Industry Story: Disruptive innovation in the education sector

In an interview for El País, the most highly circulated daily newspaper in Spain, in October 2016, David Roberts, Vice President of Singularity University, said: “Most universities in the world will disappear…; except those with a well-recognized brand such as Harvard or Stanford.” According to Roberts, the traditional university business model is about to collapse. The current academic programs and certifications do not make sense. A structured four-year degree becomes quickly obsolete because this is not able to updating at the speed of how new knowledge is created by the exponential growth of technology. The emergence of new technologies and market opportunities is requiring new set of professional skills and more agility to acquire them over time. An innovative, faster and affordable learning process is a real need in the market.

This nascent technological environment has motivated the birth of a set of new players in the educational context. Start-ups and companies such as Coursera, Udemy, Udacity or edX are part of an innovative group of disruptive models. One of those innovative educational models is known as Massive Open Online Courses (MOOC). According to Wikipedia, a MOOC is an online course aimed at unlimited participation and open access via the web – one of the first of those MOOCs was a course about AI, launched by Stanford University and taught by Sebastian Thrun (Udacity) and Peter Norvig. Enrollment reached 160,000 students – A MOOC includes traditional course materials such as filmed lectures, readings, and problem sets, and provides interactive user forums to support community interactions among students, professors, and teaching assistants. A number of universities worldwide have developed partnerships with the large MOOC providers.

Despite the business opportunities already mentioned, the MOOC model has a significant concern related to high attrition rates and course drop out. Only a very small percentage of the thousands of enrolled participants complete the courses. Different sources suggest that the average completion rate is between 7% and 15%. This attrition is happening overtime: in general terms, a specific MOOC has a number of X students enrolled, 60% of X watching a set of videos at the beginning of the learning process, 30% of X attempts a short assessment (quiz), 3% of X attempts the final assessment, and 2.75% passes the final assessment, earning a certificate.

MOOCs are considered as an important component of a larger disruptive innovation process taking place in higher education. For some experts, the services provided by traditional universities will be unbundled and offered to students individually or in new bundles. Then, in a near future, we will see specific providers for research, curriculum design, content generation, teaching, assessment and certification. A more modular value chain for higher education will be in place.

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