How can institutions address the threat to higher education? In The Search for Survival, I proposed a model for surviving disruptive technologies.5 New technologies enable an innovator to develop a new product or service that is great for the innovator but that can prove extremely disruptive for incumbents. Incumbents often fail to respond because of various factors that inhibit recognizing the threat and taking action:
- Denial. We are all accomplished at denying that something will happen. Amherst’s faculty voted against participating in MOOCs, Duke’s faculty voted against an agreement to join a consortium offering online courses, and faculty in the philosophy department at San Jose State sent an open letter to Michael Sandel, a Harvard professor with a MOOC survey course, refusing their dean’s request that they use the course. Denial in higher education is alive and well.6
- History. Colleges and universities go back to the colonial days in the United States, but a past history of success is no guarantee of future success.
- Resistance to change. Most of us resist change because it is full of uncertainty and risk.
- Mind-set. Kodak managers and employees had a mind-set that stressed film, not digital photography. Our mind-set in higher education is the traditional class that meets in a physical classroom.
- Brand. Just as Borders, Kodak, and Blockbuster had well-known brands, many of our colleges and universities work hard to create and maintain a brand, for example the Ivy League and the Big Ten.
- Sunk costs. Kodak had a huge industrial campus with manufacturing plants, a large sunk cost that was not needed for digital photography. Colleges and universities have very large investments in buildings and grounds, laboratories, and libraries, all of which are sunk costs. Accountants say to ignore sunk costs in making decisions, but that is hard to do when the physical campus contributes to brand and to emotion, especially alumni emotions.
- Profitability. Profitability is not an issue per se for non-profit higher education institutions, but colleges and universities must remain fiscally sound to continue in business.
- Lack of imagination. Kodak could not imagine film being replaced by the Internet in the world of digital photography. Blockbuster could not imagine trips to the video store being replaced by mailed DVDs and streaming videos. Can colleges and universities imagine a future that differs from the higher education experience of the last two hundred years?
Whether or not incumbents recognize the threat and take action will determine their fate. There are three outcomes in the survival model. The first is to morph one’s business model to accommodate a technological disruption. This outcome is the least traumatic and the easiest to accomplish. The second is to abandon one’s present business model and adopt a new one. This outcome is a very difficult undertaking. The last is to fail. This outcome means declaring bankruptcy and/or going out of business entirely (e.g., Borders).