Unbundling Higher Education

A recent article, “If Colleges Are Dismantled, Consider the Impact on Their Cities” (The Chronicle of Higher Education, 16 October 16), makes a good argument for the negative effect that unbundling university services can have on a community.

But what is more important is the impact that unbundling can have on students.

The passage of greatest interest in the article is:

“Anant Agarwal of edX has argued that everything from admissions to food service to health care are extraneous to the institution’s central purpose. Information technology, through MOOCs or credit-bearing online courses, is key to achieving better, faster, and less costly course delivery.”

Unbundling is closely related to the failed concept of “core competency” created by C.K. Prahalad and Gary Hamel in 1990. Business leaders flocked to the idea of core competency, which suggests they should focus on work that the organization does best in its mission to serve customers and outsource ancillary functions and activities, usually with the twin goal of reducing costs.

But, what often happened was a reduction in the overall customer experience because the suppliers of outsourced goods or services delivered lower quality or were unable to solve customer’s problems in the same way the organization once did. The penny-wise, pound-foolish decision by leaders to outsource work that customers value often resulted in lower sales, a loss of market share, or both, which creates new opportunities for competitors.

Core competency, as well as unbundling, also seeks to transfer work from the seller to the buyer, thereby reducing the seller’s costs while assuming the buyer’s time has no cost or value. While buyers tolerate this do-it-yourself service model under certain conditions, there are situations where it reduces their overall experience and causes great dissatisfaction.

Core competency and unbundling, despite their many problems, happily hop-scotch across industries and gracefully fall into the arms of unsuspecting leaders who assume they offer nothing but upside and, remarkably, imagine no downsides. Higher ed leaders, if they choose to proceed, must do so with great caution.

The best leaders – whether in industry or academia – seek out and learn from the misfortunes of others, so those outcome does not happen to the organization they lead.

Anant Agarwal’s view, here and elsewhere, is all upside, no downside. Because he is affiliated with MIT and Harvard, he must know what he is talking about, right? Wrong.

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