Aggregation Theory and Education

By Alex Spurrier

August 15, 2016

Five years ago, Marc Andressen took to the pages of the Wall Street Journal to describe how software was “eating the world”:

“More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. Over the next 10 years, I expect many more industries to be disrupted by software, with new world-beating Silicon Valley companies doing the disruption in more cases than not.”

It’s not hard to come up with a list of examples of this prediction coming true, from taxis (Uber) to hotels (AirBnB), but software-driven disruption has yet to significantly change K-12 education. Existing online education offerings, such as Coursera and Khan Academy, show promise, but few would argue that their impact on K-12 education to date could be described as anything close to “disruptive.” Jay P. Greene explains why all-online education has failed to gain traction:

Online courses appear to be less effective in getting the average student to learn and I suspect the problem is that teaching online is less able to create social communities and authentic relationships that are necessary to motivate students. Having a human being in front of students who would be disappointed if students did not learn the material seems important and something that online instruction has not been able to simulate. Students appear to be better motivated to learn when they have an in-person, authentic relationship with a teacher and when they try to please that teacher by working hard to learn. Digital instruction or a human being on the other side of the internet may not be able to create that same relationship and motivation.

The question remains: if K-12 education is going to be disrupted by software, what would it look like? Is there a way to combine the scalability of software with the power of strong interpersonal relationships?

Delving deeper into the disruption of other industries might give us an answer. Ben Thompson’s Aggregation Theory provides a great framework to understand how the Internet is changing entire sectors of our economy:

“The value chain for any given consumer market is divided into three parts: suppliers, distributors, and consumers/users. The best way to make outsize profits in any of these markets is to either gain a horizontal monopoly in one of the three parts or to integrate two of the parts such that you have a competitive advantage in delivering a vertical solution. In the pre-Internet era the latter depended on controlling distribution.

For example, printed newspapers were the primary means of delivering content to consumers in a given geographic region, so newspapers integrated backwards into content creation (i.e. supplier) and earned outsized profits through the delivery of advertising. A similar dynamic existed in all kinds of industries, such as book publishers (distribution capabilities integrated with control of authors), video (broadcast availability integrated with purchasing content), taxis (dispatch capabilities integrated with medallions and car ownership), hotels (brand trust integrated with vacant rooms), and more. Note how the distributors in all of these industries integrated backwards into supply: there have always been far more users/consumers than suppliers, which means that in a world where transactions are costly owning the supplier relationship provides significantly more leverage.

The fundamental disruption of the Internet has been to turn this dynamic on its head. First, the Internet has made distribution (of digital goods) free, neutralizing the advantage that pre-Internet distributors leveraged to integrate with suppliers. Secondly, the Internet has made transaction costs zero, making it viable for a distributor to integrate forward with end users/consumers at scale.”

Applying Aggregation Theory, K-12 schools can be viewed as an industry that integrates the supply and distribution of educational content. Like newspapers, this integrated product is limited to a certain geographic area. It also helps us to understand that most popular education reforms only seek to improve certain aspects of this relationship instead of fundamentally changing it. For example, charter schools may introduce more competition for students (customers), but they still (generally) operate with the same model of integrated supply and distribution of educational content to students.

Some tech companies are trying to flip the equation by integrating the delivery of educational content more directly with the student experience, making the actual content more of a modular component. Apple, Google, and Facebook (in collaboration with Summit Charter Schools) each offer products that allow teachers to provide a digital classroom experience for their students while also maintaining in-person relationships. This may help them avoid the pitfalls of the all-online education efforts identified by Green, but can any of them truly change the integration of content and delivery in K-12 education?

Of the three large tech companies, I think the Facebook/Summit approach has the most potential to deliver Aggregation Theory-style disruption. The online classroom products of Apple and Google are mostly abstractions of a traditional classroom in the cloud: teachers assign work to each student, then students submit it by a given due date. All of this happens online, but everyone in the class is still on the same timeline.

The Facebook/Summit collaboration, named Basecamp, takes a more Netflix-ian approach to delivering content. Here’s how it’s described on the Basecamp website:

“Students work through playlists of content at their own pace and take assessments on demand. They also work with teachers to set short-term and long-term goals and connect these back to their daily actions.”

Under the Facebook/Summit approach, time is no longer a constraint for students that have already mastered certain content, nor is it a limitation for students that may need more time to fully grasp a concept before moving on to the next lesson.

This represents a fundamental shift in the relationship between students,how they learn, and the role of educators in supporting students through that process. The Basecamp platform is still in its infancy and has much room to develop, particularly to address the needs of students with ß or limited English proficiency. However, we should still recognize the potential this approach could have in changing how K-12 schools operate.

Posted on:
August 15, 2016
5 minute read, 1024 words
aggregation theory ed reform ed policy ed tech technology
See Also:
The World Turned Upside Down
Long-Term Orientation and Educational Performance
ESSA and the Administrative State