I greatly enjoyed Megan McArdle’s thoughts on the future of higher education. But I have one small caveat. One of her suggestions is that if we assume that disruptive innovation will take hold in higher education, the sector will come to be dominated by a small number of firms thanks in part to network effects:
Education will end up being dominated by a few huge incumbents. As we see with Facebook and Twitter and, well, almost everything, the internet offers huge returns to scale, and substantial network effects. There’s a big benefit to having learned stuff the same way as the people around you–not least, that they understand what a given certificate means. To offer a small example, during my time at the University of Chicago’s business school, every class was curved to a 3.25. Most other business schools don’t curve, and as a result, Northwestern, our nearest competitor, had an average GPA of something like 3.8.
Someone at Chicago who had a 3.4 GPA was slightly better than average. Someone at Northwestern who had a 3.4 average was kind of a screwup. This didn’t matter unless your interviewer had gone to a different school–but if they had, you were apt to find yourself explaining that no, really, that 3.5 wasn’t as bad as it looked. Which sounded like whining, even to us.
I would expect that economies of scale and network effects would compress the number of schools to a few–or at least, a few within each specialty. The winners might be the early-moving incumbents like MIT and Stanford, or they might be some dark horse who takes advantage of the disruption to rearrange the current status hierarchy. But either way, I’d expect to see a few schools dominating, while many go out of business.
I look at this somewhat differently. Over time, one can imagine a number of credentialing institutions emerging, e.g., the competency-based credentialing used by Western Governors University might gain in popularity. But these credentialing institutions would allow for a wide range of instructional providers to flourish. That is, I’d get my certification from MITx or Western Governors University, which Kevin Carey has discussed in considerable detail, but I’d get my actual training from one of a large number of instructional providers, like Udacity, Khan Academy, and a panoply of other for-profit and non-profit options, several of which will have an extremely narrow focus. Carey’s suggestion that the federal government charter specialized providers (e.g., a firm that only teaches college-level calculus or Mandarin, etc.) would help spur this along.
So just as Facebook and Apple iOS are platforms for apps, the dominant higher education firms Megan envisions might simply be credentialing platforms. That is, of course, a very lucrative position to be in, potentially. But platforms flourish by being relatively open (e.g., the Android OS) or by adding sufficient value that non-openness is justified by a superior user experience (e.g., Apple iOS).
But the number of schools and specialized instructional providers might dramatically increase as niche players are empowered by the large market created by the new credentialing platforms. Credentialing platforms, like Facebook and iOS, could lower the barriers to entry by gathering a ready-made audience and providing proof of quality
In a related vein, consider Facebook’s dependence on Zynga, which accounted for 12 percent of Facebook’s sales in 2011. Perhaps some of the credentialing platforms will grow dependent on the most successful app developers (or instructional providers) in their ecosystem. As far as I can tell, Megan wasn’t making a value judgment about the emergence of powerful higher education providers — but if it is credentialing platforms that become the Facebook-like players, it’s actually very good news for higher education minnows that now have a really hard time getting established.