Colorado’s Donnell-Kay Foundation is taking impact investing to a new level: its latest initiative, ReSchool Colorado, aims to build a new education system that will embrace—rather than resist—innovation. Why does the ReSchool effort depend on the creation of an entirely new system? For one, truly disruptive innovation doesn’t happen in isolation and often calls for an entirely new value network to support it.
Take an example of disruptive innovation outside of education: back in the 1960s, a small Japanese company named Sony came out with the transistor radio, the first in a series of products that would eventually disrupt the high-flying consumer electronics companies of the time like RCA and Zenith. Early on, transistors weren’t nearly as powerful as the vacuum tubes that powered the tabletop radios and floor-standing televisions that RCA and Zenith sold. Wisely, Sony saw that trying to use transistors in these existing applications would prove nearly impossible. Rather than attempting to compete head on for RCA and Zenith’s demanding customers, the company exploited the transistor’s shortcomings by producing a cheaper, less reliable, but portable transistor radio. They marketed the original transistor radio to teenagers, who couldn’t afford RCA and Zenith’s tabletop radios, but were delighted to listen to rock ‘n’ roll on Sony’s inexpensive offering. After gaining that foothold in the market, it was only a matter of time before Sony came out with better and better transistor-powered products and eventually disrupted the consumer electronics market, as we knew it.
Straightforward, right? Actually, the story was not so simple. In fact, Sony wasn’t operating in isolation. Transistor radios and televisions needed distribution channels. Sony’s predecessors sold vacuum-tube powered products through appliance retailers. Those appliance stores made most of their money not from selling televisions and radios, but from replacing the burnt out vacuum tubes in the products they had sold. When Sony developed transistor-powered equivalents, it tried to distribute them through appliance stores, too. But the appliance stores wouldn’t bite: Sony’s solid-state didn’t contain vacuum tubes that would burn out. Luckily for Sony, however, discount retailers, such as Kmart, Wal-Mart, and Target, were emerging at that time, and they had not been able to sell vacuum-tube-based products because they couldn’t service them in the aftermarket; they were delighted to sell Sony’s new products right off the shelf.
In other words, disruptive innovations often require new disruptive channels for distribution. A value network is the context within which a firm establishes its cost structure and operating processes and works with suppliers and channel partners to respond to customers’ common needs. When disruptive innovators target nonconsumption for their foothold applications—as Sony did by marketing to teenagers—they have a good chance of succeeding. But if those applications are then locked into an existing value network—such as distributors whose definitions of quality and success were honed in the established way of doing things—the disruption won’t fly unless it conforms to the rest of the players’ needs and expectations. That typically limits the scope of the innovation. Considering the policies that currently govern the education system like seat-time requirements or once-a-year high stakes tests, it’s easier to comprehend why the education value network hasn’t budged, and why classrooms today look much like they looked a century ago.
With these lessons in mind, ReSchool is aiming not just to foster the next equivalent to the transistor radio in education—but to ensure that the best innovations reach as many young people as possible. To change this, ReSchool won’t just spur new efforts at the school or classroom level, but will aim to redefine the distribution channels of learning throughout the state of Colorado.
The Donnell-Kay Foundation plans to start out in a small, deliberate manner. Where should they begin? Like Sony did, ReSchool should start out targeting pockets of nonconsumption in education, where students and families have little to no alternative products and services. The Christensen Institute has helped the foundation research a few such options (Donnell-Kay funded this research). For example, the state has authorized Pre-K funds for far fewer seats than the total number of three to four year olds in that state. The Colorado Children’s Campaign estimates that there are 20,000 children who are three and four who need access to Pre-K, and according to Child Care Aware, Colorado ranks as the fifth-least affordable state in the country for center-based childcare for infants and four year olds. Offering alternative options for those families currently stuck on lengthy public preschool waitlists or lower cost models for families opting out of higher-cost licensed care facilities could be fertile ground for developing new Pre-K models. These models might leverage blended learning or other tools to drive the cost down of these programs.
Or ReSchool might start off at the other end of the education system, spurring the creation of online competency-based training programs in some of the state’s largest employers, for those young adults for whom college is out of reach, or who want to establish themselves in the workforce in less than four years and at a lower cost than a traditional degree. Sony successfully reached teenagers because it understood their needs and identified radio as an experience that was otherwise out of reach for these young nonconsumers. Wisely, ReSchool leaders will likewise pressure test these ideas later this year, so as to understand what families, young adults, and employers who are currently underserved would actually want out of a new system.
Simultaneously, ReSchool’s leaders will aim to study and build the new distribution channels and policies that will make such efforts possible at scale. For those interested in the conditions that will make next generation learning viable at scale, this effort presents a compelling platform for new concepts of accountability, school finance, and governance to emerge. More importantly, ReSchool’s systemic vision stands to expand access to new paradigms of teaching and learning for students across the state.
