Three Signs of Business Model Innovation Opportunities

How can you tell when there is an opportunity for business model innovation?

Recent events in higher education might give us a good indication.

There are a few issues in university education these days. The main one is that education is information based, and over the past 20 years we have seen nearly every single business model based on control of scarce information get disrupted. This has played out dramatically in the U.S.A. recently with the battle over SOPA/PIPA.

There are three signs that the business model for higher education provides real innovation opportunities right now. These probably apply to any industry approaching an inflection point:

  1. Everyone starts asking if your business model is broken: people like David Tapscott and Seth Godin have started talking about problems with the higher education business model. Questions have started to come from the inside too – David Parry and Joshua Gans have both discussed this issue recently. Clayton Christensen has even written a book on it..

    Where’s there is smoke, there’s usually fire.

  2. Business as usual stops working: there are plenty of things that are currently broken in higher education. I’m lucky in that things in Australia are better (for now) than most everywhere else. But the trends are unmistakable. See the infographic at the bottom of the post from OnlinePhD for details.

    Budgets are getting cut everywhere, it’s hard to find new staff, the journal publishing industry is under pressure, everything on the delivery side is looking a bit shaky. These are all signs that the higher education business model is under pressure.

  3. Everyone starts experimenting (except for the incumbents): there are experiments happening all over the place:
    • The post by Josh Gans talks about the alliance between Khan Academy and Vi Hart. Both have been testing out new ways to deliver material on video. Here is what Gans says about the alliance:

      The fact that these two are getting together demonstrates something important regarding online education. Experiments are happening and the successful ones are complementary to one another. In particular, both Kahn and Hart have evolved a particular style of video instruction. It is a style that removes the lecturer from the picture. Previous videos for educative purposes did not do that.

      There are people out there, for the most part far removed from traditional education, who are experimenting and working out how to make modular, compelling content that can free teacher time. They are finding each other and that is great news for the future.

      That is great news for the future – but it might not be for universities.

    • Apple is trying to reinvent textbooks – a part of the business model that rarely even gets mentioned when people discuss problems in higher education.
    • There are lots of experiments with massive open online courses. George Siemens, one of the pioneers in this area, talks about the big news this week, which is the foundation of new group that will do precisely this. The group is called Udacity, and it was put together by Sebastian Thrun, who ran a big open course at Stanford last year. It was wildly successful.

      His response to that success: “I can’t teach at Stanford again.”

      Even the experiments that take place inside of universities aren’t staying there.

    Experiments are a key part of innovation, and that is how we find out what works. New business models in higher education will come about through experiments. And the people that do the experiments will have a lot of impact on what the new business models look like.

    If you were a university right now, wouldn’t you want that to be you?

Our job is to invent the future. When you start to see questions about what that future should be, major problems with business as usual, and a sharp increase in experimentation, that is a sure sign that there is a big opportunity for business model innovation.

If you’re in higher education, now might be a good time to start trying to shape that future, instead of letting the future happen to you.

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Created by: Online PhD

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

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4 thoughts on “Three Signs of Business Model Innovation Opportunities

  1. Great post!

    Peter Thiel’s controversial TechCrunch article on the education bubble last April was, for me one of the early signs of an approaching paradigm shift. And while there have been numerous experiments in online education, something about Sebastian Thrun’s decision to resign his tenured position at Stanford this week struck me as qualitatively different, signaling that we are already in the midst of a true paradigm shift.

    I recently finished a 1961 book by Carl Rogers, “On Becoming a Person”, and was particularly struck by the personal thoughts on teaching and learning he shared in a 1952 essay. I’ll note just two of his observations here:

    d) I have come to feel that the only learning which significantly influence behavior is self-discovered, self-appropriated learning.

    e) Such self-discovered learning, truth that has been personally appropriated and assimilated in experience, cannot be directly communicated to another.

    The University of Washington Bothell, where I recently joined the faculty as a [non-tenure track] Senior Lecturer, will be convening an Innovation Forum next month. I’ll be very interested to see how much local interest and support there is for experimentation.

  2. Thanks Joe! I forgot about all of the discussion that followed from Thiel’s post – I’ll have to add that in.

    The points from Rogers are definitely important. The kicker in all of this is that Universities don’t just teach, they do a whole range of things, and many of the other things are more difficult to substitute for digitally.

    Good luck with the innovation forum!

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