Editor’s note: With this commentary, redefinED welcomes education policy expert Lindsey Burke, director of the Center for Education Policy at the Heritage Foundation, as our newest guest blogger.
Education policy scholars, especially proponents of school choice, have long referenced the late Clayton Christensen’s work on disruptive innovation. Christensen, along with his colleague Joseph Bower, detailed the concept of disruptive innovation in the Harvard Business Review in 1995.
The idea of “disruption” in a sector “describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses,” wrote Christensen, Michael Raynor, and Rory McDonald in 2015 in a follow-up Harvard Business Review article refining the theory.
Disruptive innovation theory posits that dominant incumbent businesses may ignore a segment of their consumer base as they focus on improving products for their most profitable customers. Scrappy new market entrants then target neglected customers with early, cheaper versions of their product, and then begin growing market share as the product improves. The new business then begins capturing more customers, improving product performance while maintaining affordability, and eventually becomes mainstream.
Christensen and his colleagues caution against over-application of the theory to phenomena that do not actually represent disruptive innovation, but rather sector transformation. For example, they note that Uber, despite its incredible impact on the taxicab industry, represents sector transformation rather than disruption in part because of Uber’s large market share. This is also the case because Uber wasn’t competing with the absence of a vehicle transportation market, just a crummy one.
To be appropriately described as “disruptive,” a new entrant into the market must be enabled by one of two conditions: 1) “low-end footholds” or 2) “new-market footholds.” “Low-end footholds” emerge when existing businesses ignore “less-demanding” customers because they are overly focused on their more “profitable and demanding” customers. “New-market footholds” emerge when there isn’t a market for a good or service, turning “nonconsumers into consumers.”
As Christensen and his colleagues explain, the bottom line is this: Genuine disruption happens by market entrants “appealing to low-end or unserved consumers” and then capturing the “mainstream” market.
So, does the new phenomenon of pandemic pods unfolding across the country qualify as disruptive innovation in the K-12 space?
They certainly check some of the initial boxes.
Pods are a “new-market foothold” competing with non-consumption. Pandemic pods arose this summer after the widespread school shutdowns that occurred during the spring showed no sign of stopping. Parents, concerned about the prospects for their children’s education this fall, began teaming up with other families in their neighborhoods or social circles to hire teachers for their children. Some families unenrolled their children from their district school completely, registering in their state as homeschoolers and then joining a pod.
With pods, families work together to recruit teachers that they pay out-of-pocket to teach small groups — “pods” — of children. It’s a way for clusters of students to receive professional instruction for several hours each day. Families pool resources to pay tutors who may serve as a full-time teacher for the pod of students or may only teach on a part-time basis.
With many school districts around the country planning not to reopen classrooms this fall — or, at best, planning to offer some combination of virtual and in-class instruction — pods are competing with non-consumption, establishing themselves through a “new-market foothold.”
But time will tell whether pods remain a permanent facet of the education landscape. Disruptive innovation theory also holds that “innovations don’t catch on with mainstream customers until quality catches up to their standards.” Rather than making improvements to existing products in a market (such as increasing the computing power of a laptop or the cooking consistency of a microwave), disruptive innovations are “initially considered inferior by most of the incumbent’s customers.”
So, here’s where the ground is a little shakier for pods as a disruptive innovation. According to Christensen’s work on the subject, disruption also has a second qualifying condition: The new product must be inferior to the product offered by the incumbent.
Parents may consider some, but not all, of the components of a pod inferior to the existing education model. They may find the academics to be more rigorous, but the custodial component less competitive if it doesn’t provide the same length of coverage. Pods also are on shakier ground vis-à-vis disruption because some families join as a supplement to the crisis online instruction their children are still receiving through their district school. In that way, they could end up complementing the incumbent rather than disrupting it.
A third marker of disruption: The eventual improvement of quality. But there are already promising developments in the realm of pod quality. Education researcher and redefinED executive editor Matthew Ladner describes what a marriage between pods and established charter incumbents like Success Academy could entail. As Ladner explains, taking the Success Academy (COVID-era) model of “most skilled math instructor in the network [giving] live internet broadcast lectures” and coupling that with teachers and tutors working in small pods across the country to assess student learning and provide individual instruction could lead to high-quality pods at scale.
Finally, to truly qualify as a disruption, pods also will have to eventually serve a broad segment of the K-12 market. This will only happen through policy changes that can enable widespread participation in the model on the part of lower-income consumers.
For parents who cannot afford to pay out-of-pocket to contribute to a neighborhood pod, providing resources through education savings accounts (ESAs) will be a crucial support moving forward. With an ESA, currently available in Arizona, Florida, Mississippi, Tennessee, and North Carolina, eligible families whose children exit the public education system can receive approximately 90% of what the state would have spent on that child in her public school directly into their ESA. These restricted-use, parent-controlled accounts can then be used to pay for any education-related service, product, or provider of choice, including private school tuition, special education services and therapies, online learning, and private tutors.
Unused funds can even be rolled over from year to year. They enable families to completely customize their child’s education and are the perfect education financing policy to support families of all economic levels enrolling their children in pods. The pandemic has made it clearer than ever that every state needs to provide education choice – ideally through an ESA model – to all children, yesterday.
Universal ESAs would enable pods to serve a broad segment of the K-12 market, competing with, and potentially disrupting, the district school model.
Currently, district schools are mostly closed to in-person instruction, creating a clear case of non-consumption with which pods can compete. But even when the public education “product” is on the market as usual, it’s not a product that is serving consumers particularly well. Just one-third of students across the country can read and do math proficiently, and in some of the largest school districts in the country, like Detroit, those figures fall into the single digits.
Just as the pandemic is reshaping so many aspects of our lives, it also is reshaping education. Although the extent to which this transformation is permanent is yet to be seen, some non-trivial percentage of families is likely to continue their children’s education in something other than a district public school even when the pandemic subsides.
Pods could be what they choose. Pods are a “new-market foothold” that are competing with non-consumption (closed public schools), and could, at present, be considered an “inferior” product. But that will change as families and service providers refine the pod product. At that point, coupled with changes to policy providing ESAs to as many students as possible, they could fundamentally change the education marketplace.
As such, pods are a strong contender for what could be disruptive innovation in the K-12 space.