Our universities and colleges are indispensable breeding ground for innovation and valorization. Their research activities have been the oxygen of innovative companies and civil society organizations for hundreds of years. That is why it is important to check our higher education every now and then. And to see how we can keep it robust and future-proof.
The latter becomes a major challenge. Many other sectors have undergone a radical change since the beginning of this century due to digitalization and the emergence of new business models. We call this change system disturbances† In fact, we see them almost everywhere except in universities and colleges in Europe. As a Gallic village, they have survived thanks to traditions and protection through legislation and state aid.
the demand side
System disruptions in, for example, the automotive industry, HR, politics, media, logistics and economics all followed the same pattern. New competitors are entering adjacent sectors or markets. They combine traditional services or products with new technologies. Traditional providers realize this too late and are unable to adjust their strategy and internal processes in a timely manner.
Due to the innovative product-market combinations of the new competitors, the demand side of the market is suddenly changing faster than traditional suppliers can observe. Competitors can respond much better to this rapidly changing demand because they are not hindered by leave: Market habits, assets on the balance sheet, loans, corporate culture or regulations. They then push the traditional providers out of the market.
There are five reasons why our universities should also prepare for disruption. First, it’s because we’re already seeing more new competitors emerge. The most important are Online Program Management providers like 2U and coursera† They provide complete study programs and purchase their components from traditional universities.
This $ 6 billion market is now expected to grow 13.3 billion in 2025. These competitors are more agile, offer shorter curricula and courses at the academic level, and can organize themselves around students’ needs better than traditional universities and colleges. They use reputable universities as subcontractors, thus creating quality and branding.
Second, the financial resources of these new competitors are growing almost explosively through equity investments. In 2021, venture capitalists pumped more than $ 20.8 billion into education technology. Investments from 2023 are expected to exceed the Netherlands’ total education budget. These investments must provide a return. The only way to get one fast return on equity gain: increase market share at the expense of traditional universities and colleges.
The third change can be seen in the labor market: it really requires a different type of graduates than twenty years ago. Radical technological development means that knowledge is rapidly renewed and obsolete. This requires universities to have a much stronger focus on competences, lifelong learning, closer ties to the labor market and a proactive role in shaping the labor market of the future. Universities and professional colleges work with it, but the question is whether it happens fast enough.
The fourth change has to do with the students of the future. For them, ‘online’ is everywhere, even more so than now. The innovation competitors of the traditional universities are available to them everywhere and 24/7. In this much more transparent market, students are looking for education where the return on the time and money they have invested is highest. This is not necessarily the case with traditional colleges or universities.
Finally, the social demands on universities and universities are also changing. Society demands solutions to major challenges such as the climate crisis, resource scarcity, the biodiversity crisis and geopolitical tensions. Traditional universities and colleges are organized around disciplines in silos, which we call faculties. The lack of collaboration and interdisciplinary work between the faculties stands in the way of a real focus on societal challenges. In the long run, this hurts license to operate of traditional universities and colleges.
Photo: The Academy building at Utrecht University, dated from 1462.
About this column:
In a weekly column, alternately written by Eveline van Zeeland, Derek Jan Fikkers, Eugène Franken, JP Kroeger, Katleen Gabriels, Carina Weijma, Bernd Maier-Lepla, Willemijn Brouwer and Colinda de Beer, Innovation Origins are trying to figure out what the future will look like. These columnists, sometimes supplemented by guest bloggers, all work in their own way with solutions to the problems of our time. Here are all previous sections.