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September 14
As Independent Schools Face Micro-Schools’ Disruption, They Can Cope by Sustaining Innovation

​The prospect of disruption looms on the horizon for many of America’s independent schools, which face financial difficulties not unlike those of the country’s higher education system. Against this backdrop, a relatively new type of private school has emerged in the form of micro-schools, which have the potential to transform the independent schooling landscape — and upend some independent schools in the process.  

Micro-schools are gaining traction among families who are dissatisfied with the quality of public schooling options and yet cannot afford or do not want to pay the ever-rising cost of traditional private schools.
 
This relatively new competitor is the first real disruptive threat to independent schools. With the enabling technology of online learning in a blended-learning setting, micro-schools are able to offer similar or even higher levels of personalization than traditional independent schools with a lower-cost business model. These schools lack the wide expanse of programs, reputations, and deep histories that traditional independent schools on the high end have. Instead, they offer greater affordability and accessibility.

Two Micro-School Networks Gaining Traction

One example of a school gaining a lot of attention is AltSchool, a micro-school network based in San Francisco with tuition that is 10 to 15 percent cheaper than the average for other private schools in the city and it reportedly hopes to scale its model such that the price falls over time to the point that it is only marginally more than the cost of educating a public school student. Using proprietary technology developed in-house, the schools are able to track the progress of each student and provide individual attention while, once at maturity, keeping their student-to-teacher ratio at 12-to-1. Although the campuses do not have full gymnasiums, auditoriums, or other facilities frequently seen at independent schools, they focus on providing a customized student learning experience.
 
Another set of micro-schools, the Acton Academies, has tuition prices ranging from $4,000 per year to $9,900. Acton compresses students’ core learning into a two-and-a-half-hour personalized-learning period each day during which students learn mostly online. This affords time for three two-hour project-based learning blocks each week, a Socratic seminar each day, game play on Fridays, ample art and physical education offerings, and many social experiences.
 
One lesson from the theory of disruptive innovation is that a service that looks like a primitive and incomplete offering in the early years will improve over time, so incumbent organizations shouldn’t discount it.

How Independent Schools Can Handle the Disruption

In the face of oncoming disruption, what can independent schools do?

Adopt Online Learning

For starters, they can adopt online learning as a sustaining innovation to slow their cost increases. By leveraging online learning — such as that offered by the Global Online Academy or the Online School for Girls — they can boost their offerings and focus on what they do best. They can also deploy new blended-learning models that allow them to create new staffing models that stem cost increases.

Set Up Autonomous Unit

For schools that have the leadership, vision, and resources, they can also set up an autonomous unit to manage a disruptive outshoot to compete directly with the disruptors and serve students they would not be able to reach with their core model. This new unit should focus on providing a student experience that excels on measures different from the traditional measures of quality — such as top-notch extracurricular offerings and state-of-the-art facilities — that private schools have historically used.
 
There is precedent for institutions doing this in the world of higher education. Southern New Hampshire University established College for America as a completely autonomous model separate from the rest of the university. With a goal of preparing students with specific industry-needed skills rather than the myriad of missions of a traditional university, the program is able to take advantage of online learning to offer a degree that is both less expensive and more flexible than degrees from more traditional institutions.
 
While private schools are grappling with financial challenges, understanding these disruptive innovation trends can help them update their business models and survive well into the future.
 

15-0914-MichaelHorn-sm.jpg15-0914-AnnaGu-sm.jpgMichael B. Horn is the co-founder and executive director, education of the Clayton Christensen Institute, a nonprofit think tank. He also serves on the NAIS board of trustees. Anna Gu was a research assistant at the Clayton Christensen Institute. A version of this piece appeared on Forbes magazine’s website on Sept. 3, 2015.
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