The triple threat: affordability, access, and alignment

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Mar 16, 2017

In a recent paper, I highlight five institutions that are innovating against a triple threat: (1) rising costs, (2) students who are shut out of higher education, and (3) persistent misalignment between what higher education is producing and what the labor market is demanding. The institutions profiled are diverse: some are small and some are large; some are public and some are private; some were innovating to address financial straits, whereas others were hoping to broaden their missions. But each is masterfully bringing the tools of innovation to create distinct solutions to the interconnected challenges facing higher education.

The theory of disruptive innovation describes two innovation strategies: sustaining innovation, which in higher education represents improvements to existing programs targeted at existing students, and disruptive innovation, which creates cheaper, simpler, more accessible products and services to reach those at the low end of the market. We also describe several institutions that are employing disruptive technologies in the context of their traditional business model, a type of sustaining innovation that we describe as a hybrid innovation.

A common misreading of the theory of disruptive innovation is that disruptive innovations are good and sustaining innovations are bad. This is a false dichotomy. Each is important and necessary, but to different ends. This principle is truer than ever given the myriad of challenges spanning the current higher education landscape.

Sustaining innovations

The power of sustaining innovations should not be understated: sustaining innovations are a powerful tool for tackling inefficiencies and improving outcomes for students already participating in the higher education system. For instance, developing a coaching support program to help retain at-risk students is a huge opportunity to engage sustaining innovation to benefit students. Institutions can also use sustaining innovations to drive efficiencies and control cost increases to help address affordability issues.

For institutional leaders, sustaining innovations also have the advantage of fitting in well with traditional higher education’s existing priorities and often with the existing processes of colleges and universities. This can make it more likely that the institution will accept sustaining innovations, and it simplifies the strategy and tactics involved in implementing them. Alumni are often happy to contribute resources for innovations that are likely to make the institution more well known, more selective, and higher ranking.

But investing exclusively in sustaining innovations does come with risks. In battles of sustaining innovations, as organizations compete for customers, they end up adding more bells and whistles to their products than the average consumer could ever use. As the pace of sustaining innovations starts to outpace the needs of the average customer, firms begin overserving the average consumer—that is, products are more complex and more capable than most people require and more expensive than most people prefer.

This is truer than ever in higher education: chronic affordability and access challenges are a byproduct of efforts to make colleges better and more competitive in terms of prestige. And to the extent that colleges compete on their academic reputations, which, in turn, are driven by research, institutions may also be adding bells and whistles in their research arms that don’t necessarily benefit students directly—or at all.

Disruptive innovations

Disruptive innovation holds the key for institutions to serve this customer base better while also breaking free from the limitations of prestige that drive up costs. Disruptive innovations improve often on entirely new dimensions than the ones important to incumbents. In higher education, performance and quality have traditionally been defined by prestige. But unencumbered by research activities and laser-focused on meeting the needs of specific types of students and employers, disruptive entrants are likely to be less concerned with prestige. Their performance will be defined by other metrics, like students’ return on investment after graduating, including skills acquired and workforce outcomes.

Despite this promise, engaging in disruptive strategies is tricky for incumbent organizations, and in higher education it is particularly fraught. By definition, disruption occurs at the low end of the market. In higher education, a disruptive strategy introduces the risk that—even if the innovation is successful at attracting and retaining students—the reputation and prestige of the university may suffer. Focusing on the low end of the market contradicts long-held priorities of the higher education industry.

Hybrid innovations

In part because of the risks—but also the attraction—of disruptive innovation, many institutions engage in hybrid innovations. Hybrid innovations allow institutions to incorporate disruptive technologies into their business models without abandoning prestige as a priority. Hybrid innovation can be a powerful signal to students, alumni, and trustees that the institution is paying attention to innovation and investing in the future. It, however, will not tackle affordability challenges at scale. Hybrid innovations are ultimately sustaining—they do not fundamentally upend the behemoth cost structure undergirding traditional higher education institutions.

All types of innovation are required to meet higher education’s challenges

For many challenges, the reality is that sustaining, hybrid, and disruptive innovations can all be part of a systemic solution. Regardless of the innovation strategies that leaders choose or the problems they elect to innovate against, each of these case studies we profile also demonstrates the long-term value of taking bold and deliberate steps toward innovation—even if some of some of those steps falter. Institutional leaders should consider that innovation—including disruptive, sustaining, and hybrid innovations—is required to address the complex, interconnected problems facing higher education today. But building the capacity for innovation has long-term benefits to help the institution compete down the line. Innovation, in other words, is continuous. It is a muscle that all institutions should train and maintain. It is also best realized through a healthy balance of sustaining and disruptive strategies and team structures that allow each form of innovation to thrive.

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Alana DunaganAlana Dunagan

Alana leads the Institute’s higher education research and works to find solutions for a more affordable system that better serves both students and employers. In this role, Alana analyzes disruptive forces changing the higher education landscape.Alana leads the Institute’s higher education research and works to find solutions for a more affordable system that better serves both students and employers. In this role, Alana analyzes disruptive forces changing the higher education landscape.

Alana