wework_Higher Education_ChristensenInstitute

From real estate firm to university of the future?

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Mar 23, 2018

WeWork, a provider of coworking spaces valued at more than $20 billion, began its expansion into education last October when it acquired Flatiron School, an immersive coding bootcamp.

In January, WeWork then turned heads when it announced a partnership with online program management (OPM) provider 2U. This partnership involved licensing out the bootcamp’s online platform, Learn.co, to 2U, opening WeWork’s office spaces to 2U students for use as study halls, and building a learning center together in 2019.

WeWork is now kicking off its Access Labs initiative, which aims to provide low-income learners with better access to the coding bootcamp experience, complete with scholarship funds from 2U.

Is WeWork cobbling together some kind of proto-university? Would that even make sense?

In this case, innovation theory suggests that WeWork could be onto something. It turns out that across industries, when performance is suffering, firms tend to integrate across their value chain. WeWork’s education efforts signal an increasing ability to bridge the broken interface between education and the workforce.

Innovation theory and the skills gap

As we discussed in a previous piece, when a market is mature and functioning well, companies can specialize in making different components of a product, knowing that standards are in place to make the pieces fit together. For example, multiple companies make and sell light bulbs, and customers can buy different brands without worrying if the bulbs will be compatible with the lamp sockets at home.

People have long assumed that the interface between higher education and the workforce is equally modular. Graduate from the best college that you can, and you will seamlessly find your way into the workforce. Your degree—and assumably, the skills and competencies you acquired in the course of earning it—will be compatible with some job opening.

Instead, the US simultaneously has over 6 million job openings and 6.7 million Americans looking for jobs, with 45% of small businesses struggling to find qualified applicants. Increasing awareness of degree inflation has employers and legislators alike arguing that the college-to-workforce connection is clearly broken. The 8.5 million federal student loan borrowers in default would probably second that notion.

Hence the recent push for more apprenticeships, more partnerships between employers and community colleges, and more last-mile training programs like coding bootcamps. People recognize that the supposedly modular interface between higher education and the workforce isn’t delivering what the country needs anymore, and are trying either to provide a missing link in the chain or to weave the two components together to make sure that people don’t slip through the cracks.

WeWork’s growing role in higher education

With that in mind, WeWork’s partnership with 2U and Access Labs initiative make sense in the same vein as the Flatiron School acquisition, with the potential to better serve learners and existing WeWork clients alike.

From the perspective of 2U students and other lifelong learners, WeWork leases office space to the very companies and individual professionals with which they need to network in order to get hired. Given that WeWork operates in almost 300 locations, these learners likely won’t have to go very far to tap into this network.

As for WeWork clients, companies are increasingly looking to provide education as a benefit to employees. WeWork can now offer a variety of courses, both in-person coding bootcamp sessions and online graduate programs, to clients.

This provides interesting context to WeWork’s wide variety of acquisitions over the past year, including more office spaces, residential offerings, a gym and wellness center, and a social networking platform. Are these actually WeWork’s versions of classrooms, dorms, a fitness center, and student organizations? Throw in a bootcamp, a robust set of courses, strong ties to employers, and programs targeted at socioeconomic diversity, and a clearer picture starts to emerge. Instead of following the general “unbundling” trend in higher education, in which universities outsource modular services to streamline their business models, it looks like WeWork is forming a “rebundled” university that is tightly integrated with the job market.

WeWork has taken on a significant challenge in trying to leverage so many new capabilities, however cohesive they may prove to be. But that’s a good problem to have. With this new partnership, WeWork is firmly settling into a strategically savvy position along the education-to-workforce value chain.

As a research fellow on the Christensen Institute's higher education team, Richard helps investigate novel business models in postsecondary education, professional development, and lifelong learning.