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Digital Disruption

July/August 2017

By Peter Smith

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Transformational change is pushing higher education leaders to rethink the traditional organizational model in ways that align with the digital age.

It is an understatement to say that higher education is caught in a time of disruptive change. New products, services, and resources are becoming available as the confluence of technology and data analytics redraws the landscape of higher education and lifelong learning. These changes and the new environment that is emerging are putting tremendous pressure on the traditional academic and business model of higher education. Understanding what the emerging ecosystem will look like and how it might work becomes critically important in the moment.

Scanning the horizon examining institutional responses to these disruptive forces, however, I see a wide variety of initiatives that match specific new services with perceived institutional needs. What I do not see is an overarching understanding of or model for operating in this very new, emerging universe of learning, including consistent organizational and financial models. That is why this issue of Business Officer is so important.

Every institution must take its history, traditions, strengths, and weaknesses into account when styling a response to the coming digital era. Beyond specific institutional responses, however, it is important to identify larger patterns in the solutions that are being examined and the new services that are being tested. With that in mind, my purpose in this article is to suggest an early-stage conceptual model of what higher educational organizational structures might look like in the digital world and why. This will include (1) an explanation of key disrupters, (2) a brief description of the evolution of the dominant campus organizational model, (3) a presentation of the financial and qualitative reasons why a new model is inevitable, and (4) some examples of what the “networked university” will look like, using present-day practices and some blue-sky projections.

In its early stages, profound change creates turmoil and confusion for decision makers. It can engulf us like a blizzard, blinding us to new and potential permutations and combinations, as well as the larger implications, characteristics, pitfalls, and opportunities made possible by disruptive change. It is somewhat like skiing in a blizzard without goggles, as we focus on immediate situational or institutional challenges as they come at us, but are unable to perceive the bigger picture.

This article will provide the goggles for skiing in this blizzard of change. While we may not be able to capture the overall conceptual construction of lifelong learning and postsecondary education in the digital age, we can begin to identify some of its parts and to understand them organizationally, academically, and financially.

Entering a New Era

Importantly, no one and no institution in higher education gets a pass on these disruptive changes. The digital age is impacting all the players: institutions, regulators, boards, and policymakers, as well as learners and employers. In these early stages, responses seem to be twofold: tinkering with long-held practices academically and financially or adopting dramatic new approaches to practices that would have been considered “beyond the pale” even 10 years ago for most institutions.

Several previously inviolable institutional responsibilities are subject to reconsideration, as the context within which colleges operate undergoes radical change, bringing new capacities and new assets into play. For example:

Both examples illustrate the rapidly changing ecosystem of educational services and products, their impact on cost and availability, and the adaptations that institutions are beginning to make in order to survive financially.

In addition to new practices, myriad new products and services in the new ecosystem are coming online. The following list contains both the function being developed and examples of companies and services providing them.

These new products and services, along with hundreds of others, are changing the larger ecosystem within which institutions operate and individuals learn, affecting the financial, organizational, and academic opportunities available to colleges and universities. Collectively, they herald the move from a traditional to a new organizational model: the networked university.

An Untraditional and Evolving Organizational Model

The traditional postsecondary model is, and was, a stack of services and facilities that was vertically integrated to provide a comprehensive learning community and environment for students. In this world:

Each institution largely managed its own business for two, mutually supporting reasons: (1) this is the way it had always been done, and (2) no competing ecosystem of services was available to provide effective and affordable alternatives.

Food service may have been the initial area where institutions determined that someone else might be able to do a better job, under contract, for less money. And maintenance of property and grounds, or perhaps bookstores, might well have been the second. Then we saw the rise of consortia, sharing library resources and even curricula in the case of Hampshire College and its partners, in the early ’70s. That shift to outsourced services began, initially, in nonacademic areas or in ways that did not encroach on academic autonomy. Although the institution still looked like a vertical stack to the learner, it was, behind the scenes, becoming networked and more horizontal.

Through the ’80s and ’90s, however, this organizational model—a horizontal and contractual partnership—was marginal to the general enterprise of the traditional institution. But, soon after the turn of the 21st century, the onrushing technological revolution presented a new dimension to outsourced services. Even in its early stages, this phenomenon blew past the operating definition of “online education” and brought a new set of educational products and services that were created, financed, and sourced away from the campus.

With them, came a new set of rules. “Online education” had primarily focused on a new medium for old content. These new opportunities, however, suggested the possibility of an entirely new and different ecosystem, in which learning could be offered, supported, and completed in the digital world.

Predictably, institutions responded with the “vertical” structure as the model. As they tried to develop these new services autonomously or in consortia, however, they found that:

In short, to use Clayton Christiansen’s terms, the “job” that they were “hiring” the technology to perform was not getting performed sufficiently well and at a price they could afford, even in the early stages. The complexity of the technology and the data science, coupled with the significant, focused investment needed to succeed and then keep up with the market, began to move universities, individually or in consortia, from being creators and owners to the roles of partners and customers.

The Networked University: Three Versions

And then the game really changed. During the first decade of the 21st century, the second shoe dropped: free content. When the MIT Open CourseWare Consortium began offering courses for free and the global open education consortium (OEC) and Creative Commons were formed, open education resources began to flood this henceforth unrecognized and undeveloped space. And, with the advent of MOOCs at the end of the first decade, institutions began to imagine a new marketplace with dramatically different economics and potential. Companies that focused keenly on a single product—course content, a learning management or learning support system, or an assessment process—for example, populated that marketplace and sought world-class quality in that product.

These companies were able to invest and, importantly, re-invest heavily in complex and qualitative solutions with which no institution could compete. Separate from institutional policies and revenue needs, services developed and offered through the noncollegiate online and digital world were, in many cases, both world-class and less expensive than traditional services.

Version 1: Improving on-campus services. Skyrocketing complexity and potential, coupled with far lower costs, changed the environment in which institutions of higher education operated. Although the impacts have been accumulating slowly, the tipping point came when many elite universities validated the space by offering their courses as MOOCs, for free. Then, for the first time, online and Web-based services were seen broadly as legitimate.

As new companies and services emerged, colleges did not any longer control the “high ground” in terms of service quality, structure, or costs. Initially, the potential of these disruptive innovations far outstripped the market of people and institutions interested in using them. This is often the case. And traditional policies and practices as well as organizational cultures also slowed the adoption of these ideas and services.

Gradually, however, products and services developed outside of the institutional framework were often recognized as better and cheaper than the internal services. And institutions began to adopt them. For example, consider learning platforms and support services. Early pioneers such as Blackboard, Desire2Learn, InSideTrack, and Civitas were established. And, as they developed, they began to populate the postsecondary landscape in partnership with institutions because they had the capital, the quality, and the singularity of focus to excel in their space. Today, they are seen as part of the fabric of higher education, as “the way things are.”

That is the crux of the situation that has driven the accelerating evolution of the networked university for the past eight to 10 years. The investment that was needed to stay on the leading and qualitative edge of change proved a formidable obstacle for educational institutions to overcome. They simply could not invest sufficiently to excel in areas that were not their core business. Ironically, though they might, in certain cases, be the inventors of the technology involved, they could not harness the potential of that technology for their own purposes.

Many university officials began to recognize that they could no longer afford to be good at everything; that they had to choose the areas where their claim to excellence or their core identity would lie, and excel in those chosen areas. This, in turn, revealed where they would contract with vendors or partners to provide the new services they needed to compete for learners and provide the quality of learning-life that their learners expected. The networked university was conceived.

This university is no longer a vertical stack of services, independent from outside forces. The organization is now a horizontal network of services, intertwined and engineered to achieve the learning and quality-of-life objectives espoused by the institution as its priorities. In this framework, the institution decides what discrete set of services it wants to focus on for brand quality. And then, the other services are managed through contracts with third-party organizations that bring superior quality and execution to the partnership. When we see a learning management service such as InsideTrack, with data analytics to support more successful teaching and learning, we are seeing an element of the networked university. And when we see open resources used in place of textbooks, and free and open content integrated with existing curriculum, we are seeing elements of the networked university.

Version 2: Reaching new learners in new places. Once we recognize the value and necessity of partnerships and operating horizontally, however, it doesn’t stop there. The opportunities are multidimensional. The services discussed so far support the campus and the traditional format, as well as more innovative forms. And that will continue to happen, as institutions struggle to stay current and compete for students. But another horizontal activity enabled by this new universe of learning and its constantly developing ecosystem goes even further.

New business partners are helping institutions develop and implement new programs and services based on the new ecology. For example, consulting and investment companies, such as Academic Partnerships and Entangled Solutions, are springing up to assist institutions with both consulting advice and investment capital to create new services and business entities that operate in the new ecology. With this type of partnership, a university can develop a new approach, separate from its core academic and business model, with the financial and consulting partnership model. This is yet another aspect of the emerging networked university: attracting investment partners to create new units that broaden the institution’s revenue stream and diversify its governance structure while inserting it into new markets.

As colleges explore new ways to reach additional learners, projects like the Arizona State University (ASU)–Starbucks partnership will become part of the new normal. In this breakthrough program, facilitated by technology-enabled curricula and enhanced learner support, Starbucks employees are given special conditions and treatment to enroll in selected, undergraduate ASU degree programs. For Starbucks and the employees, it is a gateway to higher morale and competence on the job, as well as new career options. For ASU, it is a pool of thousands of potential students learning in an academic model that can be quality-assured at a lower cost of their traditional, on-campus programs. In this case, Starbucks is significantly underwriting the last two years of study.

An even more adventurous approach to connecting colleges with new learners can be found in the Department of Education’s EQUIP demonstration programs. With demonstration projects, the department has begun to explore the ways that learning happening away from colleges, in settings such as boot camps, can be incorporated into the college academic experience, including financial aid for the participants with appropriate quality assurance. A good example of this is the StraighterLine–Dallas County Community College District (DCCCD) project. In short, StraighterLine, as a non-accredited learning business, is delivering up to 75 percent of two AA degrees for DCCCD. Students who can’t afford StraighterLine’s out-of-pocket expenses can enroll at DCCCD, though at a higher price, to get financial aid to take their courses. This model incorporates the validation of learning done off-campus, at noncollegiate sites or online, with acceptable quality assurance to satisfy the federal government and secure financial aid for those who need it. All of this is done in cooperation with the regional accreditation agencies.

This approach keeps the value of colleges “in the game,” while allowing other entities to bear the brunt of the design and implementation costs.

The significance of this experiment cannot be understated. Because the more ways that learning programs offered beyond the scope of colleges’ academic oversight can be incorporated for academic and financial recognition, the more learning can be sponsored and completed in just-in-time and need-responsive conditions and then translated back into academic value. This is one early example of a bridge between colleges and the “free-range learning” space in the digital age.

Version 3: Free-range learning and networked universities. The third version of networked learning exists on the “free-range.” Now that all learning—personal, experiential, and sponsored—may be assessed and can often join academic learning as legitimate and valuable, entire personalized learning pathways and programs can be constructed for individuals and groups of learners. Although traditional colleges and universities are less enthusiastic about these developments, employers and more innovative colleges are innovating in this space. As the evidence-based assessment tide is rising, the issue of where or how something was learned is becoming secondary to what the learner knows and is able to do, and how well.

There is a “network trifecta” at work here.

First, there are the creators and providers of services coming into the marketplace to drive mass personalization of learning. I have dubbed this cohort of services the “Learning GPS.” The LGPS will allow learners to map their learning journey by determining:

Tools combined into a service such as the “Learning GPS” will give learners information and support like they have never had before.

Second, there will be services such as Degreed, the Credential Transparency Initiative, and Innovate+Educate that will allow people to build a nonacademic transcript or portfolio that can be interpreted for either academic or employment value, as the situation warrants. So, the once-impregnable bond between college and “acceptable” learning is being challenged by these new practices.

And third, using services like Common Currency and evidence-based assessments, colleges that are so inclined will be able to assess learning done on the free-range for advanced placement towards degrees and certificates in response to the learners’ needs.

It’s Only the Beginning

These are just three iterations of how some institutions and learners will operate in the digital age. Many other permutations and combinations will appear in response to institutional and learner needs, driven by evermore sophisticated and powerful technologies and the innovations and improvement they enable. There will be some common elements, however, in this networked world. They will include:

For all involved in higher education and lifelong learning, the main challenge will be how to move our current financial, organizational, and academic models from where they are to a sustainable future, using these new products and services.

PETER SMITH is Orkand Chair, Professor of Innovative Practices in Higher Education, at the University of Maryland University College, Adelphi.

Related Topics

The digital age is impacting all the players: institutions, regulators, boards, and policymakers, as well as learners and employers.

This [networked] university is no longer a vertical stack of services, independent from outside forces.