Disintermediation: The Future of Higher Education (Part-I)

– Sh. Rajiv Malhotra

When I was consulting for AT&T, British Telecom and other IT giants in the 1980s on futuristic strategies, I used the term “disintermediation” to mean getting rid of intermediaries in various industries. The new technology would enable tech companies to replace the middlemen in a variety of fields. I argued that travel agents, stock brokers, record labels, book publishers, etc. were examples of highly vulnerable businesses. Displacing them with tech platforms presented great opportunities for my clients.

At that time, such ideas were considered too far out, but it made a lucrative consulting career for me to dish out path-breaking propositions for very large MNCs. They had virtually unlimited money to spend on exploring futurist ideas. Today, these ideas are considered established and even old school. Not only have the above mentioned intermediaries become obsolete, one can also see the same trend of disintermediation in retailing (i.e., Amazon), taxis (i.e., Uber), e-learning (i.e., education), to name a few.

One of my predictions for disintermediation that has not (yet) come true is politics. I had predicted that rather than democratic elections taking place every few years, there could be real-time measurement of the pulse of the voters and instant polls to make policies and elect/de-elect politicians. Further, one could envision an artificial intelligence system adapting itself in real time to reflect public opinion and have the authority to govern on some matters – subject to human supervision to avoid over-mechanization or abuse of some kind.

We must first understand how and why “intermediation” came about, before fully understanding dis-intermediation.

In the beginning, producers and consumers lived in close proximity to one another. The village was self-sufficient in many ways, and only certain kinds of products had to be imported from the outside. The industrial revolution changed this. It became more efficient and competitive to have middlemen between producers and consumers. The distance between the points of production and consumption increased and have become global. Distribution channels and supply chains are global today and there are many layers of intermediaries. This trend of globalized supply chains and distribution is likely to increase even further. It gives better resource allocation than the local model of small-scale self-sufficiency.

At the same time, every new wave of technology disrupts the supply chain and distribution channels. This means new opportunities for the creative and enterprising minds will continue to present themselves. My focus in this article is on the way such trends are rapidly disrupting the field of education.

Indians were once upon a time (during the days of Nalanda, Taxashila and other world-class universities) the preeminent producers and exporters of knowledge, ideas and values to the rest of Asia. Now we are consumers of what the Western institutions teach us. We are stuck in a system of dependency so serious that our elites feel they must get certified by the West in order to be credible back home in India. But a window of opportunity has opened up and we cannot afford to miss this chance to take back our leadership role as a knowledge producer and exporter. This window is due to the disruptions caused by the internet.

One of the latest trends in US universities is the growing role of foreigners, including Indians, in the affairs of these universities. First this role was only in the form of foreign students bringing in billions of dollars. Many US academic institutions are financially dependent on foreign students because they cannot meet their expenses through domestic student tuitions alone. An effect of this has been that a large number of Indian elites (both in USA and those returning to India) have been influenced by American values and principles, both good and bad. From the US side, this is not only a great source of tuition fees but also a way to spread its intellectual influence.

A more recent trend is for wealthy Indians to invest in US universities for personal brand building. (See an interesting article, titled, ‘Harvard is a hedge fund with a university attached.’) This is shortsighted and dangerous. Indians are giving grants and endowments to US universities without adequately evaluating the subject matter being produced by the scholars. It’s all about wealthy Indians seeking a seat at the high table of prestige in American society. They see their family name on a building or attached to an academic chair as their next step in climbing the social ladder. Few donors get sufficiently involved in the details of the subject matter and the impact that is being created by their donation.

A major contrast between India and China in this regard is that China retains strict control over the disciplines pertaining to its civilization, values, domestic politics and culture. They readily buy (or use unscrupulous means to acquire) Western science, technology and business knowhow. But they do not want to brainwash their youth with Western prejudices in areas of the humanities that are considered sensitive to the interest of national unity and security. India has not been able to appreciate this strategic point even now.

Against this backdrop, I want donors to understand some tectonic trends that are taking place in US higher education which are rapidly making brick and mortar university campuses obsolete. I wish to advise those giving donations to US academic institutions to step back and rethink their strategies keeping the future trends in mind. Most donations being given are wasteful because they fund obsolete models at a time when they should be funding the incubation of new models.

(to be continued….)

Sh. Rajiv Malhotra, Member, Board, WAVES-USA

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