It was fascinating to read the NYTimes story about the decision process behind the creation of Harvard Business School’s new on-line offering called Business School Disrupted. The offering, called HBX, teaches “pre-MBA” classes via an elaborate multi-screened platform and is the business school’s answer to education and the internet.


The article set up the decision as something of a choice between Porter and Christensen’s views of how strategy, innovation and disruption happen.

Christensen is famous for his works on disruptive innovation. He wrote a book on innovation in education called Disrupting Class. Education is also a focus of his Christensen Institute.  So it’s kind of interesting that he was not consulted in the development of the strategy. His view is summarized as seeing HBS as:

a potential Blockbuster Video: a high-cost incumbent — students put the total cost of the two-year M.B.A. at around $100,0000 — that would be upended by cheaper technology if it didn’t act quickly to make its own model obsolete.

Porter on the other hand is famous for his works on strategy and competitive advantage. He is close to HBS Dean Nitin Nohria and was reported to have played an important role in the development of the strategy. He was quoted as saying:

If Clay and I differ, it’s that Clay sees disruption everywhere, in every business, whereas I see it as something that happens every once in a while. And what looks like disruption is in fact an incumbent firm not embracing innovation.

If you’ve followed the writings of these thinkers over the course of your career (as have I), the debate is fun just to see them going head to head. But it’s also a really good example of the challenges of today’s intangible capital economy.
I’m left with two big questions that actually face most organizations today:


What is the organization’s mission? In this case, the internet is creating a huge tension today between the need to preserve and protect the exclusivity of educational brands—and the potential of the ideas of educators to reach beyond their (relatively) small communities. In this light, is HBS’s mission to run an excellent business school or to be an agent for excellence in management?


Who should be involved in a strategy process? In this case, the school developed and launched a strategy around education and technology without consulting its community (especially a professor who is world famous on the subject). Is it still appropriate to create strategy from the top downin an knowledge-intensive organization like HBS?

How could/should we scale what we do? In this case, the school literally built a virtual version of its classrooms. Is the essence of the process the professor and the wall of faces—or is it in staged discussions that can be replicated in some other way?

Not a lot of answers but lots of food for thought. What do you think?

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Comment by William Miller on June 5, 2014 at 1:27pm

Mary,

Undergraduate is different from graduate and business school MBA is still different. But my comments apply to undergraduate which needs to be (1) broadened regarding offering courses in innovation based on 4G which includes financial accounting of intangible capital (BTW - Economics needs to be upgraded) (2) offered with a life-long learning extension and (3) offered with new technology in addition to MOOC's that adds the technology behind SIRI and IBM Watson. The last point is that education is too much a game of testing that then degenerates into life-long memory loss. Education should change the value proposition of a "degree" to life-long services providing answers based on gaining analytics (IBM Watson) and information access that today requires subscriptions. Think of SIRI and Watson as calculators are to simple arithmetic. GE changed their business model decades ago from just manufacturing to manufacturing plus smart services providing maintenance to improve availability and the operational performance of expensive machines. Education needs to do the same thing. Both Porter  and Christensen (and all the educators I know) are stuck in an obsolete model and at best think the change is just adopting MOOC's to supplement an on campus education. As I said, they don't understand radical innovation.

Comment by Mary Adams on June 5, 2014 at 1:07pm

Bill -  Could you explain your concept a little more? 

One of the things I'm struggling with is this: I do think that there will be disruption of the current university models. But I think that there is something special about the immersive U.S. undergraduate experience that I don't see going away.

Another thing I struggle with is the need for exclusivity to support brands and the need/possibilities of teaching many, many more people through new models.  So is a good education a scarce or an abundant resource?

Comment by William Miller on June 5, 2014 at 11:35am

I agree with Christensen that the HBS business model is obsolete and needs to be replaced. Porter and HBS are wrong and are walking into death for HBS trying to do a pre-MBA model that feeds HBS. However, Christensen's deal with Phoenix that uses MOOC's is not a solution because he doesn’t understand how to do radical innovation. His disruptive innovation (DI) is just a lower cost innovation but doesn’t change the business model. DI attacks the unjustified HBS pricing such that alternatives will emerge that kill the HBS model. The replacement to all business schools is something I worked out several years ago using fourth generation (4G) innovation methods that produce radical innovation. The replacement does 3 things. First it recognizes that the scope of an MBA is too limited and a School of Innovation is needed with a different curriculum based on 4G with new financial accounting that measures intangible capital and that also includes management of R&D and engineering. Second, HBS ignores life-long learning and the need for continuous learning on the job (LOJ) which needs help from consulting services. LOJ with consulting help is the way companies learned lean production. That LOJ means an Innovation Extension Center is required. Third, the modes of delivery use MOOC's plus other JIT education technology based on SIRI and IBM's Watson and consulting. On a broader scale, what I’ve said applies to the obsolete university model that ignores life-long learning. Christensen and Porter are examples of obsolete thinking by university professors who have not practiced innovation in industry and have not kept pace with new innovation theory and practice such as 4G.

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