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May 22, 2013

Coursera’s not disruptive…not yet

by Michelle R. Weise, PhD

My colleague Meredith Liu recently blogged about Coursera’s latest venture: professional development (PD) courses for K-12 teachers. Meredith rightly outlined the ways in which these courses could—in their best versions—bring more variety and quality to a highly fragmented market. Particularly when we consider what PD often looks like—the two to four times per year when teachers grade homework assignments while a speaker lectures about a topic that has little or no relevance to the majority of teachers in the auditorium—Coursera’s best materials could, in stark contrast, ideally address specific teaching challenges, provide targeted, just-in-time help for teachers, and enable access to materials and ideas that might help teachers teach better.

Nevertheless, I had a slightly less optimistic reaction when I initially read about Coursera’s development of PD courses because this still does not feel like a viable business model for the company. Despite the hype about massive open online courses (MOOCs) as disruptive innovations, Coursera is not a disruptive innovation. In fact, through its latest development, the company appears to be launching itself yet again into a situation in which it will be competing head-on with established products.

In general, there are two kinds of disruptive innovations: new-market disruptions and low-end disruptions. A new-market disruption transforms something that used to be complicated, centralized, inaccessible, and expensive and makes it affordable and accessible to a whole new population of people. As a general rule, when you do that, you’re actually competing against nothing, or what we call nonconsumption. Low-end disrupters pose a similar challenge to market incumbents but do not create new markets or a third axis representing new customers and new contexts for consumption; they pick off the least attractive—least profitable and most over-served—customers of the established firms.

As we consider PD for teachers, it seems as though, at best, Coursera’s offerings might serve as a low-end disruption. PD for teachers is an extremely crowded marketplace and one that is often inextricably tied in most states to the license renewal processes for instructors. Many teachers have to take credit-bearing PD courses in order to meet their certification standards.

To complicate matters, however, the effects of this regimented kind of professional development are questionable. As Rick Hess argues: “We spend a lot on professional development…. Yet hardly any of this actually appears to make teachers better…only a tiny sliver of PD involving thirty to one hundred hours of teacher time showed any evidence of correlating with student achievement gains.” The effects of PD on student outcomes are unclear.

By intruding into the space of a well-established and highly regulated certification/license renewal process, Coursera will inevitably get caught up with accreditors and regulatory organizations that will likely impede their ability to move nimbly as a private company. The pace of change within accreditation is on the opposite side of the spectrum as that of a young start-up.

Coursera would do well to probe critically whether they are finding their footholds with the right consumers, taking advantage of a scalable technology, and carrying their business models up-market from either a position of low-end consumption or nonconsumption.

We generally ask the following questions to test whether an entrant can shape an idea into a disruption or the basis of a new-growth business. I would appreciate our audience’s feedback on whether you would answer these questions differently when considering PD:

Q)   Is there a large population of people who historically have not had the money, equipment, or skill to do this thing, have gone without it altogether, or have needed to pay someone with more expertise to do it for them?

A)   No, in most states, PD is built into the license renewal process for K-12 teachers. Depending on the state, a teacher may or may not have to pay out-of-pocket for the expenses; however, the fees are not generally prohibitively expensive.

Q)   To use the product or service, do consumers need to go to an inconvenient, centralized location?

A)   Previously, yes. It was often expensive, inconvenient, and ineffective. In some scenarios, teachers would gather in a large auditorium to listen to a speaker. In other scenarios, teachers would leave school for a day or several days to attend a workshop. Today, EdTech Leaders Online (ETLO) is an example of one of the largest online professional development programs in the U.S.

Q)   Are there consumers at the low end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price?

A)   Price could certainly be a pain point. A lower price would be welcomed; however, the course must bear credit and count toward the license renewal procedure. It is questionable whether this will ever be the case with Coursera’s courses.

Q)   Is the innovation disruptive to all of the significant incumbent firms in the industry?

A)   Established PD programs deliver classes that bear credit. The Coursera courses, on the other hand, do not count as part of the teaching license renewal process and therefore function as a kind of vitamin with potential upsides that teachers do not really have to take—ever. They’re a nice-to-have but not fulfilling a specific requirement.

Upon first glance, it does not appear that this particular avenue for Coursera satisfies the litmus test for even a low-end disruption. Although I’m encouraged by Coursera’s more strategic focus on a series of courses instead of simply amassing as many partnerships as possible with prestigious universities, their latest foray into PD for K-12 teachers illustrates their inability to carve out a truly disruptive foothold.

From our research on innovation, we have concluded that the best money during the nascent years of a business is patient for growth but impatient for profit—quite the opposite of what Coursera seems to be doing. Although Coursera announced last month that it has just brought in its first $220,000 in revenue from their Signature Track completion certificates and relationship with Amazon.com’s affiliate program, the company has, since its inception, been unclear about how it will be able to generate revenue. Despite the $22 million groundswell of enthusiasm for the project by venture capital firms such as Kleiner Perkins Caufield & Byers, no one has yet been able to identify what the eventual business model will be.

When new ventures are expected to generate profit relatively quickly, management is forced to test as quickly as possible the assumption that customers will be happy to pay a profitable price for the product—that is, to see whether real products create enough real value that customers will pay real money. It is doubtful that teachers will ultimately pony up for Coursera’s PD courses that bear no credit. What about low-cost, non-credit-bearing courses? Perhaps, but the “massive” audience would likely winnow away to a much smaller and less profitable niche of low-end consumption.

All of this pessimism notwithstanding, I believe that Coursera is nearly on the right track but that its current venture within the particular space of teacher-training is a half-step into what could be the company’s most unique, disruptive, and profitable position: certification that is not tied to accreditation.

More about that next week….

 

Comments

  • I am surprised that this blog keeps on saying that “Coursera” is not a disruptive innovation, and then limits its observations to Coursera’s entrance into offering K-12 Professional Development courses. I have been having an argument with colleagues who say that “Coursera” (read MOOCs in general) are not a disruptive technology innovation because they are really just another software business model and they can only be disruptive if they provide a viable alternative and ultimate replacement for the existing mainstream business model, in this case, undergraduate education. I guess this isn’t how I have interpreted a disruptive innovation “overtaking” the mainstream providers. The first disruption I see that MOOCs have created is an “alternative” perspective for customers currently pursuing a mainstream option in terms of cost. The reaction I have received has been that the two cannot be compared because MOOCs do not provide academic credit. Also that MOOCs are cheap, boring, canned artificial versions of the “real” thing. In all of these comments, I find the beginnings of Christensen’s Innovator’s Dilemma.

    by Cathy Downes on May 29, 2013 4:44 AM PDT REPLY

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