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When I wrote Dancing with the Stars of Pure Math the idea of attending Dick Lipton’s seminar with 10,000 students was  novel and risky.  That was 2009.  Well before the start of the innovative whirlwind in online education that was started when Sebastian Thrun, Daphne Koller and Andrew Ng opened their Stanford courses to hundreds of thousands of students.

Dick and I spoke with Sebastian before Udacity was launched and we were both impressed with his vision of the learning experience as compelling media.  As best I can recall, here is what he said.

If the traditional lecture is a stage play, then I want to be the movies.  Although early film makers tried to adapt live stage plays to the new media by pointing a camera at the stage, it was not a good experience.  It was only when film makers realized that they had to recreate the dramatic form that film became a new and compelling experience.

In his recent post at Godel’s Lost Letter (GLL), Dick has given us a vision of a new form of instruction:

The usual video-based course is a film of an instructor talking and writing at a board or on a tablet computer. These courses are popular among students, at least partially because they are free. The videos are informative, although it is yet unclear whether they are as good or better than physical courses. You know—course with students in seats and an instructor talking and interacting with them. We will see…Our plan is to make a mini-series length course with characters who have issues, who follow an interesting story line—vampires?—and yet are able to convey the information we want the students to learn. Our view is to create a new type of film: not a documentary, not a docudrama, not a dry lecture. A mixture of fiction and information.

This is unabashedly an experiment.  I have been trying to find a way to incorporate GLL into our online experiments at Georgia Tech, and this is a a prototype of how that might work.

What do you think? Will students go to the movies with stars of pure math?

What other formats do you think might work?  I have been (unsuccessfully so far) lobbying Dick and Ken to try what I call The Larry King Show format.  In this format the host (Dick or Ken) and maybe a sidekick talk about math by interviewing math celebrities (including the people who created the ideas).  They can even “interview” celebrities who are dead by using actors and inventing plausible dialogues.

Larry King was famous for his “Hello, Duluth Minnesota!” call-in dialogues, and that part of the show seems to me to be ideally suited to a seminar.  There might even be some surprise call-ins when the topic is (for mathematicians) controversial.

You have to get used to the idea of classrooms as performances.

MOOC platforms are the new startups. Nobody really knows how it will all turn out, but  these are experiments that need to be given time, space, and dollars to to incubate innovation.  But what exactly does that mean?  And what models are available to institutions that want to try to create such safe spaces for innovation?

The vision of  Al Capp’s Skonkworks, perched on the edge of Skunk Hollow, belching the byproducts of producing exquisite joy juice has been a metaphor for three generations of inventors. When it comes to skunkworks, there are ideas to try out and ideas to avoid.    New developments like MOOCs exist to bend perceptions and blur boundaries, so using traditional perceptions and boundaries to explore MOOC potential doesn’t make a lot of sense.

This is the third in a series of reposts that talk about lessons learned from other startups — in particular startups that are born within existing organizations.  The first post put us face-to-face with an oftentimes hostile culture.  In today’s post we talk about successful exits from hostile environments and how to make sure that what began in a skunkworks has a chance of succeeding once the thrill of invention has subsided.

What constitutes a successful exit in Online Education? The question that is always asked is “How will all this investment in online courses be monetized?”  I think most people who ask don’t really know what they are asking for.  They are really asking a different question: what is the value of what you have created?  How do I extract value? A successful exit needs to answer this question.

***

It’s not only the clash of investment cultures that tends to doom internal start ups. At least that’s what I told the Bellcore and SAIC CEOs at the post-mortem for the internal division that we had tried to run as a venture-backed business.

It’s also what I said to Bob — who you will recall — wanted to incubate an internal venture inside his Fortune 10 company that would match in excitement and star power the coolest gang of Sand Hill Road funded misfits. He would have to be willing to sacrifice a boatload of management principles that had served him well in his career. I didn’t think he would do that.

Like a generous parent, Bob was in a position to give the new kids everything they needed for success: mentoring, time to succeed, and ample resources. What he did not have was a clear idea of which exit to take. Bob’s idea of a venture failed the value test.  A new venture succeeds when the right leadership team focuses on a market need with staged funding.  The idea was doomed as soon as Bob said,“Look, I’m in charge of new technology and platforms and I’m going to be the venture capitalist funding a new product, so that when it succeeds we’ll be able to fold it back into our current business.

The moment someone in a large company forms a thought like this, the options for maximizing the value of the investment are narrowed to one.  The only exit is one in  which access to internal resources can be used to shoehorn a fit into existing businesses. I had seen the danger of this kind of investment strategy at other companies, and the results were not encouraging. This thinking had infected our Bellcore start-up, but I have been in the executive suites of a dozen West Coast technology companies when the discussion turned to how the value of an internal start up was going to be captured by an existing business line.  It always turned out the same:  because there were no choices to a successful exit, backers literally threw money at the new company. They were thinking way down the line about how to succeed.

There are other options, but they do not necessarily align well with Bob’s goal of internal commercialization:

  1. Sell the technology: it’s always possible that the upside does not justify continued investment.  But if you’ve made a large up front commitment–as opposed to small increments that are tied to market tests– it is hard to execute this option and capture value.
  2. Licensing: the main reason for choosing  licensing as an exit is that there are differing value expectations in the marketplace.  The technology may be used in many different applications by many different players, for example.  You can maintain a central IP position and benefit from this diversity.
  3. Resell your R&D effort: if the technology is a critical product component, there may be other vendors who would like to benefit from your near-term “deliverables.” An R&D contract gives up a little IP in the short run, but you not only recover your development costs, you also continue to expand what you know about the technology and its applications. This is such an interesting–and seldom used–exit strategy that it deserves a post all by itself.  Watch for it!
  4. Sell the right to market or form a joint venture to market and sell: this is a range of exit possibilities that allow you to keep the option of bringing the technology in-house at some later point.  Of course, the attractive thing about such partnerships is that they generate revenue while spreading the risk around several players.
  5. Spin-out/IPO: the obvious counterpoint to the internal start up is to kick the baby bird out of the nest to see if he can fly on his own. I don’t know why our Bellcore start up was not conceived from day one as a spin out.  Bellcore, after all, had a history of spinning out companies to commercialize research technologies.  Some of those companies (Telelogue for voice menus, Elity for CM analytics, and a host of companies for communication network traffic monitoring and tools) were quickly picked up by angel and venture investors who went on to ride the businesses to their own successful exits.

Why Bob was determined to retain ownership in an incubated business says as much about internal corporate culture and priorities as Bob’s own approach to innovation. What seems to be missing when managers fixate on internal startups is the recognition that there are other worlds involved in the success of a new business, and they often  have very different rules.The internal start up is an opportunity for worlds to interact rather than collide. Here is the value chain that Bob had to work with:

  • Creative engineering: internal R&D interacts with a larger, external innovation community.  It  is very good at coming up with gap-filling concepts that need to be externally validated
  • Venture funding: is useful for establising performance metrics based on value and focusing funding to meet performance goals based on those metrics
  • Corporate resources: the company itself is in the driver’s seat.  It sets out the strategy for value capture and makes the option calls that start chains of transactions that are key to success. And by the way, the creative engineers call it home.

This all started because Bob was worrying that normal, internal product R&D would not lead to  “breakthrough product ideas that do not align well with their core business.”  It is a common problem, but there are three fatal errors that doom most attempts to solve it. Here’s how to avoid those errors.

First, don’t set the new venture up for failure by limiting the end game to only those ideas that align well with the core business.  That was what got you in trouble in the first place, and can be avoided by considering up front the full range of exit options.

Second, don’t pretend that you are a venture fund.  The fundamental belief systems are different, and it is simply not possible for a large corporation–one that has to worry about quarterly results and long-term growth–to capture value in the same way that a VC does.

Finally, recognize the role that interacting worlds will play in the success of your venture.  External innovation networks, market-validating communities and the relatively heavier weight corporate resources and processes have a tendency to collide, when what is really needed is a strategy for working together.

Dilbert.com

This is a repost inspired by the explosion of new innovation models for MOOCs and how universities should organize to create safe spaces for experimentation. My suggestion is to look closely at the lessons from the commercial sector (see my previous post)

***

I had a conversation the other day with a senior executive — let’s call him Bob —  of a Fortune 10 company about their “internal start-up” culture. It seems that they are looking for breakthrough product ideas that do not align well with their core business.  The solution seems obvious: let’s create the same kind of  exciting, market-driven environment that you would find in a start-up!

Everything sounded fine for a few minutes.  They thought that the most creative people in the organization needed to have elbow room that would be difficult to achieve in the risk-averse culture of a hundred billion dollar company.  So how did they plan to achieve that?

  • Freedom to break some rules:  the start-up can use its own  product roadmaps and sales strategies
  • Freedom from process-driven corporate calendars and budgets: the leadership of the start-up is not bound by the revenue and earnings goals of their parent
  • Freedom to take risks: they have permission to fail

It didn’t take long for the discussion to go seriously off track.  When I started in with questions about how they were going to actually pull this off, Bob said: “Look, I’m in charge of new technology and platforms and I’m going to be the venture capitalist funding a new product, so that when it succeeds we’ll be able to fold it back into our current business.” I had seen this movie before.  It’s called When Worlds Collide. When I suggested that Bob lives on a different world and would make a terrible venture capitalist, things got a little heated. As I recall it, Bob said, “In your ear!” A surefire way to put a fine point on your argument.

Bob lives on a planet where the scale of his business creates a climate for successful development of new products that can be sold to familiar customers using existing channels and tried-and-true processes.  Above all, in Bob’s world, it is possible to make big bets. The examples are impressive. Everything from HP’s inkjet printing to the Boeing 777. Unfortunately for Bob and his start-up, none of those things matter.  The start-up lives in a world of new markets, which means new customers, new channels and new processes.

Even though Bob has all the talent he needs for market success,  the likelihood of failure is high. The Newton and the Factory of the Future did not fail because  because Apple and GE could not innovate.  They failed in large measure because corporations foster a system of beliefs that is fundamentally incompatible with  taking capabilities to new markets. When I asked Bob  how the start-up employees were going to be recruiteed and rewarded, whether they had a safety net for returning to the company in case of failure, and how many simultaneous bets he was willing to place, the answers were not encouraging.

I immediately did a deep dive into my archives, hoping to find traces of a long-forgotten venture that I helped steer into the ground.  In the late 1990s Bellcore was poised to enter the online services business, hoping to attract newer, smaller customers than the seven  Regional Bell Operating Companies who accounted for most of the company’s revenue.  This was a time when Bellcore’s Applied Research group was generating a blizzard of patents in e-commerce and software, technology that I have talked about before. We were as smart and nimble as any West Coast start-up, and best of all we had the cash to fund a new venture, the talent to staff it, and the power of an existing sales team to go after those new customers. I was asked to lead the new company.  We would be funded just like a VC-backed start-up…

When the dust settled and I reported lessons learned to the Bellcore’s CEO Richard Smith and later to Bob Beyster, CEO of SAIC,  Bellcore’s parent company, the first thing I said was that there had been no structural reason for failure.  A team from McKinsey had already given us the range of possibilities. We could have set up an independent business unit or spun 0ut a company in which we retained minority ownership.  Setting up a new incubator would have required more time than we thought we had, and, in any event,  Applied Research was already in the incubation business. We had chosen to bypass corporate reporting structure and create a company-within-a-company with direct oversight by a CEO who was committed to our success.  It was exactly the Hughes DirecTV model.

There are three reasons that internal start-ups like ours tend to fail.  Bob was not in the mood to listen because he is banking on success, but the topic comes up in every large enterprise, so I thought it might be a good time to repeat the conclusions here:

  1. Failure is common: Building new business is a portfolio game in which 90% of the returns come from 15% of the investments.  It is fundamentally unlike product development. A “big bet” strategy only succeeds when there is high degree of confidence in your ability to sort out winners and losers.  In a new market, that just never happens.
  2. Market-driven milestones drive success in new ventures.  An internal start-up — even one with strong support at the top — cannot divorce itself from processes that are timed to fit corporate needs.
  3. Corporate sponsors of new ventures and VCs have different belief systems.  They are fundamentally incompatible, and without early, explicit steps to stop it, corporate attitudes, practices, and beliefs will overwhelm the fragile culture of the start-up.

I will be elaborating on these ideas.  I hope Bob is reading.

Next: Investor vs Investor

This post was originally published on When Worlds Collide on 9/22/2010

There was a time before TSA and 9/11  when crazy people wandered freely around the nation’s airports. I was heading to the Eastern Airlines gates at O’Hare when I was stopped by  a guy in a suit wearing a sign that said there was now mathematical proof that the country was going to Hell in a hand-basket. I slowed a beat but it was enough for him to shove a magazine in my hand. “You should read this!” he said. “They don’t want you to know about it!.”  I glanced at the cover. It was Fidelio, Lyndon Larouche’s magazine of culture and science. “Great,” I thought. “NCLC propaganda.”

I was ready to bolt for the Eastern passenger lounge, when the guy tugged the magazine from my hand and flipped it open to a Larouche rant about Georg Cantor and transfinite numbers. My next mistake was to say something like, “Well, this is a load of crap.” I had taught set theory and for a brief instant I imagined that I could  waste a little time toying with the guy before pounding him to intellectual  pulp. It was the opening he was looking for.

I was hopelessly over matched. Never mind that I knew that he had no idea what he was talking about. Norbert Weiner, the Reimann Hypothesis, Plato, and  negative entropy and were all smashed together, mixed and reshaped as a serious critique of western political economy. He was getting louder and more aggressive, so I grabbed my bags and headed down the concourse at full speed with this guy and his sign chasing after me yelling in a vaguely threatening way.

I can’t stay away from encounters like that. I have had other run-ins with zealots who are shameless about misquoting, misapplying, and misappropriating stuff that I happen to know something about. I want to unmask them in public. Show them for the frauds they are. I tell you this story to prepare you for my comments about the worst abuse of a deep and very important idea that I’ve seen in a long time. It may end badly, but I can’t stay away.

My attention was drawn to a recent  CCAP post about unnecessary cost escalation in higher ed by Andrew Gillen who is inspired by Charles Babbage to suggest that there be a “division of labor” in which the job of lecturing is separated from the job of grading.  The result according to Mr. Gillen would be a 30% reduction in costs that can be passed along to students in the form of tuition reductions.

I am a computer scientist, so Charles Babbage is intellectually speaking a friend of mine, the originator of the very concept of a computer.  Nobody knew how to mechanize better than Charles Babbage. His book, On the Economy of Machinery and Manufactures, is aimed at the upwardly mobile assembly line workers of 19th century England. It is an explanation of manufacturing economics for the common man.

In 1850 London’s mills and factories were houses of horror:

Any man who has stood at twelve o’clock at the single narrow door-way, which serves as the place of exit for the hands employed in the great cotton-mills, must acknowledge, that an uglier set of men and women, of boys and girls, taking them in the mass, it would be impossible to congregate in a smaller compass.[P. Gaskell, The Manufacturing Population of England. London, 1833, pp.161-162]

I won’t recount all of Babbage’s arguments beyond saying that the mechanization of, say, the production of sewing needles–in which the dangerous and expensive alignment of parcels of metal so that the ends can be sharpened before they are separated can be done more cheaply by a primitive robot–has virtually nothing to do with the craft of being a university professor.  Yet here is what Mr. Gillen takes away from the Babbage text:

In higher ed, we need high [sic] skilled people for some aspects of the job (designing courses, creating assessments, mentoring, etc.) but many of the other tasks they perform don’t require as much skill, and could be performed much more cheaply by lower paid workers (routine grading, administrative tasks, most office hour questions, finding and dealing with cheating, even some of the teaching). And yet all tasks are performed by the most highly paid people.

Mr. Gillen is right that de-skilling is important in controlling costs.  It is a problem to be solved in healthcare, government and education, but not in the way that Mr. Gillen suggests. I’ve seen this argument enough in the last few weeks to know that there might be trouble brewing, so let me restate some points that are well-known to readers of Innovate.EDU:

  1. There is simply not that much expense tied up in grading exams. It may be a pain in the ass for professors to plough through mountains of blue books, but the productivity gains of separating lecturing and grading are negligible.  How do we know that?  The experiment is being conducted every day in departments that make heavy use of teaching assistants as graders.  If there were great productivity improvements to be had, they would have been noticed already.  They have not.
  2. Mr. Gillen’s  separation of labor concept actually makes matters worse for learning. An example of how it might be done is Salman Khan’s brilliant idea of inverting lectures and homework. Unlike Gillen’s proposal, this invests more professor time in one-one interaction with students, not less.
  3. Universities are not factories. Most of the problems facing higher education today can be traced to this false analogy.
  4. There is no conceivable educational benefit of decoupling the feedback that a professor gets from personal interactions with students.  Even if you are committed to a time-honored systems of lectures and exams,  simple questions like whether  the material is getting through cannot be answered by shipping students off to a specialized team of graders and routine question-anwerers.

In fact, Gillen has it exactly backwards.  The De-Skilling Argument is this:  let’s take the least value-laden part of teaching out of the hands of high-priced professors. The most valuable part of teaching lies in the personal interaction of students and mentors and in the peer-to-peer interactions of learning communities.  Why would anyone want to depersonalize that?

The issues raised by this notion are both legion and obvious.  How would you know in advance which office hour questions were routine? Why should delegating routine administrative tasks — whatever those might be — to unskilled labor lead to savings anyway? Don’t learning management systems/course management systems purport to do the same thing already? Why would this proposal not lead to increased costs as new, unskilled workers are added to the university workforce?

It’s not a fair fight, but the CCAP proposals are sometimes the only ones out there — and they are listened to — so someone needs to shout “Well this is a load of crap!”

Now, where’s that Eastern Airlines lounge?

Yesterday’s post prompted questions about what exactly a MOOC is.  It even prompted a note or two about why anyone would choose a stupid name like MOOC.  I can help with the first question.  Here is a video explaining the concept.  I can’t help with the second question, but if you have a better term please let me know.

In “Dancing with the Stars” I talked about what a classroom with 10,000 students might be like. The transformation of higher education has begun, and the pace of that change is accelerating.

Dick Lipton’s blog Godel’s Lost Letter has since attracted tens of thousands more.  It is a virtual seminar that, for example, coordinated a global effort to referee an important paper in the theory of algorithms.  At times, the number of viewers topped 100,000. Now Stanford’s Peter Norvig and Sebastian Thrun are offering an online course in artificial intelligence that will enroll 58,000 students.

On September 12, I will join with 60 or so colleagues to offer a MOOC for tens of thousands of students.  Georgia Tech  students will get credit, and others will get badges that could be convertible to credit if they ever enroll at Tech.  Other institutions will announce their approaches to certifying achievement in the course. A MOOC is a Massive Open Online Course, a style of college-level teaching that was pioneered by George Siemens and Stephen Downes. The first MOOC, offered in 2008 by George and Stephen was devoted to the subject of their research, a style of learning called connected connectivism. It attracted 10,000 students.

The 2011-12 MOOC is all about transforming university learning and the organizers hope it will attract a much wider global audience.  They are calling it the Mother of all MOOCS.

The course will also be a C21U experiment on self-certification, a concept I discussed in my book. Where will this all lead?  It’s far too soon to predict an outcome, but within the last year, the number of experiments in higher education has exploded.  If you believe like me that innovative change is just what traditional colleges and universities need, that’s a good thing. The way to innovate is to try out lots of ideas.

Crazy claims about faculty productivity are bouncing around like ping pong balls.  Public research universities in Texas are getting more than their fair share of attention from agenda-driven politicians because their professors are not spending enough time in class.  They’ve even invented a classification system based on this one-dimensional view of academic life:

  • dodgers
  • coasters
  • Sherpa
  • pioneers
  • stars

I don’t think I’d want to be a coaster, but to be honest, I wouldn’t want to be a Sherpa, either.

CCAP’s Richard Vedder has looked at the same data through a conservative economic lens and concluded that significant costs savings can be found by adjusting teaching loads — upwards, of course. Like CCAP I think there needs to be more emphasis on undergraduates, but just lopping off a part of an institutional mission is not the way to do it.  Unless, of course, you are of the opinion that everything outside the classroom is overrated in American universities.

Maybe I travel in different circles, but the faculty workday appears to me to be an already overstuffed suitcase.  Anyone who wants to cram in another sock needs to take a look at what’s already there. Mission creep, bureaucratic bloat, crushing compliance requirements, and the willful bliss with which research universities give away research time have filled every nook and cranny.

I talked a few weeks ago about how research is given away, and it’s a topic that always draws phone calls and email.  But let’s take a look at the same data that CCAP uses.  The John William Pope Center recently published a national analysis of teaching loads.  It should come as no surprise that they have gone down over the last twenty years, but more interesting is the trend.

The decreases virtually track the increased workload by program officers at Federal funding agencies. But since staff spending at agencies like NSF has been stagnant for twenty years, program officer workloads really just measure proposal submissions.

Why the decrease at Carnegie Research and Doctoral institutions?  According to an NSF study the tendency in most NSF program offices is to deliberately underfund project proposals.  Over half of the researchers surveyed reported that their budgets had been cut by 5% or more and that their grant duration had been slashed by 10% or more.  There is little room for padding an NSF budget, so these are real cuts in funds that are needed to successfully complete a research plan. One more sock stuffed into the productivity suitcase.

What does a winning proposal cost?  The same study reported:

…PIs’ estimate of the time it took for them and other people—for example,
graduate assistants, budget administrators, and secretaries (not including time spent by
institutional personnel)—to prepare their FY 2001 NSF grant submission was, on average, 157
hours, or about 19.5 days. It should be noted this is the time for just one proposal that was
successful.

Since the NSF success rate is currently around 25%, that’s about 80 days just to prepare a winning proposal.  Add to that the time needed to conduct the research that goes into every proposal submission, and you get a rough idea of what needs to be funded just to make research pay for itself.  This is lost productivity, and it shows up in reduced faculty teaching loads.

The trends at Comprehensive, Liberal Arts, and Community Colleges measure something slightly different: each of these institutions sees climbing the Carnegie hierarchy as important to their missions.  For example, NSF awarded $350M to community colleges last year.  The lions’ share of these funds went to worthy projects to train technicians, broaden participation in the sciences and support research experiences for returning veterans.  Individual awards for some of these programs start at $200,000 and solicitations for larger, center-scale proposals are encouraged. Like their research cousins, Community Colleges reduce classroom productivity to compete for federal research awards. An institution with an undergraduate research mission can easily get drawn into a system they cannot afford. And the data supports the claim.  For the period covered by the Pope Center report, proposal submissions from these institutions have increased almost in lockstep with lost classroom productivity.

Measuring technical productivity is not a job for the faint of heart. You have to take into account all uses of time, and outcomes that are often unpredictable events influenced by factors beyond an organization’s control. Modeling productivity is complex and frequently contentious, but I have yet to find anyone who seriously proposes measuring engineering productivity by the amount of time spent at a single activity.  Outside higher ed.

There is an easier explanation for the disturbing downward trend in teaching loads. It is mission creep.  There is really only one way out, and it has nothing to do with cramming more into a Texas-sized suitcase.  How about if everything from sponsored research to intercollegiate athletics had to pay its own way?  The academic suitcase is full of stuff already.  Let’s figure out where to put everything else one sock at a time.