Innovator's Dilemma: When New Technologies Cause Great Firms to Fail/The Innovator's Solution: Creating and Sustaining Successful Growth, The

Academe, Jan/Feb 2005 by Birnbaum, Robert

For those who believe that theories of structure, management, and leadership can generally be applied to organizations of all types, virtual education's challenge to traditional education can be seen as a warning. Just as leading minicomputer makers such as DEC and Wang perished in the 1990s because they failed to enter the personal computer market developed by start-up firms, so might traditional academic institutions fail unless they become major players in the new virtual education market. Moreover, institutions cannot be saved merely through better management or leadership. As The Innovator's Dilemma points out, it was precisely the rationality of good management that led to the failure of successful firms: "the usual answers to companies' problems-planning better, working harder, becoming more customer-driven, and taking a longer term perspective-al exacerbate the problem. Sound execution, speed-to-market, total quality management, and process recngineering are similarly ineffective." It is not the case that leading businesses did not adopt disruptive technologies because their lenders were "conservative, backward-looking, risk-averse, and incompetent." These commonly asserted reasons for explaining why new technologies aren't adopted in business are no better founded than the similar complaints often made about higher education.

The new educational technology is particularly powerful because it opens the door to commodification. The Innovator's Dilemma's rgues that "a product becomes a commodity within a specific market segment. . . when market needs on each attribute or dimension of performance have been fully satisfied by more than one available product." Students who select a course because they wish to understand certain materials at a recognized level of competence are purchasing a product; not any course offered by any instruction will do. On the other hand, students whose only concern is to collect credits on a transcript, and who are indifferent to the course content or the level of proficiency they achieve, are purchasing a commodity. This would suggest that when virtual education is able to meet the market's desire for functionality, its other attributes may make it a formidable competitor of traditional education. Functionality, of course, is defined differently by different market segments, and in those that define it as "credentialling," virtual education may already be a formidable competitor. Some institutions, particularly in the proprietary sector, have accepted virtual education as their technology. Their goal is to give customers the commodity they want (credentials) in as convenient a manner as possible, and market growth may be an appropriate measure of their success. If this is what mainstream consumers of higher education are really after, traditional colleges and universities may find themselves increasingly subject to the same competitive discipline of the marketplace that doomed the makers of fourteen-inch computer hard drives.