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EDUCAUSE 2010: Towards Refreshing Business Models for Higher Education?

Anaheim, CA Universities and colleges are facing budget cuts while battling for student mindshare as ubiquitous computing on multiple devices invades every aspect of campus life. It’s no wonder that existing higher ed economic models were under scrutiny at the 2010 EDUCAUSE Annual Conference held in Anaheim, California October 13-15, 2010. Earlier this week Diana Oblinger, President and CEO of EDUCAUSE, reported that 6,700 participants from 41 different countries were attending the 2010 EDUCAUSE Annual Conference in Anaheim, CA to share ideas around “The best thinking in higher ed IT.” In addition she estimated that 2,500 attendees tuned in online. The weather may have been seventy and sunny outside, but inside University IT staff and leaders were looking for ways to cut costs in chilly economic times while finding new ways to bring better services and game-changing ideas back to their campuses.

On Wednesday Oct. 13 Gary Hamel provided inspiration and examples that underscored his views on why higher education should change the game in his opening plenary talk entitled, “Reinventing Management for a Networked World.” Hamel is on the faculty of the London Business School and has been  ranked as “the world’s most influential business thinker” by The Wall Street Journal. Fortune magazine called him “the world’s leading expert on business strategy.” In his talk Hamel provided comparisons of higher education with innovative and competitive businesses through the lens of technology. He suggested that the key reason for changing the business of higher education is to achieve a deeper engagement with students.

He used the backdrop of rapid technological advances to pose the question “How do you build an organization that will forever outrun change?”  “Change is seditious,” he said.

He reviewed  the rates at which various systems evolve over time (slowest to fastest)–physical, biological, knowledge, and cultural. “Never has knowledge changed so quickly,” he said, “A thousand years from now this age will be remembered as the first time that humans had to deal with such rapid change. Our organizations were not built for this kind of change.”

He views the Web as both an instructive and destructive change agent. He cited the recent ability of political parties and movements to successfully leveraged the Web to launch grassroots efforts and win elections.

G. Hamel View of What the Web Does:

Dematerializes–Undermines the value of physical infrastrucute. Web-based infrastructure almost always supplants a physical infrastrucure. Hamel gave the example of – Zopa (  a UK web-based company that is a bank without bankers where “where everybody wins, except the fat cats.” Some customers want to lend and some want to borrow. They set interest rates and the margins are better than those offered by traditional banks.

Disintegrates–Disaggregating products and services which offers users mashed-up content often out of context. Hamel believes that Hulu (  will pull apart the traditional business model of television and that this will also happen in education as a new genre of specialized course developers compete for students.

Disintermediates–We will begin to see disintermediation at universities because the cost of a line of code cost is negligible which makes  “open” services and competition more plausible. Localized faculty could give way to centralized faculty gathered online.

Democratizes–Work is distributed to those who want to do the work and everyone can create value which can immediately create a global team is numbered in the many thousands. Learning how to exploit communities of passion to create groundbreaking educational systems and materials is an opportunity for higher education.

“If you don’t unbundle and rebundle your institutional assets then someone else will do it,” he warned.  Looking 25 years into the future he sees some traditional university assets and functions that will likely be supplanted by competitive and cost effective alternatives.

“What will it take to provoke a deep conversation about higher ed business models?” he asked. He noted that historically it has taken a crisis or “near death experience” to bring about controversial changes in business practices. He cited the example of IBM in the 1990s as a company that experienced an extreme downward swing in earnings that led the company to become a service organization. Stories of deep change are usually stories of crisis because there are few ways for change to come from the bottom-up.

To increase the evolutionary advantage of an organization Hamel suggests:

1. Treating every belief as a hypothesis
2. Seeking out the dissidents and the critics
3. Spend time on the bleeding edge of change
4. Try to imagine the unimaginable

Quoting William Gibson who said, “The future is already here, it’s just unevenly distributed,” Hamel concluded his presentation by reminding the audience that new ideas are born in the gap between  resources and innovation. He also pointed out that many examples of what we value as humans exist in that gap.

For more about the concepts presented in “Reinventing Management for a Networked World.”listen to an interview with Gary Hamel here: