For a little while, I've been following Horace Dediu's blog, asymco.com, and listening to the podcast he does with Dan Benjamin, The Critical Path. I do find that it takes me a while to digest what he says about tech markets, not because he isn't clear, but because the concepts sound simple but feel like the tip of the iceberg. I think a lot of what he's been saying is starting to click into place for me, in large because of a recent Critical Path episode. This post is different than all the others on this blog, and is pretty rambling. I still have lots of unformed thoughts about the topic, but find it fascinating enough to share, however incomplete my knowledge.
The podcast episode which tied a lot of things together for me was episode #17 where Horace interviewed James Allworth, Fellow at the Forum for Growth and Innovation at Harvard Business School. This was one of several episodes where Horace talked with people about disruption from several angles. Of interest, he spoke with Hoon Lee (an actor) about disruption in the performing arts, and with Dan Benjamin about new media, podcasts in particular.
A good portion of the interview with Allworth centered around education, and the discussion had a very meta feeling when they were talking about business schools, but many of the concepts could be applied to other types of education. What I gathered is they feel classical business education centers quite a bit around case studies and data, and in some ways seems to be becoming more theoretical. They discussed how Harvard Business School is extremely prestigious and prepares people for business as it has been viewed in the past, but concentrating on case studies and data compilation looks at past performance and not on what would be considered market disruptions.
I know that last paragraph is pretty dense and while the words may make sense, the meaning doesn't, especially at first read. That's how I've felt about Horace's discussions on market disruption in the past, but the gist is that there are companies (Horace uses Apple as the primary example in his different analyses) who thrive by not playing by the rules, but by focusing their energies on markets where they feel they can shift the ground underneath the other players. In the case of Apple, the big examples are the Mac, iPod, iPhone, and iPad; the markets existed before, but when Apple entered them, they made a big splash and have consistently iterated their products to keep ahead of other players. A company doing that once, even twice, seems plausible, but to have been a disruptive force in so many markets shows that Apple thrives on revolution rather than evolution.
Getting back to education, Horace and Allworth compared Harvard Business School (HBS) with University of Phoenix. While Phoenix is nowhere near as prestigious as HBS, it's a tenth of the cost, but with so many more students, they can pour a large portion of the tuition back into improving the materials and technology. While Clayton Christensen teaches a very popular class at HBS, perhaps 5 or 10% of the students have the opportunity to take the class. Phoenix has access to a series of Christensen lectures, which all Phoenix students can access. It's true that distance learning is not the same as being personally involved with a class, but the fact that the school continually improving itself is how they're trying to disrupt the education process, and be in a better position to study market disruptions, both how they happen and their impact. One thing which stuck with me is people are used to ignoring outlying data and take what's left to model the business or market. However, it may be more interesting to study the outlying data (such as market disruptions) and see how that affects the market.
One thing that some schools may try, according to Allworth, is to invert the roles of lecture and homework. Students will watch lectures on their own time and then go into school to work with teachers to work through what would traditionally be homework. That way the time the students get with the teaching staff is dedicated to answering particular questions. It's an intriguing idea, but I'm not sure how it maps to highly interactive lectures (such as Socratic method classes in law school). I'm also not sure how often the lectures would get refreshed, unless there's one series of "live" lectures which is taped and reused. But if that's the case, who provides the material? If, for example, HBS classes are taped and used by Phoenix, how is that transaction handled? Would HBS start to see Phoenix as a threat and stop providing material?
The discussion then moved towards companies and market disruptions, and of course, Apple was used as an example. They explained that rather than thinking of companies as being either closed or open, they think of them as integrated or modular. Apple obviously leans towards being integrated, since they offer complete solutions. Such companies are more capable of causing market disruptions, because they have the ability to pull everything together within the company and have the agility to make the necessary changes to get things working. However, once the market becomes commoditized, modular companies become more effective since they can specialize on specific parts of a market. Integrated companies can play in commoditized markets and modular companies can innovate, and companies can be integrated in some areas and modularized in others. But Apple's history is to be integrated, which positions them to create more market disruptions.
I've just covered an overview of a couple of the topics discussed on the podcast, which gives you an idea of how in-depth Horace tends to go. His style probably isn't for everyone, but he and Dan Benjamin work together extremely well. Dan knows that Horace will get started on a topic and start doing a brain dump, and every now and then Dan will interject a question. He also knows when to ask for clarification when he feels the audience will need it. I find myself concentrating a lot when listening to this podcast, and have started paying more attention to market analysis because of it.