Michael Horn testimony before Oregon’s House Education Committee

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My name is Michael Horn; and I am the coauthor of Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns, along with Harvard Business School Professor Clayton M. Christensen and Curtis Johnson, president of the Citistates Group. I am also the cofounder and executive director of education for Innosight Institute, a nonprofit think tank devoted to applying the theories of disruptive innovation to problems in the social sector.

When we approached writing about education originally, we came at it from a very different viewpoint from what has been discussed here today. Our work has centered around how do we make innovation far more predictable and successful?

And as we started to study the questions and struggles of our education system, what we saw was that fundamentally the problems they were tasked with in some sense were problems of managing innovation successfully and leading its own transformation.

The only process that has caused transformation reliably was this thing that we call disruptive innovation. A disruptive innovation is one that takes a sector where, before, the products or services or parts of the sector were characterized by things that were expensive, complicated, inconvenient, inaccessible, and only served people with the most expertise or the most wealth; and it transforms that sector into one where products and services are affordable, convenient, accessible, decentralized, and far more customizable so it can serve well many, many more people who before did not have access to it. It’s a process that’s transformed computing from the big mainframe computers that used to dominate computing some 40 years ago to the point now that we have this laptop in front of us that can do more than any mainframe computer could possibly have done on the face of this earth some 50 years ago. It’s the process that’s made automobiles far more affordable to our population. We’ve seen it in service industries, non-profit, governmental, highly regulated, and unregulated industries as well, from retail to even education. In post-secondary education, you can see this process very clearly where over 50 percent of Americans are now educated in community colleges, and online universities are growing at a rapid pace now at somewhere between 15 to 20 percent a year.

As we studied some of the problems of K-12 education, one of the things we saw was that online learning had the exact same hallmarks of a disruptive innovation—this power to transform and grow. And what I want to do is just quickly describe why, but then talk a little bit about why we’re excited about it as a bigger thing than just this transformational thing in terms of the delivery of education.

First, online learning is taking off in the classic places where any disruptive innovation takes off. If you think back to where the personal computer started, where did it first take root? Apple sold the first personal computer as a toy for children, right? Children couldn’t afford mainframe and minicomputers, which were $2 million or $250,000, but for a couple thousand dollars they could have computing and it was delightful, right? This was a classic area of what we call non-consumption—a place where people literally couldn’t access the leading products or services.

And online learning is doing the same thing. We’ve heard about the dropout crisis that continues across this country. In the state of Oregon, over 11,000 students did not graduate last year from high school that should have. Online learning is a great way to start to bring these students back into the fold by meeting them where they are with their needs around their work lives, around their family lives, around different demands—by setting up centers where they can come in and learn online. Maybe it’s only four hours a day, and then they can do some work at home, and so forth. And there it will be a big benefit.

We’ve heard of course today about how online learning can be a tremendous benefit to students who are homeschooled or homebound for one reason or another.

Another area is credit recovery. Right now, particularly in urban school districts, when a student fails a course they basically have no way to make up that credit, which means they don’t graduate—let alone the fact that they don’t get the learning that they need to actually master and be a productive member of society. Online learning has been perfect here because it’s been an affordable, accessible, convenient way to get students back on track. And so we’ve seen a huge take off of online learning there.

There are also advanced courses, right? Forty percent of high schools do not offer an AP course. But the story is actually bleaker than that. Twenty-five percent of our high schools do not offer an advanced course, which is defined as anything above biology—so forget about chemistry and physics. Twenty-five percent do not offer a course above geometry—so forget about Algebra II, forget about Calculus. And 25 percent do not offer an honors English class, period. Yet there are certainly students in those schools that want or even need access to these courses. Online learning is perfect for these students.

There are now some significant pressures mounting on Oregon schools to do more with less as well. Last year Oregon cut nearly $1 billion from its budget, and more dark clouds are on the horizon. This will increase these areas of non-consumption; if you have a good online learning policy in place, this can actually be an opportunity to educate more students more cost-effectively by aggregating demand across districts. Indeed, 53 percent of Oregon teachers are over 50 years old, so many students will not have access to a quality teacher face-to-face if not for online learning in some cases. And these mounting shortages can be an opportunity, in fact, to create change, as I’ll talk about in a moment.

Briefly, I want to talk about the growth that we do see across the nation in online learning. It’s following a classic S-curve pattern. Whenever you see a disruptive innovation enter a field, it starts out in the beginning where people creep into a sector and try it out. There’s a lot of prototyping to figure out how to actually do things for the set of people who are using it. And eventually, if it’s a true disruptive innovation, the world flips as the providers, or the new innovation, actually figure out what they’re doing. And people rapidly adopt it, and then it levels off at the top when the market is saturated.

The question is how do we know if an S-curve is actually developing when we’re on the early part of it? It could just be a line to nowhere. It could be a very rapid S-curve or a shallow one. It turns out that there’s a way to project this, and through this technique, we see an S-curve developing in online learning. In high school, in particular, where these areas of non-consumption are so clear, we project that by 2019, 50 percent of all high school courses will be delivered online in some form or fashion.

There is further mounting evidence that this is happening. There were 45,000 student enrollments in online courses in the year 2000; that number passed 1 million in 2007. A report came out last year that showed that 27 percent of all high school students in the United States took at least one online course in 2009. And other research firms are starting to join in the projections. Ambient Insight is one such firm that projects that 10.5 million students will be taking online courses by 2014. Roughly, most people think that the number is between 3 to 5 million today. So change is rapidly happening.

States and now districts are increasingly seizing hold of this disruptive innovation. Nearly 40 states have some form of real online learning initiative, and districts are increasingly getting into the game, as they serve non-consumers in their midst from homeschoolers, to students needing credit recovery, to dropouts and so forth.

The question then is this: Is this a good thing?

If you step back for a second and think about what any educator knows, way before the academics got to the party, was that all students have different learning needs at different times in their lives. There have been lots of ways of describing this over the last 20 years, but if you have two kids, and you see them playing on the ground, you know that they absorb information in different ways, are at different places in their lives at different points, and so forth.

And yet, if you realize that people need these customized learning opportunities, you would say, “Well, our school system must customize for those differences, right?” Not at all, as we all know. Our system was built to operate along a factory model to standardize the way it teaches and tests, which clashes with this need for customization. It’s prohibitively expensive to customize in this system. Just think about how much it costs to educate a special needs student with an individualized learning plan. And if there is a special needs educator in this room, they will quickly tell me that even these funds provided are not adequate for the true individualization that is needed, but it’s just cost prohibitive.

And so this is what online learning’s huge potential is: to customize for those differences. So every child can be where they need to be at the time, and move at the pace that works for them, and so forth.

On this front, there are some very encouraging things that are happening toward realizing this because the online learning, like all disruptive innovations, is improving in some significant ways.

The first way is that when online learning got its start, it was largely a distance phenomenon. We have obviously heard today about online learning in this form. But what we see from our projections is that the growth of home and virtual schooling flattens at about 5 million students, which is under 10 percent of the K-12 schooling population. And what does that mean? It means that 90-plus percent of our kids need a supervised, safe place to learn: schools. And so as a result, the online learning is increasingly less of a distance phenomenon and more and more of a blended one, in which the online learning is coupled with a point where students spend at least some time in a supervised, brick-and-mortar environment in which they have some control over the time, pace, path, or place they learn.

The second dimension of improvement that we see quite dramatically is in the communication vehicles. When online learning first came out it was awfully hard to communicate with the teacher in some settings; peer-to-peer connections were tough to arrive at, and so forth. But if you just look at the technological leaps forward, how many people I’m sure if we asked in this room use Skype, we’d have a lot of hands shoot up. Video conferencing, chat rooms, and so forth are becoming ubiquitous, and with 3D technology and touch screens and so forth moving along their way it’s hard to imagine where this might go 10 years from now.

The third dimension in improvement that we’re quite excited about is the improvement in content. The actual, real exciting thing about personalizing is that you can motivate students to really pursue learning, and that’s the key thing?to motivate. And from the power points and multiple choice questions that dominated online learning some 15 years ago when it got its start, we now see things such as full video game-based American history courses coming on the scene. One such course from the Florida Virtual School is called Conspiracy Code. In it, students run 10 missions to save American history from becoming corrupted. Many in this room may joke that it’s too late but, nevertheless, for many students, this is a deeply engaging way for them to access the material and, true to form, it’s not for everyone because as a friend of ours likes to say, “No student fits into one mold;” and now, with online learning, they don’t have to.

The second question is this: Will online learning actually realize its transformational promise of a student-centric system? On this score, there is considerable question, and the answer in the public realm will rely on the policy choices we make. Whenever we see a disruptive innovation emerge, it’s critical not to judge it based on the old metrics of performance for two reasons. First, disruptive innovations tend to not start out as good based on the old metrics of performance (think of the original simple personal computers compared to the complicated mainframes), and second, judging them this way can consign them to remaining very similar to what they are ultimately replacing, which then would miss the golden opportunity before us.

Our old factory model system has run itself on inputs. We’ve measured the seat time as the major driver of funding and so forth. We’ve measured student-teacher ratios, we’ve measured teacher certifications within the state—things that may or may not have to do a lot with learning. The neat thing about online learning is that we can move toward an outcome-based system, where we say we don’t know exactly what those inputs should look like, what the innovation should look like, but we’re only going to pay providers the bulk of their funds if students actually successfully complete the course. And so we tie funding toward mastery and competency-based learning. And that’s the real part about this: getting away from thinking about this as an input-driven system, and really focusing on the outcomes around these new things.

As a result, as you think about policies, moving beyond the input-focused ones that talk about seat time, attendance, student-teacher ratios, teacher certification, and caps is absolutely vital. And moving toward ones where we pay based on student success and outcomes is critical as dollars follow students down to the course level in self-sustaining fashion.

One piece of wisdom in the major bill before this body that I see is that the bill contemplates funding the equipment and Internet access for those who cannot afford these things—but does not require providers to provide access for those who can, which makes a lot of sense. For those who can’t afford these things, we need to provide equitable access, but many students will have access to these services in this day and age, and so government need not spend dollars in these areas.

The opportunity before this body and Oregon is a large and exciting one—to transform our education system into a student-centric one by allowing us to think about education in new ways and open up to innovation to truly benefit every single one of our children.

Thank you very much.

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