As a society we’ve grown complacent, thinking smart people in colleges are doing a good job preparing our kids for the future. Yet higher ed has become a lumbering giant, slow to adapt and increasingly out of sync with the needs of business and society.
The “education industrial complex” is perhaps the most influential in the world, with everyone from Presidents and world leaders, to Nobel Laureates, to CEOs and business executives all unwavering in their support of colleges and their accomplishments. Yet for the lowly student sitting at home with $100,000 in debt and the only job available to them is one that doesn’t require a college degree, the entire system begins to feel like a house of lies, with festering levels of anger working their way to the top. Over the coming months this seething cauldron of discontent will begin to erupt in unusual ways.
So what happens when the legacy power of an institution meets a rapidly changing business environment driven by emerging technology? Some will survive but many will not. For this reason I’ve decided to focus in on eight core issues for colleges that will drive a wedge between business-as-usual and the unstoppable forces of change.
1. Overhead costs too high – Even if the buildings are paid for and all money-losing athletic programs are dropped, the costs associated with maintaining a college campus are very high. Everything from utilities, to insurance, to phone systems, to security, to maintenance and repair are all expenses that online courses do not have. Some of the less visible expenses involve the bonds and financing instruments used to cover new construction, campus projects, and revenue inconsistencies. The cost of money itself will be a huge factor.
2. Substandard classes and teachers – Many of the exact same classes are taught in thousands of classroom simultaneously every semester. The law of averages tells us that 49.9% of these will be below average. Yet any college that is able to electronically pipe in a top 1% teacher will suddenly have a better class than 99% of all other colleges.
3. Increasingly visible rating systems – Online rating systems will begin to torpedo tens of thousands of classes and teachers over the coming years. Bad ratings of one teacher and one class will directly affect the overall rating of the institution.
4. Inconvenience of time and place – Yes, classrooms help focus our attention and the world runs on deadlines. But our willingness to flex schedules to meet someone else’s time and place requirements is shrinking. Especially when we have a more convenient option.
5. Pricing competition – Students today have many options for taking free courses without credits vs. expensive classes with credits and very little in between. That, however, is about to change. Colleges focused primarily on course delivery will be facing an increasingly price sensitive consumer base.
6. Credentialing system competition – Much like a doctor’s ability to write prescriptions, a college’s ability to grant credits has given them an unusual competitive advantage, something every startup entrepreneur is searching for. However, traditional systems for granting credits only work as long as people still have faith in the system. This “faith in the system” is about to be eroded with competing systems. Companies like Coursera, Udacity, and iTunesU are well positioned to start offering an entirely new credentialing system.
7. Relationships formed in colleges will be replaced with other relationship-building systems – Social structures are changing and the value of relationships built in college, while often quite valuable, are equally often overrated. Just as a dating relationship today is far more likely to begin online, business and social relationships in the future will also happen in far different ways.
8. Sudden realization that “the emperor has no clothes!” – Education, much like our money supply, is a system built on trust. We are trusting colleges to instill valuable knowledge in our students, and in doing so, create a more valuable workforce and society. But when those who find no tangible value begin to openly proclaim, “the emperor has no clothes!” colleges will find themselves in a hard-to-defend downward spiral.
Ironically, we are entering into a period where the demand for education will rise substantially. Yet traditional colleges are such a mismatch for what future consumers will want that dropping enrollments will cause many to fail.