Making Universities Obsolete?

I recently came across a blog post by Matt Welsh about Making Universities Obselete.  It described how Sebastian Thrun’s Udacity is going to change how higher eduction works.  His points in the article were that there were three key failures in the current model for higher education:

  1. Failure #1: Exclusivity
  2. Failure #2: Grades
  3. Failure #3: Lectures

Much of the discussion was talking about how Udacity might correct some of these failures and usurp the traditional forms of higher education.  I respectfully disagree — at least not according to the arguments stated.  One key aspect is missing from this model that the current model of higher education does really well: playing to incentives of the stakeholders.  Let me address the three points individually.

The biggest presupposition they make with any of these new models for higher education is that most students want to go to school to learn.  This is a commendable idealism but couldn’t be further from the truth.  I strongly suspect that the main motivation of students is to get a good job (high paying, growth opportunities, good location etc.).  If this is the incentive, then we should consider what is in the best interest of companies looking to hire graduates of these institutions.  Ideally, they want to hire the best candidate with a high degree of confidence.  Obviously this is not a simple task.  This requires evaluating each candidate for using strict hiring guidelines and processes.  This just doesn’t scale well when a single job may have hundreds of applicants.  Practically, employers need some easy measure to filter out candidates.  Yes, they might miss the diamond in the rough, but they save that time in hours and hours of filtering out poor candidates.  Enter grades.  Reducing your entire education to a single number or letter average may seem disheartening to the poor student who has toiled to achieve a respectable degree, but it’s dead easy to filter out people.  Below B+, out.  A+, interview immediately.  Everyone else in between, look at their resumes.  Like it or not, the purpose of grades is exactly to reduce your talent, ingenuity and performance to a single number so that you can be binned.  It’s obviously not accurate, nor precise, not to mention rife with abuse, but it’s the trade-off for how easy it is to use.

Like any fashion retailer knows, your brand is one of the most important assets when you are trying to sell a high end product.  The same goes for a person, a company or a school.  If you brand gets diluted, its value (deserved or not) goes down.  This is precisely why many schools are exclusive.  If MIT suddenly accepted ten times the amount of engineering students, how would the quality of their out-going students fare?  My bet is that the average performance would greatly decrease.  This causes a huge negative effect on the brand that, in the end, does the school, alumni and graduating students a disservice.  It’s like if we produced ten times the amount of diamonds, that 1 karat ring that you got your wife all of a sudden doesn’t mean the same thing (although it’s great for people looking to pick up a diamond).  Brand — and maintaining it — is an important factor that drives the incentives of everyone already affiliated with the university.  This means that for the most part, all these existing parties will want exclusivity over a diluted brand.

As for the final failure of universities, I think the original article is spot on.  Lectures are a very limited way to convey information, but it’s still not clear if there is a scalable model(s) that works as well.  Giving an iPad to all students definitely is not the solution.  Some universities are already providing video taped lectures for students to view online but this is not the end all or be all of learning.  Most likely different types of material work best when taught in different ways.  I believe that this is an evolution that will (albeit slowly) incorporate newer technologies.  Lectures are mostly just an older model that scales well and does a decent job.  Newer methods are welcome and hopefully we can see some great innovation here.

Incentives, incentives, incentives…
Charlie Munger is one of my heroes, in part, because he has some much wisdom without any of the BS.  He’s a huge advocate of incentives and you should be too.  Most people talk about what should happen instead of what will happen.  It’s unfortunate that we don’t live in an ideal world, but that’s the reality.  The only way to make things change for the better is if we make policies, models, and rules that play off the natural human instinct to be swayed by incentives.  Of course, I haven’t talked about any solutions, I’m not sure I have any.  I’m just reminding you that regardless of whatever innovations, ideas, or ideology you have, none of it is going to have any relevance without somehow working incentives into the picture.