Education and the Edgeconomy
So I understand this edgeconomy stuff less than 1% as well as Umair but I’ve been reading him religiously for a while now and I think I’m starting to see how it all pieces together, at least in the industry I follow most closely. This post in particular was a little bit of a mind-blower for me.
One of the tenets of the edgeconomy, as I understand it, is that firms are founded to organize resources. In the industrial era it’s tough to argue that they did the best job of doing so. And this success built something powerful that is likely to cannibalize the very firms that can’t relinquish it: orthodox strategy. The notion that the best way to succeed is to maintain the status quo and do the things that caused you to be successful in the first place. I, like Umair, had that jammed down my throat during my time at business school.
But there’s a little problem here for those who espouse orthodoxy: The Internet. And not just the Internet but new forms of communication and peer production that lead to completely different ways of organizing resources than were possible in the past. Wikipedia. Google (now the world’s most valuable brand in a striking example of the power of edgeconomy). craigslist. Twitter.
These and other services are fundamentally changing the modes of production, distribution and selection. And it’s happening fast.
Does this impact education?
Massively.
Rewind 10 years. I’m teaching classes and doing private tutoring for Kaplan Education. Kaplan pays me $20/hour. Kaplan bills out my students at $100. I don’t complain too much about this because heck, what else am I going to do? Take out a classified ad? Al Gore hadn’t invented the Internet yet so I was pretty much stuck. Kaplan was organizing the resources in the most efficient way then and making a boatload of money doing so.
Fast forward to more recent times. I’m an SAT teacher trying to decide whether I want to teach for Kaplan or set up shop privately. Stuff like craigslist makes it much (much!) easier for me to go solo. I can find students without spending any money and build a practice. Maybe I charge $50 and now I’m making more than double what Kaplan was paying me and my students are enjoying a half-price sale. In this scenario Kaplan is providing the exact same “value” of resource organization but what’s changed is that the value they are adding relative to the other alternatives (e.g., going solo through craigslist) is much, much lower.
Now fast forward again to the present, or let’s call it 2012. I want to go out on my own and there are platforms on the Net (we’re building one, there will be others) that further improve the organization of those resources. In fact, their value proposition attacks the old model on three flanks: disintermediation (allowing buying and seller to transact directly…think eBay), connected consumption (you buy something, I know how much value you got) and removal of physical boundaries (real-time, in-browser video communication).
Any one of those three could topple the big players in a massive industry. Put the three together and it’s virtually impossible that the big players will survive. Their death could be quick (think what’s happening to record labels or the newspaper industry right now) or it could take longer but it’s imminent. And it will mean some interesting stuff:
#1 - As tech improves location becomes less of an issue. When’s the last time you needed to know where your favorite band lived? That used to be an issue but the technology to deliver music has made it a non-factor. The same will happen in education. My generation learned almost of what we know from people who lived less than 10 miles away from where we lived. My children’s generation will learn most of what they know from people who live more than 10 miles away. And that will be a good thing.
#2 - Value will shift from the center to the edge. Education is a $2 trillion industry and most of the focus right now is on the core/status quo/orthodox strategy. That will shift and new value will be created at the edges replacing the value decay at the center (I hope I don’t have to go into why there’s value decay at the center). The answers won’t lie in stuff like propping up old institutions but rather by re-thinking the notion of education and learning from the ground up.
#3 - Consumers *and* producers will win. In the music biz right now both bands (witness NIN, Radiohead, Arctic Monkey, Vampire Weekend, etc.) and fans are winning. Same will happen in ed. Teachers will win, being presented with amazing opportunities they’ve never dreamed of before. Students will win as well by having a global marketplace of teachers to tap in any subject imaginable anytime, anywhere. There will be losers as well of course (unimaginative schools of tomorrow = unimaginative record labels of today).
All this stuff is still rolling around in my head so please check my logic and assumptions. Still, regardless of how I look at this it’s really hard to imagine that a Revolution isn’t close at hand.
4 Comments
- 1. Andrew Warner said:
When I was growing up, my access to information was limited to my family’s World Book Encyclopedia and the small local library.
Today, we have access to information from all over the world. I think the next step is to give us access to teachers from around the world.
Podcasting is a good start, but it’s one-directional.
posted April 9th, 2008 at 8:28 am
- 2. mathoda.com said:
Internet truths that are false in other contexts…
Many ideas about how the Internet will effect the world are right only in certain situations, yet they are stated in a breathless manner that leads to overly broad, often ridiculous interpretations. In other contexts or from a certain perspective the o…
posted April 9th, 2008 at 11:58 pm
- 3. David - laccstudent.com said:
Jon,
You are definitely correct about the disruption of the education industry.However, the music industry actually has alot more going for it than the education industry.
While both industries have vehement supporters for the old methodology, there’s a difference as far as the motivation for change.The music industry has alot of geeks and downloaeders committed to not paying for music.
The education revolution doesn’t have as many people committed to knocking down the old way. They also don’t have as many vehement opponents (except maybe the publishing industry). It’s more that the traditional education industry isn’t exactly raking in the money that they are committed to the old methodology. Rather, it’s inertia.
Internet research is a given, the defenses against plagiarism standard, and the use of online tools for courses standard. The real issue is that there’s an inefficiency in the market(read no open market at all) as far as teacher compensation vs. competency…
posted April 12th, 2008 at 11:52 pm
- 4. Dave Schappell said:
Jon — this was a great post — I actually started to read it several days ago, and then just saved it because I wanted to read it more closely. What we’re building is probably addressing more of the disintermediation aspect (using the web to directly connect the parties) and what you’re building is more removing the removal of physical boundaries — I think they’re all going to rapidly fall over the next 5-15 years (yes, that’s a fast cycle!) and that we’re all playing small/large parts of the shift. I really look forward to helping to expedite this transition.
Best of luck to EduFire!
Dave
posted April 17th, 2008 at 9:05 pm
