Friday, February 27, 2015

Universities, Disrupted!

When I talk about universities being obsolete in a decade, I usually get the bewildered looks measuring out whether I am crazy. How could an institutional form, which is perhaps the most expansive and at the peak of their prestige right at this moment, be in any danger of obsolescence? This conversation also angers some people, who see in all this a neo-liberal conspiracy and me as a messenger of the For-Profit side, though my case applies as much to For-Profit universities as much to the Not-For-Profit and Public ones.

There is huge amount of data coming out measuring whether universities are good investment, particularly as the students have to pay the full cost of education in an increasing number of countries. The case for universities, for the champions of that side of the argument, are hinged either on a teleological argument, that universities have a specific purpose and they are indispensable in a democratic society, or on the existence of a graduate premium. But both these arguments are somewhat open to questioning.

The first argument that universities sustain a democratic society fails to take into account the recent troubles of democracy even as the university enrollments are at its peak. Indeed, the proponents of this view would claim that universities are not doing what they are meant to do, and thereby twisting the argument so that it becomes unfalsifiable, and therefore, unscientific. And, indeed, one could see that the traditional university model, which is about creating an enlightened ruling class, is indeed part of the problem. It seems what the universities are doing is out of sync with what the society needs, something that even the defenders of teleological argument seem to concede, and we may need a different model of developing a democratic ethos than teaching a bunch of privileged people how to dine and dance.

The second argument hinged on graduate premium hides the fact that non-graduate wages are collapsing. It also hides the fact that graduate premium is largely driven by the exponential growth of earning of a few graduates in chosen professions, and the life is not rosy for the poor graduate with a History major from an average college. Rather, the graduate unemployment, which is running at an all-time high, should be the measurement that should be applied to check the university's worth. And, while one may blame the recklessness of bankers which brought about the financial catastrophe which is to blamed for graduate unemployment, those bankers were some of the cleverest students our best universities produced.

The observation that the universities may soon be extinct, despite their power and prestige, is actually derived from Darwin's famous argument of survival of those who adapt. The universities dont. It does not matter how big or powerful they are, but an university in its bureaucratic form is utterly incapable of questioning its own worth. I made the point in an earlier post about Apple, which dared to destroy its own successful iPod business with a phone that can play music (see here) and thereby won. Business history is replete with examples of companies - those mindless greedy ones which get all the blame - competing with themselves, cannibalising their own products and disrupting themselves, so that they remain nimble. Bob Noyce did that famously at Fairchild Semiconductor, bringing about ultra-cheap semiconductors, destroying his own juicy business but creating huge profits and a whole industry (and foreseeing Moore's Law in a way). I was hearing the story about a new company, Pluralsight, which went online despite the fact they were running a successful face-to-face training business, disrupting their own profitable $3000 a course business with $29 a course online offering - but winning a $1 billion valuation and more than 4000 loyal corporate clients on the way. Such things are unthinkable for the universities, which still make 5-year strategic plans, which take particular care in not indulging in anything that can cannibalise their market. Often, in many countries, intrusive regulation and government funding make them forget their purpose, other than ranking pressures and accreditation. Within the paradigm of natural selection, they seem to have been marked out for extinction.

Indeed, to take the analogy further, there are those which are developing favourable characteristics and adapting better. But universities as we know it are on borrowed time, and it is time to start thinking.

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