An update on StraighterLine - a "disruptor in the making"?

A few years ago, I identified a few organizations that I thought were doing things in higher education that were examples of approaches that potentially could be disruptive to the field (Potential disruptions in the higher education space). Among these is StraighterLine, which offers primarily introductory level college courses much more inexpensively and flexibly than traditional colleges and universities.  Entry level courses are relatively similar in many if not most colleges, and at the same time are the most profitable for the colleges because they are most often taught in large classes. If students in large numbers were to opt for the StraighterLIne combination of online convenience and low cost, it would prove quite disruptive to the budgets of many traditional institutions. 

Time has moved on since my original designation of StraighterLine as a potential disruptor, and an update is called for to see if StraighterLine continues to look like a disruptor. For context, it may be useful to review some of the steps Christensen has identified in the development of a disruptor. The typical disruptor begins by using a new approach to make a product that is decidedly inferior to the existing dominant product, but which has some characteristics that are different from those of the dominant product. Almost always the approach is one that leads to a less expensive product.  However, If this new product is "good enough" to meet the needs of some set of customers, it will sell despite being inferior as judged in the dominant market. Most often this set of customers is composed of those whose needs are not met by traditional products ("nonconsumers"), or for whom the traditional product does the job but with too many expensive and unneeded "bells and whistles" ("overserved"). If the new product does find a market, then the producer has the financial resources to improve the product over time. The product thus increasingly becomes comparable in quality to the dominant product, but at lower cost. In the final stage of disruption, the traditional customer base finds the quality and price combination of the new product to be superior to the quality and price combination of the old product, and move rather swiftly to the new product. As Christensen points out, this entire process can sometimes be quite rapid, but often takes many years to reach the tipping point.

So how does StraighterLine fit this scenario? StraighterLine's concept was to use online courses obtained from outside vendors rather than having a traditional faculty and facilities, and to use a radically different- and lower- pricing model. There have always been and always will be complaints about its educational quality that are motivated by the fact that it doesn't do things in the "correct" way using the right business model.  In earlier times there were also reasonable complaints about the quality of some of its courses. Nonetheless, it found students who valued the freedom offered by the flexible online programs and the low price.True to the disruption model, over time this customer base has enabled (and encouraged) StraighterLine to continuously improve the quality of its courses. The primary provider of online course material is McGraw Hill, and the courses are outcomes based, thus enabling students to move at their own pace. The Council for Aid to Education provides many of the learning assessment tests used to measure student outcomes. StraighterLine now has a partnership with Carnegie Mellon's Acrobatiq,  a pioneer in outcomes-driven adaptive courseware; together, they are working to bring this powerful approach to some of StraighterLine's courses. In addition, some of the courses now are augmented via Professor Direct, a StraighterLine platform that brings a bit of the traditional higher education approach to the online space: Professors from elsewhere who are interested in leading course for StraighterLine can add instructional materials and personal engagement to enrich the basic course, although the assessments remain the same. From very early days, StraighterLine offered fairly robust student support via student advisers and online tutoring that was unusual for online programs. 

Obviously, there is no way with the current accreditation system for a faculty-less institution such as StraighterLine to be accredited. However, its courses now are of a quality that all of them have received American Council on Education CREDIT recommendations of college course equivalency. StraighterLine now has more than 80 partner regionally accredited institutions that have committed to accepting the CREDIT recommendations for students completing StraighterLine courses. In another sign of recognition of quality, 11 institutions now offer scholarships to students who successfully complete four StraighterLine courses. A survey of StraighterLine students showed that for those who sought to obtain college credit at a regionally accredited institution for having completed a StraighterLine course,over 90% were able to do so.  All of this suggests that StraighterLine's strategy of course by course "accreditation" by ACE is able to overcome some of the obstacles that arise because it is not eligible for institutional accreditation.. 

At present, StraighterLine has roughly 15,000 students taking courses during the year, a number that has been increasing steadily over time. The students pick StraighterLine to do a variety of "jobs", e.g. college students who have been closed out of some required introductory class, deployed military personnel not wanting to interrupt their education, and high school students wanting to get ahead.  

A particularly interesting subset of StraighterLine students was described recently in Inside Higher Education(IHE). Western Governors University (WGU) (another of my original potential disruptors) is almost but not completely an "Open" university. Like all other higher education institutions, it is under some pressure to increase its retention and graduation rates.One of the biggest graduation rate obstacles for open admission institutions is that, because of their inclusiveness, they admit some students who simply are not prepared for college-level work. In order to cut down on admissions to underprepared students, WGU does reject some applicants who appear to fall into that category (for example, if they have fewer than 12 college credits, particularly if they lack credits in writing and mathematics). One of the recommendations that WGU gives to these underprepared students is to consider StraighterLine, suggesting that it is a place they can gain the background needed for WGU at a very low price. WGU obviously has been very pleased with the results of this arrangement: it accepts 94% of the students who have completed at least two courses at Straighterline. These students do unusually well when they come to  WGU, and have year-to-year retention rates above 90%. This, alone, is a pretty strong indicator that the quality of the education at StraighterLine is reaching levels that are competitive with much of the market.

In this partnership, StraighterLine is clearly demonstrating that it can successfully provide certain kinds of remedial education for students who want to enter an online accredited degree program but who lack appropriate preparation, and can do so at very low prices that do not leave students with significant debt. In doing so, it benefits its partner institution by lowering its graduation rate risk from unprepared and unmotivated students. Thus StraighterLine is providing a win for both the students and the partner institution. 

In fact, this type of situation is typical in the growth of a disruptive innovation. In most cases, dominant established organizations are pleased when the upstart potential disruptor takes over their least desirable customers. It is a result that typically brings benefits to the established organization by allowing increased focus on the better, more demanding customers. At the same time, of course, it it expanding the customer base of the potential disruptor, which enables the disruptor to increase quality. In any case, the history of disruption suggests that it would not be surprising to see additional established institutions creating such referral relationships with StraighterLine as a way to rid themselves of what is becoming their least desirable customers - underprepared students at high risk of lowering graduation rates.  

At this point, StraighterLine seems to be following a very traditional pathway for a potentially disruptive concept. It is continuing to build sales among underserved and overserved student groups, and continuing to refine and improve its educational products. Its (necessary) strategy of using course by course ACE endorsement rather than institutional accreditation slowly seems to be gaining traction. So although we don't know whether it will ever be disruptive, it should stay on my list of potentially disruptive organizations.

 

 

Comments

[Lincoln Calcavecchi]

Why do “dominant” institutions fear these upstart disruptors, or why did they initially? What is the motivation of the dominant institutions: educating the masses, or the chosen few who have proven themselves and can then return as alumni and future donors? Why is it that the products of these disruptors are determined to be so inferior? Granted, yes, some are decidedly so, but we all know that not all college professors are worth the weight of their egos in the classrooms. Many college professors and instructors in the dominant institutions are barely worth the weight of their wet clothes; so to assume all dominant institutions’ products are of always high quality is a bias we cannot afford to harbor. If we want to allow the disruptors to, as you say, take over the least desirable customers, thereby having a seat at the table and improving their quality, as reported about Straightline and WGU, we must validate the contribution they are making to educating our workforce. Therein is another problem as well. “Least desirable customers”? Because a person experienced a poor quality K-12 education, doesn’t their motivation count for something? Are we saying we don’t have time, patience, or compassion to give to these undesirables? Are we promulgating an educational caste system? This article has many implicit issues worth considering, more than just the explicit review of Straightline. Thanks for posting.
Lloyd comments: Thanks for the very thoughtful (and on-target) comments. I will keep them in mind for further posts.