Clayton Christensen’s Chickens Coming Home to Roost?

Back in 2012 I had a side blog dealing with higher education.  I include a post from it below, preceded by background and, of course, a digression.

The late Clayton Christensen, Harvard’s theorist of business disruption, had turned his eye to higher education as a business and, once over the shock, determined that the field was fertile ground for the kind of disruptive activities he’d written about in other sectors.  He wrote an open letter to university presidents urging them to drop their complacency about the change bearing down on them.  Many fretted; few took action equal to the challenge.

The economist Herbert Stein once said that when something cannot go on forever it will stop.  That simple truism is easy to grasp but hard to apply, especially in institutions that can be fairly considered incentive machines built to stay the same.

I knew something was coming.  But it is an indication of the deep power of inertia that it can work at not only one’s actions but one’s imagination.  Yes, I knew something was coming but what?  What would its shape be?  How would it gain traction?

Over the last decade I could begin to make out the fuzzy shape of change. Some colleges closed and others merged.  But all this took place on the margins.  The colleges that closed tended to be quite weak and non-selective, having lived for years close to the edge and therefore easy pickings.

The slow change that was manifest seemed suited to an institution that prizes incrementalism over grand strategy.  But it nonetheless did not seem right. Any institution that is as hidebound as higher education almost certainty would not be able to reform in an elegant way.  The game that got them to the end-point would not be the game that got them past it.  If Stein was right about things stopping that would probably mean a hard stop, eventually.  I did not grasp that adequately at the time.

The COVID crisis could well be that event.  In my imagination failure I failed to consider the obvious: Stein’s end game would unfold in a Darwinian fashion: a species fit to a niche that it hopes to be stable but proves to be anything but.  The result can be forced rapid change, or worse–fragility exposed by sudden events.

The relationship between species and niche is dynamic.  Species will evolve and niches will morph.  There is no guarantee of a correspondence.

In nature the process of natural selection mostly involves the activities of blind and selfish genes.  They don’t “guess” about the prospect of fit to current and future niches but they are proved right or wrong by events over time.

Human institutions involve greater forethought, and our ideas about strategy are often rudimentary attempts to get past the blindness of the selfish gene (or selfish meme) and to consciously arrange for a fit between species and niche.

That’s a tall order.  Not only is the future unknown but consciously arranging for a fit runs afoul of a great deal of the human nature that is the essence of the institution in the first place.  The demands of making for a fit to a niche may conflict with other “fits”, like the power of the mission of an organization, self-interest, habit, and the desire for power and status.

It’s hell doing Darwin with one’s eyes open.  It is tempting to keep them shut, and many have.

But whether a matter of a finch or a college the fact remains: the organism is always at risk.  And organisms that do not adequately make for a good fit can perish.  In this instance, COVID has taken advantage of an evolutionary weakness and it may well be merciless in its treatment of the weaker members of the herd.

To recycle one more all purpose quote, this one variously attributed to Twain, Fitzgerald and Hemingway, bankruptcy occurs slowly, then all at once.  There’s probably an underlying truth to that quote that relates to the sticky qualities of human nature.  As such it can apply to the bankruptcy of an individual, a firm, or a sector.

What did I get wrong in the 2012 post?  I predicted change would come but it would likely be gradual, in keeping with the nature of the institution.  I did not see how a bubble might burst.  But now I see that even if institutions are conservative change may be thrust upon them suddenly from an unexpected quarter.

What did I get right?  The easy reliance on online approaches as a cure.

Let’s stipulate that (Christensen) is correct that traditional universities can’t cover their costs but that on-line approaches can. He takes that insight to a possible conclusion: universities could be comprised of a combination of both approaches, with on-line subsidizing traditional. But is that in itself a sustainable model?

Students currently put up with their tuition dollars subsidizing other things for a bunch of reasons. There is often no transparency in cost allocations and subsidies so they don’t know. They don’t have the luxury of unbundling their tuition if they figure it out. They can’t help but be attracted by the reputational buzz of college X and figure they have to put up with it. And the activities they subsidize are local and visible and they may (say, if they go to football games) recognize some sort of value for payments made.

But those conditions are less likely to apply in the case of a student who is predominantly, or exclusively, engaged in an online capacity. Why should that student want to pay a tuition charge that is higher than needed so that a traditional student can enjoy the whole panoply of services and amenities that characterize the “college experience”? That’s not only unfair but likely to be regressive as well, since the more privileged are likely to continue with a traditional education under this view, with the less privileged helping to pay their way consigned to a lower cost model.

There is a lot of buzz out there about colleges leaning in to online approaches in a big way.  But that seems too cute by half.  They still have the problem of fixed costs.  If online rises at long last it likely won’t be in a forced marriage to a high-cost, second-tier college.  Online is likely to remain second rate for as long as it uses dinosaurs as its delivery model.

The post:

———————————————————————————————————————————–
Here is an open letter to university presidents written by Clayton Christensen, a professor at the Harvard Business School and the author of the well-regarded books The Innovator’s DilemmaThe Innovator’s DNAThe Innovator’s SolutionThe Innovator’s Prescription and The Innovative University: Changing the DNA of Higher Education from the Inside Out.

The titles of the books and his position at the School of Business rather than the School of Education tell you something about Christensen’s focus, which is on disruption as an across the board phenomenon to be reckoned with rather than on higher education. It is only in his most recent book, The Innovative University, that he sets his sights on higher education, and what the future may hold in store for it.

In his view, the future won’t be a bloody train wreck. But that does not mean he is any less troubled by the challenges posed by disruption than are the many pessimists out there writing about bubbles popping. Rather, if he does not dwell morbidly, Cassandra-like, on the train wreck to come, it may be that he is mostly a hopeful optimist as regards people of good will to engage in meaningful change. Or perhaps he has just opted for this persona,thinking that you can catch more flies in the world of higher education with Socratic dialogue rather than hectoring.

One way of another, his open letter is a wonderful example of an attempt at Socratic dialogue with the putative leaders of the higher education sector. His open letter covers “eight thoughts”, four of which are problems and four of which are possible solutions. Speaking directly to them, he starts by making four points about problems that, as he puts it, “in our heart of hearts, we really know”:

1) that the current challenges are real, serious and not likely to go away,

2) that sideshows like the attack on for-profits are a diversion from the core internal problem of costs in the not-for-profit sector,

3) that student needs are being systematically shortchanged in favor of “scholarship and scholars” (i.e., research and faculty interests) and

4) it just won’t do to elevate the defense of the status quo to the center of one’s strategy.

[Let me bracket a caveat here about whether it is even fair to stipulate the above relative to the letter’s recipients. I am not sure all presidents would agree that, say, the needs of students need to be prioritized and that research has gotten too much attention. Lots of folks in higher education argue that what is good for scholars and scholarship is good for students, and I suspect that belief goes beyond a matter of political convenience for many presidents and approaches a hardened, encrusted ideology. And it is also not clear whether the audience he is addressing actually exists in a form that can respond and give voice to the Socratic olive branch Christensen is proferring . . . universities tend not to be “managed” by their presidents in any kind of conventional way, and the idea that the sector as a whole has a bunch of graybearded eminences that are capable of chewing on a tough argument probably doesn’t hold up. So there is a bit of a flaw in Christensen’s reasoning and in the design of his open letter. That said, it remains a very nicely done letter and let’s return to Christensen’s next four points.]

As to possible solutions:

1. The faculty itself, being no more selfish than most and probably a lot smarter, ought to be able to be tapped to help find a way out.

2. Residential campuses will always have great appeal. “(T)here will always be young people” who will be attracted to traditional colleges as “unique academic and social gathering places”.

3. While traditional colleges systematically generate deficits, on-line alternatives are capable of producing surpluses, thereby making the way for “profitable growth”.

4. Disruption is always threatening, but the smart faculty will embrace innovation so as to “hasten a new era of higher education productivity.”

OK, what to make of these arguments?

First of all, bravo. Despite the caveats mentioned above, the idea of an open letter stipulating inarguables and looking for engagement cannot be a bad thing, and it is a nice piece of rhetoric to be out in the public square even if there’s no real response from university presidents.

Second, I for one agree with Christensen’s stipulations and there is nothing in his open letter that would send the sector in a wrong direction.

But once again we come to the Sherlock Holmesian question about the dog that did not bark. What, if anything, might be missing from Christensen’s analysis? Are there any missing barks, or bites?

Yes, I think so.

For one, Christensen seems to be banking an awful lot on the goodwill of faculty (and, by implication, others with interests in the status quo, like the research infrastructure, athletics constituencies and others). Saying they should play nice is not likely to make it so.

Moreover, arguing that they ought to get on the technology train also has a Pollyanna quality to it. Why would a middle aged faculty member with a near-lifetime of encrusted habits all of a sudden decide to offer a course online or flip the classroom? Maybe, but it will take more than an open letter to a president make it so.

There’s also the question of whether Christensen’s reforms would actually, objectively, gore some oxen. It is all well and good to speak of win-wins, as Christensen seems to do in points 1 and 4 of his four solutions. But most management is about the management of win-loses. In the real world, win-wins can play an important role as icing on the cake but are seldom the central point of leverage and action. Christensen himself speaks of the traditional summer break, something that creates large facility and program inefficiencies, as being bound up with faculty preferences. But how would one fill the buildings in the summer without a bit of–ahem–strong-arming?

Christensen describes at length in The Innovative University how Brigham Young University-Idaho was able to make that change as it morphed from a stand-alone Mormon college to a part of a large Mormon university . . . but the folks involved with this important change were, after all, Mormons. At universities with less of an identity trump card than BYU–which is to say almost all universities–asking faculty to actually give up perogatives is never easy, and Christensen does not really provide any real suggestions as to how to deal with the problem.

And it is not just a problem with faculty oxen being gored by necessity: to undertake other reforms of the type that Christensen writes about in his book (dropping athletics programs, say, as BYU-Idaho also did) calls for another set of powerful oxen to be led to slaughter, or put on diets. Not that this is a bad idea: Fenster favors (here and here). But Christensen doesn’t really grapple adequately with the problem.

I also worry that there is a more fundamental problem with Christensen’s analysis, one dealing with subsidies. Let’s stipulate that he is correct that traditional universities can’t cover their costs but that on-line approaches can. He takes that insight to a possible conclusion: universities could be comprised of a combination of both approaches, with on-line subsidizing traditional. But is that in itself a sustainable model?

Students currently put up with their tuition dollars subsidizing other things for a bunch of reasons. There is often no transparency in cost allocations and subsidies so they don’t know. They don’t have the luxury of unbundling their tuition if they figure it out. They can’t help but be attracted by the reputational buzz of college X and figure they have to put up with it. And the activities they subsidize are local and visible and they may (say, if they go to football games) recognize some sort of value for payments made.

But those conditions are less likely to apply in the case of a student who is predominantly, or exclusively, engaged in an online capacity. Why should that student want to pay a tuition charge that is higher than needed so that a traditional student can enjoy the whole panoply of services and amenities that characterize the “college experience”? That’s not only unfair but likely to be regressive as well, since the more privileged are likely to continue with a traditional education under this view, with the less privileged consigned to a lower cost model.

Granted if a college with a mixed approach could show that its mixed nature contributed to a better online experience that would be one thing. But how likely is that to happen? Given the institutional constraints discussed above, doesn’t it seem more likely that a new entity devoted to the best that on-line could offer would be able to mount a worthwhile program more effectively and expeditiously than a traditional university struggling in the face of inevitable faculty hostility and resistance to reinvent itself?

Christensen has been criticized by some of the more pessimistic commentators for being too much the reformer, reluctant to see the bubble about to burst, and too willing to conclude that the big institutions can survive if only they would tweak here and there. I myself am more of a pessimist than Christensen seems to be, per the above.

Still and all, Christensen’s letter lays out a very strong reform argument. And make no mistake about it: reform (not revolution) is in the final analysis going to be a central part of whatever change takes place. What the bubble enthusiasts miss is that the higher education sector is not the same thing, structurally, as a housing market. The latter is simply supply and demand. Yes, there are a host of institutional actors, but the real action takes place between buyer and seller. And when things drop, they drop in that sphere. By contrast, higher education is institutional from the get go, through and through.

So while I am as dour as the pessimists about the large challenge, I don’t really expect the higher education bubble to burst in as decided a fashion as the collapse of the housing market. In other words, in the end the higher education problem, though more daunting than Christensen makes it out to be, is likely to unfold in a stepwise fashion in which reformist ideas will have great traction. We will probably see some of what he suggests, too: some new leadership by to date hapless leaders, some acquiescence on the part of faculty hearing footsteps, some willingness to let the reprobate on-line world into the game. That won’t fix the problem and, per the above, it may simply set up new quicksilver tensions. But it might, just might, be enough to get by. Sometimes you just get what you need.

About Fenster

Gainfully employed for thirty years, including as one of those high paid college administrators faculty complain about. Earned Ph.D. late in life and converted to the faculty side. Those damn administrators are ruining everything.
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5 Responses to Clayton Christensen’s Chickens Coming Home to Roost?

  1. Ed says:

    I started skimming through this towards the end because in my opinion the main dynamic of the late 20th/ early 21st century college bubble is really quite simple, but the way to look at it is through the demand side, not the supply side approach taken by most education focused writers.

    College graduates in the United States went from something like 7% of the workforce to about 40% today (approximate figures, but it was a big increase), and this was at a time when offshoring, immigration, and automation was starting to cut the demand for middle class jobs. Employers went from having only a few applicants in the pool with a college degree to having more college degreed applicants than they had demand for. There response was to make the college degree a requirement for even consideration for being hired.

    At this process continued, from the perspective of the the job seeker, a college degree no longer guaranteed employment in a middle class job. But it was needed, more so than in the past, to be even considered for such a job. Hence the higher education bubble. The degree was simply a requirement to join the workforce, so it couldn’t be avoided. An equivalent would be paying high application fees when submitting resumes to employers (except in this instance the employers didn’t really benefit but there was no cost to them from going along with the dynamic).

    There were a couple of ways this could be stopped, but until one of them happens it will continue. One is a labor shortage, so employers have to consider hiring non-college graduates, which would basically restore the situation as it was in the 1960s. A labor shortage would lead to a decline in college enrollment, since the college degree would confer an advantage in the labor market, but not be a necessity, so would be evaluated on a cost-benefit basis.

    The second is a labor surplus, or employment shortage, so severe, that the gateway feature of the college degree vanishes because there is simply no labor market to participate in. There might be some senior management and specialist technicians still employed, but the numbers are so small that there would be no benefit to get one of these jobs unless you had an inside track through nepotism. For everyone else, make work jobs or welfare with no pre-requirements. In this “Player Piano” world, a college education would be worthless except for whatever knowledge it provided.

    I do think that for the education bubble to continue, a balance must be maintained that there are enough jobs that it is worth essentially paying to enter the labor force, but not so many that employers will not demand so many requirements of applicants. Eventually this balance will get upset for some reason. The current panic I think will speed up the second scenario due to destroying much of the economy that there is no point in competing for non-existent 9-5 jobs.

    Distance learning, it it has any effect at all, will delay this result. It will allow make-work 9-5 jobs to be replaced with online make-work offered by employers, allowing employers to cut salaries and still gain applicants since the (actually quite considerable) costs of commuting vanish. And colleges can cut costs as well by losing their residential programs and still sell their degrees, which will be needed to gain the online make-work.

    However, the online economy will still delay the inevitable. Without much of a bricks and mortar economy, there will be the issue that there is just not that much to spend the salary gained by the make-work on. And it will be harder for illegal immigrants to participate, reducing immigration and demand for housing. The birth dearth that was already noticeable before 2020 will accelerate, eventually further reducing the demand for both housing ahd higher education.

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  2. Fenster says:

    I agree with this but would only add some comments relative to the odd way higher ed works. I see that you can frame this in a conventional supply-demand way and point to the effect of labor shortage or over-supply as having an effect on employer attitudes. But I don’t see that relationship as being that direct, and as mirroring a normal economic transaction.

    Employers benefit from higher education in several ways, one of which is that colleges in effect subsidize training or other skill-building things that they might otherwise have to front. So they will be pretty careless with other people’s money. As long as the supply of graduates meets their needs who cares about how the sausage is made?

    Colleges don’t sell “goods” like shoes the value of which is apparent in use but rather future goods like “employment” and the even less tangible “buzz” or “reputation.” So as long as their “customers” think they are getting a good deal (something that is impossible to verify when cutting the check and even hard 30 years later) they will also be careless with other people’s money.

    So rather than see this as a Rube Goldberg economic contraption I see it more as a living, breathing (and wheezing) set of interactions, more social than economic, and prone to a slow dialectical turn.

    Change in this model comes when employers conclude that they are not getting a good deal even when it is free. We are slowly seeing that change, with some big accounting firms saying f*ck it, the grads we are getting are barely literate and we may need to spend money not only to teach ’em but to unlearn ’em too. So they are opening the door to non-college grads, and I don’t think it is because of supply and demand as much as dissatisfaction.

    The dialectic then runs the other way, with costs finally reaching levels that cause all but the most wealthy and prestige-obsessed to balk. Online lurks in the background as a potentially lower cost, less bullshit, method. But colleges are reluctant to go whole hog and the accreditation agencies, composed of college people, have a bias for “the college experience”.

    But the customer side is also getting very testy. And that’s where the dialectic left things, poised precariously over an abyss, as the virus hit. Tune in next week for the next thrilling episode.

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  3. ia says:

    What do you make of this?

    “More than 750 media outlets, led by The New York Times, intentionally misled the public to create the impression that COVID-19 existed at Liberty University — and even implied that Liberty was responsible for a COVID-19 death in the surrounding Lynchburg area. We plan to take legal action against The New York Times, in addition to enforcing the trespass warrants that have already been issued against their staff.”

    https://www.washingtontimes.com/news/2020/may/8/how-we-prevented-covid-19-cases-at-liberty-univers/

    How can you trust hysterical, oikophobic MSM and academia about anything, including the weather.

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    • Fenster says:

      I have written a lot here about my skepticism, to put it mildly, of the mainstream media. So the Fallwell piece has the ring of truth to it. But I don’t know much about the controversy other than the faint awareness that Liberty was taking heat for a less than conventional approach.

      If the Times lied, dissembled, omitted, faked, etc. I would not be surprised and to hell with them, so to speak, for that if so.

      I’ll also say that Liberty should not be scorned on the face of it for a less than conventional approach. That all “regular” colleges fell in line with the shutdown idea may show prudence but may also show higher education’s risk aversion and lemming qualities. If Fallwell is to be believed they were not (just) placing their hands in God to protect them but also undertaking certain measures more like Sweden than Wuhan or Harvard. Their record suggests that may have been a prudent, if not the prudent, approach.

      There is just too much static in the air, spin and political jockeying at this point to make any definitive conclusions about the best way with COVID. I hope cooler heads will prevail in time and that we will see some impartial analyses of what worked well and what worked less well.

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  4. ia says:

    I wonder if accelerating occurrences of spooky things like corona will cause elites to doubt their righteousness, or at least their ability to manipulate the polis.

    Surely, something like this virus which they cannot personally avoid, must cause more anxiety than, say, forced busing of the proles.

    The education establishment may even be permanently altered with many unforeseen consequences.

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