Old models fading fast

Old models fading fast

Whether it's private businesses that once ruled their sectors (such as Kodak and Encyclopedia Britannica) or government institutions (such as public education in the little red school house and the post office) or even entire industries (such as media and banking), the old models from the 20th century are fading fast in a 21st century dominated by the Internet and a digital world. As I have written here before, “Innovate or die.”

The statistics will probably be outdated by the time you finish reading this issue. Last I saw there were 2.25 billion people in the world on the Internet and 900 million users of Facebook. It's a global marketplace, and it's growing and connecting more every hour. And it will continue to change the way we live and work—and destroy the old models we are so accustomed to and comfortable with—not only through technology, but also through financial systems and demographic changes. We ignore these trends at our peril.

Just look around at the victims who would not embrace change. And there would have been more in the automobile industry if not for the federal government. Much of that was due to old union contracts that had grown out of control and choked the life out of the very companies the unions helped build. The same is happening now in government, with union benefits and pensions at unsustainable levels and no relief in sight. It is affecting state and local governments as well as public schools and universities. (Tenure was another benefit that has handcuffed innovation.) It must change across America.

Collective bargaining was the big issue in Wisconsin, where Gov. Scott Walker also asked for state employees to contribute more to their health care and retirement costs. The angry unions petitioned to recall him, and, after a bitter campaign, Walker won easily last week, signifying weakening labor unions and a message that taxpayers are fed up paying for outrageous benefits that none of them get in their own jobs—if they even have a job. Those union-brokered benefits packages were not fair, and the vote in Wisconsin showed folks are ready to put an end to the days of old.

The same issues face Louisiana and Baton Rouge. That's why Gov. Bobby Jindal pushed for an end to teacher tenure and proposed pension reforms for Louisiana; the old model isn't working and can't be sustained. The Legislature passed historic education reforms to give parents choice in the marketplace and took small steps forward on pension reform. But we must do more about pensions to avoid a train wreck in the future.

The issue will have to be dealt with in East Baton Rouge Parish, too, and it should be debated in this year's mayoral race. It is also having major impact on EBR schools, and legacy costs of pensions were part of the reason the school board claimed it opposed the southeast Baton Rouge breakaway district.

This all comes down to the fact that we can't let the tail wag the dog. Whether the business or service is public or private, the market (the customers and taxpayers) is ultimately going to dictate and drive the train. And it should. That is the free enterprise system, and it works.

The pace of change is rapid, and as the great hockey player Wayne Gretzky said, “I don't skate to where the puck is, I skate to where the puck is going to be.” Are we anticipating the future?

Higher education's old model

One of the big issues facing our state and Legislature every year is the future of higher education. But I would contend the problem is we keep arguing just over money for the old model in Louisiana, the way it has always been. We even have a Legislature that instituted “price controls” and has to approve tuition increases. This is almost anti-American. Let the market dictate tuition. Let the best win and the worst go away. Businesses open and close locations and change hours in order to meet the customers' needs and operate within budget. Let the universities compete. Do we have too many? Let the market decide. The old model is not sustainable and will not produce excellence all-around. Spreading funds a mile wide and an inch deep is not a formula for success. We must innovate—and consider what is happening around us and where the puck is going.

Consider this anecdote from Liz Dwyer, education editor of GOOD magazine: “This fall, Stanford decided to experiment by offering its three most popular computer science classes to the public—for free. Within weeks, 200,000 people from around the globe signed up, with Introduction to Artificial Intelligence, taught by renowned Stanford professors Peter Norvig and Sebastian Thrun, attracting a whopping 160,000 students.

“Norvig's tracking found that more than 3 million users have come to the page since the university announced the artificial intelligence class. And more than 35,000 of the people who signed up have stuck with Intro to A.I., turning in assignments and taking midterm exams right along with the 175 students paying to take the class in person.”

Two professors, 35,175 students. Wow.

David Brooks wrote about major changes in store for universities in his May 3 column in The New York Times, where he said, “Online education is not new. The University of Phoenix started its online degree program in 1989. Four million college students took at least one online class during the fall of 2007.

“But, over the past few months, something has changed. The elite, pace-setting universities have embraced the Internet. Not long ago, online courses were interesting experiments. Now online activity is at the core of how these schools envision their futures.

“This week, Harvard and the Massachusetts Institute of Technology committed $60 million to offer free online courses from both universities. Two Stanford professors, Andrew Ng and Daphne Koller, have formed a company, Coursera, which offers interactive courses in the humanities, social sciences, mathematics and engineering. Their partners include Stanford, Michigan, Penn and Princeton. Many other elite universities, including Yale and Carnegie Mellon, are moving aggressively online. President John Hennessy of Stanford summed up the emerging view in an article by Ken Auletta in The New Yorker, 'There's a tsunami coming.'”

Brooks made the point, “What happened to the newspaper and magazine business is about to happen to higher education: a rescrambling around the Web.”

So, while we fight in the Louisiana Legislature over the old model and how we slice the pie and “Is it big enough?”—I would argue we need to be asking, How will we compete with top universities (like Stanford and Harvard) teaching courses online for free? And which of our universities can compete, survive and thrive in the 21st century? That is where we should invest our money. There are just simply not enough dollars to go around. You have to be very good and attract customers (on campus and online) and prove your value with research and graduates. Because those that fall in the “mediocre middle” will not make it in a global market. That model is dead—and Louisiana should bury it.

The 20th century is in the history books. And that is where these old business models used will also be—sooner or later. Those of you in business, government or education who choose to change sooner might just still be around to enjoy later.

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