Half of All Colleges Won’t Exist in 10 Years. Here’s Why.

Disruption.

That’s what Clayton Christensen, a Harvard Business School professor and author of The Innovator’s Dilemma, says b-schools are headed. Christensen argues that half of all colleges won’t exist in 10 years.

The Disruption Theory

Higher education, at the end of the day, is an industry that runs as a business. And like other industries, it is prone to innovation and disruption.

Christensen calls it the “disruption theory,” or disruptive innovation.

According to his website, it’s “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”

The Threat of Online Learning

Christensen has been vocal about the disruption theory. In 2017, he spoke at Salesforce’s Higher Education Summit, where he discussed the disruption theory and how it applies to colleges and universities, Inside Higher Ed reports.

Higher education, he says, is an industry that “for several centuries was not disrupted,” but “online learning has put a kink in that.”

Technology, while not the disruptor itself, has helped sprout new business models. In the case of higher education, business models such as online learning have forced a number of colleges and universities to adapt.

Jeff Haden, contributing editor at Inc, recently wrote about Christensen’s arguments and how higher education is prone to disruption from online learning.

“As online and ‘hybrid’ learning continues to grow – and as the cost of a traditional education continues to increase — many institutions will struggle to stay in business under their current model,” Haden writes.

The Rising Cost of B-School

B-schools haven’t been shy about increasing their costs over the years.

In 2017, P&Q reported how nine b-schools already broke the $200K mark.

Rewind back to 2013, that number was the max for two-year, full-time MBA programs. However, as many top b-schools increased their costs, others followed.

In his Salesforce speech, Christensen highlights an important question: Is a Harvard Business School degree worth nearly $400K?

“…that price point has made it such that the only people who can afford it are would-be McKinsey consultants, hedge fund managers and the like,” he said. “Our customers need so much money in opening salary to pay off their debt that we have overshot the salaries.”

On one hand, many see higher education as a ticket to a successful career. Yet, with tuition costs increasing to astronomical prices, many are left without the option of pursuing a degree…or searching for lower cost options.

Enter Amazon

Haden, of Inc., paints a strikingly realistic, yet hypothetical situation: What if Amazon decided to enter the higher education marketplace?

“Amazon has almost unprecedented technology infrastructure and know-how,” Haden writes. “Amazon understands its customers’ behavior to an incredible degree. Compare Amazon’s ability to deliver what you want, how you want it, and when you want it, to that of the average college or university. Or even to the growing number of online universities, hybrid universities… and especially to the ‘traditional’ institutions that offer online learning options.”

While the idea is hypothetical, it raises an important question: When will someone disrupt the higher education market?

“Smart entrepreneurs—and smart hiring managers—care not so much about what you did in school, but what you can do on the job,” Haden writes. “And it’s likely that soon a new educational business model will better deliver graduates who have not just a ticket—and deliver more of those graduates, because everyone willing to work for a ticket deserves to earn that ticket—but also more of the skills they need.”

Sources: Clayton Christensen, Inside Higher Ed, Inc., Poets & Quants