Saturday, October 24, 2009

The Real Story about Online Learning

This week, online learning has been in the news. Both The Chronicle of Higher Education and Inside Higher Education reported on the recent report by Kenneth C. Green, Director of the Campus Computing Project. While there is a clear global trend towards lower-cost (even no-cost) online learning, this survey of senior officials at 182 public and private nonprofit colleges, conducted in conjunction with the Western Cooperative for Educational Telecommunications (WCET), found that many US institutions actually charge a premium for their online offerings through higher tuition, fees, and special charges.

This survey also found that many US institutional leaders were uncertain about the profitability of their online operations or how they compared, performance-wise, with traditional offerings. Dr. Green also found that many institutions were None of this is truly surprising to anyone familiar with the dereticent to provide their data or to illuminate their offerings.

Understand the Leaders, Not the Herd. None of this is surprising to anyone familiar with the development of online learning in US higher education. Most institutions use online and hybrid learning to replicate their existing classroom practices, online. Unlike emerging practice elsewhere in the world, they do not attempt to unbundle learning, assessment, and certification. Nor do they attempt to change the business model or price points for learning. For these reasons, looking at the herd is less instructive than understanding the global leaders and extrapolating their innovations into the future.

By examining the breakthroughs achieved by true market leaders, both in the US and abroad, in online learning, we can understand the real story about the future of technology-supporting learning in all its settings.

Two Evolutionary Transformations in the Models of Learning and Competence Building. In understanding the leaders, one should examine two evolutionary transformations that are ongoing and interconnected.

First, the evolution of the business models for institutions and formal learning enterprises from the traditional higher education model (bundled learning, assessment, and certification; quality-focused; traditional business model with premium price) to a transformed model (unbundled and reimagined learning; value-based, changingthe financial model with lower price to the consumer).

Second, the evolution of the learning setting from the traditional institutional setting to the transformed, open setting of peer-to-peer and community of practice-based learning.

So let’s begin with five stages in the transformation of the business model for online learning toward a focus on value.

First Stage in Business Model Evolution for Learning Institutions: Replicating Practices Online. The first stage is one in which traditional institutions enable their faculty to put courses online and create various forms of online offerings under the institutional brand. These offerings are often more expensive to develop and offer than the traditional institutional offerings because they do not achieve any breakthrough economies, they use traditional faculty, and replicate many existing practices. They do not use technology to transform faculty roles and patterns of interactivity. In the long run, this digitize-the-traditional approach to online learning will not be sustainable in the face of national and global competition.

The market leaders in online learning and the course reinvention efforts of Carol Twigg at the National Center for Academic Transformation have shown that technology can be used to improve performance/success and reduce costs in virtually every physical or virtual course. Sustainable online learning requires the pervasive application of these principles to the entire online learning enterprise

Many institutions remain stuck in the digitize-the-traditional-but-don’t-reinvent stage of development. In the WCET survey, most institutions were still searching for satisfactory, sustainable models for organizing and delivering online learning. They will continue to search fruitlessly unless they apply the following principle. The keys to evolving new, sustainable models for online learning is to utilize technology to:

• unbundle and reinvent teaching, learning, assessment, and certification;

• focus on value, not just quality;

• change the use and roles of faculty, mentors, and peer-to-peer learning; and

• transform business models by continuously seeking new income streams that can reduce the need to charge users, reducing costs, seeking lower price points and enabling more rapid completion of learning objectives, reducing total cost of achieving learning goals..

The following stages illustrate how this evolution is being followed by market leaders.

Second Stage in Business Model Evolution: For-Profit Universities and non-Profits that Emulate Them. This stage developed at the same time as Stage 1, but in different organizational cultures: for-profit institutions (and a small group of not-for-profit universities that deploy these techniques).

The for-profits such as the University of Phoenix, Capella University and the rest have utilized online learning to reinvent their production function (using team-developed resources in all instances of a course), engage mentors (not content experts rather than faculty, and deploy world-class (high-quality, high-value) online support services. These providers also vet their offerings with employers more extensively and effectively than traditional universities. This is not black magic or rocket science: the UK Open University pioneered many of these practices over 30 years ago as a not-for-profit, although like everyone it is reinventing its practices to fit today’s circumstances and trying to move fast to stages 3-5. Other non-profits like Regis University have emulated these methods.

These institutions focus on getting substantially lower production/delivery costs per student than traditional universities. This means paying close attention to class size: bigger means more opportunity to achieve economies of scale. Course materials are created by teams and used in all instances of the course. They utilize a core, standardized curricula that ensures quality and allows for continuous improvements, refinements and ability to quickly include new industry competencies. This can give economies of scope. At the same time, these institutions are able to charge a premium price for their offerings because of the recognized value they provide learners (who value shortened courses, accelerated learning for adults, lack of barriers, and premium online services). The higher resulting margin (difference between price and actual cost) is spent on marketing, profits, business/industry market research. and instructional technology/systems development costs.

In future stages of development, today’s for-profit providers may not be able to maintain their current premium price levels, in the face of competition now emerging at the low end (from no-fee systems) and at the high end (from innovators such as Capella University that have migrated to a competence-based approach that is more valued). Moreover, Capella-type innovators will be able to compete on lowering the total cost of achieving learning objectives and eventually become certifying enterprises. More discussion about that in the description of stages 4 and 5.

Third Stage in Business Model Evolution: Marginal Costs Driven Down to Less Than the Cost of Tuition at a Market Competitive Price. Institutions like the Western Governors University, Florida State College at Jacksonville’s Open College, and Lamar University have reinvented the production function and faculty roles to achieve many of the financial advantages realized by the for-profits. They have used technology to unbundle and reinvent teaching, learning, assessment, and accreditation.

But these institutions pass the savings on to learners in the form of more competitive tuition – a strong value proposition. They charge a market-competitive tuition which covers the marginal costs of learning. These institutions can grow based on tuition, alone, rather than appropriations from the state. This is critical during times of financial recession, when student demand spikes and state resources decline.

Achieving this stage is essential for public institutions attempting to attain financial sustainability. It is a strong value position – but even this value position will be improved over time and in the face of the withering competition that is emerging globally.

Fourth Stage in Business Model Reinvention: Reduction in Market Price and Total Cost of Degrees. Inexorably, the affordability crisis will force learners and their families to search for better value/options. Online providers will be driven to enhance their value proposition in four ways: 1) create better, more amenable, and more effective learning experiences; 2) demonstrate that their programs are linked to employability success; 3) decrease tuition and fees; and 4) reduce total cost of education by reducing time to degrees. This will affect the for-profits as well as traditional institution.

The reduction in time to degree will be achieved in three ways: 1) giving credit for prior learning more effectively and extensively, 2) competency-based approaches that unbundle and give credit for already acquired, demonstrated competences, 3) improved K-12 preparation through P-20 improvement initiatives. These efforts can substantially reduce the total cost of learning, over time.

A key factor in the price competition will be international competition. India- and China-based providers are entering the equation. Also, social networking-based learning offerings from commercial providers, perhaps using Second Life-like virtual and augmented reality, may soon enter the competitive scene at very competitive price points.

Fifth Stage: Some Institutions Become Certification Agencies.
A natural extension of the credit-for-prior-learning and competence-based learning movements is for some institutions to become certification agencies for learning. Such institutions would charge a certification fee for conferring a degree for learning achieved elsewhere This will prove attractive as peer-to-peer and “free range” learning opportunities develop. It is precisely the growth of non-institutional learning opportunities that is the second vector of evolution in elearning methods, models, and practices.

It could take years for this system of free-range learning and certification of competence to develop and be recognized and accepted by US employers. Or it could happen more quickly than we think (it is already starting to happen elsewhere in the world). When it does, a learner who is home-schooled, self-taught or educated-outside-of-the-US in a non-accredited institution, could take competency test/s and be granted a learning certificate or even a degree.

Evolution of Learning Settings from Institutional to Open. The learning settings described in the first vector of evolution are institutional: Traditional colleges and universities (including their extension and continuing education divisions), for-profit universities, and learning enterprises in corporations. These so-called “institutional” settings will continue to be the primary players in traditional learning. But they will see their dominance shrink in the face of open learning environments that are the property of the student, not the institution. The challenge institutions face is to keep pace with both the changing nature of knowledge and competence and the inexorable move toward greater value in learning and competence building experiences. Over time, open learning with the student at the center of a personal learning environment (as a free-range learner) will be the predominant mode for learners over the course of their lives.

Clear “stages” of open learning have not yet revealed themselves. They may emerge over time – or not. But there are several prototypes and expeditionary experiments that have been described in earlier blogs. Some of the forms of open learning environments and experiences are described below.

Peer-to-Peer Voluntary Associations. A recent article in Fast Company, “How Web-Savvy Edupunks are Transforming American Higher Education,” described the growing movement toward high-tech, do-it-yourself education. Some of these experiments reside within existing institutional settings, such as classes structured like role-playing, serious games that are being tested out in universities across the globe. Others are occurring in start-up organizations, like Peer2Peer University and the University of the People, attempting to bridge the gap between free online materials and cheap education.

Neeru Paharia and Jan Phillip Schmidt have hacked together Peer2Peer University, which uses a Web site to enable would-be-students to convene and schedule courses, meet online, tutor one another, all facilitated by a volunteer. This is very much a demonstration of concept. Shai Reshef founded University of the People and has his first class of 300 students from nearly 100 countries. His aim is to offer bachelor’s degrees in business and computer science using open courseware and volunteer faculty for a price of about $4,000 for a four-year degree.

Other pundits, such as Richard Vedder have mused about associate degrees for as little as $2,000.

Formal Communities of Practice. Informal and formal communities of practice are common in the world of business and professional practice. These sorts of communities will become the focal points for open learning experiences in the future. Earlier blogs described the efforts of Oregon State University to create an Open Campus dedicated to community-based learning. Another example is the Food Safety Knowledge Network.

In their partnership with the Global Food Safety Initiative, Michigan State is developing the Food Safety Knowledge Network (FSKN), a program of food safety resources to efficiently and effectively reach competency at all levels of food safety. The FSKN will use open resource techniques (social networking, dynamic knowledge sharing and evaluation tools) to harmonize standards, practices, qualifications, and training criteria. The FSKN pilot platform will be in place in late 2009 and will be rolled out globally in 2010. The FSKN will create a curriculum for food safety competency through partnerships with industry, government, academia, local/regional authorities, and other stakeholders. Coupled with a unique learning environment using face-to-face sessions, seminars, formal courses and on-line learning, it will present a low cost, fast and efficient way for professionals to achieve competence qualifications across all sectors of the food safety industry.

Community-of-practice learning is likely to thrive in the Web 2.0 environment. Its permutations are virtually limitless. One of the advantages of learning based on real communities of practices will be the capacity to receive early warning of the emerging competences that are essential in particular fields of endeavor. Communities of practices will be able to identify, promote, and develop fresh competences among large bodies of participating practitioners at warp speed. And without involving anything remotely esembling a campus curriculum committee.

Free-Range Open Learning.
Over time, individual learners will have access to a vast constellation of open learning experiences. These will range from formal communities of practice and competence building networks, to easily configured, temporary learning cohorts. Using these tools and experiences, individuals will be able to develop, maintain, and extend their competence in a variety of ways and at very reasonable prices, or even at no cost. Even when “mature”, this constellation of alternatives will be perpetually changing, adapting, and improving.

This environment will constitute a “free range” option for learners who appreciate alternatives to traditional or even transformed institutional learning. These options will enable most adult learners to more easily advance and maintain their competences and acquire new and emerging skills at a pace that institutional learning cannot match – at least not today (just as there is no “I” in team, there is no “curriculum committee” in open learning).

Open learning environments and experiences will interact with institutional learning, assessment, and certification experiences. Institutions that do an excellent job of competence-based learning may become certifying entities that charge a fee for authenticating competences acquired through open learning and awarding credit, certificates and degrees for a fee. This is one way in which the two evolutional paths of learning and competence with link together. Mash-ups to offer that link are under development in Europe, in partnerships between business/industry (a primary source of information on the skills that graduates need to be employable) and universities. As an example the description and materials on Project Role, an EU-funded initiative (

Many Models, Competing for Learners. These two evolutionary paths do not suggest that any single model will become dominant for all learners, at all stages of their development. But they do mean that institutions will need to sort out their competitive position and determine how to provide the constellation of options that will be optimally attractive to their learners. Merely digitizing the traditional and hoping for the best will not be a winning strategy.

This will be the subject of future blogs: How institutions can capitalize on the dual evolutionary paths of learning and competence building. This is critical to reimagining higher education to establish finance sustainability.