Tertiary Education: Disaggregated and disrupted

In this webinar, Maria and Rob explored mega-trends in the education industry, looking at what’s causing disruption, and how industries like ours are increasingly being ‘disaggregated’. Below we summarise some of the ideas introduced in a wide-ranging discussion.

Rob talks disruption

Rob Brown, Group Manager for eMarketing at Navitas, kicks things off by talking about how many industries have been disrupted in recent years: music, movies, taxis, hotels, news and especially the knowledge and information industries. As an industry which has been in the business of ‘selling knowledge’, to put it crudely, education is already being disrupted across multiple fronts.

How much longer will education keep trying to charge $30,000 for a degree?

Rob shares examples of ‘forces for change’ disrupting our lives, study and work, including:

  • Mobile: anyone with a smartphone has information/knowledge in their pocket now. For the younger generation, the notion of going somewhere specific to find information is absurd, especially when you can choose to watch a lecture on the bus on the way to work!
  • Bandwidth: we couldn’t have done some of the things we do in the classroom even 10 years ago. In South Korea you can download a movie in a matter of seconds – we’re seeing a paradigm shift in terms of what you’ll be able to do and disseminate online.
  • Data: LinkedIn now has university pages helping students choose the best place to study. Students will be looking for a data-driven approach to decide where to study; it’s only a matter of time before you’ll be asking Siri about the top 10 places to study audio engineering in Brisbane and you’ll get a list straight to your phone.

Rob also outlines what’s happening in a few disrupted industries right now:

  • Music: we used to have to buy the whole album when all you wanted was 2 songs, right? Then iTunes launched and album sales went through the floor. In turn, iTunes is being disrupted by Pandora and Spotify; people don’t even want to pay 99c a track these days, and are happy to have advertising interrupt their listening so they can listen to music for free.
  • News: The ‘rivers of gold’ (classified ads) have dried up in the news industry; in 3-5 years, some are saying that newspapers will only have weekend editions in print – the money just isn’t there in online news.
  • Movies: Netflix not only disrupted the movie studios but is now producing content – House of Cards and others are becoming hugely popular series and now Amazon is getting into the production business too. Who owns the right to produce content? Anybody does, today.
  • Hotels and taxis have no answer to what Uber and Airbnb are doing; these companies own no real estate or cars – they’re just leveraging surplus requirements. This is particularly frightening for bricks-and-mortar universities who may be challenged by a competitor who doesn’t need classrooms or a physical teacher presence.

Rob concludes his section of the presentation with this favourite quote from a TechCrunch article last year:

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.
Maria Spies on disaggregation

three-chain chimeMaria’s section begins with a quaint and complex visual of a ‘three-train chime’ (shown here). Her point is that the pieces work together to make the clock chime and give an accurate time, and the same goes for industries; every part of the system works together to produce an outcome. These sort of clocks, however, exist less and less, and we don’t need so many different component parts to get the accurate time.

This is what disaggregation is all about: looking at the system of parts that combine to make a value or an outcome.

Maria then speaks about 3 key enablers to disruption:  new technologies, new business models and new value chains. Rob’s industry disrupters above don’t sell anything as such, but take a cut of something; there are new value chains, and Maria talks through a few examples of how this is happening. Take life insurance, for example, where certain things have to happen in certain sequences to deliver the product to the customer. Here they include activities like product management, sales & distribution, underwriting & risk management, claims management and so on. These are all bundled inside a platform called a company/organisation, which in turn are all bundled together in an industry.

To another example: the finance industry. Here the value chain includes items like personal finances, lending, payments and so on, but now there are smaller, start-up finance companies doing activities in one or more of these areas – and eating the banks for lunch! Just like the 12-track album with just 2 tracks we wanted, customers are starting to pick and choose which parts they’ll buy, and discarding the others.

Think of education: people don’t necessarily want a whole degree, either.

And so to the education industry, where the value chain includes activities like student recruitment, tutoring & learning support, teacher recruitment & management, content & course design, credentialing and more. Lots of new companies are doing things faster and better than the big industry players in each of these areas. We’re already partnering with some, like SEEK Learning (student recruitment) and Smarthinking (tutoring service, 24/7) and we can embed these into how we do things. For the moment, we are the platform.

The challenge comes when the platform changes. Credentialing may protect the big education providers at the moment, but that’s now changing with the growth of players and products like Deakin Digital, Openbadges and Skillsbook. MOOCs are also a platform, and didn’t provide credentialing initially – but now they do. What does that mean for us, and what can we do? Maria kicks off the rest of the discussion by encouraging participants to re-examine our core, what we’re really good at, and what we have already that we can use in other ways. The conversation continues on Yammer…

[Webinar available to Navitas staff only. To watch the full webinar and discussion, follow this link to Yammer.] 

See below to view the slides from the presentation: