Disruptive Innovation and the Higher Education Business Model

On Tuesday, February 8th the Center for American Progress (CAP) hosted a discussion focusing on the challenges of performance and productivity facing American college educators in the 21st century. America currently ranks 12th in graduation rates and underperforms its competitors in math and science.  The event’s panel of educators and administrators suggested that the current business model for higher education in the United States needs to be rethought.

In the discussion, Clay Christensen presented his publication “Disrupting College: How Disruptive Innovation Can Deliver Quality and Affordability to Postsecondary Education,” and proposed looking at institutions through the lens of business innovation.  He described “disruptive innovation” as changing a “complex product” to become more accessible by “redefining quality in a simple and often disparaged application.”  Online education, particularly the successful Phoenix and Western Governors Universities, have emerged to challenge the preeminence of the 4-year model in just such a way. These institutions reach large groups of people at low cost by eliminating distance, “non-productive credits,” and moving towards “competency learning” where students are rewarded based on what they learn rather than time spent in the classroom.

In analyzing the flexibility of the higher education system, new and innovative business models are instructive.  Straighterline, for example, offers students their freshman year of college via online courses for $999; if models like this are able to compete with brick-and-mortar campuses now protected by accreditation rules, degrees could become more affordable and available to a much wider swath of the American public.  While the wave of online education presents a more affordable, accessible option, doubts have emerged about these universities.

As the CAP panelists argued, traditional colleges are invaluable to the American education system, and disruptive innovation simply adds another viable and affordable option for a broader range of the population to attain a postsecondary degree and stay competitive in the global market.

Posted by: John Coit

Sources: Center for American Progress, International Business Times, Online Journal of Distance Learning Administration, Washington Post,

Photo Credit: Columbia Alumni courtesy of Flickr user The Library of Congress


One Response to Disruptive Innovation and the Higher Education Business Model

  1. Monica Schager says:

    My mother obtained her Master’s degree in education online through Western Governors University and often spoke about feeling disconnected from the other students. While she had a “mentor,” she didn’t exactly have peers with which to brainstorm, etc. It’s important to remember that traditional universities allow for a real, geographical center where students can exchange ideas and problem-solve together. Online secondary education can be a “viable and affordable option,” but it cannot replace the inherent benefits of traditional universities.

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