How exactly does a new and innovative product, perhaps dismissed at first as marginal or impracticable, become a major player in a market? It doesn’t tend to happen the same way that established products gain market share. So-called sustaining innovations occur within a market’s established competitors and make existing products more effective (and sometimes more expensive), since those innovations occur at the higher end of the market and are geared toward the most demanding customers.
“Disruptive innovation,” on the other hand, refers to the types of innovations that occur at the bottom of, or outside of, an industry, and give access to new consumers who were previously priced out of the market due to limited financial resources. This concept of disruptive innovation was first identified and coined by Harvard Business School professor Clayton Christensen, and it has informed how analysts think about the ways that new products find success in the market.
A great example of this is the personal computer. Before the rise of the PC, mainframe and minicomputers existed, but they were prohibitively expensive and required knowledge of engineering to operate. The PC was cheaper and easier to operate, allowing new consumers to enter the computer market. Furthermore, because the PC was smaller, simpler and cheaper than its predecessor, it was able to be mass-marketed to many consumers and eventually become an integral part of the 21st-century American home and workplace. No longer was access to computers limited to large companies and universities for research purposes; computers were now available for work and entertainment to almost everyone. The market had completely changed in just a few years.
Today, K–12 education in the United States is going through a period of disruptive innovation. Although many may consider online courses to be outside the education mainstream, online learning is beginning to disrupt how education content is delivered to students. That disruption is becoming more acute as states begin to reconfigure education financing, by separating dollars from delivery. Education savings accounts (ESAs), which allow parents of all income levels to customize their children’s education, are one example.
With ESA options, like in Nevada, parents can choose to apply the funds the state would have spent on their child in an assigned public school toward any education-related service, product or provider. This enables low-income and middle-income families to access forms of education that were once outside their reach, such as private schooling and tutoring.
ESAs are sometimes referred to as the next step in school choice. Worthwhile options, such as school vouchers, allow children to attend a private school of their choice. These models have been instrumental in providing escape hatches for students who were underserved by their assigned schools, based entirely on their parents’ ZIP code. Yet these options are limited. ESAs, on the other hand, enable families to choose among schools, as well as pay for private tutors and special-education therapies. ESAs allow parents to purchase textbooks, curricula and a host of other education-related services and products. They even let families roll over unused funds from year to year.
With an ESA, a family in Wyoming, for example, can purchase an online AP physics course that isn’t offered at the nearby public school, enroll in a dual-credit writing course offered by the local community college and take calculus from the online Harvard Extension School. The family can also use the ESA to hire tutors, pay for textbooks and pay for education therapy services. As with other forms of school choice, the child in rural Wyoming would not be limited to his assigned public school, and thanks to online learning, that child would also not be limited by geography.
Unlike other reforms, ESAs disrupt the principles upon which K-12 education in the United States is based: that students are assigned to schools according to geographic location, that age is the best way to determine academic level, and that all students advance at the same pace, which is based on an arbitrary timeline.
Moreover, advances in technology are disrupting the traditionally narrow delivery of education and hold the potential to dramatically lower costs, allowing even more people to enter the market of individualized education. For example, the online learning company Khan Academy offers free online tutorials in a variety of subjects. The videos are easily accessible and offer tutoring for a whole wide world of academic content for free.
Like all new disruptive innovations, online learning, course choice and financing mechanisms, such as ESAs, are viewed as foreign and untested by education incumbents, who have a vested interest in maintaining the status quo. Ultimately, these disruptive innovations hold the promise of transforming the education landscape to enable every child to access high-quality content that fits her unique needs, at her own pace, from anywhere, at any time.
Molly Field is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.