Some guidance on Assignment 2

Note the following example assignment. Don’t feel you need to EXACTLY follow or ‘mimic’ this assignment to get a great mark, but the key things here is that this sample assignment DOES really hit the target in relation to the following criteria. It was written by a very advanced student, and is actually somewhat hard to understand…so NOT so very persuasive. Because the student was an economist by background (at undergraduate level) there was a high degree of ‘evaluation of the feasibility of the idea’ but it is important only that you demonstrate you’ve thought about the feasibility. IF you think your idea has weaknesses, that might threaten its viability, talk about those openly. Honest assessment is better than pure ‘real estate-style’ spruiking/sales pitching. The assignment is really good from the point of view of quality of writing, referencing. While I just criticised the ‘persuasive argument’ component, note also that the referencing shows wide reading, which in itself, if done accurately, is persuasive. Note for example, the author doesn’t say “university degrees are getting more and more expensive”. The author instead says very definite things, with real numbers, AND a reference to back it up: “The average three year degree is predicted to cost $50,000 by 2026 (Knott, 2016).” So don’t just say “everyone wants a happier life”, instead say “A GlobalValues Survey in 2016 showed a continuing global trend towards self-fulfilment in countries as diverse as Vietnam and Austria (GlobalValues, 2016).” These examples show the value of being PRECISE, definite, and evidence-based, rather than just broad and waffly.

1. Effective explanation of the customer/market problem that needs solving and/or the reason the innovation is required. (15%

2. Persuasive argument of the benefits to be generated by the idea (15%) 3. Discussion of the proposed business model (15%) 4. Critical success factors to be managed during execution of the idea (20%) 5. Evaluation of the feasibility of the idea (20%) 6. Quality of written submission, referencing (15%)

Don’t worry about delivering an executive summary or table of contents, or fancy graphics. Focus on your idea, organising and presenting the material tidily, professionally and clearly. Focus on delivering evidence (either for or against your idea) and focus on addressing the Canvas, not in the precise, point by point way that you did in Assignment 1, but keeping the Canvas and it’s components in mind as you develop and explain your business idea. Those nine components are a great way of reminding yourself of key elements of ALMOST any business.

PoweredBy: Offering a new way of thinking and delivering higher education I. Introduction This report explores the PoweredBy business model using the nine component Business Model Canvas and the Value Proposition Canvas to determine the feasibility and critical success factors for a disruptive competency based business model in higher education. The context of the problem the model addresses and the benefits of the model will be discussed in light of value creation and capture. PoweredBy flips current understanding of the higher education sector by focusing on packaging and delivering competencies rather than curriculum. Disruptive innovations transform expensive and complex activities to be dynamically cheaper and more widely accessible. Sustaining innovations make good activities better. Efficiency innovation allows more to be achieved with less typically lowering activity costs (Weise & Christensen, 2014). II. The problem Australian tertiary students are paying ever higher fees to access post-secondary education. The average three year degree is predicted to cost $50,000 by 2026 (Knott, 2016). Successive Commonwealth governments have expanded a national income contingent student loan program where loans are repaid through the taxation system once students are employed. In 2016 student loans represented 4.8 percent of national debt. By 2026 the Parliamentary Budget Office estimates that this figure will grow to be 18.3 percent or $180 billion (Knott, 2016) while the Reserve Bank (2018) records wage growth continuing to fall (see Figure 1, Appendix 1). Education is becoming too expensive. The National Disability Insurance Scheme (NDIS) now funds individuals to purchase support services effectively providing no fault universal insurance in the event of severe disability. An additional 70,000 full-time equivalent jobs will be created over the next three years as a result (Productivity Commission, 2017). More than 74 percent of staff are women, over age 46, vocationally qualified and 68 percent work part-time or casually (Productivity Commission, 2017) (Workplace Gender Equality Agency, 2018). Return on investment for vocationally qualified women is negative. The Grattan Institute identifies women who complete certificate level qualifications are worse off for taking on extra debt with their median incomes falling below year 12 graduates (see Figure 2, Appendix 1). The Grattan Institute finds three in ten students will not complete their degree after eight years (Norton, Cherastidtham, & Mackey, 2018) identifying part-time students who work and have family responsibilities as being most at risk (see Figure 3, Appendix 1). A cheaper and more supportive approach to education is required if Australia is to meet its growing work force skilling requirements.

III. Benefits Christensen, Hall, Dillon, & Duncan (2016) contend that understanding the job to be done is far more powerful than a simple propensity to purchase when framing value propositions.

Osterwalder, Pigneur, Bernarda, & Smith’s (2014) Value Proposition Canvas provides an elegant means of mapping the job to done on the right to the value proposition on the left through the pains and gains they experience along the way. Five sequential jobs have been identified for women aged over 46 in the disability sector; commencing a casual job, then getting qualified, securing a permanent position and then a promotion will enable her family to purchase a house. This final step is the actual job to be done. Many difficulties exist along the way including being away from family, expense, lack of confidence and poor previous educational experiences. Mature-aged students typically are employed, possess pre-existing knowledge and have busy lives. The Grattan Institute identified these elements as risk factors. Western Governors University (WGU) has developed a model that uses demonstrated competency as the basis for course progression. Students that work can apply their existing knowledge to make quicker progress and are not restricted to minimum semester. Rates of employer satisfaction exceed 98 percent as graduates can immediately apply their knowledge to the workplace. The PoweredBy solution creates customer value in the same way by solving customer pains with a cheaper, quicker and more supportive approach to mature aged education based on demonstrated competency. IV. Feasibility Feasibility screening has resulted in a series of pivots or changes to the initial idea. Prior to the 2009 reforms, only universities could issue student loans on behalf of the Commonwealth. Widespread fraud accompanied the expansion of income contingent student loans to vocational education where private for profit providers are common (see Figure 4, Appendix 1). A shift to a high trust non-profit model is required. The second pivot occurred when research identified the Grattan Institute’s (Norton, Cherastidtham, & Mackey, 2018) finding (see Figure 2, Appendix 1) that returns to women for vocational education are negative. Clearly student debt is only justified if it results in higher wages. A shift to degree qualifications exclusively was made. Feasibility assessment caused a third pivot due to cost. The Moodle platform’s freemium business model (Osterwalder & Pigneur, 2010) that allowed a cheap and uncomplicated launch (Cole & Foster, 2007). However, the free product is limited to 50 cloud based users for a single unit. Additionally hiring the requisit the expertise required to apply competency based learning principles to higher education qualifications, given the regulatory framework represented a sunk cost that offends the practice of lean enterprise (Cooper & Vlaskovits, 2016). Osterwalder, Pigneur, Bernarda, & Smith (2014) (see Figure 11, Appendix 1) question upfront costs too. Figure 10 summarises (full detail Figure 9, Appendix 1) the requirement to partner with an established and trusted reputation with operations in higher education and vocational education that used Moodle. CQU is the preferred partner.

V. Business model Osterwalder & Pigneur’s (2010) nine building blocks are used to detail the PoweredBy business model (see Appendix 2) and is based on public information.

The business model clearly recognises the importance of identifying customers with a propensity to purchase. Importantly though they also have a job to do, they wish to purchase a house with higher income (Office of Inspector General, 2017). Potential customers need to have confidence in the quality and expertise of the institution. This is particularly important given the industry forces and trends impacting the higher education sector following the widespread private provider fraud. CQU has been identified as the anchor partner provider. Such a strong partner allows the customer value proposition of a ‘high quality, low cost qualification that recognise my skills, my employer rewards and secures a better future for my family’ that address a lack of confidence and external work and family pressures through a close mentoring support model. The traditional role of teacher, assessor and mentor/tutor would be separated. Teaching would be entirely online. Assessment would be undertaken by qualified external expert assessors. The main focus will be on telephone based support providing encouragement, developing skills and assessing knowledge with reference to the reporting and quizz tools in Moodle (Cole & Foster, 2007). Significant and well targeted direct mail will engage potential students directly and through their employer. Per student revenues will halve from approximately $35,000 for a three year degree to $16,000. A dynamically lower price structure will drive both total market expansion and market share. Despite the price reduction, operating margins of 2.5 percent are forecast. Lower prices are facilitated by lower costs. Moving entirely online using high touch telephone support frees PoweredBy from huge property costs. Depreciation will be less than 1.5 percent of costs. Central overhead costs will also be crunched down to allow a doubling of expenditure on academic support. Access to direct mailing lists is central to direct channel growth. Development of Moodle in line with competency based learning principles is also fundamental. Finally customer relationships are managed by telephone with a qualified expert student mentor.

VI. Critical success factors “The microphone was a way to lower our cost per student, without lowering the price we charged.”

Clay Shirky, Associate Professor NYU (2013) The post war business model of universities has been to grow economies of scale by building large lecture halls capable of holding many hundreds of students. The audio microphone was the enabling technology (Shirky, 2013). Internet delivery is largely an extention of this logic. Rethinking business model value creation, applying a different learning methodology and deploying internet delivery will deliver a disruptive shock to Australian higher education. Employer acceptance is key. Employers report 100 percent of WGU graduates were prepared for their jobs with 75 percent indicating they were extremely well prepared and 94 percent exceeded their expectations (Office of Inspector General, 2017). Graduates need to see this employer acceptance in their outcomes. WGU gradutes have on average received a $19,100 pay rise within four years of graduating and 88 percent have full time employment. Importantly graduates have a strongly positive return on investment having paid for their education in less than four years.

Moodle platform needs to be restructured to allow mentors to receive activity reporting and assess student progress using time limited responses to randomly generated questions drawn from a large bank of multiple choice, true/false, short answer, matching, numercial and embedded answer questions. Student expectations, backgrounds and existing skills also need to be captured on commencement to provide independent variables to inform subsequent assessment. A new grading regime is also perhaps required. Competency based learning requires a high pass threshold to ensure all graduates are in command of their knowledge. Interestingly US studies indicate an erosion in value of the traditional A, now being the most awarded grade (see Figure 5, page 9). Student completion rates will be essential. The traditional model of full time on campus unversity education does not serve employed, mature aged students with families. Such a disruptive innovation will need to demonstrate solid outcomes for these particular students. While implementation occurs, PoweredBy will be widely misunderstood as it is truly third horizon thinking (Coley, 2009) and diffusion is hard to predict. Commitment partnership from CQU will be essential. CQU will not only be disrupting the higher education market, they will be disrupting themselves

VII. Conclusion The Post-war model of growing economies of scale to lower unit costs and maintain high prices is unsustainable. Importantly it serves mature aged, part time students who are employed and have families poorly. The preceding analysis is based on public information and establishes performance benchmarks for the development of a disruptive business model innovation in higher education.

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Appendix 2: Business Model Canvass