Standing Next to a Mountain
Vox recently published a piece in its Business and Finance section speculating on the conditions in which “online instruction could begin to overtake traditional higher education” from the perspective of Jeff Bezos, CEO of Amazon, in 2030. Alexander Holt, a policy analyst with the Education Policy Program at New America, drafts an imaginary letter from Bezos to shareholders in which he cites the extension of the online retail giant into the for-profit, higher education market under the banner, Amazon University. “Uniquely suited” to for-profit higher education because Amazon “actively avoids short-term profits,” Holt forecasts how the absence of the for-profit motive will enable the success of Amazon University.
While Amazon certainly has size, by net sales revenue, to stand tall next to the entire U.S. higher education market, the retail giant is only 1/5th the size of postsecondary education revenues in the United States. If Amazon transforms itself into a higher education provider capable of driving demand to the point where “as many as half of major US employers” favor Amazon “badges” as a top-five criteria for new hires, the size of its higher education operations likely would have to become equivalent to 20%-40% of the entire higher education market within fifteen years: or, at minimum, equal to its current net sales for all revenue streams. In a word, the estimated reach of Amazon University by 2030 seems to underestimate the immense size and complexity of the U.S. higher education market.
Setting aside the knotty problem of scale, the speculative piece imagines Amazon University will introduce a number of innovations to “crack the code” of student learning outcomes in higher education. Amazon University will award “badges” that signify completion of a “track” and, unlike the employees with “advanced degrees from prestigious universities… [who are] incompetent at core aspects of their jobs,” the Amazon “badge” will “demonstrate mastery of a skill…” In the process, Amazon University will solve the issue of low student retention in MOOCs and provide the first fully accurate measure of ROI measured as a ratio of salary-to-tuition to demonstrate the Amazon badge is “worth the cost.” Amazon will achieve all of this by offering education “at cost” while eschewing the “cumbersome, confusing, and dissatisfying” federal financial aid system.
All the Pieces Make an Island
In essence, the Vox article exemplifies the tenuous grasp that the media and self-styled entrepreneurs have on the complexities of U.S. or global higher education. The higher education market is not a monolithic enterprise. Student learning outcomes are not a code to be cracked. Incompetence is contextual. The Amazon “badge” will signify incompetency to employers when the tasks Amazon University teaches its own employees to perform for Amazon are met by the unforeseen demands for competency as defined by other corporations. Retention in MOOCs and “tracks” are not comparable to retention-to-degree in baccalaureate degree programs. Calculating the ROI on tuition with graduates’ self-reported job outcomes or salary increases is no improvement on the current challenges. Lastly, retailing higher education “at cost” without the benefit of federal financial aid suggests a complete lack of knowledge for the cost of higher education and the ability for the average American to pay those costs without public assistance.
The higher education market is a highly fragmented space in which serious entrepreneurs must learn “to pick up all the pieces and make an island.” As we discussed in Outsourcing Student Success, one lucrative way to pick up those pieces is the acquisition of student unit records. Earlier this month, Hobsons announced the acquisition of the Predictive Analytics Reporting (PAR) Framework, Inc. Hobson’s is an established player in the market to provide “college and career readiness, enrollment management, and student success solutions.” Hobsons adds the PAR Framework shortly after acquiring another system capable of collecting, storing, and leveraging student unit record data, Starfish Retention Solutions, “a student success and advising platform serving hundreds of colleges and universities.”
The PAR Framework was one of the student success vendors we featured in our discussion of outsourcing student success in November, 2015. Unlike its competitors, the PAR Framework was a nonprofit organization that, as the article states, benefited “from community insight and effective practices shared from across the collaborative.” Following the acquisition by Hobsons, the market for student success solutions no longer has a viable non-profit competitor and for-profit big data management has been secured. Like Civitas Learning, which boasted of its ability to acquire other businesses after its latest round of funding, Hobsons focused its efforts on buying up the islands created by other enterprises in the student success solutions market. With two acquisitions in the past year, Starfish and the PAR Framework, Hobsons has taken two giant steps to becoming the the Hobson’s Choice for outsourced student success solutions in higher education.
Don’t Be Late, Don’t Be Late
One aspect the Vox article correctly emphasizes is the importance of the Amazon Web Services (AWS) division to the formation of Amazon University. For Amazon to become a player in the U.S. or global higher education market, however, the retail giant’s AWS division would be best served by the acquisition of student unit records currently stored locally in the nation’s student information systems and enterprise resource planning systems. Its cloud services division is one of the few in the nation with the capacity to aggregate the world’s largest database of unit records for student enrollments, retention, and learning outcomes from higher education institutions globally. But Amazon must act now. Hobsons, Civitas Learning, and IBM Watson will continue to consolidate the islands of predictive analytics in the current student success market at an astonishing rate. Amazon University, “the first truly global university,” will become a figment of the unlettered imagination — washed away like a castle made of sand — if the retail giant fails to realize that the most valuable commodity in for-profit higher education is not a badge to signify skills or mastery. The most valuable commodity in for-profit higher education is student success.