Donald M. Norris, President and Chief Scientist, Strategic Initiatives, Inc.
Paul Lefrere, Partner, Strategic Initiatives, Inc.
This is the second of four blog posts on this subject.
II. Two Evolutionary Transformations in the Models of Learning and Competence Building
In studying the strategies and actions of the market leaders, one should examine two evolutionary transformations that are ongoing and interconnected. These involve both the business models and learning settings of online learning. In our view, these dimensions are undergoing transformations that will shake higher education’s world.
First, there is the evolution of the business models for institutions and formal learning enterprises from today’s traditional premium price model (bundled learning, assessment, and certification; a focus on what constitutes a quality education/institution; and traditional roles for faculty) to a transformed model (unbundled and reimagined teaching, learning, assessment, and certification; value-based in times of scarce resources; reinvented roles for faculty, mentors, instructional designers, and peer-to-peer learning; and changing the financial model to achieve financial sustainability and lower prices to the consumer).
Second, there is the evolution of the learning setting from the traditional institutional setting to a transformed, open setting in which “open” includes but is not limited to Open Educational Resources (OER). Open also means that users have far more choice today about what they learn, how they learn it, what if anything they pay for it, and who they learn it with/from (e.g. peer-to-peer learning and community of practice-based learning). Some of these transformations are being incorporated in traditional institutional settings. Others are occurring outside the realm of accredited institutions and formal learning enterprises.
So let’s begin by discussing five stages in the transformation of the business model for online. These are presented in the graphic “Evolving Models of Learning and Competence Building” attached at the end of the white paper. The horizontal axis represents progressive transformation of business models toward greater value and financial sustainability. The vertical axis represents progressive expansion of open learning practices, both within traditional institutions (represented by the expansion of the “institutional arrow” in each successive stage) and in emerging peer-to-peer environments, communities of practice, and “free range learning.”
This diagram presents these stages as logical, sequential stages of evolution for describing the current state of development of online practices. The reality is substantially more complex. First, individual institutions may demonstrate characteristics of several stages at any point in time. Second, individual institutions may experience a jump shift and make a leap from Stage I to Stages III or IV if they achieve strong leadership, learn from the best practices of others, and develop or acquire infrastructures, processes and competences. And third, the boundaries between institutional and open learning experiences will blur as institutional practice evolves into States Iv and V.
Stage I: Online/Blended Learning Innovations, Traditional Financial Model. The first stage is one in which traditional institutions enable their faculty to put courses online and progressively create various forms of online, blended, and e-learning offerings under the institutional brand. These offerings are often more expensive to develop and launch than the traditional institutional offerings. They do not achieve any breakthrough economies, may use traditional or adjunct faculty, and replicate many existing practices. They do not use technology to truly transform faculty roles and patterns of interactivity. In the long run, this digitize-the-traditional and incrementally-improve the approach to online learning is a transitional state. This model will not be sustainable in the face of national and global competition.
Online/blended/e-learning innovations can work to reduce the overall cost to students and the institution, even if the tuition charged to students is the same or greater than the tuition for face-to-face instruction. Online students not only save on transportation costs, they reduce the opportunity costs of travel time, lost income, and such. This can be a significant savings. Blended learning can save institutions the cost of new facilities by reducing classroom demand and allowing institutions to reduce the impact of commuter student traffic and use of on-campus facilities and services. Campuses in hyper-growth metropolitan areas like the University of Central Florida use combinations of online, blended, and e-learning to “sculpt” enrollments at their multiple physical campuses and in virtual learning spaces.
Moreover, the market leaders in online learning have shown that technology can be used to unbundle and transform the existing classroom-centric model for individual courses. The course reinvention efforts of Carol Twigg at the National Center for Academic Transformation (NCAT) have improved performance and student success and reduced costs in virtually every physical or virtual course they have redesigned. Some institutions are scaling these processes to departmental, institution, or even system level. But the greatest challenge to scaling these approaches across the institutions has proven to be getting faculty and institutional leadership seriously interested in reducing costs, which some associate with diminishing quality. In times of constrained resources, institutional leaders need to focus on value, as well as quality. A genuine commitment to performance measurement and improvement requires a dedication to cost reduction in ways that does not diminish outcomes
These efforts at course reinvention can be a good start, but they are not sufficient to meet the challenges of establishing financial sustainability, post-recession. Sustainable online learning requires pervasive adoption of unbundling, reinvention, and a value focus 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 key 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: 1) continuously seeking new income streams that can mitigate the need to continuously increase tuition to fill revenue gaps 2) reducing operational overhead (i.e. new buildings, parking lots, dorms) and other costs; 3) seeking lower price points and enabling more rapid completion of learning objectives; and 4) reducing the total cost of achieving learning goals.
We remain hopeful that online, blended, and e-learning innovators will seize the opportunity to move on to transformation when they understand the potentials provided by Stages II-V, the challenges provided by the open learning movement, and the imperative of the Great Recession. The following stages illustrate how this evolution is being followed by market leaders.
Stage II: Unbundled Offerings, Reinvented Practices and Business Models, Premium Price. This stage developed at the same time as Stage I, 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 others have utilized technology-supported learning to:
• reinvent their production function (using team-developed resources in all instances of creating courses ),
• engage mentors (who are not content experts) rather than traditional, tenure-track faculty, and
• deploy world-class (high-quality, high-value) online support services.
These providers also vet their offerings with employers more extensively, continuously and effectively than traditional universities.
This is neither black magic nor rocket science. The UK Open University pioneered many of these practices over 30 years ago as a not-for-profit, although recently it seems to be working hard to reinvent its mix of practices to fit today’s circumstances and to move to Stages III-V. Other non-profits like Regis University have emulated these methods. There may be as many as 1 million learners involved in these kinds of learning experiences.
These institutions focus on consistent, demonstrable outcomes and learning experiences especially attuned to the needs of working adult learners. The for-profits have achieved 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, without sacrificing quality of engagement and outcomes. Course materials are created by teams and used in all instances of the course. They utilize a core, standardized curricula to ensure consistency and quality of learning outcomes that, in turn allows for continuous improvements, refinements and ability to quickly incorporate new industry competencies. This practice affords 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 (courses taken sequentially, accelerated time to degree, lack of family/work barriers, and premium online services). The higher resulting margin/profit (difference between price and actual cost) is invested in extending institutional brand, business/industry market research, and instructional technology/systems development costs.
In future stages of development, many of 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 who have migrated to a more competence-based approach that achieves a high perceived value with learners). Moreover, Capella-type innovators will be able to compete on lowering the total cost of achieving learning and competence objectives and eventually become certifying enterprises. More discussion about that in the description of Stages IV and V.
Stage III: Unbundled and Reinvented Offerings, Drive Down Marginal Costs, Offer 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. While their methods vary, the basic principles are fundamentally the same.
These institutions pass the savings on to learners in the form of more competitive tuition – a strong value proposition. They charge a market-competitive rate that covers the marginal costs of learning. These institutions can grow based on tuition alone, rather than appropriations from their respective states. 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 must be improved over time in the face of the withering competition that is emerging globally.
Stage IV: Continued Reinvention, Reduce Market Price and Total Cost of Competence, Respond to Competition. Inexorably, the affordability crisis will force learners and their families to search for better value/options. And the presence of new, lower-price alternatives will enable potential learners to shop around and consider different options.
Online providers will be driven to continue to reinvent their offerings, enhancing their value proposition through a variety of practices:
• create better, more amenable, and more effective, engaging learning and support experiences;
• demonstrate that their programs are linked to highly valued, demonstrable competences and employability success;
• decrease tuition and fees;
• reduce total cost of competence by reducing time to achieve competence objectives, certificates and degrees; and
• provide graduates with social-networking-based mechanisms for refreshing and maintaining their competences on an ongoing basis. Think of alumni associations as communities of practice, -- in particular disciplines, rather than as general purpose institutional associations. This could be especially attractive for online graduate programs that could be a ‘competency observatory” for their alumni, identifying emerging competences even before they are standard industry practice/requirements?.
These conditions will affect the for-profits as well as traditional institutions. The reduction in time to degree will be achieved in at least three ways:
• giving credit for prior learning more effectively and extensively,
• achieving competency-based approaches that unbundle and give credit for already acquired, demonstrated competences, and
• improving K-12 preparation for college-level work through P-20 improvement initiatives and partnerships. 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 have entered the online tutoring business for K-12 and postsecondary education. They will soon be a force in online learning, as well, through acquisitions and repurposing of institutional providers in the US. Also, social networking-based learning offerings from commercial providers, perhaps using Second Life-like virtual and augmented reality environments, may soon enter the scene at very competitive price points.
Stage IV will be a time of withering competition and feverish efforts by institutional providers to demonstrate their adaptiveness and nimbleness in order to attract learners and offer distinctive, superior value propositions. Increasingly, open learning practices will be incorporated into institutional offerings and accepted for credit if they involve “recognized” providers (accredited with established articulation agreements). Fast, fluid, flexible, and affordable will be the watchwords of the day. Institutions will focus on developing infrastructure, support services, processes, and reward systems necessary to support these efforts.
Stage V: Continued Reinvention of Practices, Institutions Certify Both Institutional and Free-Range Learning. The graphic illustrates that with each successive stage of evolution, institutional learning also expands upward, embracing more open learning techniques within institutional learning practices. During Stage V, institutions will have incorporated open learning practices into their offerings and will accept and certify high-value outcomes provided by other institutions. In addition, selected leaders will have developed or acquired the capacity to certify free-range learning and competence building pursued by individuals independent of formal institutions.
This is a natural extension of the credit-for-prior-learning and competence-based learning movements. Not all institutions will have the core competences to become certification agencies for learning. Such institutions would likely charge a certification fee for conferring a degree for learning achieved elsewhere, in order to award valued certificates or degrees. 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 e-learning methods, models, and practices.
It could take yearsfor this system of free-range learning and certification of competence to develop and be recognized and accepted by US employers. Decades, if the traditional pace of transformation persists. 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 United States in a non-accredited institution, could take competency test/s and be granted a learning certificate or even a degree.
Leading institutions that develop the infrastructures, practices, processes, and core competences to demonstrate or certify competence will become certifying entities and/or license their practices to other institutions. This could be a lucrative business for forerunners like Capella University or Western Governors University who have led the way in competence-based learning and performance.
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