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General News    H3'ed 3/3/11

Creative Destruction-The demise of the brick and mortar university and the looming college debt bubble

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william czander
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Electronic education offers the potential to be on going, and wouldn't be bounded by age or any socioeconomic group. Everyone would have access, all the time, at any time. Learned societies, and professional associations would function similarly without the need to hold location based conferences. Like minded scholars could freely meet, discuss and collaborate using information technology.

Brick and mortar universities are currently in a fight not for prestige but for survival and this is based in part by Joseph Schumpeter's description of the transformation process that follows radical innovation. In his book Capitalism, Socialism and Democracy. Schumpeter, maintains that companies like the university that were once dominant would lose out as technological advances improve delivery of goods and services, alter customer service and significantly cut costs.

We may even see a Wal-Mart type of university. Wal-Mart has become a retail giant in its short history through its use of innovative supply-chain and inventory-management processes, economy of scale, and personnel-management techniques -- all resulting in significantly lower prices that allowed it to destroy older or smaller companies. Older behemoths once perceived as retail powers died (e.g., Montgomery Ward, A&S, Korvetts, S.S. Kresge, Fedmart, and Woolworth) because they could not compete with their nimbler and more innovative competitors. Not surprisingly it may turn out that Wal-Mart will also die as it faces threats brought about by globalization. Wal-Mart relies on China to produce the products they sell, some suggest as much as 80 percent of the products they sell are made in Asia. Will there come a day when the Chinese decide to eliminate the middleman (Wal-Mart)? It is happening: China has its own online store 360buy.com and Wal-Mart sensing the end may be near has invested half a billion dollars in the company. Soon the Chinese will establish retail stores in America. This is Schumpeter's creative destruction and we see it all around us. Just as the 8 track replaced the vinyl record and the cassette tape replaced the 8-track, only to be destroyed by the compact disc, and then the compact disc sent to scrap-heap by the MP3 player and then the iPod followed by the iPhone and droid, which will be followed by a new device. We see creative destruction as the music industry continues to be transformed. In 2009 it is possible for anyone even the slightest bit of internet savvy to have thousands of songs in their hard drive - all obtained free.   Nothing is static in this technologically changing world and this includes the brick and mortar university.  

Radical innovation has altered almost every facet of American life and cultures around the globe. In American millions of manufacturing jobs, once consider safe, have been lost and the economy has been turned on its head by change. Consider the biggest supplier of clothes and toys to Wal-Mart and Target, it is Li & Fung an outsource and trading company in China. In October 2009 they purchased Wear Me a New York based design and manufacturing company. Wear Me holds licenses for brands like Calvin Klein, Timberland, Disney, Marvel and Nickelodeon. With the purchase of Wear Me, Li & Fung now had the capability to move into the business of designing, sourcing, licensing, marketing and selling of apparel and accessories.

We are witnessing the same phenomena in newspaper industry as free online papers destroy traditional print journalism. Also in the publishing industry and some predict that all books will eventually be free and digital. Today's students not only do not pay for music they also do not pay for textbooks and these publishers are scrambling in a feeble attempt to survive. They are busy creating platforms to supply learning materials on digital devices. The software is already in use in India and it will be offered in other developing countries in Asia and Africa and of course will be used by students in America. Just as a sixteen year old looked at a rotary telephone 2005 and said "what's this," years from now a teenager will look at a book and say the same thing.

We are witnessing a similar phenomenon with universities. Existing technology (often free) offers the ability to drive digital information (instruction, music, etc.) and distribution costs down to a fraction of traditional costs. Open source, open course, online synchronous and asynchronous delivery with facilitated group interaction through social media is already a nearly free educational tool. Anyone can sign on, read the same course materials, see and listen to the instructor and classmates at several campuses. Students can contribute, ask the professor questions or engage in group conversations with classmates online in real time, through video group chats. They can take the same tests, quizzes and collaborate with others through email, blogs, wikis, you tube, shared docs, and video chats. In 2009, less the sheepskin, this is all available for free. We are now witnessing the beginnings of free universities.

Universities are struggling to keep up with the technology and they know that obsolescence means a fast end of business. At the European School of Management and Technology (ESMT) they offer the following:

* ESMT Open Lecture with Prof. Avinash Persaud * New video series: ESMTcast "Learning for Leading" available on iTunes * Up-to-date information presented on social networks Facebook, Twitter and YouTube * Deutsche Welle TV's 4-part documentary on the ESMT MBA online   There is a model of education put forth by India, a country that sends 12 million young people into the labor force every year.   India's Model

Given the demand for secondary education (considered high school and junior college) India will need to increase the numbers to be educated from 17 million 2008 to 57 million in 2017.   In addition India is attempting to achieve a university enrollment increase of 30 per cent by 2020.   To meet these goals the traditional way (brick and mortar) would require the addition of 700 universities and 25,000 schools and junior colleges with an addition of more than a million teachers, 15,000 faculty with   Ph.D's in management and over 30,000 Ph.D's in engineering (Pathak, 2011). They cannot and will not build institutions or hire thousands of professors that they do not have, instead they will use electronic means to deliver the needed education.

Consider one method they will use- NPTEL is a joint venture by Indian Institution of Technology and Indian Institute of Science established to deliver education in engineering throughout the country using curriculum based video and web courses. This allows a single experienced professor to reach thousands of students. Each course contains materials that can be covered in depth in 40 or more lecture hours. In addition, 110 courses have been developed in video format, with each course comprising approximately 40 or more one-hour lectures. Students have access to 129 web courses in engineering/science and humanities and these offerings will continue to grow.

India will also deliver distance education courses through so-called study centers where students go to take online and televised courses. If the student does not have access to television or the internet at home they walk to the local study center. Many of these centers are franchised operations owned by locals. The Indira Gandhi National Open University has over 2.4 million students with 3,000 study centers. Other players in distance education are: Punjab Technical University with 1,200 study centers; Sikkim Manipal University with 750 study centers and Maharishi Dayanand University with 759 centers. At present here are about 100 online universities and the number will continue to grow. In addition these online institutions stream educational content through the third generation (3G) mobile telephony using the satellite-based Very Small Aperture Terminal (VSAT) Technology and Broadband, and McGraw-Hill is developing a platform to teach English and test preparation on cell phones and of course they use YouTube and FaceBook. NPTEL has around 4400 videos on You Tube contained in 120 courses and 2.6 million viewers. Indian corporations are also participating in higher education especially in the areas of pharmacy, engineering and medicine. This is how India will educate its populations and do it inexpensively.

 

No 12 hours a week studying for these students

No bear blasts that go from Thursday night to Sunday

No 110,000 students and alums at the football game

And

No $200,000 diploma

 

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He has taught in MBA programs for almost 35 years in 2002 he left academe to work for Home Depot where he witnessed the absurdity of corporate life. He is now semiretired and serves on the faculty as an adjunct professor at several institutions. He (more...)
 
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