Welcome to our “Innovators Worth Watching” series, spotlighting interesting and potentially disruptive players in higher education.
With three Innovators Worth Watching profiles under our belts, we wanted to zoom out and put these innovators’ efforts in a larger theoretical context. Disruption Theory provides a framework for understanding why some successful, established companies fall to upstart newcomers, whereas others survive and thrive. Each of the companies we’ve profiled thus far—Cell-Ed, MissionU, and StraighterLine—highlights elements of disruption at work in higher education. In particular, the three offer insights into the all-important question, “who are my target customers?”
Gaining a disruptive foothold
One of Disruption Theory’s key insights for potentially disruptive businesses is that they should not aim for established companies’ most profitable and valued customers. It may seem counterintuitive, but disruptors gain a competitive advantage by targeting the kinds of customers that established companies are motivated to ignore or run away from. These consumers can be either nonconsumers or overserved consumers.
Nonconsumers are those shut out of a market entirely. They don’t use an existing product or service currently, but would if they could. Nonconsumers are unable to access the product for any number of reasons, including lack of money, time, or prerequisite knowledge.
Companies like Cell-Ed work with one group of learners that clearly fits this description—the 36 million U.S. adults who aren’t literate enough to even consider higher education, can’t afford robust courses or software, and typically don’t have large blocks of available time. Many of these potential students do want to learn to read and write; literacy confers huge economic advantages. By serving these adult learners, Cell-Ed effectively competes against nonconsumption by targeting individuals whose only alternative is nothing at all. They do so by delivering small chunks of educational content in text message format, tackling the most essential language and jobs skills while addressing adult learners’ time constraints.
StraighterLine serves a different group of nonconsumers through its low-cost remediation courses. Of potential college students that are required to first take remedial courses, 30% never show up for the first course, and 40% don’t finish their remedial coursework. StraighterLine’s online and asynchronous courses provide an accessible on-ramp for our financially and/or academically neediest students—students who are often deemed less attractive/profitable to more traditional institutions. This business model also allows StraighterLine to reach overserved college students, another valuable consumer base.
Serving the overserved
Overserved consumers are those who use an existing product, but who would gladly pay less for something simpler, cheaper, or more convenient. In higher education, MissionU and StraighterLine are targeting overserved learners in highly innovative ways.
Everyone likes paying less, but overserved learners are especially tired of premium prices in the postsecondary market. The business model of college is tremendously complex, and no one student can possibly engage with the full buffet of experiences and courses on offer at the typical college or university. Companies like MissionU target college-age students who may prefer a shorter or more bare bones pathway into the job market if it means lower costs. To satisfy this group, MissionU offers its one-year educational program online, saving on costly campus amenities that its target group didn’t want to pay extra for in the first place.
StraighterLine is likewise betting on students preferring to save thousands of dollars on required remedial and general education courses, even if it means not having a live professor or not being in a physical classroom. In both cases, these education providers are appealing to overserved learners, those who don’t need all the bells and whistles, thus luring them away from incumbents.
These companies illustrate noteworthy examples of the theory in practice. They continue to evolve in real time. Cell-Ed is gaining traction and is one of eight semifinalists in the Adult Literacy XPrize, StraighterLine continues periodically adding colleges and universities to its list of partners, and MissionU’s first cohort starts today. We are eager to see whether companies like these fulfill their disruptive potential down the line—and hope that you’re watching right along with us.
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