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Education Funding Commentary

The Innovator’s Dilemma

By Paul T. Hill — June 14, 2000 9 min read

The Innovator’s Dilemma, a book about how companies can fail even when they have good products and loyal customers, has business leaders scared. Its message should also be scary for the people who run public education.

The author, Professor Clayton M. Christensen of the Harvard Business School, writes about the effects of “disruptive technologies” on successful organizations. Disruptive technologies offer simpler, cheaper, and more user-friendly ways of accomplishing some goal. Their performance is often not as high as the products of established companies. But they serve the needs of users whom the established companies might have ignored, thus establishing a new customer base. Once these technologies improve, they can squeeze the established firms and their products out of the market.

People with new ideas do not have to appeal to the groups that now get the most from the system. They can serve those who benefit least.

By “technology,” Mr. Christensen means more than mere widgets. He means fundamental ways of doing business. Thus, catalog retailing can threaten conventional clothing stores, and nurse practitioners can cut into the demand for medical doctors. His examples from education include distance learning, a disruptive technology that can threaten classroom- and campus-based instruction; modular digital textbooks that can threaten standard textbooks; and corporate universities that threaten graduate schools of management.

Disruptive technologies are a threat because established providers cannot incorporate them. Successful companies (such as Xerox and makers of mainframe computers) have succeeded by doing business in a particular way and continuously upgrading their products to appeal to the most sophisticated and demanding users. They see no need to find simpler ways of doing the same thing, or to focus attention on customers who can barely afford their products and do not need all the refinements that have been built in over time. Thus, disruptive technologies create the innovator’s dilemma:

“The logical, competent decisions of management that are critical to the success of their companies are also the reasons they lose their positions of leadership.”

There are ominous parallels in education: new ways of providing instruction, poorly served groups that want alternatives to what the system has to offer, and non-mainstream providers to serve these groups.

What are the potentially disruptive technologies in education? As Mr. Christensen writes, these are hard to identify in advance. Will new technologies like distance learning, online provision of instruction, home schooling, and charter schools always be marginal, or will they threaten the mainstream product? One can never be sure. Like disruptive technologies in business, these can start small. They do not need the kinds of capital and political support required for a fundamental transformation of a huge organization. But they can expand quickly once it is obvious that the technologies work well and serve unmet needs.

Big new foundations are balancing their support, aiding both the conventional public school system and potentially disruptive options.

Home schooling is growing, and it might spawn new institutions that allow families to specialize in particular subjects and even be paid to offer instruction after their own children are grown. Charter schools are growing rapidly, and after a shaky start, many are providing high-quality instruction in more intimate environments, producing higher parent satisfaction, and spending less money, than conventional public schools. Home schoolers and some new private and charter schools are also making much more fundamental use of online technologies than are district-run public schools.

Sources of Demand. Families that consider themselves well-served by the existing public schools will not want these options at first, but many others will.Sources of Demand. Families that consider themselves well-served by the existing public schools will not want these options at first, but many others will.

Minority parents, especially in the cities, are demanding options, and are moving to private and charter schools whenever they can. Charter schools are attracting parents who want smaller, simpler schools that have few bells and whistles but teach the basics well. Highly educated parents are relying more and more on online sources for tutoring, special programs, and advanced instruction (for example, preparation for Advanced Placement exams). Parents unhappy with the conventional public schools are using online resources to buttress the growing home schooling movement.

These are not huge movements: Taken together, home schooling and charter schools now serve only about a million students. They are, moreover, largely dominated by extremely small providers, individual schools and families. But their growth rate is steep, and if charter or even private school providers start offering networks of more intimate, responsive middle and high schools, demand could explode.

New Providers. Providers outside the conventional public school system are ready to serve these groups—home school networks, companies like National Heritage that help assemble groups of parents to provide richer home school programs, multischool provider organizations, charter schools, small independent and religious schools, preschool care centers willing to evolve into elementary schools, and online providers of all sorts. Community colleges and businesses are also appealing to older students who want a more varied, practical experience in their last two years of high school.

Taxpayer funding and philanthropy, always mainstays of district- provided public education, have become two-edged swords.

Investors and groups of maverick educators are working toward alternative delivery systems for instruction, with new mixes of in-class work, use of online resources, and experience in real community settings. People with ideas about more effective uses of teacher time are exploring schools staffed by teacher cooperatives, through which excellent instructors and subject matter could teach and be taught in more than one school, relying on technology to keep in close touch with students. As the shortages of qualified teachers grow, groups like Microsoft co-founder Paul Allen’s APEX, which can offer online instruction in advanced high school mathematics and science, will become increasingly prominent.

Reaction. Most public school districts are reacting to this “dilemma” like established business firms, responding to their own internal pressures and focusing on their most vocal middle-class clients. They continue to offer large schools with many curriculum options, try to shore up failed schools rather than creating alternatives, keep their distance from groups that offer new ways of organizing schools and providing instruction, maintain labor agreements that cut them off from promising alternative sources of teachers and school leaders, and buy computers but do not use them for fundamental instruction.

No one seriously thinks that these are the most effective ways to provide instruction to all the public’s children, or that every student benefits. However, the forces maintaining the current arrangements are strong: middle-class families that know how to get the best teachers and schools for their children, parents who want schools to be just like the ones they attended, and employees who like their working arrangements and job security.

Charter schools are attracting parents who want smaller, simpler schools that have few bells and whistles but teach the basics well.

This is a situation ripe for disruption. People with new ideas do not have to appeal to the groups that now get the most from public education. They can serve those who now benefit least from the system, drawing away people and resources so that the system can no longer afford to operate in its traditional way.

Rather than absolutely stonewalling new ideas, school districts tuck them into an existing structure—a little technology, a few alternative programs, a few charter schools. The innovator’s dilemma suggests that new ideas can no longer be so easily contained.

Early evidence of disruption can be seen. A few districts in Arizona, Massachusetts, and Michigan have lost so many children to charter schools that they have been forced to rethink their basic ways of doing business. Even successful districts like Seattle are having trouble keeping schools open in neighborhoods where many children have fled to private schools.

Taxpayer funding and philanthropy, always mainstays of district-provided public education, have become two-edged swords. Both private and government capital is flowing toward disruptive technologies.

Big new foundations, like the Bill and Melinda Gates Foundation and the Broad Foundation, are balancing their support, aiding both the conventional public school system and potentially disruptive options. Private investors are prepared to spend more than $6 billion to create new modes of instruction and support new schools. They will attack barriers to new school growth—developing space, trained principals and teachers, and new teaching methods and materials. Government financing for charter school start-ups is growing, as are pressures to let state and federal funds follow children from low-performing public schools into private and charter alternatives.


What does this mean for state and local leaders responsible for public education? They should look for ways of meeting the needs of customers whom current arrangements do not serve well, and create new services that challenge their own mainstays.

At the end of The Innovator’s Dilemma, Mr. Christensen urges now-dominant organizations to do the following:

  • Give responsibility for disruptive technologies to organizations whose customers need them. (Empower educators who want to create new options for poor children.)
  • Set up a separate organization dedicated to developing these technologies. (Set up a powerful independent charter school office.)
  • Expect that some such initiatives will fail. Be prepared to terminate them and try something else. (Tend and constantly prune a varied portfolio of schools.)
  • Don’t count on sudden breakthroughs. At the beginning, the new technologies will not be attractive to sophisticated high-end users. (Don’t let middle-class objections interfere with efforts to serve the poor.)

The alternative, as Mr. Christensen suggests, is for previously dominant organizations like public school systems to surrender their market dominance to groups that will do it better, simpler, and cheaper for the large numbers of families that are now not well-served.


Paul T. Hill, the author of It Takes a City: Getting Serious About Urban Education Reform (Brookings, 2000), is a research professor in the graduate school of public affairs at the University of Washington in Seattle.

A version of this article appeared in the June 14, 2000 edition of Education Week as The Innovator’s Dilemma

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