In noted education investor and author Ryan Craig’s latest musings, he makes the argument that even as it’s time for the unbundling of colleges and universities, it’s well past time for workforce development to do the reverse—bundle—to help people bridge the education-to-employment gap.
It’s an argument that is not only supported by Craig’s intuition and amusing stories about his children, but also by Clayton Christensen’s theory of integration and modularity.
In every industry, the early successful products and services often have an interdependent architecture—meaning that they tend to be proprietary and bundled. The reason is simple: when a technology is immature, to make the products good enough so that they will gain traction, an organization has to wrap its hands around the system architecture so that it can wring out every ounce of performance.
As a technology matures, however, it eventually overshoots the raw performance that many customers need. As a result, new disruptive innovations emerge that are more modular, and customers become less willing to pay for things such as raw functionality and increased reliability. Instead, they start to prioritize the ability to customize a product to their individual needs at an affordable price. Customizing a bundled service is expensive because it forces a full redesign of the underlying system architecture, but customizing a modular offering is affordable because it is merely a matter of mixing and matching discrete parts that fit together in well-understood ways.
The computing industry provides one illustrative example. The Dell desktop computers that disrupted Apple and IBM’s personal computers were modular devices, as Dell made none of the parts internally but instead purchased them from manufacturers such as Seagate, Intel, and Microsoft. This modularity enabled Dell’s customers to specify the features and functions they wanted, and then Dell could assemble and deliver them an affordable computer within 48 hours.
A similar unbundling has taken place in the newspaper industry—a favorite of folks drawing analogies to the challenges facing higher education. Newspapers are a bundled offering that perform many functions—including allowing people to sell used goods, find a job, become well-informed, and make commuting time more productive— even if readers historically chose which aspects they consumed. As such, it has not been just news websites and blogs that have disrupted newspapers but also services such as Craigslist, Cars.com, Zillow, and Monster.com, along with affordable hardware such as smartphones and tablets.
This overshooting of performance—offering an integrated bundle of services at a price that is more than what people can pay when they can’t consume or don’t need all of the services—is what is leading to the unbundling of college.
But the opposite dynamic is in play in workforce development with organizations like HUD Employment and Training Programs, Job Corps, Local Veterans’ Employment Representatives
As Craig observes, it’s a fragmented system that underperforms. As a result, integration-modularity theory suggests that for it to be effective, it must integrate across the interfaces where performance is not yet good enough.
To make a comparison outside of education, Dell Computer’s strategy that worked so spectacularly well in the 1990s would not have worked in the early 1980s in the early innings of the personal computer when integration was vital to make them perform good enough to gain adoption.
Craig suggests that workforce development integrate to reduce education friction and hiring friction. Education friction means the time to up-skill, the cost of up-skilling, and the uncertainty of a positive employment outcome. Hiring friction means tackling the cost of bad hires and the high churn in entry-level jobs.
If workforce development is to step into the void of helping close the education-to-employment gap, bundling will be a key way how.