Monthly Archives: January 2017

Employment, education and back to that new Adidas plant

For many years it has been widely accepted that there is a strong causal connection between additional years of formal education and likely future income.  Simply put, data from around the world showed that, on average, university graduates could be expected to earn significantly more than those who did not proceed to university.

That connection is becoming weaker. At the same time as the actual cost to students of higher education has been rising in many countries, the returns have become less clear cut.  The data from the US are particularly stark: whereas in the latter twentieth century the average wages of university graduates rose significantly, the average wages of those who only completed secondary school were static; however between 2002-14 while the average wages of high school graduates remained almost static, the average wages of college graduates actually declined.

Data of this sort underscores complaints frequently heard in Australia, the United States and many other countries, that universities are failing to prepare graduates adequately for the world of work. Such concerns have come to take on a sharper edge as the actual cost to students (or their families) of attending university has risen sharply.

Recent articles by the The Economist on Learning and earning and Established education providers vs new contenders provide a handy digest of some of the main causal factors at play here and the wider implications for tertiary education.  The central message is that whether one is in higher or lower skilled work, employees need to be continually reskilling themselves over the course of their working lives if they want to remain competitive in the labour market.

How this ongoing education need will be met is a key question, for at the same time universities around the world are being assailed for underperformance in preparing students for employment, employers themselves are funding much less on-the-job training than in the past.

The net effect of this is large scale unment demand from prospective and current employees seeking to enhance their work-related skills. And technology is enabling new and and existing education providers to experiment with new ways of addressing this unment demand.

I’m particularly interested in thinking about the implications of the evolving relationship between education and employment, and the business model of universities.  And this is where my post last week my previous post on a new Adidas plant in Germany may tie in to the changing economics of post-secondary education.

For some years we’ve been talking about digital disruption in higher education, the rise of for-profit providers, the ‘unbundling’ of the university experience and the emergence of micro-credentials and digital badging.  This is playing out in different ways in different countries, depending on the local regulatory context. But a critical common ingredient is the interplay of economic pressures and technological enablement resulting in increased specialisation in the internal operations of educational organizations and greater responsiveness to market demand.

In the for-profit space, the likes of Coursera, Udacity and have received a good deal of attention in recent years. Newer to me at least, is the rapid rise of firms like General Assembly (offering intensive in-class courses in coding) and  Pluralsight (offering intensive online video-based professional courses).

Universities are experimenting too.  Arizona State’s much acclaimed success with online delivery has earned it the US News and World Report’s most innovative university award for two successive years. Here at RMIT, we’re also launching new initiatives – in collaboration with specialist private sector partners – for online masters programs, digital badging of employment-enhancing skills for our current students and industry-specific stackable micro-credentials for workers looking to acquire new skills in response to changing labour market requirements.

Increasingly, a key differentiator for all education providers looking to serve people worried about employment, seems likely to be how quickly and effectively they can respond to the changing needs of particular industries. Just as Adidas is beginning to replace labour-intensive sports factories with 3D printing and robotics driven plants that enable it to be much more responsive to changing customer preferences, so too education providers are likely to focus increasingly on the  responsiveness of their operating models.

The for-profits will be the first movers. The earlier mentioned Pluralsight, for instance, seeks to optimize its catalogue of educational  videos by compensating the subject experts who create them on the basis of the number of subscribers per video. A model of that sort might suit a highly focused start-up educational venture, but what about universities with their wider social mission and dual focus on education and research?

It may not yet be a large scale phenomenon, we are likely to see growing numbers of universities releasing academics from traditional teaching responsibilities and instead asking them just to develop the content for new (hopefully) sought after courses.  Once developed, delivery of this course content will be handled by a different set of online pedagogy specialists – for so long as there is sufficient demand. This would give the academic greater time to specialize in research and the conception of courses.  And it may allow universities (like high-end sports shoe manufacturers) to conceive, design and bring to market new course offerings much more rapidly.

Over time, a model of this sort seems likely to see the number of academics a university needs decline and the number of online pedagogy specialists grow. It’s a model marked by greater specialization of function in which universities – and individuals academics – focus increasingly on only those activities they can perform more effectively than any other provider.  And it’s a model marked by the increasing embeddedness of for-profit practices and specialist sub-contractors in what have core tenured academic functions within traditional universities.

Brave new world.




What does a new Adidas plant have to do with the future of higher education?

Reading a story in The Economist last week about a new high tech production plant in Germany got me thinking about possible parallels in the evolution of some parts of higher education.



The Adidas story is fascinating in its own right. I hadn’t realized the sports shoe industry is worth $80 billion a year; though I did know manufacturing was quite labour-intensive and largely took place in Asia because of labour costs.   But this new plant is being built in high-cost Germany (with a second like it to follow in the US).

Under established production practices, The Economist reports that it takes up to eighteen months from conception of a new pairs of shoes until they start arriving in retail outlets.  The catch, however, is that about 75% of shoe models only survive in the market for one year.  This opens up a window of opportunity for manufacturers able to respond to shifting fashion preferences quickly.  (If I’m not mistaken, the Spanish clothing company Zara, rose to global heights by being able to respond much more quickly than its competitors.)

But back to Adidas.  The design, testing and production-simulation will all be done digitally and then the constituent elements (plastics, fibres and other stuff) will be brought together as latest-style shoes via a process that integrates computerized knitting, cutting by robots and layered spraying of material by 3D printers.  Not only is this vastly faster than existing processes, but it can also shift immediately from one shoe model to another – without the need for costly and time-consuming retooling.

The big advantage of this system is responding to customer preferences in particular locations quickly.  The thinking, apparently, is that these plants can be spread around the world, close to concentrations of customers.  The article’s author is clear about the implications of this for current production operations in countries like China, Indonesia and Vietnam:

…as advanced manufacturing expands, the need for armies of manual workers in Asian factories will surely diminish.

Which doesn’t mean Adidas will leave Asia – inconceivable, given that huge and expanding Asian middle class – but it does mean, that the current production facilities will be progressively superseded by this emerging production model and the dramatically increased capability for customer responsiveness it promises.

So then, what does this story about 3D printing (well, 3D printing plus digital technology more broadly) have to do with possible futures for higher education? Rather than making this a very long post, I’ll try make that case in a separate post in a couple of days.  Hold the Adidas story in your head, and mean time ask yourself whether you think any reasonable parallels can be drawn with at least some parts of contemporary higher education.

Start-up dynamism in Southeast Asia

Author: Joshua Tanchel, Deloitte Australian start-up technology companies are finally getting some of the attention that they deserve from the government, media and big business. With increasing momentum in the sector, Australian start-ups need to be aware of all of their potential expansion opportunities. Instead of just looking to expand into the U.S and European…

via Australian start-ups need to look north to South East Asia and not just to ‘the west’ — East Asia Forum

Judging governments

Evaluating the record of achievement of a government is deceptively difficult. Too often such assessments make insufficient allowance for inherited starting conditions, the impact of circumstantial events or do little more than reflect one’s underlying political views.

A more subtle challenge is overstating the significance of government action — for good or ill.

As the pungent 18th century English commentator, Dr Johnson, memorably put it:img_0019

Of all that human hearts endure, how small that part, That laws or kings can cause or cure

This past week, many people have been reflecting on the record of Barak Obama’s two-term administration. Among the thoughtful pieces I’ve read, the one that impressed me most was Martin Wolf’s assessment of Obama’s economic legacy.

Wolf is a globally influential journalist with the London-based Financial Times. He starts out by emphasising that Obama came to office in 2009 in the depths of the Global Financial Crisis with the US economy in free fall. This was not of his making and, equally, the remedial work was not all his doing (the Bush administration had already begun the task).

Nevertheless, the Obama administration took decisive action with a strong fiscal stimulus (the American Recovery and Reinvestment Act), backed the stabilising influence of the Federal Reserve and rapidly stabilised and re-booted both the financial and auto industries.

On the negative side of the ledger, he failed to make any significant inroad into the dramatic worsening of economic inequality in American society, he did nothing to arrest the long term decline in male participation in the workforce, labour productivity fell steeply while he was in office and he did not pursue the companies and individuals whose extravagance or malfeasance ignited the crisis with any great vigour.

As in most other domains, the power of government over a modern economy is easily exaggerated. But in times of crisis – when confidence is the most precious commodity – governments are more consequential than usual. Wolf’s summary judgement that Obama’s administration succeeded in rescuing the US economy and laying a solid foundation for those who came after him, is one I find persuasive.

Leaping and mounting: China’s changing political economy

A recent article by leading US-based China scholar, Dali Yang, tells a powerful story about the evolution of China’s political economy. The outlines of China’s truly spectacular economic progress are familiar: it has been leaping forward to become the world’s second largest economy in the world, to have the largest foreign reserves and the second largest defence budget.

The political consequences of this economic change are less understood. Among an array of great insights, four points stood out of Yang’s essay for me.

First, one in seven of China’s richest people are delegates to the National People’s Congress or members of the Consultative Committee of the Communist Party. Who would have predicted that the Party would so spectacularly become the “handmaiden for wealth accumulation by capital and families of the party elite”?

Second, there has been a massive expansion in the number of young Chinese accessing higher education. Not counting those who studied abroad, in 2014 more than 7 million students graduated from local tertiary institutions – more than ten times the figure for 1990 and at least two and half times a comparable figure for the United States.

Third, with the rise of local stations and the explosion of digital media, viewership of prime time news on CCTV has dropped dramatically, especially among the young.

Fourth, notwithstanding increased popular support for the country’s political leadership under Xi Jinping, more educated people trust the government less (even in the countryside).

As Yang puts it in closing, authoritarian developmentalism is not a stable equilibrium. He doesn’t mean that the CCP regime is currently unstable, but it does mean we need to be clear-eyed about the mounting challenges of sustaining CCP rule in the face of a slowing growth trajectory and rising expectations among a citizenry that has access to more information and is asking more questions than ever before.

China’s particular circumstances are unique, but the social and political challenges unleashed by sustained economic development are anything but. You can read Yang’s full argument here; it’s well worth it.