Disrupting Tree-Textbooks in Higher Education

The publishing industry for textbooks in higher education appears to be the long forgotten child of media innovation: the same old business model has been around for decades while the world around it transforms. Some startups like Chegg and Kno have sought to disrupt this model by introducing e-book technology and attempting to provide lower-cost models for the textbook industry, but their efforts have not yet paid off.  We found through our research that technology and lower prices alone will not bring this disruption to our classrooms. Context is important. In this case, the incentives and “jobs-to-be-done” for textbook authors are not currently being addressed by these startups. A holistic solution that addresses the diverse needs of the different stakeholders, combined with the technology, is necessary to disrupt a model that has been well guarded from all fronts for decades.

Startups’ Attempts

In contrast to traditional publishing companies, startups are striving to use tablet and e-book technologies as a disruptive tool instead of a sustaining one.  However, despite some interesting efforts from several companies the results have not been as expected.  Currently, although publishing companies claim to offer a 20-30% cheaper price for e-textbooks, e-textbooks are almost always more expensive than tree-books.  Although e-textbooks are—in some cases—slightly cheaper than new tree-books, e-textbooks still struggle to offer a competitive price compared to used books.  In addition, it is important to note that when purchasing a textbook, students take into consideration the money that they could recover by reselling it in the aftermarket after usage.  In short, current e-textbook prices are often no match for the net price that students pay for a tree-book.  This could lead us to believe that price is the cause of why similar companies have struggled to disrupt the industry.  However, other startups are offering free e-textbooks—by dramatically innovating around their business model—and are still struggling to fully disrupt traditional publishers (e.g. FlatWorld Knowledge has been around for three years and has yet to breakeven). If the benefits of free e-textbooks seem obvious, why does this business model fail to meet the expected growth?  Clearly price is not the only factor to consider in disrupting the market.

 

In the book The Wide Lens, Ron Adner reasons that many companies fail because they over-focus on their own innovations, and therefore “neglect the innovation ecosystem on which their success depends.”  In order to understand the likelihood of the adoption of new technologies, Adner argues that one must pay close attention at the value chain of the particular product.  By looking at this model with a holistic view, we learned that companies face several red and yellow flags along their innovation ecosystem that would need to be addressed to experience a higher and faster success rate.  The annexed chart illustrates a simplified value chain for textbook publication through startups utilizing a freemium business model (such as the one used by FlatWorld Knowledge) and marks where red and yellow flags might occur.

 

In order to understand some of the alerts of this innovation ecosystem, it is important to understand the different jobs that the authors (often professors in research universities) are trying to achieve.  As we interviewed over 20 different higher education professors and authors, we identified three of the main “jobs-to-be-done” for textbook authors: (1) receive prestige and recognition for their work—critical for progression in their professional career— (2) make a profit, and (3) enhance the learning experience for students by providing tailored class content and resources.  It is important to note that the desire to move forward in the professional career is predominant among assistant or associate professors, more so than among those with tenure.  Despite this, professional progression and the enhancement of class experience remain the predominant jobs-to-be-done.

 

 

Now that we understand the main jobs-to-be-done, let’s address the different alerts along the ecosystem.

Red Flag: Although a publishing platform is provided, this business model does a poor job in giving professors the prestige that usually comes from being supported by a recognized publishing company.  As no meaningful recognition is provided the work does not aid a professor to progress in their professional career. If a professor, however, holds tenure at the university level he/she might venture to write a textbook with a company like Flat World since the overarching job-to-be-done would be to enhance the learning experience for his/her students by providing tailored class content.

 

1st Yellow Flag:  Giving textbooks for free represents a yellow flag in the innovation ecosystem as there are some authors—though not the vast majority—who have an economic incentive.  While this fails completely to meet a job-to-be-done, organizations like Wikipedia—with some articles edited for free by several professionals—might serve as illustration that economic obstacles can be overcome.

 

2nd Yellow Flag:  Some students do not feel completely comfortable with studying online.  Out of the 200 students interviewed there were two major concerns in regards to studying from and taking notes in an e-textbook: (a) the interaction of a student with an e-textbook is not as efficient for learning as the interaction with a tree-book, and (b) there is a lack of trust in technology—or in their ability to use technology—to keep all the documents saved.  These are only yellow flags for two reasons.  First, because those concerns are well known in the market and are being addressed by e-textbook providers; and second, because most students are price sensitive and said that despite their concerns, they would replace tree-books with e-textbooks if the latter were free or cheaper.

 

Key Takeaways

An understanding of the different author’s jobs-to-be-done and of the innovation ecosystem leads us to believe that in order for a more accelerated disruption to happen in the publishing industry, companies would first need to address the red and yellow flags in the innovation ecosystem.  Using new technologies to lower e-textbook costs while addressing the professor’s evident job-to-be-done of progressing in their professional career would create a powerful business model capable of rapidly disrupting publishing companies.

Daniel Falabella

Salvael Estrada