Wednesday, October 19, 2016

Competing Against Luck

CompetingOver at TaxProf Blog, Paul Caron calls attention to Clayton Christensen's new book Competing Against Luck: The Story of Innovation and Customer Choice (HarperBusiness 2016). Here's a very brief excerpt from Philip Delves Broughton's review in the Wall Street Journal:

Disruption, in Mr. Christensen’s formulation, is not caused simply by anything new or clever. It arrives in the form of “minuscule threats” at the bottom of the market. The studios and networks treated Netflix as a minor player when it mailed DVDs, not seeing that the move to online streaming would turn it into a formidable competitor.

Similarly, grand universities right now see no threat from grubby online courses. But over time students and parents may wonder why they should pay all that money for sports facilities they don’t use and professors who don’t teach. Meanwhile, employers start to ask potential employees what they can do rather than where they went to school. And maybe the whole structure of higher education shifts.

If Christensen is right, I would expect economic pressure at many "teaching" schools to disaggregate scholarship from teaching, so that cost savings can be passed along to students thus giving those schools a price advantage. Look for a further bifurcation of research universities from teaching universities, and perhaps for a spill-over into law schools.


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