Utah higher education must adapt or die, Harvard business innovator tells legislators

SALT LAKE CITY — What does the demise of Geneva Steel have to do with the future of Harvard University — or for that matter, Utah's system of higher education?

According to Harvard business professor and Utah native Clayton Christensen, all but one of the nation's large, integrated steel mills, such as Geneva, were driven from the business by smaller, more adaptable "mini-mills," such as Nucor Steel in Tremonton.

That drastic change in the steel industry was due to a new, lower-cost technology — the electric furnace embraced by newer steel manufacturers, Christensen told the Higher Education Appropriations Committee Tuesday.

Only one traditional, integrated steel mill company survived the market changes, he added.

Today, the technology of online courses threatens a similar change in higher education. And unless mainstream, traditional universities learn to adapt, they will go the way of the dinosaur, Christensen said.

For about an hour, the business guru, whose books and research on "disruptive innovation" have made him influential in the business world, explained to the committee how his ideas relate to the future of higher education.

"Online learning changes the whole equation," he said. "In the past, higher education was exempt from disruption, but that's not going to be the case in the future."

Christensen's ideas may greatly influence the future of higher education in Utah.

Committee chairman Sen. Stephen Urquhart, R-St. George, said Christensen's theories as outlined in the book "The Innovative University: Changing the DNA of Higher Education from Within," form the basis for changes the Utah Legislature hopes to make.

"These are game-changing ideas," Urquhart said. "It's the text for what we hope to do this year."

The book has been required reading not only for the committee, Urquhart said, but for the faculty of Dixie State College as well, which is in his district. And University of Utah President David Pershing, whose appointment was announced on Monday, attended Christensen's presentation.

Afterward, Pershing said he has also been influenced by the book's ideas. However, he said coursework is not the only product that the U. offers, but experiences provided by programs such as the Hinckley Institute of Politics and others.

Disruptive innovation happens in a market when a new core technology makes cheaper, more useful products for customers who cannot afford the higher quality, more expensive, but older products, Christensen said.

Initially, those cheaper products get sold to the low end of a market by new companies whose lower costs make them willing to compete for lower profit margins, Christensen said.

He gave the example of computers, initially manufactured as large mainframes that only a few customers could afford. But innovative, less expensive technologies gradually made computers available to more and more customers who could afford it.

That led the computer industry from the mainframe to minicomputers to desktops and laptops and to smartphones, he said. Many larger, traditional companies that previously dominated the computing market failed to adapt to the changes and went out of business or lost market share.

Christensen explained that the older companies making higher-end, quality products willingly cede the lower, less lucrative end of the market to the new competitors.

In the automotive business, a company like Toyota started with inexpensive cars like the subcompact Corona, which companies like General Motors had little interest in. But with its lower costs, Toyota gradually increased the quality of its offerings and is now a larger automotive manufacturer than GM, he said. Now, Hyundai and Kia are following in Toyota's path.