping young people turn into adults in a semi-safe setting

The MOOCs largely emphasize the first two points, and seem to be completely ignoring the value of the rest of the bundle. Meanwhile, Minerva promises to complete the bundle through a global cohort experience while saving money on buildings the way Amazon saves money on mall space.

As a college professor (and eventually a college parent), I believe the partial bundle is going to be less effective at preparing young adults for life — unless the missing pieces are provided another way — and also going to be less desirable for anyone who has a choice. Still, ala Clay Christensen, a disruptive innovation is one that appears inferior (but cheaper) at first and eventually displaces the higher quality solution.

I don’t have a financial stake in the success of Minerva, nor do any of my co-workers. Thus we can afford to be a bit more dispassionate than Nelson (and all the other entrepreneurs) attempting to remake the world of higher education. As with any disruptive innovation effort, it’s a high-risk, high-reward endeavor.

If I were 25, I would be terrified that my industry is heading the way of the landline, record store and the newspaper, but I’m expecting that the disruption will come slowly enough — and I’ll stay valuable long enough — to allow me to retire at the customary age.

Update 12:30 p.m: KGI has posted a press release from its perspective, and both EdSurge and GigaOM have articles on the news. Below is the publicity photo from the PR Newswire press release.

KGI president Sheldon Schuster and Minerva CEO Ben Nelson