Not all experts think expertly. Consider Clayton M. Christensen, a professor of business administration at Harvard Business School. Christensen, as his web site informs us, “is the architect of and the world’s foremost authority on disruptive innovation.” Last year, he predicted that hundreds of colleges and universities would go bankrupt within the next ten years.
One can’t rule it out, but Christensen’s reasoning does not inspire confidence. In a recent column, Christensen and Michelle R. Weiss,
a senior research fellow at the Clayton Christensen Institute for Disruptive Innovation, responded to skepticism about Massive Open Online Courses (MOOCs) by making this surprising declaration: “In 2013, we witnessed aggressive discounting strategies as well as schools experimenting with lowering net — not sticker — prices in an effort to recruit students. . . . MOOCs have managed to generate price competition previously unheard of among traditional campuses.”
The declaration is surprising because there is no evidence that MOOCs–as opposed to a weak economy and a decline in the number of high school graduates–are driving price competition. Christensen’s argument seems less a hardheaded admission that universities need to adapt to change than a devout wish that MOOCs are changing
everything.
In the devout wishing business, Christensen is a piker compared to Rich Karlgaard, the publisher of Forbes magazine who, as he tells us himself, “lectures up to 50 to 60 times a year on the innovation economy.“ His piece urges us to imagine the higher education sector as a stock market and decide whom to bet on. As our tough talking investment adviser, he tells us to “make no mistake: The expensive liberal arts colleges in America are going down-fast and hard.” Their “brands have become laughingstocks.”
He has in mind Haverford and Smith, both of which have been in the news this spring for successful, politicized, student campaigns against
commencement speakers. In part because of the harm their politics have done to their brands, “return on a four-year $250,000 investment in such colleges will be poor in future years.”
Karlgaard, who presumably feels compelled to offer evidence for predictions he makes about his own business, offers none at all for this one about higher education. Agreed, Haverford and Smith should be embarrassed by the episodes in question. But when this commencement season is forgotten, Haverford College will still have an enviable 93.3% graduation rate, a modest median student loan debt of $15,000, and a high but not astronomical annual net cost of $20,623 per year. With an endowment of about $434 million, and a small student body, Haverford will still be able to provide its students with opportunities less well endowed colleges cannot provide. While Payscale’s value rankings are not dispositive, Haverford is ranked 28th in a pool of 1486 schools because Payscale calculates from cost and salary data that Haverford provides an excellent return on investment.
Perhaps parents will stop sending their children there, or employers will stop hiring Haverford graduates, because this year’s commencement speaker withdrew under pressure. But I doubt it.
Smith College’s numbers are not as impressive as Haverford’s, but its one and a half billion (!) dollar endowment should shield it from major upheavals.
Compare Ashford University, a for-profit that Karlgaard vouches for because it “has a Forbes M.B.A. program.” Ashford’s annual net price is about $2500 less than Haverford’s. It has a poor graduation rate, 16.3% of its students default on their loans, and it recently was forced to settle with Iowa’s attorney general, who accused Ashford of multiple violations of the state’s Consumer Fraud Act, for $7.25 million. How is its brand doing? In preferring places like Ashford to places like Haverford, Karlsgaard is less a hardheaded business analyst than a wishful thinker.
Academics are sometimes accused of hoping that higher
education’s problems will just go away. Whatever there may be to that accusation, Christensen and Karlsgaard are doing little more than hoping themselves.
