The subject of this report is the development of online learning and how it might affect the university sector. The aim is to consider the potential and threat represented by this technology. To achieve this it is necessary to consider the strengths of the new online learning approaches, their likely development and plausible market reactions. It is a deliberate scenario-setting, written in order to facilitate strategic analysis and responses. The only judgments made are that, first, this is an important topic and that, second, this is in part because teachers have a responsibility to use technology well. No other position of judgment is taken as to what will happen in the coming years but instead four scenarios are described, each conveying a different level of impact upon UK higher education.

1. Online Networks & the Traditional University: A Prospectus
Peter Kawalek, with research by David Roberts.
1

2. Introduction
The subject of this report is the development of online learning and how it might affect the university sector. The aim is to consider the
potential and threat represented by this technology. To achieve this it is necessary to consider the strengths of the new online learning
approaches, their likely development and plausible market reactions. It is a deliberate scenario-setting, written in order to facilitate
strategic analysis and responses. The only judgments made are that, first, this is an important topic and that, second, this is in part
because teachers have a responsibility to use technology well. No other position of judgment is taken as to what will happen in the
coming years but instead four scenarios are described, each conveying a different level of impact upon UK higher education.
An appendix is provided to highlight the likely importance of alumni networks in the development of the sector, and their relevance to
networked forms of social capital.
A number of key theoretical ideas are relied upon in the report and are used both explicitly and implicitly. These are described in this
introduction, immediately below.
Transaction Costs
This is the economic basis of firm development, relying first on the work of Ronald Coase1. The idea is that firms grow in order to
manage transaction costs. A transaction cost is the whole cost of acquisition, i.e. search costs, comparison, price, distribution etc. Thus a
firm employs an accountant when it is cheaper to do so than to acquire equivalent accountancy services from the market, in the overall
of the transaction cost.
For many products and services, including education, digital technology diminishes transaction costs. This invites questions over the
form of the firm (i.e. the institution), and whether it might be reconfigured. Effectively a large online learning initiative exploits this
1 Coase, R., (1937), "The Nature of the Firm", Economica 4 (16): 386–405, DOI:10.1111/j.1468-0335.1937.tb00002.x
2

3. changed set of costs. It does this both in the supply-side acquisition and distribution of knowledge and teaching, and the demand-side
organization of students and alumni.
Network Effects
After Metcalfe2, it is theorized that a larger network becomes, the more valuable it is (e.g. the utility of a telephone grows as more people
obtain one.) There are also contrary trends to differentiate networks and to trade over the perceived value of them (e.g. membership of
Investment Banking network versus non-membership, membership of Harvard network versus membership of a public university
network). The development of network forms of organization is a key theme in the work of Castells3, and the view that networks and
institutions are involved in conflict and negotiation in the 21st Century.
Innovation Theory
The term ‘disruptive innovation’4 is used to describe a change through which a new technological platform is adopted with concomitant
change in market dynamics. In this theory, a disruption occurs when the market adopts a new technology on different terms to an
incumbent alternative. Often this change in the adoption criteria confuses the incumbent that continues to try to compete on its
established terms. Often, at least initially, this confusion sees the new disruptor labelled as ‘inferior.’ However, classically, it carries the
capability of building a bigger market through a lower point of entry. There are many examples of this, including digital photography
versus film, smartphones versus PC’s, PC’s versus mainframes, production-line versus craft etc.
2 Metcalfe’s contribution is the thesis that the utility of internet networks is proportional to the number of nodes, leading some to speculate that markets will work
to ensure that networks remain open. See internet resources including http://www.ibiblio.org/pioneers/metcalfe.html, accessed 5th August 2012. Other authors
are associated with this idea in other contexts.
3 E.g. Castells, M., (2001) The Internet Galaxy, Reflections on the Internet, Business and Society. Oxford, Oxford University Press
4 Christensen, Clayton M. (1997), The innovator's dilemma: when new technologies cause great firms to fail, Boston, Massachusetts, USA: Harvard Business School
Press, ISBN 978-0-87584-585-2.
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4. Long-Tail
This idea is claimed both by Anderson5 and Shirky6. It describes the effect wherein digital artefacts can be assembled without additional
costs e.g. blog media or music downloads available through Amazon or iTunes. This allows the market to develop a wide-range of
responses across multiple niche interests. Hence, in the music industry, the ‘long tail’ of sales of little known artists becomes more
numerate and profitable than the sale of smash hits.
5 Anderson, C., (2006). The Long Tail: Why the Future of Business Is Selling Less of More. New York: Hyperion. ISBN 978-1-4013-0966-4.
6 See http://www.shirky.com/writings/powerlaw_weblog.html accessed 5th August, 2012.
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5. The Future
On May 3rd, 2012, David Brooks wrote a piece called ‘The Campus Tsunami’ in the New York Times7. It followed the announcement of
$60m of venture funding for edX, a new joint initiative of Harvard University and the Massachusetts Institute of Technology. Brooks
wrote:
“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.”
The launch of edX added to a debate that was already growing quickly. Pages of online articles and magazines are dedicated to the
potential. They all concede that online learning is indeed not new, but that the technology has been developing quickly, markets have
become accustomed and attached to online activity, and the combination of economic decline and student fees have pushed a lens of
scrutiny towards campuses. Back in 2009, Fast Company magazine published an article called “How Web-Savvy Edupunks Are
Transforming American Higher Education.”8 It proclaimed:
“The edupunks are on the march. From VC-funded startups to the ivied walls of Harvard, new experiments and business models are
springing up from entrepreneurs, professors, and students alike. Want a class that's structured like a role-playing game? An accredited
bachelor's degree for a few thousand dollars? A free, peer-to-peer Wiki university? These all exist today, the overture to a complete
educational remix.”
7New York Times, accessed August 4th 2012, http://www.nytimes.com/2012/05/04/opinion/brooks-the-campus-tsunami.htm
8Fast Company Magazine, accessed August 4th 2012 http://www.fastcompany.com/1325728/how-web-savvy-edupunks-are-transforming-american-higher-
education
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6. Then, in 2011 Sebastian Thrun and Peter Norvig began to record class videos in the basement of Norvig’s guesthouse in California.
Thrun and Norvig are both Stanford professors, roles they combine with working as leaders of Google technology projects. They
developed an online version of three Stanford courses; Machine Learning, Introduction to Databases and CS221, Artificial Intelligence.
The courses were delivered online for free, covering the same material as Thrun’s lecture-based equivalent at Stanford. Assessment was
incorporated and led to a certificate of completion. Standards were the same as the Stanford courses. The initiative was an instant hit.
104,000 registered for Machine Learning and 13,000 completed the course. 92,000 registered for Introduction to Databases and 7,000
finished the course. The most popular was CS221. 160,000 registered for Artificial Intelligence and 23,000 completed the course. There
were over six million hits on the You Tube videos that Thrun and Norvig provided to the community.
Thrun did not seek permission from Stanford for his venture, but instead brokered an arrangement as the course ran. Subsequently, he
co-founded Udacity, an online learning provider funded by venture capital. There are already more than 200,000 registered learners on
Udacity. Thrun has reported that he found his online experiment compelling, and that within ten-years he expects Udacity to offer
degree courses to an online market that might, within fifty years, be focused on only ten global providers9. At a conference in Germany
in January 2012, Thrun declared:
“Having done this, I can’t teach at Stanford again. I feel like there’s a red pill and a blue pill, and you can take the blue pill and go back to
your classroom and lecture your 20 students. But I’ve taken the red pill, and I’ve seen Wonderland.”10
No doubt Thrun sees the asset of already having worked with tens of thousands of the world’s most able programmers. The value of that
network alone is huge. If Udacity develops click-throughs, affiliate and advertising schemes, he can expect to very comfortably exceed
his Stanford salary. If a large corporate seeks access to some of the brightest programmers in the world, he can expect handsome
referral fees. All of this is achieved without charging students a fee.
Thrun will prosper. Udacity has probably already made him into the world’s most famous teacher of Computer Science. Alongside
Daphne Koller of Coursera, he has become the recognised face of an American move into a global, online world of education. The main
platforms are:
9Wired magazine, accessed 4th August, 2012. http://www.wired.com/wiredscience/2012/03/ff_aiclass/all/
New York Times, accessed 4th August, 2012. http://www.nytimes.com/2012/03/05/education/moocs-large-courses-open-to-all-topple-campus-
10
walls.html?pagewanted=all
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7. - edX, populated by Harvard University, Massachusetts Institute of Technology and latterly University of Berkeley.
- Coursera populated by Stanford, Princeton, Pennsylvania, Michigan and twelve others. Edinburgh is the first UK university to join
this initiative that was originally funded by $16m of university investment.
- Udacity – the Stanford off-shoot headed by Thrun.
- Many smaller initiatives.
Currently none provides a complete degree course, although both Coursera and Udacity have openly declared that this is on their
trajectory. A number of terms are used to describe the systems. They are ‘platforms’ in the sense that Gawer and Cusumano11 use the
term to describe a base technology or system around which many others may innovate (e.g. Apple app store). Another and more
descriptive label is ‘Massive Open Online Community’ or MOOC. The term works well and with ‘community’ fastens the technology to
web 2.0 and social networks.
Whatever term is used, this has to be understood as a movement that is not just technological and economic but also pedagogical.
Teaching methods will change as less emphasis is placed on listening to and replaying the textbook or lecture notes, and more emphasis
is given to showing competency in problem solving. Many commentators talk of the ‘flipped classroom.’ This term describes an inversion
of a normal educational experience. Traditionally, it is argued, basic information dissemination is social (e.g. in lectures) whilst
interpretive and creative work is solitary (e.g. essay-writing or other forms of homework). With the new technology, the arrangement is
flipped. There are four main reasons for this pedagogical shift. One is the ubiquity of the core knowledge itself, lessening the perceived
value of being able to retain and describe it. A second is that although peer assessment and artificial intelligence hold promise, online
assessment is likely to rely substantially on short answers that reveal understanding of complex problems. Thirdly, the social isolation
implicit in online learning will lead to greater value being placed on social learning events, experiential development and face-to-face
discussion. Finally, it is argued that this flipped arrangement more closely mirrors the world of work and the social projects of adult life.
11 e.g. Gawer, A., Cusumano, M.A., (2002) ‘Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation,’ Harvard Business Press.
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8. The Brands/Institutions
Perhaps the most distinctive characteristic of the development of online learning is that the pioneers are universities that already have
very high social and market prestige. This makes the dilemma especially acute for other universities. Might students soon have the
choice of online qualifications backed by a brand that is perceived to be superior to their own? In this the pioneers appear to have
learned from the difficulties of incumbent organizations in previous generations of technological innovation e.g. Metro-Goldwyn-Mayer
in media, TVT and Tower in music, Kodak or Polaroid in photography. These examples show that even highly prestigious brands can
suffer when they prefer to remain with an established model rather than to adapt to a new technology.
Counterweighing this, a potential problem this gives the prestigious institutions is how they will protect this status whilst also
competing lower down in the market. Might they cannibalize their own prestige? Could, for example, Harvard be tarnished by edX?
There is that threat but in practice there are precedents for tactics in which this kind of compromise can be avoided. Service or product
differentials can be built-up and emphasized to audiences even where there is common provision and shared components e.g. (e.g.
Skoda and Bentley, Lufthansa CityLine and Lufthansa). Moreover, the institutions are likely to adapt their pedagogy to provide different
services in different arenas e.g. Harvard Business School has already moved to a practice-based, action-learning curriculum that cannot
be replicated online12.
The Making of a Disruption: A Thought Experiment
Thrun’s plans for Udacity are as audacious as the word-play of its title suggests. With its large funding package, the declared intentions
of edX are no more circumspect. In the press briefing, Anant Agarwal, director of MIT’s Computer Science and Artificial Intelligence
Laboratory and new president of edX, called the new initiative a “historic partnership.” He described online education as “creating a
revolution driven by the pen and the mouse.” He went on to clearly identify that edX is “disruptive, and will completely change the world.”
12 See, for example. Accessed 5th August 2012, http://www.businessweek.com/articles/2012-07-23/minding-the-gap-nohrias-mba-reforms-at-harvard#p1
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9. According to the press briefing, the new possibilities afforded by today’s technology have created “the biggest change in education since
the invention of the printing press.”13
The self-confidence of these declarations seems to inherit from the successes of American IT companies in establishing dominance of
that industry, before successfully translating its principles to other sectors and thence to culture itself14. As Thrun and Norvig exemplify,
the American IT industry and American academia are tightly coupled. The key ideas used in this report (Disruptive Innovation, the
internet’s impact upon transaction costs, network effects, the Long Tail) all originate from scholars studying, and sometimes consulting
to, the IT industry. It is prudent to consider this whole movement to be an amalgamation of various academic and IT industry interests,
to see it as a synergy of their ideas.
Nonetheless, online learning has to compete with, or find a role that is complementary to, the very rich tradition of years of study on-
campus. It remains a great and deep ideal that we should be free to study amongst friends, in a new location, and with all the excitement
of those early weeks of the fresher experience. To be alongside scholars in a formative experience on a campus is as meaningful as
anything else in our culture. It is staple. Could online learning possibly disrupt this and supplant all the resonance of Waugh, Larkin,
Educating Rita, The Wonder Boys, Dead Poets Society, The Graduate, the college bar, the long hours in the library, and the
uncomfortable, cold, echoes of the lecture theatre? The traditional university degree is a dramatic cultural artefact as well as being vital
to personal and societal economic progress.
In this section, a thought experiment is presented with the intention of arguing that the threat is significant. For the purposes of this
experiment, online learning (wholly online) and its blended variants (part online, part campus or centre) models are taken together as a
single new innovation confronting the existing campus-based institutions. It is also assumed that all the current platforms develop
degrees or degree-equivalents. Moreover, it is deliberately argued here that the phenomenon brings some key advantages that suggest it
will be able to perform strongly in the market, and thence conceivably to disrupt the whole sector.
13Massachusetts Institute of Technology, accessed 4th August 2012, http://web.mit.edu/newsoffice/2012/edx-launched-0502.html
14Companies like IBM, Microsoft and Apple best exemplify the American domination of the IT industry, whilst Apple, Amazon and Google give examples of
companies able to dominate other sectors. The whole effect is cultural, of course, but Facebook and Twitter are particularly noteworthy examples of how social
behaviour and norms are changed. See, for example, Andreesen, M., (2011), Why Software is Eating the World, accessed 4 th August 2012,
http://online.wsj.com/article/SB10001424053111903480904576512250915629460.html
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10. Key threats to the traditional model are articulated here:
Scale
Huge potential scale brings network effects amongst learners and alumni, as well as global recognition of the brand.
o Learners can enter strong peer communities with the feeling that they can share resources and techniques amongst sub-
networks of learners of complementary ability.
o The brand e.g. “edX by Harvard, MIT & Berkeley” becomes a global aspiration without seeming remote, e.g. similar to
“Apple” for technology users.
o Teachers and tutors will compete to get access to students through the global networks, some becoming global superstars
through their performances and ability (similar to media industry, and the route being pioneered by Thrun for academia).
Others will be locked out of the biggest networks and best roles.
Data analytics will be used to provide advanced feedback, comparison, insight into learning style, peer compatibilities etc. There
might be as yet un-developed “big data”15 effects that can transform how feedback is done, e.g. suggesting learning paths across
modules and courses, linking to recruitment, psychological profiling, building peer groups for tasks, lifetime services and so forth.
Price
Free or very low cost models will help build scale.
o Access to University education is easier for some of the poorest in society, across the globe.
o The brands will celebrate successes in order to build their profile, e.g. “Rajat from Kolkata was unable to afford a UK
university and worked in a local store, but scored in the top 10% of all students on our online course and then was hired
by a Silicon Valley giant.”
Transaction cost advantages for learners. Blended models potentially offer price advantages, and cheaper or shorter courses. The
lower opportunity costs for students means that they are more suitable to part-time, poor or time-poor students.
o e.g. John from Stockport has good grades and would like to study for a degree. His parents Tom and Julie are a bathroom-
fitter and school secretary respectively, and worry about costs. They also have little experience of university courses and
15 ‘Big data’ is the IT industry’s term for data-sets beyond the normal control of a single database and reliant on pattern identification and matching techniques
10

11. struggle to advise John on how to maximize the benefit. After a family meeting, they decide a blended experience is best
because it is cheaper, also allowing John to work with Tom through his studies. To compensate John for the loss of the
traditional university experience, they decide to invest in some high quality ‘learning camps’ from the providers that are
developing around the new online market. There is a particularly prestigious camp in Rome that John can attend, and
costs are still cheaper than the traditional model.
Substitution of experience
The UK campus is a hugely alluring and significant experience for young people and their parents. For many years, many of our
most gifted people have marked the transition between childhood and adult life by going through three or more years of study
and social experience at university. It is hard to imagine it removed from its position as a key episode in UK culture. However,
online course providers might seek partnership arrangements with UK universities, adding their modernity and scale to a
campus life-style. Such arrangements might be shorter in length than traditional degrees and more flexible in their composition
(e.g. one plus one degrees, across two campuses). Learning camps (e.g. six weeks) and other substitutions are also possible,
bringing in additional private providers like colleges and hotel-chains.
It is also possible to conceive of top-of-market experiences that create greater educational experiences than the market has
hitherto seen, e.g. a MBA predominantly online but with five three-week camps on five continents, wherein action research
projects are undertaken, with nightly broadcasts over the web to future recruits and other stakeholders; medical schools in
different continents using the web to collaborate on advanced teaching.
Pedagogical advantages
The economics of online learning support teaching by ‘superstar’ teachers, Nobel prize-winners, acclaimed researchers etc. They
can recorded, live or part-live, and their messages can reach millions more easily.
Learning is no longer, or more rarely, a memory-test. Students are able to pause and repeat lectures, to rewind and repeatedly
analyse them and to contrast materials with a plethora of web sources.
The ‘flipped classroom’ makes small group seminars and tutorials (online or physical) more significant. Coffee-shop tutorials and
debates began to flourish.
Competition forces traditional universities to seek pedagogical differentiation such as ‘learning by doing’ on-campus. This might
be effective, but still signals retrenchment from the current model of making and providing both content and assessment, and
therein will challenge the current economic base of universities.
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12. Long-tail effects mean that students can build degrees or degree-like qualifications across huge numbers of courses (e.g. selecting
amongst options provided by a single platform or many platforms) e.g. Sara, always a multi-talented student, has a core in
Mathematical subjects but has combined these with successful passes in History, Literature and Politics modules.
Well-funded online platforms like edX start producing material to Hollywood standards (e.g. Business Strategy articulated by the
Actors studio), and accessing the best technology of the IT industry (e.g. virtual reality tours of the human body).
Revenue streams / expansion of value
The big online providers use their student performance data and global reach to provide recruitment services to employers.
The big online providers gain revenue from advertising (e.g. at Facebook rates published for their IPO and assuming constant
residency in the UK, Manchester University’s current student population is worth $190,000 per annum in advertising revenues).
Virtue, beyond brand
The provision of courses to poor populations across the globe might result in the online course providers being widely perceived
as virtuous, whilst traditional UK universities struggle to avoid labels like ‘stuffy’ and ‘elitist.’ Daphne Koller of Coursera says:
“Our mission is to educate the world.” Imagine the scenario: ‘Who gave the world’s poor a chance?’ says a senior American
academic on a tv. show, ‘we did.’
Genuine engagement and enthusiasm from these populations reciprocates, and US academia becomes the global standard.
Brand development
edX degrees join Coursera degrees, Udacity etc. They are flexible and feature tradable modules as the universities learn from the
open source movement in software.
Ratification and support by employers is sought to boost the credibility of the new degree types and brands e.g. ‘Google likes
Udacity’, ‘General Electric recognizes edX scores.’
Some employers recognize that cheaper courses mean less student debt and then a lower salary at graduation. This motivates
further elevation of the online brand, with students from traditional courses having to compete hard to win jobs (the opposite of
what traditional universities had expected).
Franchise and other forms of cooperation
Franchise arrangements and partnerships with traditional universities and other learning providers are developed. They give the
online providers access to accreditation, testing, seminar and experiential services. In the UK, the market reacts when ‘new’
universities react first and use franchise association with Harvard, MIT etc. to attack the Russell Group.
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13. Lecturers leave traditional universities to provide tuition and other services to learners on the online programmes. It is easy to
become established in these roles. All you have to do is perform well and attract good ratings from students, and the systems will
automatically start referring students to you.
Leisure-time and pastoral modules are developed, encouraging get-togethers and events amongst learners and ex-learners who
live in the same neighbourhood or region. “It really is an incredible network,” states one member, “a network for life….. We go
bowling together.”
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14. Scenarios
Four possible scenarios are articulated below. They describe how this contest might develop. Each is written retrospectively from about
2022.
Open University + : Back in 2012, the UK already had substantial experience of high quality distance learning, but it had little impact on
demand for its campus experiences. Ultimately, the allure of three or more years of the campus experience remained highly prized by
students and their parents. It proved to be the case that the new wave of online learning technologies offered only a supplement to that
experience. Looking back at 2012, there were some pedagogical changes on most campuses, but overall it could fairly be described as
much ado about nothing.
Invasion Rebuffed : There was a major threat from American online platforms, but the UK sector was equal to it and able to rebuff it.
There has been only a very low percentage intrusion. Loans and fee structures helped – domestic students had to pay up-front for
coaching associated with the international courses, but could pay retrospectively for a UK campus education. UK universities innovated
with their own platforms, elevated their own superstar professors, and invested heavily in development of alumni networks. Joining
these networks became almost as valuable as the degree certificate itself; lively networks provide peer support and international
contacts way beyond the campus years. Clever positioning made students aware that unlike their American counterparts, at a UK
university they could expect to spend quality time with peers and with inspiring academics. Overall, a self-confident sector and
supportive government was able to make the UK Higher Education experience even better, winning online and on-campus. All of this
was enough to keep local markets at home and to keep students travelling in through its airports each September.
Side by side, boxers locked together : The two models are now side-by-side in the marketplace. It has been bruising but sometimes
transformational. UK universities have suffered substantial percentage losses, especially in the arts, Business, other humanities and
Computer Science. Professionally accredited courses have sometimes held firm, sometimes collapsed. Science and engineering have
generally done best and even grown on some campuses as students have proved willing to pay for high-quality technical teaching and
laboratory experiences. A few UK research institutes and centres have done particularly well and become even more famous. For them
demand remains very strong. Other, select UK universities have served as beacons to a changed world, having used online courses to
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15. expand their markets and to promote more flexible models of learning. Many more students come to these universities for only a small
proportion of their total course, but as a result access has grown and overseas demand is higher than ever. Some Vice-Chancellors can
afford to be resolutely optimistic and are proud of the transformation of their “industry.” Nonetheless, even on some of the most
successful campuses, there is now plenty of office accommodation to let, and the student housing market has struggled to adapt, with
many halls falling into disrepair. Meanwhile, a recent government report has noted that many private learning services, often staffed by
former university employees, have been expanding rapidly. Some are advertising “no degree, no fee” services, aimed at getting students
through some of the toughest American online degree programmes.
Perfect storm : Technological innovation was a dramatic challenge in itself, but it then found its path further eased by economic crisis,
student fees and affordability, visa restrictions, industry preference for cheaper graduates, and general uncertainty over the value of a
degree in the marketplace. Many universities carried debt into the storm, limiting their ability to flex and experiment. Others had a tired
teaching staff that struggled to adapt to new online systems and additional performance measures. Most of all, the UK sector had failed
to see how accreditation, tutoring and experiential industries would grow quickly around the new online platforms. It had been unable
to build business models around a population that was actually inclined to study more but over much longer periods, and was eager to
send its children overseas to short-term learning camps, rather than to sign them into a UK city for a year or longer. As a result, online
news journals carry headlines about a new American triumph: after Hollywood and then the IT industry, American universities woke up
and provided the curricula to the world.
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16. Conclusion
“Education, more than any other human endeavor, should be a real and lasting beneficiary of the ICT revolution.” Raj Dhanarajan, President
Commonwealth of Learning16.
The aim of this report was to consider the potential and threat represented by the development of online learning technology. If the
report alerts decision-makers and stakeholders to the challenge, then it can be considered of utility. There is, of course, no special claim
or insight that allows the future to be seen with certainty. The scenarios of about 2022 are approximations, and it is the actions taken
between now and then that will determine which is most likely to resemble reality.
Back here in 2012, although university education remains both vital and cherished, the sector has rarely been as controversial as it is
now. The value of a degree is increasingly subject to media and parental scrutiny. In substantial part this is because of discomfort with
fee regimes and the rate of acceleration of fees in the UK (and even more pointedly in the USA)17. Commentators talk of an ‘education
bubble’, arguing that investing in education has become an act of faith for households, similar to the ways in which investing in a house
or a pension became acts of faith. People used to believe that their house and their pension were safe and would always rise in value.
Now, after repeated stock market crashes and the banking collapse, there is a willingness to question the standing and preparedness of
all institutions, including academic institutions. Whether this is fair or unfair, it is surely wise to take note. The destinations and well-
being of our graduates were always of concern, but are now open to new scrutiny. It is not just students, parents and academics who are
interested, but also potential students and media commentators. The argument follows then that it is useful to ask the question of when
the greatest value of a university education is realized. It is not on graduation day, but some time later, after several valleys and peaks in
the workplace, when the graduate can reflect and say, ‘yes, it was worth it, it has helped make me.’ In thinking like this, we begin to
16http://cde.athabascau.ca/online_book/
17For example, http://www.economist.com/blogs/lexington/2009/06/the_higher_education_bubble and
http://blogs.telegraph.co.uk/news/drmartinstephen/100172970/young-people-are-going-to-bad-universities-to-study-subjects-no-employers-wants-this-
tragedy-is-our-fault/ and http://www.bbc.co.uk/news/uk-northern-ireland-17309759 and http://www.independent.co.uk/opinion/commentators/rupert-
cornwell/rupert-cornwell-is-this-the-bursting-of-the-education-bubble-7768689.html
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17. stretch understanding of higher education beyond a metaphor of production and into it being a network and a service. This is a better
way of thinking for the 21st Century with its altered transaction costs and global panorama.
17

18. Appendix. Alumni Networks and their Engagement.
We recognize the pronounced association. We expect the degree of identification. Alumni still belong. The success of the institution is
their success. Its failure comes to their irritation. Chance upon another alumna or alumnus of your University in a coffee-shop or railway
carriage, and a conversation ensues. When were you there? Do you ever go back? Do you remember so and so? What do you think of it
now?
This is the shared social capital of the network. It relates to the ‘value-in-use’18 or worth of a degree. A university’s social value does not
peak with the graduation ceremony, but constantly evolves with the actions of the network it has created. This is where the contribution
to society is made. The alumna that you met in the coffee-shop is a lawyer. She knows a friend of yours who is a senior engineer. By their
sheer number and by their qualitative impact, the alumni are the primary means by which any university imparts its value.
The lowered transaction costs of the internet era change alumni networks in three main ways.
1. It is easier for members to keep in touch with each other and to build new social capital (most of this is currently supported or
co-opted by the likes of Facebook and LinkedIn that exploit their advantageous network effects.).
2. It is easier for the successes (and failures) amongst alumni to become more prominent. Marketing of institutions is likely to
increasingly rely on the authenticity of alumni contacts and stories.
3. It is easier to manage institution to network relationships, allowing the institution to build more knowledge of the needs and
pressures felt within the network, and to develop education services that are of relevance and value.
Recently, the Joint Information Systems Council has been supporting pilot work on the development of alumni networks. Examples are:
- Kent, with permanent login accounts and then the development of personal development planning.
- Cardiff Gradspace for work transition out of university.
- Glasgow with volunteering and connections back to university.
18 Vargo, S.L., Lusch, R.F., (2004) Evolving to a New Dominant Logic for Marketing, Journal of Marketing, Vol. 68 (January 2004), 1–17
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19. These projects are each compact in ambition and scale, but seek to bring technology and engagement to this vital set of relationships.
They also represent a continuum, outwards from personal development on campus, through transition, to the return to campus for
volunteering. Projects of these kinds are especially important in the context of the development of online education markets. This is for
two reasons. The alumni networks represent the key social capital and utility of the university as a whole (i.e. its collective investment
across all its stakeholders), and they provide the key focus for a service model.
1. Social Capital – alumni are stakeholders who want the institution to remain healthy, whose successes will become more
transparent through the web, and who ultimately provide all meaningful aspects of the brand value of an institution.
o This in turn provides a defensive function against new challengers that are unable to match the established social ties,
stories and proven associations of the network.
o Alumni have personality and authenticity. They are more meaningful to new recruits than brochures and manicured
brand messages, and hence give market advantages.
o So too, dissatisfied alumni, if they emerge on the social web, will contest brand messages. They can only be
counterbalanced by the alternative testimonies of satisfied alumni.
2. Alumni provide the natural ties and market for more flexible teaching and knowledge services of an institution.
o This in turn becomes a market advantage as traditional institutions use their existing networks for competitive advantage,
seeing needs and opportunities that newer competitors can only guess at.
Taken together, it becomes possible to use technology in order to create lifetime relationships that have value for all stakeholders. The
possibility can be explored through the concept of ‘value-in-use.’ If institutions focus only on the production of an accredited individual,
and do not closely associate with that individual in the workplace, then they are foregoing most of the ‘value-in-use.’ Again, this is to
change from seeing universities from manufacturers or producers of accredited learners, to networks of value.
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20. Figure 1. Lifetime Leaning? Universities help prepare people for a lifetime of many forms of productivity.
To date, alumni initiatives are mostly motivated by immediate pressures such as fund-raising or social-interest. More imaginative
initiatives work on volunteering and expertise sharing, or selling executive courses. All of this is appropriate but could be more
strategically valuable.
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21. Figure 2. Lifetime Learning? Innovation In Alumni Relationships is motivated by Immediate Pressures.
The modern workplace is unstable and challenging. Currently, technology is not used to ensure that the learning needs of the alumni are
managed and brokered as a service. The development of a service model is an obvious opportunity for UK universities acting
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22. individually or in concert. Online and other kinds of courses could be sold but, more importantly, the service model could support
learners in accessing knowledge and peer networks.
Figure 3. Lifetime Learning? Focusing on the Networks Helps Us To See That There Is Great Untapped Potential Beyond The Course.
How To Harness It?
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23. The threat is that if UK universities do not do it, others will. Many America universities are fine institutions with a strong alumni
tradition. This tradition is now combining with software expertise, online learning and social networks. It is a potent mix.
Figure 4. Lifetime Learning? Culturally, American universities have put greater emphasis on this space and now they are doing so
technologically too.
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24. The success that American universities have with fundraising from alumni is widely recognized, and stands on a deeper commitment to
alumni/institutional relations than is usually seen in UK universities. Rituals like the Princeton P-rade were created to affirm and
develop the social network in an age before the online community was developed19. Today, UK universities have to use technology to tap
and develop their personality, to bring forward the enthusiasm, advocacy and abilities of their alumni. Although technology is a key
opportunity, the art is to bring people together, to invest in them and to assist the development of meaningful experience, rather than to
provide functions and technology for their own sake.
19e.g. http://alumni.princeton.edu/goinback/reunions/reunionshistory/ and
http://www.timeshighereducation.co.uk/story.asp?storyCode=189317&sectioncode=26
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25. Figure 5. Lifetime Learning? The challenge for UK universities is to develop the cultural and technological base of the networks they
create.
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26. The Authors
Report written by Peter Kawalek, with research by Peter Kawalek & David Roberts.
Peter Kawalek, PhD,
Peter is Professor of Strategy & Information Systems at Manchester Business School, University of Manchester. His PhD is in Computer
Science. He has explored the pedagogical relevance of social media in MBA and MSc classes since 2006. Peter has collaborated with
many companies and institutions including Department of Communities and Local Government, Greater Manchester Police, IBM, Fujitsu,
Lancashire Police, Manchester City FC., O2, Office an Taoiseach, Royal Commonwealth Society, Salford City Council. As well as
Manchester, Peter has taught in various roles at Deusto Business School, Instituto de Empresa, Letterkenny Institute of Technology,
Trinity College Dublin, Warwick Business School and others.
Contact Details:
Email peter.kawalek@mbs.ac.uk
Twitter @kawalek
David C Roberts MBA, Dip IOD, Cert IOD.
Principal, Wentworth Jones Associates
During a long and successful entrepreneurial career David has a history in the design and development of web based information
systems – including the successful deployment of the first e-CRM system for a global pharmaceutical company. In addition to his
international consulting duties with Wentworth Jones David is a popular keynote speaker and undertakes adjunct teaching posts at
Manchester Business School, The University of Salford, and Manchester Metropolitan University.
Contact Details:
Email David@wentworthjones.com
Telephone 0044 780 123 1640
Twitter @davidcroberts
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