Welcome to our “Innovators Worth Watching” series, spotlighting interesting and potentially disruptive players across a spectrum of industries.
Now in its third decade, Western Governors University (WGU) has students in every U.S. state and has over 100,000 enrolled students—a 230% increase since 2011. This growth is particularly notable given that overall higher education enrollment has declined by over a million students since 2011—a decline concentrated in the adult learner population.
WGU is growing quickly, but is it disruptive? Six questions for identifying disruption—as well as a new paper released today—help us analyze WGU’s disruptive potential.
1. Does it target people whose only alternative is to buy nothing at all (nonconsumers) or who are overserved by existing offerings in the market?
Yes. In the mid-1990s, governors of 19 states across the western United States founded WGU as a way to bring accessible college education to rural populations, especially working adults. Today, WGU students aren’t typical college attendees: the average WGU student is 37 years old, 74% are working full time, and 40% are first-generation college attendees.
2. Is the offering not as good as existing offerings as judged by historical measures of performance?
Yes. Traditional colleges compete on academic prestige. WGU’s programs are entirely online and the school doesn’t offer the traditional campus facilities and experiences. The school eschews the research focus of more prestigious universities, and President Pulsipher notes that WGU is not an attractive destination for faculty who wish to be a ‘sage on a stage’. Instead, WGU’s faculty model optimizes for flexibility, and the supports needed by working adults.
3. Is the innovation simpler to use, more convenient, or more affordable than existing offerings?
Yes. WGU has held undergraduate tuition more or less steady at just under $6,500 per year and has driven down student loan debt per graduate to less than half of the national average. WGU’s online competency-based model allows students to determine the pace of their learning and move ahead once they demonstrate mastery in a concept. This offers students flexibility on when and where they are learning. Indeed, WGU’s mascot is the owl, in recognition that the majority of its students are ‘night owls,’ working and caring for their families during the day and pursuing their studies at night. It also offers students the flexibility to personalize their educational journey, spending more time on concepts they struggle with, and less time on areas they are able to master quickly.
4. Does the offering have a technology that enables it to improve and move upmarket?
Yes. The online model used by WGU not only enables a lower-cost business model for delivering coursework, it also creates a stream of data that is used to continually test new approaches and improvements to the curriculum, and rigorously measures the impact of these changes on student outcomes.
For instance, based on insights that ‘soft skills’ correlate with long-term academic and professional success, WGU recently tested curriculum on leadership, self-management, and motivation with a small group of students in the College of Health Professions. These students had significantly improved engagement and retention rates, and based on those results, WGU quickly scaled the course to a much broader group of students. To date, over 10,000 nursing students have taken the course.
5. Is the technology paired with a business model innovation that allows it to be sustainable?
Yes. The profit formula at WGU is unique: students pay tuition for each six-month term, rather than paying for each credit hour as in the traditional model. During each term, WGU students must complete a minimum of 12 competency units to demonstrate adequate academic progress—but there is no limit to how many competencies they can complete. On average, WGU graduates complete bachelor’s degree programs in five terms, which dramatically lowers the cost of a WGU degree.
Processes and resources are also aligned to support WGU’s value proposition. WGU’s cost structure eliminates areas, like research, that don’t directly contribute to student success, enabling the University to spend more on areas that do. WGU’s instructional model is specifically designed to support working adults, employing coaching and mentoring to a much greater degree than traditional schools do.
6. Are existing providers motivated to ignore the new innovation and not feel threatened by it at the outset?
Yes. While some research suggests that a large number of schools are interested in exploring a competency-based approach, only a handful have actually done so. Most schools continue to be motivated to attract the highest paying, most academically accomplished students they can, in order to maximize their prestige and their financial sustainability. That same focus on prestige and the demands of the traditional business model push most schools to recruit faculty based on their research abilities, not their teaching abilities.
Although higher education has long been resistant to disruption, WGU fits the definition of a Disruptive Innovation. WGU’s data-driven focus on self-improvement has steadily improved the quality of its offering, as demonstrated by a range of metrics, including student satisfaction, retention, and graduation rates. Since its founding, WGU has pioneered new approaches, new technologies, and new business models, all with the aim of bringing high-quality education to underserved adult learners.
