Disruptive versus destructive innovation: an answer to Paul Prinsloo

I think that the discussion on business models, innovation and disruptiveness will improve as we make a distinction between value and profit, and between disruptive and destructive.

In my opinion, each organization tries to deliver value to the outside world. Whether you supply a product or a service. Whether you aim to earn a profit or are a task oriented organization, someone has to belief your activities.

Whereas profit is the outcome of a monetary transaction, value is created by the usage of the offering: by using a product or using the products which result form a service. It is therefor that in modern marketing the influence of the user or receiver is so important: production determines the characteristics of a product or service, usage determines its value.

A monetary profit is neither a sufficient nor a necessary condition for the realization of value. Learning can add value by increasing a persons competences, by making an organization smarter or a society more egalitarian. Yet it can be very difficult to express these increases in monetary terms, necessary to determine the amount of profit.

Classical oriented economists and politicians will argue that learning will increase a person’s potential future income and that it would be justified that people would pay for their own education. This ignores the positive external effects of this education on the productivity and lives of other members of society, but it also ignores the risks of general economic factors which are as important for the realization of the potential income.

Value does not imply profits, hopefully profits do represent value.

Within the field of innovation, we often speak of Schumpeterian destructive innovation. With that economists indicate that often the creation of new things will result in the replacement of old products and services. Creativity is a source of more productive processes, of more attractive products and better services. A problem is the translation of a creative invention into a sustainable innovation. Frequently, the proof of the superiority of an innovation is backward looking. Economists can give a long list of inventions which were technically superior to other inventions, but did not survive the competition.

Disruption is something else; Christensen defines it as an invention, aimed at non-consumers and the bottom of an existing market. It becomes a successful innovation when it convinces non-consumers to use the product and slowly nibbles at the bottom of the existing market. These kind of innovations are characterized by a negative development: by removing features which are aimed at the upper part of the market, the product or service becomes less complicated and cheaper to produces. This results in a lower price. Both the decline in price as the concentration on the core features of the value offering, non-consumers will be convinced to try the new product.

Christensen predicts that the newcomer will, in time, move upwards in the market; the same propensity explains why the incumbent firms cannot counter the entry of the new firms at the bottom of the market. Given an initial position, existing customers expect the firm to add new features increasing quality and usability for the existing customers. However, this increase in quality will cause the costs of production to rise. It therefore not to be expected that incumbent firms are able to counter the entry of the new firms or even initiate a disruptive innovation in their own market.

Disruption adds additional products to total supply and can turn into a destructive force when the firm moves upwards. Creative destruction will be replacing existing products with superior competitors from the start.

Applying these concepts towards the educational sector, we have to distinguish new alternatives aimed at non-learners and alternatives replacing existing educational supply.

For example, studying physics through Youtube-movies can be inferior to an f2f education in modern laboratories. Yet, for some students it is the only way to study a subject, given their restrictions in terms of location, money or time.

Educational alternatives as Moocs can be disruptive in the sense that they offer non-learners a chance to (re)start an education by removing some of the barriers of traditional education. However, they will not be destructive in the sense that they will replace traditional education as long as they miss some of the essential features as certification and degree awarding. When they move up, for example when a firm uses Moocs as internal trainings programs, they replace part of the traditional education. Yet, they have a long way to go before free educational programs will take the place of traditional education.

(Open) Distance education is potentially more destructive than Moocs. In a world of fragmentation, where people want to find a personal mix of work, learning, personal time, there is a demand for just in time and just in case (formal and informal) learning. The supply determined approach of traditional education does not fit this modern way of life. So an open and creative approach to education could result in forms of education which will replace (destroy) the traditional 16 – 24 years oriented programs.

This depends, as Christensen et al. points out, on the way accreditation institution react. Incumberants will try to influence the quality “eisen”, to protect their own programs. So standaards can act as a barrier to entry, the same as in other sectors.

Soucrce: Christensen et al on disruption of education

So when Paul Prinslo remarks that: “In the context of Unisa, there is also ample evidence that some initiative is launched under the banner of “disruption” and “innovation” without considering the implications and impacts of these ideas on our students, staff and institutional well-being. Some of these also disrupt the core business of the institution to such an extent that the center does not hold, and that several systems cannot cope with the impact. I am OK with the idea of piloting a novel and disruptive idea alongside the main business  and then go big. But there seems to be a believe that starting small is not disruptive enough

I can sympathize with his feelings. Management at the Open university of the Netherlands also has the tendency to start developments that are criticized by the staff and students. I think that the educational sector globally is in a state of flux, ranging from financial problems of institutes to financial problems of students, from having to redefine their mission to dealing with the effects of the economic crises.

Yet, disruptive innovation has become a fashionable management term; sometimes disturbing your organization can be a good thing, often it is not. Organizations benefit from incremental changes. It shows good management: [most of the time] sudden changes indicate that management was not prepared for outside changes; incremental changes towards the new outside conditions give the opportunity to build on the existing competences and change them slowly. When the organization (management and non-management) are incapable to react to new conditions, they leave room for others to come up with creative new modes of education which better fit the new economic and social conditions. These trends could become destructive and replace educations as we know it.

Disruptive innovations are occurring in situations that traditional education ignores the potential group of non-learners increasing research efforts and raising demands on students to meet rising qualifications. The ignored group could become the target of organizations which supply a less complex and cheaper form of education.

Organizations should make a well balanced choice between stakeholders, potential students and competitors before drastically changing their existing business model.

Yet, I belief that especially the open universities of this world offer value to individual students but also to society as a whole by offering a formal education to those who otherwise would not be capable to increase their knowledge, be it a single course to increase their knowledge on a single subject, by taking several courses as lifelong learning or taking a full program as a second chance to education!!

And because a new version of something old can be beautiful:

(the original: https://www.youtube.com/watch?v=FaVDXyXqI9Q)

The Crowd and Open Education: resilience and sustainability

Updated July 21 2014

 Update:

A relevant quotation I found in my notes:

Paul Stacey

Crowd learning

Crowd learning describes the process of learning from the expertise and opinions of others, shared through online social spaces, websites, and activities. Such learning is often informal and spontaneous, and may not be recognised by the participants as a learning activity. In this model virtually anybody can be a teacher or source of knowledge, learning occurs flexibly and sporadically, can be driven by chance or specific goals, and always has direct contextual relevance to the learner. It places responsibility on individual learners to find a path through sources of knowledge and to manage the objectives of their learning. Crowd learning encourages people to be active in setting personal objectives, seeking resources, and recording achievements. It can also develop the skills needed for lifelong learning, such as self-motivation and reflection on performance. The challenge is to provide learners with ways to manage their learning and offer valuable contributions to others.

 

Deloitte University Press published an infographic on crowdsourcing. Crowdsourcing is defined as “an approach to harnessing the power of individuals to work to solve problems in a decentralized way”.

They distinguish five different kinds of crowd sourcing, using the crowd’s creativity and knowledge (competition, collaboration and voting), its funds (funding) or its labour power (labor). According to the writers, Rob Hamill, Emily Malina and Elizabeth Pal, each form of crowd sourcing is applicable in certain situations and will be contra-productive in other situations.

The table below gives an overview of the different ways of crowd sourcing, the video has some funny examples, starting with 1714 as start of one of the first crowd sourcing projects.

 

Form Pro Contra
Crowd CompetitionCrowd competition refers to the hosting of contests in which participants work individually or in groups to come up with a solution to a given problem. The outputs may include many viable ideas or solutions.
  • creating actional solutions
  • developing prototypes
  • Generating outside ideas
  • predetermined desired outcomes
  • lack of resources to review submissions
  • building community
Crowd Collaboration
Crowd collaboration requests the input of decentralized individuals to develop, aggregate, and share knowledge and information across a pool of contributors, generally through a loosely controlled web-based platform. The typical outputs of a crowd collaboration effort are collective concepts with shared buy-in.
  • building and sharing knowledge
  • responding to emergencies
  • shared policies
  • User anonymity
  • Small and inactive crowds
  • Promoting individuality
Crowd Voting
Crowd voting is the process of turning to the crowd to reach a decision. This practice typically involves inviting participants to help make a decision based on pre-defined options.
  • Decision making
  • Rating and ranking
  • Quality assurance
  • Strategic decision making
  • Political sensitive issues
Crowd FundingCrowd funding is the process of funding projects through small contributions from a large group of participants. Crowdfunding activities are typically hosted through web-based platforms.
  • Fundraising
  • Disaster relief
  • Start-ups
  • High transparency

 

  • Ongoing operations
  • Loosely structured initiatives
  • High short term expectations on returns
Crowd Labor
Crowd labor refers to the engagement of a distributed labor pool to accelerate the completion of large-scale projects by splitting up a task into components that require little creativity or coordination but that cannot be automated.
  • Creating actionable solutions
  • Data entry and validation
  • Translation (eg language)
  • Digital archiving
  • Unstructured tasks
  • Subjective tasks
  • High-level thinking

As I argued before, the sustainability (or resilience to use a new buzz word) of business models for Open Education will depend on the inclination of people and institutions to cooperate either on the input/production side as on the user/learner/consumer side of the business model. As crowd sourcing is a form of this kind of collaboration, it could generate knowledge on the the potential success factors by reversing this table and apply the pro’s and contra’s to different systems of Open Education.

Crow Labor is one of the most used forms of Crowd Sourcing in the development of Open Educational Resources. Organisations as the Saylor.org, Merlot.org rely heavily on materials of others. However, this kind of free labour has also some aspects of Crowd Collaboration because it is not necessarily about projects which “require little creativity or coordination”.

Crowd Competition is seen in situations in which organisations as the EU, Hewlett foundation or the American government ask for proposals which will be subsidized. On an individual level, these calls will be passed on towards teachers and other educational developers to come up with the creative solutions to win the funds.

It can also be used as an instrument to start-up a new data-base or website on educational resources and programs. By setting a suitable reward, the system can generate a certain minimal critical mass, above which it will be interesting for other partners to participate.

Crowd Voting is often used to give an indication of the quality of the resources or programs. For a ranking to be functioning, there have to be enough votes and the voting public has to be something of an “in-crowd” of experts.

The remaining form of Crowd Sourcing is the financial form, Crowd Funding. According to the authors, this instrument is unsuitable for ongoing operations and loosely structured initiatives. Yet, I have the impression that several non-commercial projects depend on one large fixed subsidizer and a fringe of minor short-term donors.

Concluding, the examples of Open Educational Resources and Open Education show that the forms of Crowd Sourcing as described by Hamill, Malina and Pal is not complete; there are other situations which can only partially described by this taxonomy. Especially the voluntary participation in high-knowledge projects does not fit either the Crowd Collaboration nor the Crowd Labor definitions.

Still, the research in Crowd Sourcing should generate a further understanding of these kinds of collaboration: the free contribution and exchange of educational materials between individuals and organisations. A better understanding of these phenomena will enhance the changes of success of the Open Education movement.

 

Value, effort and education.

Upon the education of the people of this country, the fate of this country depends. Benjamin Disraeli

Value, effort…………

In modern business economics, there is a realization that is not so much the organization which creates value, but the organization makes an value offer and the realization of this is in the usage of the product or service by the customer.

In traditional approaches (as still in can be seen in the tax system: taxes on value added), when inputs are transformed during each sequential stage, the efforts of the firm are seen as adding value to the product. Taxes are levied on this effort, measured by the costs of the labour and capital used.

In the transformation of grain into bread, the labour of the farmer, the miller and the baker are seen to increase the value and so the price of the outputs. Yet, if the bread is not sold and thrown away at the end of the day, does all this labour add to the welfare of society? The realization of the potential value in the offering is the appreciation of the customer, in the case of bread this is shown by the price paid for the bread. This appreciation will be different in different situations. In countries with a shortage of foods, a simple bread will be sold, whereas in countries with a lot of possible substitutes, simple bread will not be valued highly. Doubling the inputs (efforts), without changing the quality or characteristics of the bread will not increase the value.

More difficult is it to determine the value of art. However,it should be clear that it is not the level of effort which determines the fact if something is valued as a work of art. Yet, the reverse is -of course- not true: most artistic work will require hard work. Thinking about the way the artistic level of something could be determined, I think it is not the price paid on the free market, or the opinion of experts but the effort of people to preserve it. At least, the efforts and costs invested in preserving art over the centuries is a better approximation of the value for society, than the money invested in making the object itself.

From The Picture of Dorian Gray

…………………….  And Education   We see different trends appearing at this time:

  1. The success of Moocs, measured in participation,
  2. The expectation that (commercial) distance education providers will have a destructive influence on the sector as described by Christensen and others, and
  3. The financial problems of different governments, where the examples of California and Greece show that education is one of the first sectors which will suffer.

The success of the Moocs can be interpreted in different ways:

  1. As a rise in demand for education which is not supported by a rise in income;
  2. A demand for training increased in the last years due to the economic crisis.

Related to the success of the Moocs is the concept of disruptive innovations as used to forecast developments in American education by Christensen and others. The success is partly explained by the price (free for Moocs). The prices for education will decline because of the separation of research and teaching: concentration on key activities being a central theme in disruptive innovation. The idea of cheaper or even free education is, of course, attractive to governments which have budgetary problems. Especially when education is not a top priority for local and national governments with liquidity problems. To summarize, learners and financers of education substitute traditional education for cheaper and free alternatives, a tendency which only will become stronger according to Christensen and others. In terms of the new business economics as described above, the key stakeholders in education refuse to create the value, offered by the efforts of the educators. Rephrasing this, the value offer of the educational institutes may not be acceptable or affordable for the stakeholders. The value of education is determined by the usage by the learners of the learned competences and knowledge. In general, we can distinguish two extreme approaches to the effects of education.

1.  At one side of the spectrum, education is seen as an important factor increasing social cohesion, democratic participation and (economic) welfare. For example, the European Union writes in the evaluation of the Lisbon Agenda:

Underlying this was the realisation that, in order to enhance its standard of living and sustain its unique social model, the EU needed to increase its productivity and competitiveness in the face of ever fiercer global competition, technological change and an ageing population.[..] These ambitious targets could only be achieved through structural reforms to tackle a number of challenges within Europe’s labour markets; tackling labour market segmentation, addressing skill needs through more and better education and training, promoting a lifecycle approach to active ageing, and inclusive labour markets. […]Education and skills policy is at the heart of creating a knowledge-based economy, but it is apparent that the EU has some way to travel in this regard.

2.  The approach on the other side of the spectrum emphasis the economic effects, especially for the individual who becomes more competent. Education, in this view, primarily produces individuals which are more competent in their work, increasing employment by a better fit between demand and supply in the labour market. More productive workers will earn a higher income and firms will earn their firm an additional profit.

In the second view, employers, employees and learners are primarily responsible for financing education as the value will only partly crystallize in the form of additional income for the learner and the employers. The broader approach of education puts part of the responsibility with society: government has incentives to finance at least the general competences of the learners, through educational subsidies. Again, effort will determine quality but rise costs, but when demand shifts to other alternatives, much of the effort will be lost. Problem with disruptive tendencies in the sense of Christensen et al. is the “catch-22” between costs and demand, which results from the move towards quality which is the standard response of all organizations in these situations. Traditional education wants to take its social responsibility, teaching collective social competences next to functional content based on research efforts. However, if society doesn’t want or can pay for this kind of education, it will end up with purely functional education, paid for by employers and employees and aimed totally to an efficient fulfilment of jobs and the furthering of individual careers.

Is Higher Education disrupted or not?

Freedom’s just another word for nothin’ left to lose
Nothin’, I mean nothin’ hon’ if it ain’t free
Joplin Janis – Me And Bobby Mcgee

Do we have to expect that traditional education will disappear within the next three decennia as mainframe computers are replaced by handheld smartphones? Following Christensen and Horn (2013) Moocs will have this effect in time, with Moocs as disruptive innovation replacing brick-and-mortar universities.

However, in  Christensen, Horn, Caldera and Soares, they give a more nuanced approach, based on the existence of (open) distance learning institutions, given the different problems of (USA-based) higher education (p. 2): stagnating graduation rates; financial difficulties, both by the educational institutions, by the students and on the different government levels, declining prestige in the field of education, notwithstanding a good reputation in research.

To follow their 2011-analyses, we will give a description of disruptive innovation, followed by the analyze why ODL will be a disruptive force, but also reasons why it will fail if some conditions are not met.

Funnily, Moocs do not have the characteristics Christensen et al (2011) see as essential for ODL to become a disruptive force. Given the attention given in the last year to the possible disruptive influence of Moocs, it is interesting to see what the conditions leading to disruption in the educational sector.

Disruptive innovation

Disruption does not mean ‘a radical breakthrough improvement’, but it is an innovation replacing an existing complicated high price-high profit offering with a low price- low profit alternative, which is generally less complicated and with less functionality. This alternative replaces the original offering at the lower end of the market, but also opens up new opportunities in making the product or service available to customers who formerly could not understand or afford this product/service.

For a number of reasons the existing firms are not able to provide a similar alternative, as this alternative cause them to lose the higher profit upper part of the market. According to Christensen et al., business models are designed to solve one specific ‘problem’ and make money via a particular profit formula (p. 20). In an existing market it makes more sense to increase quality, prices and profit rates by moving production capacity from the low-profit bottom of the market toward the more profitable upper part of the market. A conclusion which is not fully accepted in the business model literature (see for example Osterwalder and Pigneur (2010), who assume that one organization can house more business models).

Assuming the new entrants to be price fighters, their costs advantage will disappear when the last of the original firms leaves the market. However, then:

..disruptive companies must move up-market through sustaining innovation once their business model has been established in one of the outer circles in order to sustain profitability and organizational vitality. The reason: If they stop this up-market pursuit and compete only against equal-cost competitors, then they have no cost advantage. It is only if they carry their low-cost business model up-market that they can retain their cost advantage against competitors (p. 15).

So the disrupting firms will move towards the top-end of the market pushing out the old existing firms.

The only exemption to this destructive force is IBM, who decided to open a new business unit at arm’s length, after the introduction of personal computers. In time, the business unit replaced the original mainframe producer!

ODL as disruptive innovation

Question is if the conclusions from the research into disruptive innovations in the profit sector are valid in a not-for-profit sector as education. Their answer is yes, because:

Improved profitability tends to drive the decision making in for-profit circumstances. But in not-for-profit circumstances, the ambition to do more and have a bigger footprint—an ambition driven both by administrations and often alumni in the case of education—precipitates precisely the same behavior as profit maximization in the for-profit world. The companies on the sustaining trajectory, when faced with the choice of making better products that merit better profit margins vs. making lower-priced, simpler products that merit slimmer margins, invariably find it more attractive to build and offer more and better (p. 14).

So, what are the problems with the present business models of education?

Christensen et all. distinguish three kinds of business models, solutions shops, value adding processes and facilitated network-users. In the table below, these three types of business models are described. Problem is that most universities try to combine at least two of these business models, as can be seen in the fourth column.

Model

Type

Source of income

Education

Solution shops Institutions focused on diagnosing and solving unstructured problems such as consulting firms, advertising agencies.These shops deliver value primarily through the people. Fee-for-service model: being compensated for their inputs, not the results, because the outcome depends on many other factors. Most university faculty research is solution shop-like activity
Value-adding process businesses Organizations with value-adding process business models, in which resources and processes are used to transform inputs into more complete outputs of higher value. Value is created by efficient processes and organization. Income is based on the output of their work. Teaching
Facilitated user networks An enterprise in which the participants exchange things with each other. Fee for membership or fee for use. Thanks to the Internet, many university activities that were formerly conducted as solution shop and value-adding process businesses are evolving into facilitated networks among students and faculty, such as hosted discussion forums.

Because of the combination of different business models within the same organization, there will be costs of complexity: additional overhead costs and inefficiency in the organization of the different activities (education, research and consultancy).

So in this time of financial crisis and a reorientation of students, the reaction of  existing educational institutions will be to increase their efforts in the existing activities: putting more effort in excellent research, aiming for the outstanding students and academic standards.

In the view of Christensen et al. (2011) this ignores the fact that the educational customers are changing: was the majority of the students in the 18 – 24 years old group, for whom degree less important than ‘becoming of age’, nowadays a large part of the learners is older and factors like costs, competences and timing become more important than degrees and socializing.

They see online education as the technological driving force which makes it possible for large amounts of people to get this ‘just-in-time’ education, based on competences at low costs:

online learning offers a natural medium to move forward focusing on competency based measures around what one is actually able to do, about which employers and society at large are actually concerned (p. 45).

One of the major barriers for moving towards a more just-in-time education based on competences is the fact that accrediting agencies reinforce the existing situation, by stressing the importance of research and keeping outsiders that operate differently out of the “club” (p. 46).

As existing organizations will not be able to move down the market; providing less services, but more value at lower cost, Christensen et al. (2011) assume that government agencies and politicians have to ‘open up’ the sector, giving four advices to regulators in the educational sector.

Some critical remarks

A lot of the examples in the 2011-rapport are of for-profit institutions, concentrating on online education or of existing institutions which have transferred their online education towards another ‘business unit’ outside the university.

Lawton and Katsomitros wrote about the failures of ODL (for-profit) organizations, listing the following institutions:

2001 NYUonline (part of New York University)UMUConline (University of Maryland University College)Virtual Temple (Temple University)
2003 Fathom (a high-profile and for-profit elearning portal launched in 2000 and led by Columbia, with Chicago, Michigan, LSE, Cambridge University Press, the American Film Institute, and other partners including the New York Public Library, British Library and a number of museums in London.)
2004 UK’s e-university experiment (UKeU)
2006 AllLearn, a not-for-profit online collaborative venture of Yale, Oxford, and Stanford, which started in 2001, and which more closely resembled the current MOOCs.

So not every alternative educational institute has become a success. Furthermore, although not every academic researcher is a good teacher, every good teacher is capable of translating scientific research into educational materials.

As I have argued elsewhere, a lot of the commercial educational institutes are built around  teaching professors, with a research position in publicly funded institutions. In this way, they can offer education at a cheaper rate as they do not have the investments in research and education of the teaching staff. In this sense Christensen et al. are right in the sense that there are less overhead and complexity costs, as these costs fall upon other institutions.

It is, however, a good approach to determine what society and individual learners really demand from educational institutes. It is a reminder that (academic) education is the translation of new knowledge into learning and competences. Accreditation should take this aspect of education more into account and put lesser emphasis on research activities of educational institutions.

Yet, in my experiences, working at the faculty of Management Sciences of the Open University of the Netherlands, most of my adult students are not only interested in the content of the courses, but also in the certificates of the individual course, to show their employers that they have acquired the essential knowledge. A large group is also interested in the Msc-degree. After some years, in which working experiences determines their career, they encounter some kind of ‘glass ceiling’ as they lack a formal degree.

The message of Christensen et al. is clear: online distance education should be concentrated on education, reducing overhead- and complexity cost. Affordable education, driven by the demand of the learners and society, will disrupt the educational sector; but only when policymakers will create the conditions for these initiatives to be sustainable.

Wirred: Christensen’s napkin

Moocs, education from service to product and back.

At this moment, all kinds of enterprises experiment with the change of “Product Dominant Logic” towards Service Dominant Logic”.  Value creation is seen in the usage of a product, which implies that the interaction between supplier and consumer becomes more important. We don’t sell simple products anymore, but the product is part of a consumer-experience and the firm accommodates this experience. Products become services and customers co-creators, interaction becoming a major competitive force.

In education, however, we see an opposite movement. Distance learning, whether open or not, involves the translation of the didactical interaction, the presentation of the content and the experiences of the teacher into an electronic product, which could be uses independent of the individuals who made the online course. Again, because of the required quality and completeness of the course materials, a good online distance course will be much more expensive to develop than a face-to-face course. The quality and completeness are requirements which follow from the fact that the student should be allowed to study most of this material independently from tutors or peers.

By packaging the teacher into an electronic self-sufficient educational product, education moves from a service orientated sector towards a product orientated sector. In a sense it is showing a shift seen before in the performing arts. Baumol showed that labor productivity did not rise for a long time in performing arts; a performance of King Lear did require a standard amount of actors and the amount of spectators was constrained by the physical possibilities (space and time); leaving the ration spectators/actors roughly constant. However, through movies, television and –later- internet made it possible that the same performance was seen by millions of people, over and over again. So this altered the ratio spectators/actors largely, reducing the costs per spectator to almost nil.

The same applies for ODL: whereas production costs are above the development of face-to-face education, once the product is available, the delivery costs depend largely on the amount of students interested in the course. So if the course becomes Massive in usage, the delivery costs will go towards zero, justifying a free and open supply of online courses. In this sense, ODL is the answer to stagnating marginal labor costs in education and the logical  way to increase total factor productivity through capital intensive innovations.

The declining marginal costs do not solve the problem of covering the initial cost of development. At this moment there are three models developed to cover these costs:

  • Institutions bear the costs themselves for different reasons: for example marketing motives, the universities as MIT and the OU-UK who were frontrunners in OER reported on the rise in new students; others invest in potential future earnings by selling the program to third parties.
  • Institutions and the participating individuals use materials which are developed in a different context(regular programs) for which is paid by students and the government thereby reducing   the investment in ODL or Mooc.
  • Several governments and private foundations funded initiatives in the OER-movement; for example the Hewitt foundation, the Gates foundation and at present the Obama administration.

Of course, institutions do combine the three sources of funding to reach an optimal solution. The shift from education as interaction towards education as a product does not only provide the possibilities for a commercialization of education, this shift is expected to generate new sources of income, as described by different authors [ 1, 2].

In line with the Bottom of the pyramid –approach of Prahalad and the Blue-Red Ocean approach Kim and Mauborgne Moocs are the ultimate version of this development: strip your product of every unnecessary feature, leaving the bare supply which meets the demands of the customer. The decline in costs (and price) will make the product widely available, reaching customer segments comparable products will not.

This commoditization of products results in a downward spiral, were competition brings down prices and quality in a shark infested ocean, coloring the water red as only “the strongest survive”. Yet, several thinkers have suggested a way out of this situation. By moving from the commodity towards an experience, seeing a service instead of a product, firms can add unique features to their product offerings.

It is interesting to notice that what took the private sectors decennia to develop, is adapted by the educational sector within two years. Fred Mulder, the Unesco-chair on open educational resources,  proposed a system in which the content was separated from other educational features as tutoring, assessment and  certificates; describing a kind of Mooc before it really existed, but also foreseeing that independent sustainability requires additional sources of income. Thomas Friedman implicitly describes the flipped class room:

Therefore, we have to get beyond the current system of information and delivery — the professorial “sage on the stage” and students taking notes, followed by a superficial assessment, to one in which students are asked and empowered to master more basic material online at their own pace, and the classroom becomes a place where the application of that knowledge can be honed through lab experiments and discussions with the professor. There seemed to be a strong consensus that this “blended model” combining online lectures with a teacher-led classroom experience was the ideal.

In these approaches Moocs become a kind of electronic text book, used by others in their education. It will become a matter of time for the suppliers of the Moocs to ask a contribution of either the students or the institutions which make use of their materials. Yet, if this is the only contribution of Moocs to education, this is hardly to be called disruptive.

In several publications, we can see that Coursera, edX and Udacity are thinking about alternative earning models. These models all involve some kind of service to accompany the electronic lessons within the Mooc.  So in this sense, Moocs are no disruptive innovation, nor a treat to traditional education. However, Moocs can be a change agent in the sense that they facilitate educational innovations as flipping the classroom, integrating learning and working or stimulating quality (why sit through a boring class when you can take the content from a first degree university or teacher).

Also do Moocs open up education for people who otherwise would not be in a position to attend classes. This will, however, depend on two factors:

  1. The attitude of employers to free online courses; will they have a civil effect or will employers still hold onto official degrees?
  2. Openness in Moocs should be redefined not only in terms of barriers of entry, but also in the availability of the course over the year.

Within two years, Moocs become full circle. From a publicly founded service related activity (education) towards to a free product orientated electronic course, a commodity; towards a privately funded experience by adding exclusive services to the free commodity.

ODL, the social contract and the economic crisis.

Suddenly a social contract appears in the blogs I am reading. In “The Perfect Storm for Universities“, Popenici writes about the fact that more education does not necessary means a higher income or more change of a steady job. Bonnie Stewart states that the social contract can no longer fulfill its promises. Adding “Of course” to this sentence. Prinsloo lists the assumptions and links between Bildung, graduation and employment which are replaced by other forms of curriculum development, assessment and accreditation, as one of the major changes of 2012. 

Respecting the differences between the blogs, they all blame education for the break down of this relationship. Either the appearance of Moocs and the Internet flow of information (Stewart, Prinsloo) or the student loans, a business attitude of university administration and faculty and the arrogance of universities in general (Popenici). Or taking a quote of Christine Teelken: It seems that universities are no longer viewed as ivory towers of intellectual pursuits and truthful thoughts, but rather as enterprises driven by arrogant individuals out or capture as much money and influence as possible.

However, a contract is a two-sided agreement, depending on certain conditions. This social contract states that if the individual does his best to get explicit grades and diploma’ s, society will take care of his or her employment. One of the conditions attacked is the state of education, which is either bad or treated by ODL‘s as Moocs. Neither of them talks about the other conditions. In Europe as in the USA, there are only a few jobs available. Because of the credit- and the euro-crisis, because of the decline in competitiveness, the social contract has been broken, not necessary because of the rise in alternative sources of information and education.

If online distance learning (ODL) is not the source of the problem, perhaps they can be (part of) the solution? ODL’s, whether open educational resources aimed at teachers (reusable, remix and redistribution) or open online courses aimed at learners (and massive if successful).

In a world where income and employment decline, the access of education is limited as the example of Greece shows. Free resources and courses could help to overcome the scarcity of materials and teachers.

As one of the reasons to be involved in the production of open educational resources, the Unesco reports on the Russian Federation and China state the availability of good quality materials in distance parts of the countries, in Brazil availability over income groups is also mentioned.

Another reason for introducing ODL in a large scale in traditional education is given by Stephan Ruth. Combining different models of ODL (Mooc’s, course redesign using e-learning, virtual campus, the $10,000 degree), he concludes that e-learning can greatly decrease the costs of education. He therefore comes to a combination of models, the Export Import Model, in which the excellent universities offer open online courses and resources. Because of the restricted supply, each ODL becomes a Mooc, used by not-so excellent universities, who organize the tutoring, the discussions and exams. The not-so excellent universities pay the excellent universities a fee for the use of the materials and get an income from the students who want to get tutored, take exams and so forth.

Having some experience in developing distance education myself, I think the cost reduction is strongly depending on the amount of students. Designing and making good distance education is much more expensive than designing and giving face-to-face education. When the initial development costs are spread over more students, there will be a point after which ODL is cheaper than f2f education. However, as tutoring can not be up-scaled indefinitely, there can be an upper bending point after which the efficiency of tutoring declines and the cost reduction declines too.

Another drawback of Ruth’s approach is the division between developing and exploiting institutes, between high paying students studying on site at the excellent universities and other students studying at the not-so excellent universities. What such at division means for the social contract even when the economical crisis disappears, is not clear to me.

Mondon and Hoffstaeder give yet another view on such a division, however along the line of humanities versus natural sciences. They are afraid that online learning is in favour of hard sciences, which in their view can bet assessed by single answer questions, whereas humanities require other skills as good essay writing.

Secondly, they are afraid that students will not study humanities as the job prospects are limited; thirdly humanities are more dependent on student numbers and government grants as they find it harder to find private partners for funding their research.

Partly these worries are mirrored by the research of Teelken and the translation of this by Prinsloo, Stewart and Popenici, especially the dependency of education on market forces and efficiency, as stressed by Ruth. However, ODL, OER and Mooc’s are not the monsters depicted by Mondon and Hoffstaeder. Assessing essays, papers and other kinds of assessments are available and under construction. The fact that students in the present situation take their future job opportunities in account by choosing a curriculum is not strange given the economic situation, whereas the relation between ODL and research funding is a strange one.

When the Hobbit, Bilbo Baggins, closes his home to go There and Back Again, he didn’t realize what lay ahead of him. Also it is the question if modern multimedia techniques can beat 35 years of imagination. Will free ODL’s change the world is an open question but hopefully there will be a Back Again.