How to Disrupt Class: Throw the book out the window!

In a book published this summer, the business guru, Harvard professor and author of the best selling book, “The Innovator’s Dilemma” Clay Christensen, turns his analytical lens to the education sector and offers some compelling arguments about how best to reform it. His new book is called Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns (co-authored with Curtis Johnson and Michael Horn), and I strongly recommend it to anyone involved in educational technology. If you can’t get to it right away, an excellent summary of it, written by the authors,  appears in this Forbes article. More can be found on their website, Publisher’s Weekly offers this commentary:

It’s no secret that people learn in different ways, so why, the authors of this book ask, “can’t schools customize their teaching?” The current system, “designed for standardization,” must by its nature ignore the individual needs of each student. The answer to this problem, the authors argue, is “disruptive innovation,” a principle introduced (and initially applied to business) by Harvard Business School professor Christensen in The Innovator’s Dilemma. The idea is that an audience in need will benefit from even a faulty opportunity to fulfill that need; in education, the demand for individual instruction could be met through infinitely customizable online computer-based instruction.

A reviewer on Amazon offers this summary of the book’s arguments:

Dr. Christensen argues that the traditional government-run education system will in the near future be “disrupted” by the innovation of computer-based learning. At first, online learning will compete against nonconsumption by offering classes in subjects where there isn’t enough demand in any given school to justify offering a traditional course (such as a very advanced math one or an unusual foreign language). But eventually, He believes that the technology will improve such that computer-based learning will render the traditional model of education obsolete. In “Disrupting Class”, he postulates that demand for computer-based high school classes will follow an S-curve that will start to “flip” (significantly accelerate) in the year 2012. In the years between 2012 and 2018, Dr. Christensen projects that the share of online courses will grow from 5% to 50% of all high school courses.

Professor Christensen’s influence on industries and large organizations should not be underestimated. Intel sent its top 2000 managers to his workshops in the early 1990s, when it was being attacked on the low end by innovators such as Cyrix and AMD. The Celeron chip emerged from this exercise, which helped Intel fend off the disruptive technology of the newcomers. However, he recognizes that the public school system is a very distinct animal from a profit-driven corporation, and the tools needed to effect change are quite different indeed.

One aspect of his analysis, I believe, is spot on regarding how one of the major players in the educational field will be affected by the predicted disruption, and that is the publishing industry. He characterizes the textbook industry as:

a scale-intensive value chain business, marked by high fixed costs, much like the pharmaceutical and commercial aircraft manufacturing industries. The costs of writing, editing and setting up to print and bind a book are roughly the same, whether 1000 or 1 million copies are sold. …These are blockbuster seeking businesses. A large monolithic market for a single best selling title is just as attractive to a textbook publisher as the blockbusters Zantac and Lipitor are to a drug company.

There is little dispute among textbook publishers that because individual students learn differently, they need differentiated learning options. But the textbook companies can’t get there from here. Were they to focus on developing different books for each type of intelligence, their volume per title  – and their profitability – would decline markedly. Because this is so disruptive to their business models, most of the intellectual and financial energy of this formidable industry focuses on creating and commercializing still more blockbuster books for large, undifferentiated masses of students.

But Christensen and his co-authors point to the enabling technology of such Web 2.0 innovations as User Generated Content as the solution to this dilemma. In other words, the disruptive innovation will come from the consumer side, as opposed to the producer side, since the producers have too much to lose to be the innovators. Like most disruptive technologies, these tools will initially be adopted on the margin, say for tutorial purposes, rather than be integrated into the mainstream system right off the bat. His prediction:

For several years, most teachers and students will still have conventional textbooks. But little by little, textbooks will give way to computer-based online courses – increasingly augmented by user-generated student centric learning tools. At some point, administrators, school committees, and teachers unions will recognize that even without explicit administrative decisions ever having been made, student-centric learning will have become mainstream.

A bit of historical perspective may be appropriate here. Anyone who studied engineering or science up to the early 1970s would recognize the name K + E (Keuffel & Esser), the premier manufacturer of slide rules for over a century. Their story may ring a bell:

K+E held patents for a wide range of slide rule features, including improved cursor indicators, functions and scales, and the adjustable body mechanism. Caught by the huge market shift created by electronic calculators, CAD systems and laser surveying systems, which displaced all of their strong markets, K+E shrank dramatically after 1972. K+E even sold some TI manufactured calculators for a brief period trying to capitalize on their existing customer base and industry knowledge. The final assets of K+E, mainly involving paper products, were sold to AZON in 1987, after several painful internal re-organizations.

There are some striking parallels between companies like K+E in the 1970s and the textbook publishers of today. A prime indicator of an industry in decline is rapid consolidation. Another is the introduction of “new” products whose main objective is to protect the existng franchise that the “old” products have built up over the years. One wonders if any publishing executives have ever heard of K+E. The authors may want to leave a couple of copies on the desks of their publisher, McGraw-Hill.

Kindles in the Classroom: The Forecast for Education is “Cloudy”

Cloud computing is currently the hot trend in geek- world, if my RSS feeds from Mashable, Ars Technica and Technorati are any indication. The concept of being able to access all your information from anywhere, anytime using any device has a certain appeal, if you can get over the privacy concerns. Much digital ink has been spilled speculating on the benefits and risks of cloud computing, and there’s no need to rehash all that here.  However, one domain where it has the potential to fulfill that trite prediction, “This changes everything!” is in  the field of education. Many critics of the public school system have argued that it is fraught with so many antiquated practices and restrictive union rules that any effort to reform our educational system is doomed to failure. But even in the scorched aftermath of a forest fire, the seeds of a new generation of flora are covertly taking root, and one simply needs to nurture them and be patient while a new ecosystem emerges.

An example of how the Kindle (or another ebook reader) will play an integral role in shaping the future of education appears in an interview with a high school world history teacher conducted by Joe Wikert on his Kindleville blog. The teacher, Chris Edwards, makes some bold and, in my opinion, insightful predictions about the future of learning, as well as the demise of the textbook as we know it:

Practically speaking, there is no way that any district 10 years from now is going to be able to resist buying a $200 Kindle for their students at the beginning of their 7th grade year and then simply buying textbook updates as the student progresses. The money saved and hassle avoided will be tremendous.

I look at the Kindle as a kind of transitional species. Certainly textbook downloading is going to be an important feature for the Kindle, but I actually don’t think that it will be necessary to buy textbooks with them. I really think that humanity is quickly moving toward compiling a kind of Comprehensive Human Memory (CHM) that will exist in binary code form and will, metaphorically, just kind of float above us. This is kind of the case now. We’re simply realizing how to access it. It is very likely that in 20 years we will all be carrying blue-tooth type devices that will access this CHM and bring us whatever facts we need on command.

If I had a class set of Kindles with Internet access I would not, strictly speaking, need a textbook. I could simply access sites that have the historical information I’m looking for and use my state standards as a road map. Textbook companies will, of course, evolve with this. If they are going to compete they are going to have to figure out how to make Kindle books accessible and cheap.

What Mr. Edwards is describing when he talks about “Comprehensive Human Memory” is cloud computing in education: all knowledge is floating out in the ether and it can be accessed on demand, by any device. The device may not be a Kindle, however, given Amazon’s “walled garden” model, which favors content from the Amazon bookstore. The Kindle was developed as a delivery mechanism for Amazon’s content, and for that it achieves its objective. It was not, however, designed to seamlessly access and display a whole array of material that might be considered an integral part of a student’s learning: textbooks (either open source or proprietary), PDFs, Poweprpoints, etc. Two years from now there will likely be a handful of such devices, and while they may not have the Kindle’s national wireless coverage, as more and more campuses and schools offer wi-fi, that may become less of an issue in the education space.

What will almost certainly be widely available will be open source textbooks as start-ups like CK12, Connexions, and Flatworld Knowledge begin to proliferate.  This new, disruptive technology, will at last tilt the economics of  education sharply in favor of the student. Instead of spending hundreds of dollars per year on books with a limited shelf life, they (or the school system) will be able to simply purchase an e-book reader (for less than $200) and put all their semester’s required reading material on it for the price of one college textbook today. Truly a cloudy, but bright, future for today’s students.

NY Times says textbook publishers are like drug companies: (Prozac with your Proust?)

Another article in the continuing odyssey of the nefarious publishing industry appears in today’s New York Times. It contains the usual litany of egregious behavior by the textbook oligarchy: double-digit price increases, crippled digital versions padded with empty caloric content, under-the table-kickbacks to faculty members, etc. But it also charges that the publishers are similar to drug companies in that they both benefit from the so-called “moral hazard” problem, as explained by Cal Tech economist and open source microeconomics textbook author R. Preston McAfee:

that is, the doctor who prescribes medication and the professor who requires a textbook don’t have to bear the cost and thus usually don’t think twice about it. “The person who pays for the book, the parent or the student, doesn’t choose it,” he said. “There is this sort of creep. It’s always O.K. to add $5.”

Hmm… Maybe MacMillan could throw in a free prescription for a semester’s supply of Paxil. Having been back on campus for a few weeks now and having to deal with higher tuition and outrageous textbook prices, the class of 2012 is coming to the painful realization that they can barely afford their case of Heineken, their daily Starbucks double iced frappacino, and their music downloads (oh, I forgot – they get that last one for free.)

Professor McAfee adds one more comment:

“This market is not working very well — except for the shareholders in the textbook publishers,” he said. “We have lots of knowledge, but we are not getting it out.”

This is a true but incomplete statement, at least as quoted in the article. It is accurate to point to the increasing returns to shareholders, although it is becoming increasingly difficult to track this data as the trend towards consolidation and private equity in the publishing field removes the need for public disclosure:

There is no doubt that major textbook publishers are big business. The college textbook market represents between $5 billion and $6 billion and the the last 18 months have seen the sale of two major publishers (Houghton Mifflin College and Thomson Learning) for $750 million and $7.75 billion respectively. The overall consolidation of the college textbook market has left four primary players (listed in order of size and market share): Pearson, Cengage Learning, McGraw-Hill, and Wiley.

There is little doubt that the M&A activity has resulted in the remaining publishers adding staggering amounts of debt to their balance sheets. A consequence of this new economic reality is a shift in attention from textbooks to those other books that the company produces: the ones that deal with assets, liabilities and net income. Accountants tend to focus on different assets than editorial directors do.

But another party is apparently complicit in this cozy arrangement of uncontrolled textbook price increases, according to a 2006 study by Dr. James Koch called

An Economic Analysis of Textbook Pricing and Textbook Markets.

Yet another distinctive characteristic of textbook markets is that nearly
every institution of higher education has a financial stake in higher
textbook prices.  With a few exceptions, noted below, institutions of
higher education either own and operate their own bookstores, or they
contract that responsibility to an external vendor such as Follett or Barnes
and Noble, in which case they usually receive a lump-sum payment plus a
percentage of dollar value of sales at contracted on-campus stores.

What this market structure leads to is ever increasing pressure on the producers to raise prices, which works well for as long as there are few supply alternatives for the consumers (students). As thought leaders such as Preston McAfee, enabled by disruptive innovators like Lulu and Flatworld Knowledge, (which I have blogged about frequently this year) begin to offer a viable alternative to the two extremes currently faced by most students – price gouging or illegal file sharing sites – the publishing cartel may soon find itself cozying up to the drug makers, if only to get their own supply of Prozac.

Plastic Logic unveils E-reader that’s everything Kindle isn’t

At the Demofall08 conference that was held this week in San Diego, (“72 companies. Each with six minutes to show their product to the world. It doesn’t get any more straightforward and fast paced than that.”) a company named Plastic Logic introduced a new type of e-reader that looked like it featured nearly everything the Kindle doesn’t, at least in its current incarnation. Take a look at this video:

Demo08 Plastic Logic

Some of the oustanding features of this yet to be named product are:

  • Touch screen
  • 81/2 by 11 inch display
  • as thin as a pad of paper
  • durable, unbreakable plastic (not glass) display screen
  • virtual keyboard
  • Bluetooth and Wi-fi capable
  • allows notes and annotation on a document
  • handles PDFs and other open format content

Some reviewers have commented that it lacks content, when compared to the Kindle’s library of 170,000 or so titles. But the device was presented to the crowd as a “Business reader”, in contrast to the Kindle, which they referred to as a device for “recreational reading”. Elsewhere they  mentioned that their device allows them to work with publishers to create “new business models”. Perhaps they could find an intrepid textbook publisher that would be willing to offer textbooks on the device. Its form factor and durability would appear to make it far more suitable for the high school and college market than the Kindle. Whoever gains the first mover advantage in this market will be able to write their own ticket when Jeff Bezos comes calling.

Perseus Books Announces “Constellation” to Level the Digital Playing Field

Yesterday, Perseus Books, one of the largest independent publishers of general interest books, announced a new service this week which will open the digital universe to smaller book publishers. As reported in yesterday’s New York Times:

The new service, called Constellation, will allow independent publishers to make use of electronic readers, digital book search, print-on-demand and other digital formats at rates negotiated by Perseus on their behalf. Unlike large publishers, small ones typically lack the resources to use digital technology and as a result often bypass it altogether.

The company’s website describes their new offering as follows:

  • Constellation is a set of digital services intended to enable Client publishers to participate widely in the emerging digital landscape at a cost balanced with the revenue potential of those digital opportunities.
  • It currently includes digital print services—both short print run (SPR) and print on demand (POD)—online content sampling services, e-Book sales and distribution, and a number of online marketing tools.

This development is good news for independent publishers, who often find it hard to get decent distribution deals with the large, national booksellers. This is becoming less of a problem as fewer book buyers even shop in stores, but it forces the smaller players to fight for space on virtual bookshelves.  At first glance it seems to fly in the face of the tenet, “Any party that comes between the author and the reader is simply an intermediary that adds unnecessary cost and will eventually be driven out of the value chain.” This argument becomes more compelling in the digital age, when there are seemingly fewer links in that chain. After all, if the author creates the work on a computer then it already exists in a digital format, right? Can’t one just click the send button and then reach millions of eager readers effortlessly? It’s not that simple, if you are to believe the information in the company’s FAQs about the new Constellation service offering:

Logistically, you will need to be able to supply digital files of your titles, order ISBNs for the digital edition(s), establish a Digital List Price for the digital edition, and have a means of disseminating the PDF to the digital marketplace (in this case, Constellation). Each digital partner with which we work has differing metadata requirements (i.e., requisite fields that must be supplied). These include everything from Title, Author, Publisher, etc., to territorial rights.

In addition to providing support for e-book conversion (including to Amazon’s Kindle and Sony’s E-Reader), the new service also helps its customers take advantage of POD and SRP (Short-Run Print) technology, as well as conversions to Online Content Sampling programs (such as Amazon’s “Search Inside the Book” option).

The emergence of a service like Constellation is an indication of the relative immaturity of the e-book business. Just as the availability of consumer-friendly desktop publishing software eventually drove many specialized graphics shops out of business, as digital publishing formats and standards become more widely adopted and accessible to non-professionals, the need for an intermediary offering such as Constellation will decline over time. This will most likely occur when the term “e-pub” is no longer only familiar to members of the IDPF. But in the meantime, it will most likely contribute to an increase in the selection of digital books.

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When Irish Eyes Are Smiling: Schoolkids Get Free E-Readers

The country that gave the world U2, Guiness beer, and the shamrock also seems to be on the cutting edge of educational technology, according to a story in Thursday’s Irish Times:

A GROUP of 18 secondary school pupils yesterday became the first students worldwide to replace their academic books with electronic devices. The first year students of Caritas College girls’ school in Ballyfermot, Dublin, each received an electronic book, pre-loaded with the required textbooks, as well as 50 classic novels including Moby Dick, Pride and Prejudice and Oliver Twist . The use of the electronic devices will mean a dramatic reduction in the weight of the pupils schoolbags, replacing more than 6kg (13.2lbs) of textbooks, workbooks, an English dictionary and a novel with a 400g (0.9lbs) e-book.  In addition, the students will no longer need copybooks to take notes, as they can write and doodle on the electronic pages, similar to a regular copybook.

The pilot program has apparently been launched by Dublin based educational publishers Gill & Macmillan. Their director of sales is quoted as saying: “Although we believe that the widespread adoption of e-readers is some time off, this project allows us to determine how well they work in the classroom, how the pupils interact with them and to examine their potential.”

The device being used for the pilot program is the Iliad, by iRex Technologies. It list for $599 U.S. and is generally regarded as the Mercedes of e-book readers. In addition to handling e-books (including PDFs), this device incorporates Wacom’s pen writing technology, allowing the user to write directly on the screen with a stylus. The mind boggles when imagining the scenario in which a student can carry all her books and notes in a 15 oz package that fits in her purse.

No doubt some critics will say that at this price, why not buy them all laptops, but you’d be hard pressed to find a laptop with handwriting recognition and touch screen technology incoroporated for $600. Besides, the electronic paper display is unbeatable for reading long passages of text. The iliad comes with built in wi-fi for downloading content wirelessly, as well as an optional ethernet hook-up, in contrast to the built in “Whispernet” feature of Amazon’s Kindle, which is based on Sprint’s high-speed mobile phone network.

This is a bold step for a publisher to take, assuming they are underwriting the full cost of the program. If this assumption is correct, this begs the question, (or several questions): Does Gill & Macmillan plan to migrate all its textbooks to an electronic medium? How is their economic model different from that of North American textbook publishers, who so far have shown little interest in adapting their content to an electronic format? And finally, could they please open a U.S. branch?

We will be following the progress of this experiment in digital publishing closely over the coming months. Stay tuned.

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