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2 Key reason why students motivation is weak is that schools are improperly integrated: Instruction is typically uncoupled from activities in which students can feel success Clayton M. Christensen 2 What jobs are students trying to do? Be successful/ progress Have fun with friends

3 Performance Performance that customers can utilize or absorb Time 3

4 Performance Incumbents nearly always win Sustaining innovations Pace of performance improvement 60% on $500,000 Different measure Of Performance 45% on $250,000 Performance that customers can utilize or absorb Time Non-consumers or Nonconsuming occasions Disruptive Innovations: Competing against non-consumption 40% 20% on $2,000 Entrants nearly always win Time 4

5 Yesterday Ford Dept. Stores Digital Eqpt. Delta JP Morgan Xerox IBM Cullinet AT&T State universities Sony DiskMan Today Toyota Wal-Mart Dell Southwest Airlines Fidelity Canon Microsoft Oracle Cingular Community colleges Apple ipod 5

6 Disruption of Toyota Copyright Innosight Institute, Inc. 6

7 Yesterday Ford Dept. Stores Digital Eqpt. Delta JP Morgan Xerox IBM Cullinet AT&T State universities Sony DiskMan Today Toyota Wal-Mart Dell Southwest Airlines Fidelity Canon Microsoft Oracle Cingular Community colleges Apple ipod Tomorrow Chery Internet retail RIM Blackberry Air taxis ETFs Zink Linux Salesforce.com Skype Online universities Cell Phones 7

8 Performance Tabletop Radios, Floor-standing TVs Different measure Of Performance Non-consumers or Nonconsuming occasions Hearing aids Pocket radios Portable TVs Path taken by vacuum tube manufacturers Time 11 Time

9 Proprietary, interdependent architectures: Modular, open architectures Microsoft Windows; Apple products Customization is very expensive Linux; Dell PCs Customization is straightforward 02/14/10 5

10 Copyright Innosight Institute, Inc. 10

11 Temporal Lateral Physical Hierarchical Standardization!! Customization!! Multiple Intelligences Learning Styles Paces of Learning 11

12 Performance Core curriculum Different measure Of Performance Path taken by most schools, foundations and education software companies Time Non-consumers or Nonconsuming occasions Time 12

13 Looming budget cuts and teacher shortages are an opportunity, not a threat Copyright Innosight Institute, Inc. 14

14 Importance of program English language & literature Science Math Economics Psychology Statistics German Time Time Copyright Innosight Institute, Inc. 14

15 Math Political importance of program Science English language & literature Economics Psychology Statistics German Time Non-consumers or Nonconsuming occasions Computer-based learning: Compete against nonconsumption Time 15

16 % new % new % old

17 Enrollments up from 45,000 in 2000 to 1,000,000 in

18 46 states have some form of online learning initiative 27 states have supplemental state-led programs FLVS, Idaho Digital Learning Academy, MVU At least 7 have 10K+ enrollments Districts increasingly getting into the game Serving nonconsumers: drop-out recovery, credit recovery, advanced courses, home-schoolers Copyright Innosight Institute, Inc

19 Predictably improving Copyright Innosight Institute, Inc. 19

20 20

21 7

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23 Autonomous Self-sustaining funding Not beholden by the old metrics Seat time Mastery/Performance-based Student: teacher ratio Teacher certification Human resources pipeline and professional development Broadband/wireless infrastructure Portal/Based on usage and what works Treatment and use of data Copyright Innosight Institute, Inc. 23

24 THE VALUE PROPOSITION: A product that helps customers do more effectively, conveniently & affordably a job they ve been trying to do RESOURCES: People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition to the targeted customers REVENUE FORMULA: Assets & fixed cost structure, and the margins & velocity required to cover them PROCESSES: Ways of working together to address recurrent tasks in a consistent way: training, development, manufacturing, budgeting, planning, etc. 24

25 THE VALUE PROPOSITION: A product that helps customers do more effectively, conveniently & affordably a job they ve been trying to do PROFIT FORMULA: Assets & fixed cost structure, and the margins & velocity required to cover them Business units don t evolve. Corporations do. RESOURCES: People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition to the targeted customers PROCESSES: Ways of working together to address recurrent tasks in a consistent way: training, development, manufacturing, budgeting, planning, etc. 25

26 Level of change Organizational model in which product is used Product architecture: What are the components, and which ones interface with others? Change the specifications for how components must fit together Improve performance of each component Autonomous VP VP VP VP Heavyweight VP VP VP VP Lightweight VP VP VP VP Functional VP VP VP VP 26

27 Manufacturing Food services Medical procedures Instruction Textbooks; education software today Telecomm Insurance EBay D-Life Education software tomorrow

28 Different measure Of Performance Performance Path taken by Educational software developers Time Non-consumers or Nonconsuming occasions Time 28

29 Little Extensive Different measure Of Performance Different measure Of Performance Degree of customization Performance Online courses Teacher-led courses Teacher-led monolithic instruction Tutoring tools Online learning Student-centric learning facilitated user networks 29

30 Performance Different measure Of Performance Non-consumers or Nonconsuming occasions Tutoring Modules Custom classes Facilitated Network: parents, Time teachers, students, entrepreneurs 30

31 Deliver content to students Testing & assessment Progress to next grade, subject, or body of material Receive results

32 Deliver content to students Testing & assessment Receive real-time interactive feedback Progress to next grade, subject, or body of material 32

33 When education is not delivered in an intrinsically motivating way, prosperity is an enemy to education 33

34 Start small Break the mold grant for $200K What should it look like? Unconstrained by old assumptions; what can we do with this new medium? What is true in this world? Experiment and learn from failure Puzzle: who will want to use this? Copyright Innosight Institute, Inc. 34

35 Autonomous organization Established in 2000 as independent educational entity New value proposition Freedom to create its rules and procedures and enter into agreements with providers, hold patents, etc. as need be to fulfill its mission Funding Initially a line-item allocation In 2003, self-sustaining model established FL funding formula Seat time Mastery Copyright Innosight Institute, Inc

36 200, ,000 FLVS Enrollments 100,000 50, Copyright Innosight Institute, Inc

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