Like all heavily regulated (protected) industries, #highered is ripe for disruption. But #startups have failed to challenge #universities because #entrepreneurs are, simply put, doing it wrong. They have focused on the wrong problem, trying to beat universities at their best, not
their worst. Higher ed does not actually have a teaching problem, despite what people may assume. The classroom method of teaching, or guided learning through instruction, has worked very well for centuries. There may be plenty of tweaks to make it more effective, less costly,
but disruption is not about tweaks or cost-cutting. Disruption is about rethinking how things are done. Universities, while perhaps lagging in adoption of online technologies and not doing enough to enthuse students in the classroom, do not have a delivery problem. Entrepreneurs
(and VCs) entering this space have assumed that they can use advanced technology to improve delivery. Maybe they can, but placing lectures and interaction online is not fertile ground for disrupting education. Even tweaking how education is done, and thus attempt to change the
offering, has not been enough. It is easy to see why: heavily regulated industries stagnate in their offering, but typically around an offering that has been proven to work. Uber didn't change the personal transportation offering, which is still to be driven from point A to point
B in a car; they changed how the offering is organized and thereby more or less wiped out (protected) taxi companies. As history shows, disruption does not happen because a new competitor takes on incumbents head to head with "more of the same" at lower cost, but because someone
is doing things differently. Similarly, universities have taught students for centuries--their offering, education, works. Technology can improve it, for sure, but this is not novel and not a means for disrupting the industry: universities have already adopted loads of technology
and also offer online teaching and online degrees. Startups could do this in a better way, but that would be akin to Uber competing with taxi companies using nicer or faster cars. I doubt anybody thinks that would have disrupted personal transportation. The way to disrupt higher
ed is not to replace or augment the professor with technology (which universities are already using technology to do). The way to do it is to change the organizing of the education offering: the "back end" processes that underlie and produce the classroom experience that students
get. Entrepreneurs have so far only looked to their personal experience as students. While there are of course things you can do to improve classroom delivery, doing so will not disrupt higher ed. What has not been addressed is the organizing of education, similar to what Uber
did to taxi companies: do things differently. Similar to taxi companies, universities are poorly and inefficiently organized. In fact, universities lack proper management and function much like cooperatives (with professors as members), which means they suffer the problem of
economic calculation: there is no bottom line, no way of properly measuring outcomes. As a result, universities lack a common direction, a problem exacerbated by democratic "management" by committees. This is ineffective, inefficient, and highly frustrating for whoever is on the
inside. Talk to any professor, and they will tell you how little time they have to put on education or research (their main responsibilities). Yes, there is overhead and too many meetings in private, managed business too. The point is not that there are costs that could be lower,
but that a bottom line facilitates professional management and rational direction of operations toward that common goal. As Mises taught, the use of proper market prices allows for rational prioritizing and management. This does not, in practice, exist in higher ed. Instead,
faculty committees deliberate on issues of university policy and engineer plans for how to generate preferred outcomes. Unfortunately, professors, with little to no (or only historic) experience of business management, are unaware of the problems arising from not having a bottom
line. Universities are organized much like capitol hill, with faculty members being 'elected' for a lifetime to run the show. There is even a faculty senate... If a professional manager were to be hired by a university, they wouldn't know where to start. But their first question
would be how their work could be measured. And there would be no intelligible actionable answer. Higher ed is indeed ripe for disruption, but it will not happen by changing or replacing classroom instruction. The truly disruptive idea will find a way to effectively and rationally
organize the production of education. IOW, an "Uberification" rather than head-on cost competition; a blue ocean strategy, not red ocean. So far entrepreneurs have pursued the latter, which is always a poor strategy for starting a new business. That's why education startups fail.
