Just How Disruptive Can Innovation Be?

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Just How Disruptive Can Innovation Be?

imgres-2Do you want to understand disruptive innovation? Fill your car’s gas tank. And if you think the price of gas has nothing to do with the future of schools, read on!

In the 1970’s (I know this stuff because I was a geologist at Stanford and with the US Geological Survey back then), the official reports of the USGS estimated that the world would run out of oil in less than 100 years.  These were not the estimates of stupid people or bad science; the fact is that most of the world’s regions that contain sedimentary rocks and were accessible to exploration and drilling had already been explored; we knew what we knew. Given any reasonable assumptions in the demand curve, oil would increasingly become a commodity way too expensive to burn in cars; predictions of $1,000/barrel oil in the later parts of the 21st century were not quickly dismissed. (Virtually none of the assumptions about fossil fuel use considered the existential challenge that burning all these fuels poses to the planet and very possibly the future of human kind. But this post is about disruptive innovation, not eco-disaster.)

So what happened; why is gas selling for close to $2/gallon? Disruptive technologies.  Here are the main elements:

  • Engineers figured out how to drill wells in very deep water in the Gulf of Mexico and off the coastlines of Africa and South America. This comes with increased risk as we well know after watching the Gulf of Mexico disaster a couple of years ago.  But now we are finding and producing hundreds of millions, perhaps billions, of barrels of oil that supposedly “did not exist” in the 1970’s.
  • Computers got a whole lot faster, better, and cheaper. In the 1980’s, the oil industry used the biggest, most powerful, and most expensive computers on the planet (after the NSA) to look for oil and gas.  As that computing power became accessible on desktops, the industry got vastly better at finding where oil and gas actually occur underground. In the 1970’s, for every 10 wells drilled, one would produce commercial quantities of oil or gas. By the 1990’s, that ratio had increased to 7 in 10.  HUGE difference; think about what would happen if schools could be started and effectively run at a 70% reduction in cost.
  • Engineers figured out how to drill oil and gas wells horizontally as well as vertically. A horizontal well can tap into a whole lot more of a productive rock formation than a vertical well.  That is a radical idea when you think of it; how the heck do you make an iron drill pipe curve from vertical to horizontal at the right spot, a few miles below the surface of the earth?

imgres-1And then came hydraulic fracturing, or fracking, which has been around a long time, but in the 1970’s when oil was selling for $12 a barrel or less, the cost to frack was just way too expensive.  But at $100 a barrel of more, and with some new technology, fracking has allowed oil companies to exploit massive new deposits in sedimentary basins that “did not contain exploitable oil and gas” in the 1970’s. (The technology may also contain inherent environmental problems that are probably solvable, but at a higher cost.)

Why has the price of oil, the most important commodity in the world, fallen by 60% in less than a year? Because fracking has allowed the world to produce a lot more oil and gas, and there is no end in site.  AND because the US and Europe are finally starting to reap a few rewards from renewable energy, putting downward pressure on demand. AND because the global economic rebound has been slower than other historic upturns. AND because US auto makers, despite their passionate pleas and the arguments of their legislative supporters that it “couldn’t be done”, now produce fleets of cars that get 30% better gas mileage than they did 30 years ago. AND the Saudi’s, who are the only country in the world that can produce oil at a cost of about $20 or less per barrel, decided to keep the taps open to drive the cost of oil down to preserve market share and drive more expensive competitors out of the market. Clearly disruption is not a “thing”; it is a combination of things acting in ways that radically change the landscape.

What does this disruption actually mean?  To you it probably means that you get to fill your tank for $25 instead of $50, and that is great for American consumers. For US Steel it means laying off workers because there is going to be a lower demand for drilling pipe. For Venezuela it may mean revolution. For Russia it means a 50% fall in the value of the Ruble in the last 12 months, and may mean a return to the Soviet era days of Cold War isolation and food shortages (and hopefully the downfall of Mr. Putin). For the earth it means that cheap fossil fuels are going to be around a LOT longer than we had predicted, which is great for your pocketbook…until it comes time to pay the vastly greater, perhaps un-payable price, of global climate change.

elements-of-disruptive-innovationWhat does this mean for schools? We have been kicking the idea of disruptive innovation around since it was introduced by Clayton Christensen and others almost 20 years ago. Christensen and many forward-looking educators thought that the big disrupter was going to be computers in the classroom; they were wrong (which is not a criticism; predications of the future are mostly wrong!). The magnitude of disruption to the system of education caused by computers in the classroom is not a fraction of the kind of disruption we see in the example of technology in the oil and gas industry. Schools look much like they did 30 years ago, while the functioning and distribution of global energy markets are dramatically different than they were during the oil embargo crisis of 1973. I think the big disruptions in education are still very much in the future. They will be made possible by technology, but will be evidenced by a pedagogy and learning experience that transcend the still-nearly ubiquitous teacher controlled quantum packet of time, space, and subject.

Does this mean schools are immune from disruption? Hardly. It just means that, like the good minds in the USGS that made those estimates of remaining oil and gas reserves in the 1970’s, good minds in education that ignore pathways of true disruption are just not thinking expansively enough. Reports like those put out by the USGS are based on probabilities, a sophisticated calculation of the likelihood that different outcomes will actually occur.  There was a probability in the 1970’s calculation that technology would allow vast new deposits of oil and gas to be exploited; the term was just not given enough weight. There was not enough belief it might happen.  Those who weighted the equation were really, really wrong, and that IS a criticism. There are terms in any forecasting equation for uncertainty, for the rise of events that we cannot specifically predict, but which account for the fact that SOMETHING big is going to change the landscape.  Those predicting the future of oil exploration in the 1970’s vastly underweighted the extent to which “something” would happen.

Are you thinking about possible disrupted futures for “school”?  What weight are you and your school leaders putting on the possibility that something is going to disrupt “schools” in the next 10-20 years that can cause the equivalent reorganization of markets and thinking of a 60% increase or decrease in the global price of fuel? Do you have the market position and capacity of Saudi Arabia to overcome the disruptions? Will you have to lay off workers like US Steel did this week, and how will that impact your school? Like Venezuela and Russia are you going to bet the entire future of your school on being right?

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By | 2015-01-09T16:35:20+00:00 January 9th, 2015|Innovation in Education, Uncategorized, Vision and Strategy|3 Comments

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3 Comments

  1. Terry January 9, 2015 at 5:52 pm - Reply

    Excellent article….and spot on….thanks

  2. Cal January 9, 2015 at 10:04 pm - Reply

    Outstanding Post. Will share it with my board colleagues at our next meeting.

    • Grant January 9, 2015 at 10:54 pm - Reply

      Thanks. These examples should be real canaries in the coal mine for educators, but have not been to date. We have the analogues, but many educators, for many reasons, turn a blind eye until too late.

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