business models in the education sector

Higher education industry is implementing new business models

To gain a better understanding, on a global and regional level, of what's important to higher education students and what their challenges are with respect to learning, academic goals, and career goals, as well as staff perspectives on how to best communicate with, instruct, and prepare students, Salesforce partnered with Ipsos and The Chronicle of Higher Education to collect over 2,200 higher education student and administrators using an online quantitative survey. 

Here is the executive summary of the 2021 Connected Student Report : 

• Supporting students and staff wellbeing is critical - Concerns about student mental health and wellbeing had already led many institutions to offer more services, including ones that students could access online. The anxieties and calamities faced by students and faculty, and staff increased those worries, with 76% of students and 73% of staff reporting that maintaining their well-being remains a challenge. 
• Flexible learning and working options are here to stay - One major takeaway from the report is the need for learning options that fit within students' busy schedules. One in four students said that having more flexible courses and part-time offerings would help them succeed. 43% of students prefer hybrid courses.
• Student career pathways are top of mind - Financial challenges and anxiety about the future are common amongst students. Close to half of students (49%) say that future career prospects are most important when deciding to enroll in a college/university.
• Universities explore new business models - The COVID-19 era has led many institutions to make considerable adjustments to how they operate -- changes that represent opportunities for growth and increased efficiency. 45% of staff said their institutions are implementing new business models.
• Learners and institution success require innovation - Many institutions are experiencing a gap in trust. Nearly 6 in 10 students say the trust gap between students and institution leaders is due to a lack of consistent communications; about half of the staff agree. 45% of staff said their institutions are prioritizing investments in integration technology

2021 Connected Student Report, Salesforce.org 

Here is a deeper look into each of the key takeaways from the 2021 Connected Student Report : 

Supporting student and staff wellbeing is critical 

• 34% of students said they need more help managing their course load.
• 76% of staff said maintaining their work/life balance is a top challenge.
• 40% of students said their institution can best support their wellbeing by offering more flexible learning options. 

Flexible Learning & Working Options Are Here to Stay

• 54% of staff prefer hybrid courses.
• Students expect 50% of their courses moving forward to be online.
• 46% of staff anticipate more remote work in the near future.

Student career pathways are top of mind

• 31% of students identified low career prospects as why they have a poor college/university experience.
• 29% of students said they need more career resources from their college/university in order to be successful.
• 50% of staff say their institutions are strengthening corporate partnerships in order to help students prepare for digital careers.

Universities Explore New Business Models

• 48% of staff said their institutions are investing in new business models focused on more part-time learning options.
• 33% of staff said their institutions are investing in new business models focused on executive education.
• 29% of staff said their institutions are investing in new business models focused on credentialing/ micro-credentialing.

Learner & Institution Success Requires Innovation

• 27% of staff say their institutions are hiring for a head of digital experience.
• 53% of staff members say they will rely on social media to better engage with students in the coming fall semester.
• 40% of staff said their institutions are prioritizing investments in real-time data analytics.

2021 Connected Student Report, Salesforce: Technology challenges and investment areas in higher education 

The 2021 Connected Student Report also highlighted solution line key findings: 

Recruitment and Admissions

• Students say they would choose one university over another if it offered more help finding paid internship/ job opportunities (40%) or more flexible course options (36%).
• 51% of recruitment and admissions staff anticipate an increase in social media engagement to target incoming students.
• Coming out of the pandemic, only 7% of staff anticipate their institutions will continue to buy lists to attract prospective students, yet close to a quarter (24%) expect digital advertising to be a key tactic moving forward.

Student Experience 

• Only 27% of students say they can easily sign up for an advising appointment at their college or university.
• 26% of students say they have to sign in to two or more different platforms to find answers to their questions and access the resources they need to be successful every day.
• 92% of staff say tailored student enrollment plans have successfully ensured accepted students enroll at their university or college.

Advancement 

• Advancement staff anticipate video conferencing (39%), social media (38%) and email (38%) to be the most effective channels in securing major gifts coming out of the pandemic.
• 55% of advancement staff anticipate more virtual events to engage alumni and constituents coming out of the pandemic compared to pre-pandemic times.
• Of those students that don't feel connected to alumni, 34% said it's because their college or university does not provide an online community to interact with alumni.

Marketing and Communications

• 59% of students attribute a leadership-student trust gap at their college or university to a lack of consistent communications; about half of the staff agree.
• When asked how their university could improve their communications,42% of students said more personalization.
• When asked how their university could improve their communications,39% of students said more reminders or alerts.

2021 Connected Student Report, Salesforce: Communication is key to establishing stakeholder trust 

9 in 10 students want institutions to communicate with them as often or more via email, personalized communications, and alerts. Around four in 10 say they'd like communications to be more personalized, while 25% say they'd like a more personalized college experience overall.

2021 Connected Student Report, Salesforce: Three ways universities can improve student communications 

Institution Operations 

• 62% of staff say their institution is reevaluating their faculty/staff support & service model as a result of the pandemic.
• Of those staff members that indicated they don't have enough support from their institution, 31% said it's because their college/university uses multiple technology systems. It's hard to get the data they need to do their jobs effectively.
• When asked how their institution could better help staff, close to half said more online resources for technology support (44%) and an online portal to connect with other staff members (42%).

The pursuit of new business models in higher education is an important finding. According to the Chronicle: 

"COVID-19 may not have created any new reasons for colleges to change how they do business, but the pandemic rapidly accelerated the process. Just in the U.S., the loss of dining hall income, residential and student fees and, in many cases, tuition has likely cost institutions around $183 billion . Post-pandemic, institutions will need to do more than assure the safety of students and staff. They'll have to keep an eye on the bottom line as well. Findings show that many institutions are reworking their business plans to reflect this reality. Nearly half of staff surveyed globally say their institution is more likely (at 45%) than not (35%) to be implementing a new business model. 

Some institutions, such as Southern New Hampshire University, are creating new models that make on-campus learning more affordable, while Cambridge announced in May that it will roll out 50 online courses over the next five years, with an eye toward increasing learning opportunities. As institutions look ahead, many have made shoring up their value proposition for future workers more of a priority."

2021 Connected Student Report, Salesforce: New business model trends in higher education

The report highlighted these key findings: 

• Nearly half of all institutions are implementing new business models due to the pandemic. 
• 7 in 10 staff say their institutions are investing in new growth opportunities, chiefly more online learning options. 
• About half of the total staff surveyed say those business model revisions involve the creation of more part-time learning options or shorter-term courses and programs -- changes that reflect more of a concern for non-traditional learners and other working students. 
• Nearly 40% of staff surveyed say they are seeing more partnerships between corporations and higher education. 
• About half say that their institutions are engaging employers to help recruit students by managing corporate relationships on a single platform or by tailoring marketing campaigns to corporate partners -- with France and the U.S. courting private companies at the highest rates. We know companies are key to solving the digital skills gap . 

2021 Connected Student Report, Salesforce: Staff predict more investments in technologies and engagement opportunities 

• Institutions have continued to upgrade their technology during the pandemic. Slightly less than half of those on staff say that more people on campus are involved in making tech decisions, with more than half of those in the Netherlands and U.S. reporting the highest rates of collaborative tech decision making.
• The digital competency of staff has become a priority for most institutions as well. More than 6 in 10 staff members say that the pandemic led their institution to re-evaluate their staff support and service models and invest in training that would allow faculty and staff to do their jobs virtually.
• More than half of staff (52%) anticipate their institution will invest in classroom technology, while a slightly lesser number (46%) expect to see more money going toward research tech. A considerable number (44%) anticipate investments in faculty and staff learning and engagement opportunities.

2021 Connected Student Report, Salesforce: Higher Education is investing new technologies, leadership roles and staff services models 

New business model innovation is a top priority for higher education institutions. Whether it be new sources of revenue or new areas of investment, institutions are evaluating how to create value from anywhere and what internal shifts they need to make to catalyze these changes. Learning from anywhere, success from everywhere. 

To learn more about the 2021 Connected Student Report, you can visit here . 

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Building Higher Education's Future Business Model

Peter Stokes, Andrew Laws

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The higher education industry is at an inflection point. Public and private institutions alike are tracking, if not yet being impacted by a tectonic shift in who they serve (and how they do it).

Overall enrollment has incrementally declined, forcing some colleges and universities to consider consolidation and closures. At the same time, higher education’s target market is no longer limited to new high school graduates. The pool of potential applicants is diversifying across race and ethnicity, age and socioeconomic factors. This changing audience is challenging institutions with new expectations that traditional academic offerings may not be equipped to meet.

As the higher education environment continues to transform, maintaining the status quo is the riskiest move leaders can make.

As higher education’s audience evolves, questions about institutions’ cost structures become more pressing. Tuition at public and private institutions rose more than 100 percent over the last two decades. With government appropriations shrinking, many colleges and universities are more reliant on tuition dollars than ever before — reinforcing the affordability barrier that prevents schools from attracting and retaining bright minds.

Demand for higher education is diminishing and the offerings institutions supply are losing shelf life, rendering current financial and operational structures unsustainable. To thrive for decades to come, higher education leaders, even those at institutions succeeding today, should prepare to fundamentally adapt their business models .

Connecting the Dots for Student Success

Learn how to achieve student success and financial sustainability by using strategic planning and integration across your higher education campus.

Laying the Groundwork for a Viable Future

Tactics such as tuition discounting are short-term fixes for higher education’s long-term challenges. Higher education leadership teams need a bold vision for innovating their...

Tactics such as tuition discounting are short-term fixes for higher education’s long-term challenges. Higher education leadership teams need a bold vision for innovating their operations and offerings to ensure their institutions’ longevity.

Four areas higher education leaders could explore when building future-proof business models include:

• Academic portfolio optimization: Academic offerings account for approximately half of institutions’ total expenses, but few leadership teams have visibility into the efficacy of their programs. Similar to an investment portfolio, higher education executives should treat their academic offerings as a portfolio with balanced priorities (e.g., mission, prestige and profit), that has a regular cadence for review and reimagination. With a unified, data-driven approach to academic portfolio optimization, leadership teams can objectively measure each program’s performance, financial viability and alignment with the institution’s current and future strategy. Conducting this exercise on a constant cadence can reveal programs ripe for consolidation and areas worthy of additional investment.
• Revenue-driving partnerships: Another private sector trend with potential for the future of higher education is the pursuit of partnerships. The right alliance can infuse your institution with the expertise and resources necessary for successful reinvention. For example, U.S. universities have historically used joint ventures to expand their global footprints. More recently, it has become common for institutions to establish partnerships for online programs. Forging similar partnerships in other operating and academic areas could be a fast-track to cost reduction and scalability. Mergers and acquisitions should also be up for consideration. Beyond minimizing expenses, M&A can unlock growth opportunities. Purdue University’s 2017 acquisition of Kaplan University, for instance, set the stage for the launch of Purdue Global, an online program with more than 100 offerings largely geared toward adult learners.
• Education delivery innovation: Leaders’ most difficult step in building a new higher education business model is unlearning what you already know about your audience. Teams should commit to understanding the needs, challenges and goals of a new student body. With that detail, you can identify which capabilities you need—and those that are no longer relevant—to succeed. If your institution plans to increase the number of rural or working adult students, the main venue for learning may shift from the lecture hall to virtual platforms or more distributed microcampuses. For these emerging populations, two or four-year degrees may not be as feasible (or effective) as certificates, “stackable” credentials or interdisciplinary programs that can be enrolled in year-round.
• Evolved pricing structures: As education delivery and student demographics transform, institutional pricing should adapt accordingly. While undergraduate tuition discounting has steadily increased for the last decade, awarding more aid alone isn't a long-term solution to enrollment and budget challenges. Just as the healthcare industry is moving from fee-for-service to value-based payment models, higher education could benefit from more closely tying costs to student outcomes. For example, some institutions are implementing differential tuition where costs vary depending on an academic program's internal costs or graduates' earning potential. Online learning and stackable credentials also present opportunities to pilot new structures, such as subscription payments or program-specific pricing.

As the higher education environment continues to transform, maintaining the status quo is the riskiest move leaders can make. Positioning your institution for long-term financial and operational success starts with more than near-term tactics; it demands a new, strategic business model.

By developing a plan for tomorrow’s changes today, higher education leaders can protect their institutions’ relevance and competitive edge.

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How can higher education systems better prepare for our Fourth Industrial Revolution future? Image:  REUTERS/Lucy Nicholson

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Stay up to date:, education, gender and work.

• Education models need to reflect the demand for lifelong learning to cope with the technological and social changes brought by the Fourth Industrial Revolution.
• Skills not degrees may be the reality of the future.
• Start-ups and new business models are disrupting traditional educational institutions and operating models.

In a future of unprecedented societal shifts, education is crucial to managing the challenges ahead. With more automated, digitized and fluid job markets, today’s higher education systems are quickly becoming incompatible with the future we are looking towards. We are two decades into the 21st century, yet higher education is generally still geared to succeeding in the 20th. Indeed, universities themselves (at least in the US) express doubts about their ability to adapt to future developments .

While most debates around the future of education focus on the skills needed for the future and the imperative of reskilling , it is equally important to discuss the inevitable structural transformations of higher education.

Have you read?

We need an education revolution – and it starts in your local community, is online learning the future of education, these countries could be the world's new education superstars.

There are at least four – and arguably many more – major developments that in their interconnectedness structurally challenge the current higher education model.

We need to continually learn and update our skills in order to stay relevant. Work in the digital economy will, not surprisingly, consist increasingly of knowledge work. More jobs will require substantial interaction with technology, shaped by technological disruption, labour automation and more flexible and fluid employment. The outdated industrial-age mindset where people received an education early in life to be ready for a lifetime of work no longer reflects the individualized and unexpected trajectories of modern careers.

The idea of life-long learning is nothing new. But in a world that has become much more non-linear, the conditions for lifelong learning have changed significantly since the concept was first introduced. The need for lifelong learning to enable individuals to access learning opportunities – in different ways, for different purposes and at various career stages – has never been greater. We need to build education models that reflect this change and a culture that promotes it.

Like any other business sector, the changing demands of consumers (in this case, students and life-long learners) drive change in the education sector. Student demographics are changing, while learners who would previously be considered ‘non-traditional’ are becoming the new norm. As a result, there are new expectations for seamless higher education and life-long learning experiences that fit different lifestyles, individual circumstances and preferences.

Younger generations entering higher education have a completely different point of departure than previous generations. As digital natives, they have always had technology fully integrated into most aspects of their lives, so why would they expect anything else when it comes to their educational experience?

One-size-fits-all in education will soon be a thing of the past and individual learning paths will arguably be less defined by traditional educational structures. Consequently, students increasingly adopt a consumer’s mindset and shop for flexible, seamless and personalized educational experiences. They look at an increasingly diverse array of education providers to fulfill their demands and will exercise choice by going elsewhere if their expectations are not met – as is the case in most aspects of their lives.

Even though the pace of change in the education sector is generally slower than in other more profit-driven sectors, business model innovation is becoming ever more prevalent thanks to digital transformation. As such, the education landscape is bound to change significantly in the next decades as new actors shake up conventional higher education and life-long learning models.

Fast-growing innovators in educational technologies and education industry outsiders are already challenging the status quo by structurally undermining the long-established business models of higher education. These new actors use technology and data to introduce new, alternative approaches that better deliver on the evolving expectations of learners. Imagine tech giants such as Google, Microsoft, or Amazon offering inexpensive, personalized, AI-driven education, maybe on a flexible “ Netflix for education ” style scheme.

This will inevitably test the agility and adaptability of established players and their long-prevailing business models. In response, more and more universities are experimenting with changes to their business models, but the future higher education landscape will almost certainly include disruptive new entrants , competing and collaborating with the traditional actors – maybe with a redefined role for traditional institutions altogether.

While the degree still rules, by and large, we are slowly moving towards a reality with more focus on acquiring skills not degrees. Conventional thinking tells us that the surest route to success in professional life lies at the end of a higher education degree and, not surprisingly, that holding a degree correlates with improved chances of employment as well as higher income .

However, the value of degrees is being questioned more than ever before and not just in places where students face high tuition fees and life-long debt, but also in education systems where university is “free” (the opportunity cost of spending several years on study are worth the next 60 years in a career that will likely constantly change over time). Whether traditional higher education is still the best way to provide people with the skills needed to compete in unpredictable job markets is debatable.

For most companies, degrees continue to function as a signalling device that vouches for a potential employee’s abilities. But research shows that education level is only weakly correlated with job performance and, in fact, more and more companies, including prominent ones such as Google, Apple, Penguin Random House, Ernst & Young UK and IBM, are actively shifting focus away from degrees to new ways of measuring employability as a consequence of the changing nature of work.

Higher education today finds itself in a society in flux and it is becoming increasingly difficult for “education incumbents” to keep up.

Almost everything developed for the 20th-century workforce is being dismantled and reconstructed; higher education is no exception. Universities must reevaluate their roles now and what they could grow to be in the future. We will have to acknowledge that the educational systems and pathways of the future will be better served by alternative, innovative models that do not necessarily add up to four or five years, and that likely involve new actors – however uncomfortable this first makes us feel.

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Five trends to watch in the edtech industry

Over the past couple of years, we’ve seen rapid growth in the education-to-employment segment of the edtech sector that serves adult learners. Valuations for these education-to-employment edtech firms have had a roller-coaster ride, as existing companies attract a huge influx of capital, thousands of new players enter the field, and investors question what scalable and profitable business models look like in the space. There are now dozens of edtech “unicorn” start-ups with valuations of more than $1 billion.

Here are five things we see happening in edtech that sector players may want to consider as they plan their next moves:

1. Capital inflows are higher than ever

Thanks to rapid technological change and enterprise digitization, many companies are looking to continuously upskill their workforce. At the same time, broadband access has become more affordable, and distance-education technologies have become more advanced. These developments have helped the edtech sector boom; venture capitalists (VCs) invested $20.8 billion in the edtech sector globally in 2021. 1 “Global EdTech venture capital report - full year 2021,” HolonIQ, January 2, 2022. That’s more than 40 times the amount they invested in 2010.

While public valuations have recently cooled, private companies are still raising capital at double-digit revenue multiples. VCs continue to flock to edtech because professors, administrators, students, and employees have grown more comfortable with education technology during the pandemic. We believe these habits are here to stay and that online education is becoming the new normal.

2. Edtech players are merging and partnering to achieve scale and efficiency

Edtech companies want the lifetime value of their customers to exceed the cost of acquiring them. Financial statements show that sales and marketing costs at several of the largest edtech firms have ranged from 20 to 60 percent of revenue in recent years. 2 From the 10-K filings of 2U, Coursera, and Grand Canyon Education.

As they seek sustainable ways to drive down the industry-wide problem with high customer acquisition costs (CAC), some edtech firms are turning to M&A in hopes of reaching economies of scale. In June 2021, 2U announced an $800 million acquisition of edX, a nonprofit run by Harvard and MIT. This acquisition gives 2U access to a strong customer-facing brand, approximately 40 million registered users, and hundreds of university partners. These assets give 2U a significant presence in growth markets outside the United States and could help reduce CAC while it builds out its free-to-degree model.

There have been other recent major mergers and acquisitions in the edtech sector. For example, Anthology and Blackboard agreed to a $3 billion merger. All these mergers and acquisitions have been enabled by plentiful capital. But once companies have signed the contract, they face the challenge of integrating their respective operations to realize the promised benefits.

3. Large firms view employee reskilling and upskilling as a necessity

With a near-record number of US jobs going begging, thanks to a tight labor market, attracting and retaining talent has become a core challenge for many firms. Large employers like Amazon, Walmart, Target, and Google have announced major investments in workforce education and development programs to decrease churn and fill talent gaps. Some, like Walmart, are dovetailing these programs into their diversity, equity, and inclusion (DEI) initiatives. 3 Patti Constantakis, “Walmart.org Center for Racial Equity update: Creating career pathways through education,” Walmart, October 21, 2021.

To meet the demand for upskilling and reskilling, online-education companies are expanding and emphasizing their enterprise offerings. Among the 15 adult-education companies that received the most funding in 2021, all but one have an enterprise offering (Exhibit 1). Even companies like Coursera, which initially focused on consumers, have drama­tically increased their revenues from enterprise clients in recent years.

To succeed in the enterprise space, edtech firms could offer features such as comprehensive workforce analytics that appeal to both HR departments and employees. For instance, apps could identify skill gaps in the workforce, offer educational content to fill those gaps, and provide coaching and career navigation services to match newly upskilled graduates with positions where they can add the most value.

4. India becomes a leader in the edtech race with global aspirations

In 2010, the United States attracted nearly three-quarters of global edtech VC funding. A decade later, investors turned their attention to India (Exhibit 2).

With increasing regulatory headwinds buffeting the Chinese edtech industry, prominent edtech players—including Udacity, Coursera, and edX—have turned their investment focus to the enormous Indian market. While the Chinese market accounted for 63 percent of edtech funding in 2020, that dropped to less than 13 percent in 2021. In India, edtech funding has grown from $0.2 billion five years ago to $3.8 billion and 18 percent of global investments in 2021. Since English is widely spoken in India, international edtech firms may be able to achieve rapid success there even without translating much of their content.

At the same time, locally grown Indian edtech players like Emeritus have reached billion-dollar valuations and begun acquiring companies in the US market.

To thrive amid global competition, edtech firms can tailor a growth strategy for each target country while protecting their home market.

5. Edtech leaders are focusing on supporting career progression

In 2021, McKinsey surveyed more than 3,500 edtech students. We found that many were motivated by the prospect of jumpstarting their careers and were seeking a sense of community.

New modalities, such as virtual and augmented realities, web3, AI, and machine learning, are making their way into education. However, our findings suggest that edtech providers cannot rely too heavily on technology and content. Learners want value-added services such as personalized mentoring, preparation for interviews, and support in getting a job.

To deliver more holistic user experiences, some edtech players are building their internal capabilities and making acquisitions. In India, for example, upGrad acquired a recruiting and staffing agency to help its students advance in their careers. In the United States, On Deck built a business model to give students access to a community rather than sell them courses. Arizona State University offers free counseling, mentoring, and crisis intervention support to online- and hybrid-learning students.

Despite a dip in 2019, global investments in edtech have registered an average 45 percent CAGR for the past five years and still grew 30 percent from 2020 to 2021. It’s an exciting sector to be in, but players may want to keep a close eye on how it develops.

Saurabh Sanghvi is a partner in McKinsey’s Bay Area office, and Marius Westhoff is a consultant in the New Jersey office.

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Emerging online educational models and the transformation of traditional universities

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The information and communications technology (ICT) led revolution in the last two decades has transformed a large number of traditional businesses. The impact has been more significant in industries dominated by information goods such as music, software, and newspapers. Higher education sector is information-centric and its digitization is inevitable. The new generation of the Internet-based educational business models have emerged and they have already started evolving to make electronic learning (eLeraning) as effective and efficient as electronic commerce (eCommerce) has become in retailing. Drawing on information goods theory in economics, online retailers and marketplaces literature in information systems, and contemporary research on eLearning, this paper classifies and analyses the emerging educational business models into online education marketplaces (OEM), online education providers (OEP), and online education services (OES) and also provides a roadmap for the transformation of traditional universities.

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Pathak, B.K. Emerging online educational models and the transformation of traditional universities. Electron Markets 26 , 315–321 (2016). https://doi.org/10.1007/s12525-016-0223-4

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Edtech Business Models: Key Insights Explored

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Are you curious about the driving force behind the rapid growth of the education technology industry? Look no further! Here we will uncover the key insights that have transformed the landscape of education. 

As technology continues to shape the way we learn, Edtech Business Models have emerged as a pivotal aspect of the sector. From upsurging interest in Edtech to the latest trends affecting the industry, we will cover it all. 

Get ready to discuss the success stories of well-established education startups and the innovative approaches of industry giants like Duolingo, Khan Academy, Masterclass, Udacity, and Udemy. 

Let’s embark on a journey of discovery into the world of Edtech Business Models!

What Is an Edtech Business Model?

An Edtech Business Model refers to the strategic framework that outlines how an education technology company generates revenue and sustains its operations. It encompasses various elements, such as target audience, product offerings, revenue streams, and distribution channels. 

Edtech startups often adopt different business models, including freemium, subscription-based, marketplace, and sponsored models, to cater to the diverse needs of learners, educators, and institutions. 

These models are designed to optimize the delivery of educational content, leverage technology to enhance learning experiences, and create a sustainable and profitable venture within the fast-evolving landscape of education technology.

What Makes EdTech a Profitable Business Model?

The EdTech revolution has reshaped the educational landscape, leveraging technology to enhance learning experiences. This dynamic sector offers a plethora of educational apps and solutions for kids and organizations, making it a highly lucrative business model.

Look at the following image to analyze some edtech stats that prove it’s accelerated growth –

1. Impressive Market Potential

With the global education technology market valued at USD 89.49 billion in 2020 and projected to grow at a CAGR of 19.9% from 2021 to 2028, EdTech’s growth potential is undeniable.

You can understand the market potential of ed-tech startups by having a look at the following graph –

2. Resilience Amidst Challenges

Even amidst the COVID-19 pandemic, EdTech has demonstrated remarkable resilience, cementing its status as a future-proof investment.

3. Entrepreneurial Opportunities

EdTech is a magnet for entrepreneurs seeking to fund and develop innovative ideas, driving advancements in 21st-century education.

4. Strategic Considerations

Success in EdTech hinges on carefully evaluating business models and embracing cutting-edge technologies like AI, ML, AR/VR, and robotics.

5. Compelling Portfolios

For investors, a robust portfolio of educational app development services is a crucial indicator of a startup’s potential.

6. Targeting Sub-Verticals

By tailoring solutions to specific educational sub-verticals, EdTech startups can gain a competitive edge and cater to unique demands.

As EdTech continues to shape the future of education, strategic vision, innovation, and a customer-centric approach are key to thriving in this dynamic and promising industry.

What Trends Are Affecting The Edtech Industry?

The EdTech industry is experiencing a transformational wave driven by technological advancements and changing user preferences. Here we have highlighted the key trends that are shaping the future of education technology. 

By looking at the image below, you can have a better understanding of the key trends –

1. Global Internet Penetration

With approximately 62% of the world population having internet access, digital learning is becoming borderless. As the total number of internet users is projected to reach 6 billion by 2022 and 7.5 billion by 2030, Edtech Solutions has an extensive global reach. Remote accessibility of learning material and self-paced classes is becoming commonplace, providing personalized and inclusive education opportunities.

2. Data-Driven Decisions

The adoption of digital textbooks and AI-driven analytics is transforming the way educational content is delivered. Big Data, machine learning, and predictive analytics enable personalized learning experiences, allowing educators to focus on teaching while technology takes care of individual needs.

3. Virtual Reality

Immersive learning through Virtual Reality (VR) is revolutionizing education. VR simulations and AI-driven experiences provide students with practical and engaging learning opportunities. Startups like Labster and Interplay Learning are leveraging VR to create virtual laboratories and skill training programs.

4. Augmented Reality

Augmented Reality (AR) is gaining popularity due to its smartphone compatibility. AR apps like BBC Civilisations and educational tools like Pokémon Go enhance learning experiences by blending virtual elements with the real world.

5. Conversational AI

Conversational AI, powered by voice-enabled devices, is making its way into the education industry. Companies like Cognii offer conversational AI products to improve critical thinking and learning for K-12 students and corporate professionals.

6. Adaptive Learning

Adaptive learning algorithms are tailoring education to individual student needs. Startups like Quizlet and Querium use AI to identify students’ requirements and customize the learning experience. Although some attempts at hyper-personalized learning have faced challenges, investors remain confident in its potential.

7. Robotics

Robotics is making strides in education management. Startups like Roybi and Robotify use machine learning to customize STEM education for young children. Robotics-based educational tools enhance interactive learning and cater to diverse learning styles.

8. Blockchain

Blockchain’s decentralized nature offers opportunities to upgrade education infrastructure and secure student records. Platforms like Blockerts and ODEM facilitate certificate issuance, verification, and connection between students and teachers through smart contracts.

9. Game-Based Learning

Gamification is gaining traction in online learning systems, engaging students through interactive and enjoyable experiences. Projects like “Minecraft: Education Edition” exemplify the success of using games for educational purposes.

These trends collectively redefine education and create new avenues for entrepreneurs in the EdTech sector. Embracing technology-driven innovations can lead to successful entry and growth in this thriving industry.

What Are the Top 5 Target Markets in the EdTech Industry?

The success of an EdTech start-up heavily relies on identifying and understanding the right target markets. With a diverse range of audiences, catering to their specific needs is crucial. Let’s elucidate on the top five target markets in the EdTech industry –

1. K-12 Education

This market encompasses students, teachers, parents, and educational institutions from pre-K to 12th grade. Interactive and personalized learning experiences are crucial in this segment, with EdTech companies leveraging technology and data analytics to enhance teaching and student progress tracking.

2. Higher Education

Comprising undergraduate and graduate students, as well as working professionals seeking further education, this market demands flexible online learning platforms like MOOCs, virtual classrooms, and Learning Management Systems. EdTech companies must continuously adapt to the evolving needs of higher education learners.

3. Professional Development

Working professionals seeking skill enhancement and career advancement represent this market. They look for convenient and flexible learning solutions, often delivered online, to improve their expertise. The professional development segment offers significant growth potential for EdTech start-ups.

4. Corporate Training

This market focuses on providing Learning and Development opportunities to employees within organizations. EdTech companies cater to businesses of all sizes, delivering scalable and effective training solutions to enhance employee productivity and job satisfaction.

5. Language Learning

Catering to individuals interested in learning a new language, this market includes language apps, online courses, tutoring services, and language exchange platforms. EdTech companies play a vital role in meeting the demands of language learners in today’s globalized world.

EdTech entrepreneurs can develop innovative solutions that resonate with their audience, paving the way for success in this dynamic industry by recognizing and addressing the unique needs of these target markets.

What Are the Top 6 Business Models in the EdTech Industry?

Selecting the appropriate business model is essential for the success of any EdTech start-up. We will explore the most widely-used business models in the EdTech sector, examining their advantages, drawbacks, and real-world examples, including SaaS business model examples.

1. Freemium Model

The Freemium Model involves offering a basic version of an educational product or service for free while charging users for access to premium features or advanced functionalities. This approach allows users to experience the product before committing to paid options, attracting a broader user base.

• Attracts a large user base by offering free entry.
• Enables users to test the product’s value before purchasing.
• Generates a recurring revenue stream from premium upgrades.
• Converting free users to paying customers can be challenging.
• Requires significant investment in customer acquisition to sustain growth.
• Quality differences between the free and premium versions may lead to user dissatisfaction.

2. Subscription Model

The Subscription Model entails users paying a regular fee, either monthly or annually, to access the educational product or service. This approach fosters predictable revenue streams, encourages customer loyalty, and allows continuous product improvement.

• Provides a predictable revenue stream with ongoing subscriptions.
• Offers scalability and growth potential for the business.
• Facilitates continuous improvement and updates to meet subscribers’ needs.
• Acquiring and retaining subscribers can be challenging without unique or high-quality content.
• Some potential customers may be deterred by subscription pricing.
• Faces competition from free or low-cost alternatives in the market.

3. Marketplace Model

The Marketplace Model involves creating a platform that connects educators or content creators with students or learners. This platform facilitates the buying and selling of educational content, resources, or services.

• Provides a scalable business model with relatively low overhead costs.
• Generates revenue through commissions or transaction fees.
• Offers a diverse range of educational content and services to users.
• Quality variations in educational content depend on individual sellers.
• Competes with other marketplaces for both buyers and sellers.
• Requires managing disputes or issues between buyers and sellers.

4. Partnership Model

The Partnership Model involves forming strategic alliances with other companies or organizations to offer educational content or services. Partnerships can expand market reach and leverage each other’s expertise and resources.

• Provides access to new customer segments and markets.
• Allows the company to leverage the partner’s expertise and resources.
• Enhances brand recognition and credibility through partnerships.
• Establishing and maintaining partnerships may require significant time and resources.
• Limited control over the quality and delivery of the product or service offered through partnerships.
• Potential competition with the partner organization for market share.

5. Sponsorship and Grants

The Sponsorship and Grants Model involves receiving financial support from sponsors or grant-giving organizations to deliver educational content or services. This funding allows the company to focus on content quality without immediate revenue generation.

• Provides significant funding without relying on customer revenue.
• Increases visibility and reach through association with sponsoring organizations.
• Allows a focus on educational content impact and quality.
• May encounter restrictions from sponsors, limiting innovation and evolution.
• Faces competition for limited grant funding from other organizations.
• Requires demonstrating a certain level of impact or outcomes to maintain funding.

6. Ad-Based Model

The Ad-Based Model offers educational products or services for free to users while generating revenue through advertising. This model lowers barriers for users and aims to monetize the product through targeted advertisements.

• Provides a low barrier to entry for users who may be hesitant to pay for educational content.
• Can generate significant revenue through targeted advertising.
• Enables offering a high-quality product or service to users for free.
• Advertisements may distract or annoy users, leading to a poorer user experience.
• The quality of the content may be impacted by the need to prioritize advertising revenue.
• Ad-based revenue can be unpredictable and fluctuate based on market conditions.

By understanding the strengths and weaknesses of each business model and aligning them with their target market, EdTech entrepreneurs can create sustainable and successful ventures in this ever-evolving industry.

How Can You Create a Successful EdTech Startup Business Model?

In the wake of the global COVID-19 pandemic, EdTech has gained immense popularity, revolutionizing traditional education with enhanced pedagogy and learning experiences. 

The following graph illustrates how global education technology expenditure will be growing in the upcoming years –

EdTech’s target audience extends beyond the education sector to include employees in large organizations seeking corporate learning solutions. To create a successful EdTech business model, follow these key steps:

1. Understand Your User Base

Gain a clear understanding that while kids or employees will be using the app, parents or organizations will be making the decision to invest in your product. Tailor your offering to address their needs and concerns effectively.

2. Identify Current Issues

Engage with potential clients, conduct thorough research, and identify existing loopholes or shortcomings in the current education system. Gather feedback on desired features and functionalities to create a user persona that caters to your customers’ needs.

3. Build a Minimum Viable Product (MVP)

Before launching a fully-fledged application or solution, develop an MVP with essential features and unique selling points. Share the MVP with prospective clients to gauge their reactions and gather valuable insights to refine and improve your offering.

You can lay a strong foundation for your EdTech startup and increase the likelihood of success in this rapidly growing industry by following these steps.

What Are the 5 Popular EdTech Companies And Their Business Models?

Several prominent EdTech companies have disrupted the education landscape with innovative business models that cater to diverse learning needs. Let’s learn about some of these leading players and their successful approaches:

1. Duolingo

Duolingo, a language learning platform, adopts the freemium business model. It offers a basic version of its app for free, providing users with language lessons and practice exercises. To access advanced features and remove ads, users can opt for a premium subscription called Duolingo Plus. The freemium model attracts a vast user base and generates revenue from premium subscriptions.

2. Khan Academy

Khan Academy operates on a nonprofit model, offering free educational resources and instructional videos across various subjects. Founded with a mission to provide a world-class education for anyone, anywhere, Khan Academy relies on donations, grants, and support from philanthropic organizations to sustain its operations.

3. MasterClass

MasterClass follows the subscription-based business model. It offers a premium subscription that grants users access to a vast library of online courses taught by celebrity instructors in various fields. The subscription-based approach allows MasterClass to generate recurring revenue while providing subscribers with exclusive and high-quality content.

Udacity offers a unique business model focusing on upskilling and career advancement. It partners with companies to offer nano degree programs that prepare learners for specific job roles in tech industries. Students pay for these programs, and Udacity collaborates with partner companies to ensure course content aligns with industry demands, increasing employment opportunities for graduates.

Udemy operates as a marketplace business model, providing a platform for instructors to create and sell online courses. Instructors set the course prices, and Udemy takes a commission for every sale. This model allows Udemy to offer a wide range of courses, catering to various subjects and interests while empowering instructors to monetize their expertise.

These EdTech companies showcase the diversity of business models available in the industry. From freemium and subscription-based models to nonprofit initiatives and marketplace approaches, each organization has found success in addressing the evolving demands of learners worldwide.

Wrapping Up

The EdTech industry is witnessing a transformative era, revolutionizing education for learners of all ages. With innovative business models and a diverse range of offerings, EdTech companies like Duolingo, Khan Academy, MasterClass, Udacity, and Udemy have reshaped the learning landscape.

Embracing technology-driven solutions, they cater to global audiences, making education more accessible, personalized, and engaging. As the demand for digital learning continues to soar, EdTech’s future holds immense potential for empowering minds and shaping a brighter tomorrow.

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The future of management education: Re-thinking business models

A business model describes how an organization creates, distributes, and captures value in a profitable manner. The model should cover the four main areas of a business: customers, suppliers, infrastructure, and economic viability (Osterwalder & Pigneur, 2010).

According to Gassmann et al. (2014), the business model is a kind of blueprint of a strategy that will be applied in the structures, processes, and systems of a company. It describes a company current activity. The model consists of four dimensions, presented in what they called “a magic triangle”:

• The customer
• The value proposition
• The value chain
• The profit mechanism

The aim of the triangle according to the authors is to have a clear notion about who are our target customers, what do we offer to our customers, how do we produce our offering and why does it generate profit. Gassmann et al. (2014) suggests that an adjustment at one corner (for example, optimizing revenue generation) automatically necessitates adjusting the other two corners. Also, innovation of a business model requires modifying at least two of these four dimensions.

Business schools also have a business model and like the rest of the industries in the economy, the management education sector is facing major challenges. Some of these challenges come from external aspects such as the increase relevance of rankings and accreditations and the considerable decrease in public funding, and internal issues such as the continuous debate on rigor vs. relevance in research and undoubtedly the digital revolution (Kaplan, 2018).

For business schools the technologies available from the digital revolution to influence how to create, deliver, and capture value are varied. New developments in ICT bring new facets to learning and specially e-learning every day. The ones that are considered most relevant are augmented reality, big data, blockchain, mobile learning and artificial intelligence (AI). We will focus on the first four on this post and leave AI for our next contribution. Its relevance in personalized learning warrants its own post.

Augmented reality

According to Hamzah et al. (2021), the term augmented reality refers to “technology that enhances the user’s sensory experience of the real world with a layer of computer-assisted contextual knowledge” (p. 50). These are environments where physical and digital objects coexist. The distinction regarding virtual reality technology is that it completely replaces the real world with a synonymous environment, while augmented reality provides the context of the user with virtual knowledge. Augmented reality allows the superposition of a layer of virtual knowledge on real elements to improve the understanding of reality by the user. That is, while virtual reality provides constructed reality, augmented reality provides an enhanced view of a real image. In the context of training, augmented reality allows, among other things, to increase learning engagement.

The global augmented reality (AR) and virtual reality (VR) market was forecast to reach US $ 18.8 billion by 2020. This represented an increase of more than 78 percent over the last year’s expense. As figure 1 shows, the size of the global extended reality (XR) market is expected to reach approximately US $ 300 billion by 2024. Experts point out that in the future this technology will be as prominent as mobile devices in the current market (IDC & Statista, 2020).

For the experts of the industry of extended reality (XR), the prognosis is that the sector of healthcare and medical devices will be where the biggest irruption of the immersive technologies will take place during the next 12 months. The second place is occupied by the education sector, mentioned by 28 percent of the respondents (see figure 2).

According to Quero (2020), the Big Data concept refers to the management of large volumes of data carried out by companies and public bodies. The data can be of three types:

• Unstructured
• Semi-structured

Big Data refers to the management of large volumes of data carried out by companies and public bodies. The data can be of three types:

• It is data that has some type of structure, such as that obtained from databases.
• Those that lack any structure, such as emails, text files, or photo or video files.
• Semi-structured. It is data that combines characteristics of the structured and unstructured. Examples of them would be documents that are in CSV, XML, JSON format, or those from systems such as electronic data interchange (EDI).

Big Data is based on 3V principles: volume, speed, and variety. Volume, that is, the amount of data generated; velocity suggests the speed with which data is collected and processed; and variety refers to structured, unstructured, and semi-structured data formats (Bagde et al., 2021).

Even though emerging technologies such as artificial intelligence, machine learning and Big Data will further increase the influence of technologies in education in the coming years, the education sector is lagging other industries in what regarding the adoption of Big Data technology. As can be seen in figure 3, by 2019 only 17 percent of the organizations in the sector were implementing it; however, 74 percent indicated that they could use it in the future, while 9 percent indicated that they have no plans to use this technology. This data contrasts with what happens in the services industry, in which around 63 percent of those surveyed said that their organization was currently using Big Data technology in 2019.

Big Data takes on special relevance in the analysis of learning and the possibility of understanding and optimizing its results. In e-learning, the analysis of the results of the teaching process is advancing with the progress of Machine Learning algorithms and Big Data techniques. Learning Management Systems allow managing learning analysis through key performance indicators and thus predicting student performance (Souabi et al., 2021). This positive correlation between a student’s grades and their use of the LMS was demonstrated in a study at the University of Maryland Baltimore County (UMBC). The study found that students who scored less than a C continuously demonstrated 40 percent less LMS use compared to students who scored a C or better (Hanover Research, 2016).

Two other examples related to the potential that learning analytics can have to help educational institutions in their decision-making process and in the design of institutional strategies are Syracuse University and Saint Louis University. In the first, learning analysis was used in its student advisory programs (Grush, 2018), and in the second, Big Data was used to make calculated decisions regarding its scope in enrolment (Selingo, 2017).

Blockchain is a technology that guarantees the ownership of a digital asset. It allows the exchange between people without intermediaries, reducing costs, guaranteeing the immutability of the digital asset, and ensuring its traceability. It is a set of databases distributed in different geographical spaces that store blocks of information. This enables public peer accounting based on the impossibility of modifying or reviewing the information once it has been registered.

PwC defines blockchain as a decentralized ledger of all transactions through a peer-to-peer network. With this technology, participants can confirm transactions without the need for a central clearing authority (PWC, 2018). The technology was introduced as a result of its link to the Bitcoin currency and is commonly associated with cryptocurrencies, although it is currently being adopted on an increasing scale in the industry and is gaining popularity (Bartolomé Pina, 2020; Stoica et al., 2020).

According to Altinay et al. (2020), the blockchain could become a new platform for school management. Its application in record storage, learning identity verification, information security, and content protection represent the potential value that blockchain could have in education. Many States of the European Union have launched initiatives to implement blockchain technology, especially in the governmental area. From the perspective of the education sector, most blockchain applications are related to the management of graduation certificates and diplomas, especially for higher education (Stoica et al., 2020). It is also used in massive open online courses (MOOCs) and portfolios to verify skills and knowledge. Blockchain technology systems (Distributed Ledger Technology) will respond to the authentication, scale and cost problems of e-learning agencies (Bagde et al., 2021).

The projection of global spending on blockchain solutions in 2021 reaches 6.6 billion dollars (see figure 4). Forecasts suggest that spending on blockchain solutions will continue to grow in the coming years, reaching nearly US $19 billion by 2024.

Figure 5 shows how in 2020 the banking industry had a market share of nearly 30 percent of global blockchain market revenue, while process manufacturing accounted for 11.4 percent of global spending. In general, global spending on blockchain solutions will continue to grow in the coming years and “other sectors”, in which the education sector would enter, already represent more than a third of the market share.

Mobile Learning

Mobile learning is described as e-learning, regardless of location in time and space. The new learning model moves the learning process away from the physical classroom and from direct interaction with the trainer, whose role becomes that of supervisor and monitor of the learning process, clarifying doubts and guiding students towards resources that they could use successfully outside the classroom (Istrate, 2019).

Greany (2018) found that one of the distinguishing characteristics of the modern student is that they learn as needed, wherever and whenever. 56% do it on demand, 48% at nights and weekends, 41% at their workplaces, 30% during breaks or lunchtime, and 28% on the way to or from the place of work. 96% turn to their mobile phones (cell phones) to do searches when they need it and check their mobiles about ten times an hour. It seems clear that the accessibility of mobile learning and its portability conforms to the habitual behaviour and lifestyle of the modern student and therefore it will continue to be one of the most popular channels for e-learning.

According to Gupta et al. (2021), mobile learning has evolved as a powerful component of education. Mobile learning helps impart knowledge focused on learner accessibility, needs, infrastructure, and interaction, regardless of time or location. The development and launch of innovative applications (Apps) and services for mobile learning and online learning grows exponentially and does so hand in hand with the incredible advances in information and communication technologies (ICT). For students of all levels, mobile learning has become the preferred learning and access to knowledge format.

In summary, the success of business schools in creating, delivering, and capturing value will depend, among other things, on how they incorporate into their business model these disruptive technologies:

• Augmented reality and its potential in immersive teaching.
• The use of Big Data in learning analysis and its importance to understand and optimize learning outcomes.
• Blockchain and its application in the storage of records, verification of learning identity, information security and content protection, in addition to the ability to allow the student to manage personal learning itineraries.
• Mobile learning , which helps to impart knowledge focused on accessibility, needs, infrastructure and student interaction, regardless of time or place.

Dr. Luis Toro Dupouy is Professor and Head of Academic Programs at OBS Business School (Spain). See also his articles, “ New trends in online learning: the impact of disruptive technologies ” and “ E-learning trends: traditional schools vs digital schools “.

References:

Altinay, F., Beyatli, Ö., Dagli, G., & Altinay, Z. (2020). The Role of Edmodo Model for Professional Development: The Uses of Blockchain in School Management. International Journal of Emerging Technologies in Learning, 15(12), 256–270. https://doi-org.proxy18.noblenet.org/10.3991/ijet.v15i12.13571

Bagde, P., Bobde, A., & Bagde, L. P. (2021). Information and Communication Technology (ICT) enabled Higher Education: Current Trends and Challenges. Ilkogretim Online, 20(1).

Bartolomé Pina, A. (2020). Cambiando el futuro: “blockchain” y Educación. Pixel-Bit, Revista de Medios y Educacion, 59, 241–258. https://doi-org.proxy18.noblenet . org/10.12795/pixelbit.82546

BCG (February 18, 2021). Augmented reality (AR) and virtual reality (VR) market size worldwide from 2016 to 2020 (in billion U.S. dollars) [Graph]. In Statista. Retrieved July 27, 2021, from https://www.statista.com/statistics/591181/globalaugmented-virtual-reality-market-size/

Gassmann, O., Frankenberger, K., & Csik, M. (2014). The business model navigator: 55 models that will revolutionise your business. Pearson UK.

Greany, K. (2018, August 15). Profile of a modern learner. Elucidat

Grush, M. (2018, August 13). Data analytics and student advising: Creating a culture shift on campus. CampusTechnology.

Gupta, Y., Khan, F., & Agarwal, S. (2021). Exploring Factors Influencing Mobile Learning in Higher Education – A Systematic Review. International Journal Of Interactive Mobile Technologies (IJIM), 15(12), pp. 140-157. doi: http://dx.doi.org/10.3991/ijim.v15i12.22503

Hamzah, M., Ambiyar, A., Rizal, F., Simatupang, W., Irfan, D., & Refdinal, R. (2021). Development of Augmented Reality Application for Learning Computer Network Device. International Journal Of Interactive Mobile Technologies (IJIM), 15(12), pp. 47-64. doi: http://dx.doi.org/10.3991/ijim.v15i12.21993

Hanover Research (2016, November). Learning Analytics for Tracking Student Progress.

IDC & Statista. (November 17, 2020). Augmented and virtual reality (AR/VR) forecast spending worldwide in 2020 (in billion U.S. dollars), by segment [Graph]. In Statista. Retrieved July 27, 2021, from https://www.statista.com/statistics/737615/ar-vr-spending-worldwide-by-segment/

ISTRATE, A. M. (2019). The Impact of the Virtual Assistant (VA) on Language Classes. ELearning & Software for Education, 1, 296–301. https://doi-org.proxy18 . noblenet.org/10.12753/2066-026X-19-040

Kaplan, A. (2018). A school is “a building that has four walls…with tomorrow inside”: Toward the reinvention of the business school. Business Horizons, 61(4), 599–608. https://doi-org.proxy18.noblenet.org/10.1016/j.bushor.2018.03.010

Osterwalder, A., & Pigneur, Y. (2010). Business model generation: a handbook for visionaries, game changers, and challengers (Vol. 1). John Wiley & Sons.

Perkins Coie (March 30, 2020). Sectors expected to witness the most disruption by immersive technologies over the next 12 months according to XR/AR/VR/MR industry experts in the United States in 2020 [Graph]. In Statista. Retrieved July 27, 2021, from https://www.statista.com/statistics/1185060/sectors-disruptedimmersive-technology-xr-ar-vr-mr/

Quero, O. (2020, septiembre). Huge Data: la gestión masiva de datos. OBS Business School.

Selingo, J. (2017, April 11). How colleges use big data to target the students they want. The Atlantic

Souabi, S., Retbi, A., Idrissi, M., & Bennani, S. (2021). Towards an Evolution of E-Learning Recommendation Systems: From 2000 to Nowadays. International Journal of Emerging Technologies in Learning (IJET), 16(06), pp. 286-298. doi: http://dx.doi.org/10.3991/ijet.v16i06.18159

Stoica, M., Mircea, M., & Ghilic-Micu, B. (2020). Using Blockchain Technology in Smart University. ELearning & Software for Education, 3, 134–141. https://doi-org . proxy18.noblenet.org/10.12753/2066-026X-20-187

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Business Models Education Entrepreneurs are Exploring

For some strange reasons education is not considered entrepreneurial by nature, but in fact it is a humongous industry scaling between other sectors of business.

Given a little less importance than deserved, just like education the business model in education on which it is being operated plays a significant role in the success stories of an education enterprise.     

As said by Mr. Ravi Shankar Prasad, IT Minister “ Healthcare, Education and agriculture are three priority areas in terms of technology, where the government can provide long term benefits to people of India .”

For edupreneurs who are constantly working to mark a place in the industry, the business model turns out to be the backbone irrespective whether you are approaching for your next round of funds or some potential clientele.

In an institutional scale a business model describes the way an organization defines itself. It is not only an earning model: describing the earnings versus the costs, determining the net income of the organization. The business model also contains collaborations, essential activities and processes and core competencies. By defining the organization in this way shows clearly what the organization sees as its raison d’être, its competitive position in regard to other institutions and organizations.

A canvas of business model in education is painted by various colors such as key activities, value proposition, customers’ relationships, customers, revenue, channels, key resources, cost, key partners and more. Indeed, “ There is no substitute for a great product .” But without the right business model in education “the great product” may end up losing its worth.

Following are some business models that you would like to explore depending upon the nature of your product being offered.

Check’em out below:

This education business plan requires the company to offer a “Freemium” model for teachers, students and parents is the best way to maximize sales. Under this scheme, you have to provide your customer with amazing few free features of your product and premium version of your product is paid with even better features that make them shed a little weight from their pocket. The content must be of upmost quality with better material being provided for money.    

Institutional

This is the more traditional business model in education. The selling to schools is done through district leaders. The sales strategy is generally referred as “top-down,” meaning a district makes a purchase for all the schools under its administration. The main advantage of an institutional business model is that districts are positioned to sign large contracts. This is the best approach for edtech companies that need to integrate into school- or district-wide data systems, or whose users are going to be school administrators.

A less common, but quite interesting business model in education is one where neither schools nor parents pay. Instead corporate or foundation sponsors pay for product placement, usually as part of a corporate social responsibility (CSR) initiative. The advantage of this model is that the sponsor will care mostly about usage, which is likely to be quite high if you’re offering a quality, free product to schools.

The consumer approach is an emerging business model that allows schools to use a product for free, and then charges families if they want to continue usage at home. This model is suited to companies with products that kids can use on their own. Schools, in this case, essentially become lead generation for consumer adoption.

With this model, it is important to create a “product loop” between school and home, where teachers use the product with kids in school and then also recommend to parents that students continue using the product at home. The advantage of this model is that schools love free (quality) products, which can drive user adoption, and parents tend to listen to teachers’ recommendations for what tools to use at home. The adoption is highly seen in the edtech tools for the toddlers or the kindergarten level.

Growth with Aim to Monetize

This is one of the most common model being used by the edtech startup. Free services are being offered to sustain the user base with aim to monetize in the future. One big drawback of this model is meeting the high expectations they set for the VCs when it comes to monetization of the same. n edtech K-12, this very selective league includes a small number of companies  

Boots on the Ground

This model is highly expensive and slow but does bring some real results. Companies like MasteryConnect and BrightBytes have been able to mark a place with working on the same model.

The strategy is to pitch district administrators with a top-down sales approach that involves large ranks of salespeople with their “boots on the ground.” Sales cycles in K-12 are infamously bureaucratic, which makes it frustrating for startups that need to move fast and show continuous progress and significant growth on a monthly or quarterly basis. Even if a product does manage to catch the eye of the right person in the district administration, approval processes in these organizations are cumbersome.

Startups with this approach can succeed, but sales and marketing expenses will drive up the price of the product.

“ Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations .” – Tim O’Reilly

“ Vision is great, but don’t forget the numbers, especially in the edtech space .” – Sunitha Viswanathan, Unitus Seed Fund

Though both the quotes are in paradox but so is life. The road isn’t the same on all lengths.

[Whitepaper] The B2B and B2C Battle in EdTech Globally

What Education Entrepreneurs Miss When Selling to Schools

Because education entrepreneurs have no rule book get creative, imaginative and get out with something different… a business model of your own. 

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Applying the Business Model to Education: Current Failures, Future Possibilities

In recent years, there has been a growing trend to view educational institutions as businesses, assessing them in terms of business models and measures. Just as individuals seek guidance from a life coach and financial advisor to navigate their personal and financial goals, universities and schools are increasingly turning to specialized consultants and experts to optimize their operations and achieve their educational objectives. Consistent with such models, institutions are required to justify their existence based not on criteria such as quality of faculty or resources, but on whether they:

• satisfy a current demand,
• anticipate a future one,
• keep their clients happy,
• continuously increase product offerings (courses/programs) and sales (enrollment), and
• positively balance their books.

This trend arose partially from the need to move away from the subjective and over-emotional manner in which education has been traditionally approached (vague references to intellectual maturity and greater good) and was encouraged by the increasing reliance of educational institutions on state or private Online Broker “investors,” who demand increasingly measurable, objective, short-term “return on investment.” Also, in my experience, taking the guidance of a seasoned broker is indeed a prudent choice. For those seeking to make an informed decision, I would urge you to get expert advice now . The expertise that I encountered significantly influenced my journey, making it a rewarding and enriching experience.

Conceptual and Practical Problems with the Business Model in Education

In the business model of education, the institution is viewed as the “service provider” and the students are viewed as the “clients.” The only tangible and measurable components of the transactions between the two in the current version of the model are the fees the students pay to attend an institution and the degree (“product”) students receive at the end of their residency at the institution. Leverage the potential of free seo tools to fine-tune your website and propel it to new heights.

However, unlike any other business transaction in the US, payment of the fees does not guarantee that the “clients” will:

• always be right (by definition, the opposite is most often the case),
• receive the end product (the “provider” actually delivers the “product” based on criteria other than fee payment),
• be able to return the end product for a refund, exchange, or credit if it does not fulfill the expectations raised by the institution (there is no system in place to hold providers accountable for their products), or
• get a refund if they eventually change their minds and decide not to attend the institution.

To stay consistent with their current business model version, institutions would have to either:

• provide degrees upon payment (I do get several emails per day advertising just that), eliminating in the process the degrees’ value and therefore the institutions’ reason for existence or
• issue refunds to students that do not earn the degrees, permitting noncommittal students to take up resources and bankrupt their business.

If you find yourself in this position, Seeking Business Insolvency Guidance can provide the support and solutions needed to navigate these challenges and ensure the sustainability of your business.

Hypothetical Solution

One could envision a two-stage model in which the provider-client roles switch half way through the paying-fees-receiving-degree process.

Stage 1: Institutions as Service Providers, Students as Clients

In this stage, students pay a fee. In return they get access to resources that facilitate and structure learning, such as:

• qualified, accomplished, passionate instructors,
• comprehensive, manageable, and timely curricula, and
• physical and virtual facilities that promote retrieval and dissemination of high quality information related to the educational area they paid for.

These resources are clearly spelled out in the institution’s mission/advertising/contract with their “clients” (through admissions policies, for example). After the service has been provided (e.g. at the end of each quarter), clients have the right to evaluate the service they received and examine whether it fulfilled the admissions contract. If it has not, they should be able to request remedies such as:

• improvement in instruction/curricular resources and
• re-offering of a course for a reduced or waved fee.

If these requests are not satisfied, students should be entitled to a refund. This is where the first stage of the transaction ends.

Stage 2: Students as Service Providers, Institutions as Clients

In this stage, institutions “pay” students with a grade and/or degree. Degrees are the currencies of educational institutions. Their value has been earned through the universities’ work and, like all currencies, degrees carry a proof/promise of value and can be “handed over” in return for employment (among other things).

Once students have completed stage one and have accepted the educational service they received as fulfilling the admissions contract, the institution demands that students demonstrate that they deserve the grade/degree. Students do this in the form of:

• submitted projects, etc.

In stage one, it was up to the students to assess whether the institution provided them with what was promised in the admissions contract. In stage two, it is up to the institution to determine whether or not the students can provide the “service” necessary to earn the degree, which constitutes a certification that the recipient has demonstrated thorough knowledge of the topic the degree is for.

Staying within the business context, the reasons institutions would enter stage two and require proof that the students deserve the “payment” (degree) cannot be of the vague, education-for-the-greater-good kind. In other words, it cannot be about ensuring that the students have grown intellectually, are better and more knowledgeable and experienced individuals, and can better serve society, and they can also learn from the Nomad Offshore Academy if they want to start a business and travel offshore. Rather, the reasons for requiring proof before handing out degrees will be about ensuring that the promise this degree makes to the world is true (the promise that the recipient has demonstrated thorough knowledge of a topic and has acquired certain certified skills). The motivation is that ‘true’ degrees result in:

• happy employers of the degree recipients,
• trust in the institution,
• demand for recipients of the institution’s degrees, and, consequently
• increase in the institution’s business, the ultimate measure of any business’s success.

Such an approach to education-as-business and to the meaning of a degree would be more consistent with the scope of a true business model. The question that remains is, “Is this what we want education to be?”

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5 thoughts on “ Applying the Business Model to Education: Current Failures, Future Possibilities ”

• Pingback: Applying the Business Model to Education: Part II | Instructional Design and Development Blog

Too often when people look at business models and education they assume the student is the client. Not so. The community is the client.

Let’s look at public K-12. The entire community buys the product through taxes and has an expectation of the product. The product is the student graduating with a pre-determined set of skills: reading, writing, arithmetic, but also more elusive skills such as citizenship and responsibility. Think of students like a car that we expect to run, stop and do a pre-determined set of things like defrost the rear window.

When public school began that set of expectations was clear–the three Rs–and because schools were local and paid with local property taxes these service providers were pretty responsive to the needs of its clients (the community). Our world is more complex and global, and communities expect our schools to prepare students for every possibility. Public schools also need to be responsive to, and show respect for, the diversity our modern world demands. So, religions, race, gender and other roles, previously simple, are now making complex demands as well. Thus, the demands of the client/community is in flux and a bit muddled. No service provider can meet such vague and changing demands.

Enter NCLB. In defining outcome with clear standards the public schools are expected to teach towards that target. Each year schools are tested, and those results are released to the community at large. As payment has shifted from local taxes to state and federal, those larger entities now assume more of a client/community role and thus demand satisfaction, or withhold payment.

What does this mean for schools? In short, service providers (aka schools) are required to meet the needs of the client/community. The students are merely product. This means that the needs and wants of the students are immaterial other than what makes them meet the expectations of the community. Learning does not need to be fun, and teachers do not need to be liked other than how that succeeds in creating a better product (students will skills).

One problem with looking at students as cars, though, is that some people automatically turn to being “old school” and harsh. But that does not work for all. Let’s remember that NCLB stands for No Child Left Behind. Graduation rates in the past were horrible compared to today, but our economy allowed for students to drop out and still become productive members of the community. Students also graduated with skills far below the standards because they showed up. Now, our client/community expects all students to not only graduate, but to have the skills expected at each grade level. How to get there?

This is where free and reduced lunch, counseling, sports teams and fun come in. What motivates students? What provides the support and motivation required for students to learn? As each student/product is different, schools need to be flexible, but they also need to get the job done for each student. If they do not–if some children are being left behind–then they need to reexamine what they do and change accordingly.

The community as client is not new, but in examining what motivates students and supports them schools have mistaken students as clients, and not products. Our society used to look at students as the children they are, and do what was best for them as a matter of course. At some point schools began to ask them what they thought, and then catered to them. There is an always-moving but clear line between getting feedback and responding versus thinking they (and their parents) know best. Schools are, at best, partners in providing what the client/community deems worth paying for.

Much of the current frustration in education comes from these confused roles. Not all students respond to the traditional curriculum, yet students are clearly not self reflective nor honest enough to determine their own needs. Schools no longer teach, but facilitate, and the debate of what to do with those not meeting standard is complex and frustrating because what works for that shrinking under served product is hard to determine. Their failure also calls into question to experience of the service providers and the client/community that succeeded with past methods. And, unlike a car, we cannot reject it and sell it for scrap. We also cannot reject delivery of students for being defective, but have to work with what comes in the door; at best we can work with our suppliers through early education and nutrition.

Differentiation and Response to Intervention are two basic strategies that service providers are now using. They are a start. Along with programs like Head Start and free and reduced lunch schools are providing services clients demand. But, notice that every solution to schools has nothing to do with the student at that moment, but instead with what skills they walk in the door with (including attitude, tenacity and other elusive skills) and what teachers do with where they are. In looking at students as the product (the car) business models such as The Toyota Way, Lean Manufacturing and organization skills like Getting Things Done suddenly speak to the educational crisis in our country.

I suggest these models are our next step.

This article seems to be focused on the college level. In that case, the client is even more elusive, but I would argue it is the future student. What goals do they have? In ten years, what do they expect from their investment. A job that pays a certain amount? A career? Or simply to be well rounded? Assume the client is future-student, and present student becomes the product while the school remains the service provider. To this end, a survey of alumni might provide guidance.

Students are not the product the schools are selling. In reality, the teachers are the product. When you provide and pay for good teachers, the education increases, but as school continue to find the cheapest, most inexperienced teachers, the value of the education goes down. Young people looking at different careers reject education because they are witnessing the erosion of teachers being able to make a living. This article comes close, but fails miserably when truly identifying the product.

• Pingback: Business model canvas applied to education - Model canvas

Dear Prof. Vassilakis.

Your essay is the most thoughtful and constructive critical analysis of the “business model” of ed–ucation I have thus far found online. I have a sense that it is offered by a committed and thoughtful classroom educator.

(Just to introduce myself:” I hold a PhD. (philosophy) and a M.A. (philosophy of ed.). I have multiple peer review publications and conference presentations in both areas and have taught at the ABE/GED, high school, community college, and university levels, including for-profit institutions).

As I understand your more thoughtful and realistic proposal, it is offered as an approximation of the best outcome that is be reasonably “consistent with the scope of a true business model;” and that it is an open question for you whether such benefits are all we should expect from our educational institutions. But is it an open question whether any educational model can be acceptable that is conceived in terms of a commercial exchange and motivated, at least one side, by profit?

I oppose the business model because it would place the principal means of our intellectual and cultural development in the hands of people who do not understand or value them and who do not seem to be capable of reflecting on their own limitations. When used disingenuously by Wall Street, appeals to these values are, as you say, appeals to “sentimental idealism.” But the fact is that acceptance of business model would be a cultural catastrophe and massively profitable windfall for corporations. At best it would serve the perceived needs of children, older adolescents, and a general public whose beliefs and values have been shaped by these same commercial interests.

(1) You are obviously right in insisting that learning outcomes must be assessment ; but, it is equally obvious that the assessment must not be controlled by the for-profit-institutions themselves. It must be done by an independent agency through standardized tests of proven validity and reliability (including “hands on” assessment), with guidance from relevant professional organizations and oversight by Federal and State authorities, It should issue no grades, diplomas, or certificates of qualification — only an explanation of what was assessed, the evidence for the test’s validity and reliability (including correlations with related academic and employment goals), and guidance about how the results should be interpreted and applied, Of course, tests alone cannot measure everything that is educationally important, but they are the only means available to us of blocking inevitable — and highly profitable — institutional abuse. (Were such a validating resource available, there would also less need for formal educational institutions. One would be free to learn whatever one wishes, either independently through one’s own efforts or from someone able and willing to serve as a teacher; and there would be a credible, publically available, and realistically applicable measure of what was learned.)

(2) Unfortunately, the profits of post-secondary for-profit institution depend upon a pool of 700,000 fully qualified academic professionals working – if at all – as part-time “adjuncts” in traditional institutions where they are hired part-time by the semester, paid a small fraction of full-time faculty salary per course, receive no benefits, have no role in departmental or institutional governance, and are terminated at will without cause or appeal. These essentially jobless educators would provide additional for-profit institutions with a ready source of low-cost faculty. If the business model succeeds, the status of post-secondary faculty as “hired hands” will have been established, and higher education will no longer be our principle sources of intellectual and cultural leadership.

(3) Your “two step” plan would make honest bargaining and real learning at least possible; but, given grade inflation and the profit incentive, it is more likely to result in student demands for lower standards and administrative pressure on faculty to comply in order to maintain the high enrollment required for high profits, The same considerations would motivate strong corporate resistance to any rigorous, objective assessment. (The SAT is already being altered to permit lower admission standards and to reflect more popular, i.e., commercial, values.)

(4) Employer dissatisfaction with other businesses’ profitable but unsatisfactory “products” would in-pose some “quality control,” but this would take time; and if it has a serious effect on profits, the “pro-duct suppliers” will do what businesses do – cut their losses and invest their capital elsewhere.

(5) “Is this what we want education to be?” As the issue currently stands, it matters very little what “we” want. State funded educational institutions have already adopted the business model in principle and private non-profits are not far behind. All that is needed is for further cut-backs in government funding, together with continuing increases in tuition, administrative, and other, non-instructional costs, to create a financial crises. It will then be urged that the only solution is to be transfer control of curricula, standards, educational methods, revenues, and physical assets to the managerial “efficiency” of Wall Street.

(6) Growth is only valued in business if it leads to greater profits. This is not a trivial point. Growth in the number of individuals served may be assumed to be good, depending on the service actually provided; but growth for the sake of unlimited increase in wealth and power cannot. It is the latter which has led to the present problem. The business model scenarios we are being sold are produced by ad agencies; the real reasons for selling them to us are written on the “bottom line.”

As far as I can see, the only solution is for educators, K. through graduate school, to organize to block any further progress of the business model and to reverse the damage already done. (Who else will or can do it?) This can also be a first step toward permanent, responsible control by educators of their profession.

Best wishes,

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• Vol. 2, No. 2

The Business Model

Jay P. Greene

Like the makers of hot dogs, psychometricians, economists, and other testing experts know too well what goes into the creation of achievement tests. Their intimate knowledge of the technical difficulties involved in measuring student achievement makes a number of these testing experts some of the most vocal (and persuasive) opponents of testing. But the flaws in techniques like value-added assessment do not automatically lead to the conclusion that those techniques shouldn’t be used to hold educators accountable. Testing may be imperfect, but the alternative–the old system, which allowed us to know very little about the performance of educators–is far, far worse.

To be sure, many of the technical criticisms of value-added testing are correct. It’s true that there is more random error in measuring gains in test scores than in measuring the level of test scores. It’s true that there is some uncertainty as to whether gains in one area of the test scale are equal to gains at another point in the test scale. And it’s true that factors besides the quality of the schools can influence the gains that students achieve. But, on balance, these downsides hardly outweigh the benefits to be reaped from being able to measure and reward productivity in education.

Consider what is likely to continue to happen in education without high-stakes value-added assessment. Unless productivity is measured, however imperfectly, it is not possible to reward teachers, administrators, and schools that contribute most to student learning. If we do not reward productivity, we are unlikely to encourage it. If we do not encourage it, we should not expect more of it.

In fact, this is precisely what has been happening in U.S. education during the past few decades. Between 1961 and 2000, spending on education tripled after adjusting for inflation, from $2,360 to $7,086 per pupil. During that time, student performance, as measured by scores on the National Assessment of Educational Progress (NAEP) and high-school graduation rates, has remained basically unchanged. Whenever spending triples without any significant improvement in outcomes, there is a serious productivity crisis. Yet U.S. public schools just keep chugging along, resisting serious attempts at reform.

Meanwhile, private firms in the United States have been able to achieve steady gains in productivity because the discipline of competition has forced them to adopt systems for measuring and rewarding productivity. Firms that fail to measure and reward productivity lose out to their competitors who do.

Moreover, the systems that private companies use to measure and reward productivity are far from flawless. In fact, the challenge of measuring productivity in the private sector is often as great as or greater than in education. Imagine a soft-drink company that wishes to measure and reward the productivity of its sales force. The company might determine bonuses (and even decisions on layoffs) based on its salespeople’s success at increasing soda sales in their sales area. Like measuring gains in test scores, measuring increases in soda sales is fraught with potential error. Changes in soda sales could be influenced by a variety of factors other than the sales acumen of an employee. Unusually cold weather in an area, a local economic downturn, or exceptional promotional efforts by competitors could all suppress the soda sales of even a very good salesperson. If data on sales are collected using survey techniques, there is also the possibility of random error attributable to the survey method, just as testing has random error. Moreover, if we are comparing sales increases across geographic areas, it is unclear whether it takes more skill to sell soda in an area where the market is already saturated than in an area that initially consumes less soda.

In short, many of the same technical flaws that critics find in value-added testing also exist in the measurement of increases in soda sales. Changes in outcomes may be attributable to factors other than the efforts of the employee. There is random error in collecting the data. And the effort required to produce gains at one level may not be the same as at another level. The only difference is that private firms have rightly not let their inability to achieve the best deter them from pursuing the good.

In the private sector, companies have realized that even flawed evaluation systems nevertheless encourage improvements in productivity. This is because employees cannot be sure that a flawed system will completely obscure the picture of how hard they’re working. Employees therefore act as if their productivity were being measured accurately; the chance that slacking will be detected inspires employees to avoid slacking. In fact, evaluation systems with a fairly large amount of error in measuring productivity can still be effective at motivating improvement–if the errors are mostly random, or at the very least do not create perverse incentives, such as encouraging teachers to focus on improving the achievement of one group of students to the exclusion of others.

None of the technical concerns with value-added testing involve perverse incentives. For the most part, the criticisms have to do with random noise in measuring gain scores. Even the nonrandom errors that worry testing critics, such as unevenness in the testing scale or the possible influence of factors outside the school’s control, do not create perverse incentives because there are no strong theories about the kinds of behaviors those errors would encourage.

If no one knows what is being mistakenly rewarded, no one has an incentive to engage in that perverse behavior. As long as educators are aware of what the value-added system is supposed to be rewarding, and as long as that system rewards the desired outcomes more than it erroneously rewards something else, the system will help to elicit more of the desired outcomes–namely, improvements in student achievement.

The Uses of Data

The development of even an imperfect value-added testing system would revolutionize the systems for hiring, promoting, and compensating teachers. Our current methods provide teachers with little incentive to improve achievement. Promotions and salary increases are based on teachers’ seniority and their acquisition of advanced degrees. These characteristics are, at best, weakly related to student achievement. Excellent teachers who possess a master’s degree and a few years’ experience receive exactly the same salary as lousy teachers with the same formal credentials. Under the current system, we have turned the keys over to educators and trusted that their professionalism will yield improvements in student achievement. Education’s productivity crisis in the past four decades should be evidence enough that simple trust is not sufficient.

The development of value-added assessment would also revolutionize how we govern schools and hold them accountable. We currently have little rational basis for saying that a particular school is a good school or that a particular superintendent is a good superintendent. Value-added testing would at least give voters some idea of whether they are getting their tax money’s worth out of the school system by giving them at least some information on how the schools are doing. The fact that voters would have better information on achievement provides the school board with incentives to hire and retain a superintendent who can elicit improvement in student learning. The superintendent, in turn, has an incentive to hire and retain principals who will use the value-added results to hire and promote the best teachers.

Critics of value-added assessment don’t necessarily object to using value-added assessment. They object to using the data gleaned from it for high-stakes purposes, such as rewarding or punishing individual schools and teachers. Instead, they suggest that value-added results be provided to administrators so that they can make informed decisions about their employees. This is, to some extent, what happens in the private sector; most private firms do not use the crude techniques exemplified by the real-estate company in David Mamet’s Glengarry Glen Ross , where the salesperson with the fewest sales was fired. Most companies use productivity measures to inform the subjective assessments of supervisors, with some companies permitting less subjective judgment than others for fear of bias or favoritism.

But here is where the parallel between measuring productivity in public education and private industry ends. Supervisors in private companies have incentives to use the information provided by productivity measures properly, because their companies face the discipline of competition from other companies. If supervisors fail to put data on costs, sales, and revenue to good use, their companies will lose out to competitors who do.

In public education, by contrast, local decisionmakers have few or no incentives to make good use of data in assessing their employees because public schools face no meaningful competition. There are basically no consequences for principals who disregard the results of value-added assessments in making decisions about employees, and they’re more likely to disregard those results if they consider value-added assessment an unreliable analytical technique. Superintendents will not be able to judge whether principals have used their discretion properly, because they will be told that the value-added test results are not proper grounds for assessing the decisions of principals. And school boards and voters, in turn, will all be stymied in making independent judgments because they will be told that the professional decisions of educators are more reliable than value-added test results.

So there is good reason to fear that principals in public schools, if given discretion to reward teachers as they please, will base their decisions on personal relationships rather than on the results of value-added assessments. In both private industry and public education, a balance must be struck between the mechanical use of productivity measures in assessing employees and relying on the subjective judgments of supervisors. But, in public education, the balance needs to tilt more toward the mechanical application of results, because supervisors have fewer incentives to make appropriate subjective judgments. This means that value-added assessment needs to be high stakes to have the desired positive effect on student learning.

Injustices are unavoidable if value-added assessments are used more mechanically. Some educators will be improperly punished for eliciting what appear to be low gains because of measurement error. Conversely, some educators will be rewarded for improvements for which they were not actually responsible. That said, some of the flaws in value-added assessment have potential technical solutions. For example, if judging a teacher based on his classroom’s test scores contains too much error because the sample is too small, we might decide to rate teachers based on a moving average of multiple years of results, thereby increasing the sample size and reducing the random error. But even with technical fixes, some injustices will still occur.

This is not a good reason to abandon the idea, however. After all, some educators will be treated unjustly under any evaluation system. Under the current system, excellent, hard-working teachers who put in tons of overtime receive the same salary as mediocre teachers. What’s fair about that? The Buffalo, New York, district recently announced layoffs as a result of a budget deficit. Who were the first to receive pink slips? Not the worst teachers in the district, but the most recently hired. Surely some excellent teachers lost their jobs, while the district retained its burned-out veterans. A peer- or supervisor-review system may reward teachers who are popular among their peers rather than effective with students. Attempting to measure and reward successful educators, with all of its imperfections, is likely to create fewer injustices than any other arrangement. At least using value-added assessments increases the chance that good teachers are rewarded and bad teachers are sanctioned.

Besides, ensuring that every single educator receives justice is at most a secondary concern. An obvious but infrequently recognized truth is that the primary purpose of the education system is to provide a quality education to all students. If high-stakes value-added assessment can help motivate public schools to provide students with a better education, it’s a promising reform even if it has some cost to school employees. In no other industry would we even entertain the notion that the interests of employees trump those of customers. Only the political dominance of teacher unions makes us consider the question. It is true that customers usually receive the best service when employees are treated well and fairly. Happily, high-stakes value-added assessment is likely to achieve both ends.

The productivity crisis in public education has certainly created injustices for students and taxpayers during the past few decades. Students have failed to receive high-quality instruction while taxpayers have been paying more and more in return for stagnant test scores. Again, what’s fair about that?

-Jay P. Greene is a senior fellow at the Manhattan Institute for Policy Research.

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Vol. 24, No. 2

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Business Model of Education Explained

June 9, 2023 | By Hitesh Bhasin | Filed Under: Business

The business model of education revolves around different processes of facilitating learning or procuring skills , knowledge, beliefs, habits, or values. Education is indeed one of the basic needs of man. There is hardly any chance of earning a living without proper education.

A person is known by how educated he/she is. There are various stages of education. Starting from kids’ playschools, there are colleges and universities around the world.  Every region has its education system, which has the essence of that region.

These days, there is more focus on technical education and in-depth knowledge of the subjects you are learning.

Hence, education systems across most of the countries have evolved over the past few years. It has led to the emergence of educational institutes not just as a service but also as a business.

This post will take you deep into the Education Business Models and guide you about the key traits of successful education-related business models. So, let us get started-

Table of Contents

Introduction

Education is often held accountable for the success of students. The education systems aim at imparting good quality education to one and all.

Students are those who are seeking answers. They look at the educational systems with hope and believe that they will find those answers. That is why the business model of education should be drafted to cater to these needs of students.

Moral Value System associated with the Business Model of Education

Every business runs of profit. But, the motive behind the business of education is to impart pure and unbiased knowledge.

The customers of this system are the students or learners. Their satisfaction is the soul of this business model. There is no business that is intrinsically good or bad. The profits earned from these businesses determine their nature.

In an educational system, the profits are in two primary forms. One is the financial profit gained by the institution, and the other is the educational insights gained by the students.

If both of these profits are achieved in equal measure, both the parties are in a win-win situation. It helps the education business reach a neutral end.

Need for a Good Business Model of Education

In the initial school years, the students take education for teaching fundamental moral values. The education they receive is aimed at making them better as human beings.

High school education is aimed at professional expertise. Students learn the skills which can help them earn a living and be the breadwinners for their families. The technological and professional trends keep on changing. Concerning technology, there are constant changes and upgrades. These changes demand changes in the business model, as well.

The current business model should be efficient . The education imparted through this model should help the students sustain themselves in the professional world. The students gain technical competence as well as the ability to mitigate the risks of vulnerability.

Best Ways of Money-making via Trendy Educational Business Models

As mentioned above, every business wants to maximize its profits. They want the revenues they earn increase manifolds. So, here are some ways that can be used by an educational institution to make money.

1. Live Classes

There can be nothing as good as actual teaching. A teacher dedicating his/her precious time for her students and empowering them in almost every aspect of life is one of the greatest gifts for the pupils.

That is why live classes are hugely popular and form the surest way of earning money. Some institutions give face-to-face learning experiences to the students. Here the teacher can understand the grasping power of the student and amend the lectures accordingly.   

Also, in these times of the Covid19 pandemic, the live classes can be conducted on video calling platforms like Zoom and Google Meet.

2. Online Courses

Many people confuse between the live classes on video calling platforms and online courses. They misinterpret them to be the same. However, there is a small difference between them. The online courses are packages of audios, videos, and textual chapters that can be used by the student according to his/her convenience.

These courses are mostly self-paced. But, some of them do come with a deadline. The students need to complete the course within a specific amount of time. Then, they can get a certificate of completion.

3. Starting Institutions

Many education providers wish to start an institution like a school or a college. It encompasses a more extensive client base.

In today’s times, the institutions are also of the form of coaching classes or tuitions. They need less infrastructure and yet get all the due accountability and respect. The institutions get recognition from the government, and they also receive grants and funds for imparting knowledge to the students.

4. Consulting Services

Education is not just classroom teaching. It comprises many aspects of teaching, including consulting services.

Consulting is the process of counseling people and giving them appropriate solutions. We all need guidance at some of the other points in life. So, consulting is always in demand. There are various forms of consultation services provided by multiple educators. Some of them are given below-

• Curriculum Design
• Research Work
• Communication Skills
• Learning Experience Design

5. Professional Services

Apart from consulting services, there are professional services which are offered by some educational institutions.

These services come after the inception of consultation services. We can define the professional services as the services which fulfill the needs of the client. Some of the most popular professional services are given below.

• Translation
• Curriculum Development

Challenges While Planning a Business Model of Education

The business model for education should be adequately planned, considering many aspects that are important in education. However, there are some challenges which one faces while designing these models.

In private education sectors, there is a system for rewarding productivity . It enhances the efficiency and creativity of the people working in that association.

However, if people start working for rewards more than working towards excellence, it poses a threat to the business model. The vicious cycle of expectations begins there and meets no end.

Technical Flaws as Threats to the Business Model of Education

Along with the flaws in the moral and value system of the business model, there could be flaws in the technical aspects as well.

One of the most impactful technical flaws is the inefficiency of the teachers. Sometimes, the teachers themselves do not know the subjects they are teaching thoroughly. Also, the infrastructure of the classrooms in the case of institutions plays a vital role. The maintenance of these structures is an integral part of the business model.

Innovations in the Education

We all know and believe that change is the only constant thing in the world. Hence, innovation picks up the lion’s share in making a sustainable business model. Here are a few innovations that you can bring about:

1. Make the Doors Wider

The con of many educational institutions is that they keep the doors narrower. They don’t expand enough to provide newer opportunities to their students.

It can be eradicated by making the sea opportunities available for the students as well as the teachers. The new domains of education can be made available by making slight changes in the business models.

It will give the students more exposure to the newer world. It will encompass the learners from different streams and engulf them in the education system.        

2. Earning and Learning

Many people in the world cannot afford quality education. The costs of education have seen a tremendous rise in the past few years. Also, some people like to learn using their own hard-earned money.

Here, the concept of earning while learning comes into the picture. The business model of any education system should allow the students to take up internships and part-time jobs.

It will empower the students to learn on their own. This policy will get more students into the system of education. There will be lesser drop-outs, and lesser people will fall out of the educational system.

3. Employer as Payer

Many times students do not know what exactly to go for, whether to take up a job or stick to traditional higher education. Here, they can undertake a job or an internship whose profile they like and find suitable.

If they have the relevant skills, they will be approached by the employer.

The employer will take care that they complete the education they require. He/she will pay the fees for the educational course or program. It will facilitate career-specific training and promise better employment .

How to Make a More Sustainable Business Model of Education?

The essential form of stability that any educational institution needs is financial stability. If they get proper funding, they can improve their ways of teaching.

If they do not get enough money, they will not want to explore other avenues and streams of education. In the education system, it is essential to stay relevant and keep on changing the business model according to the need of the market .

They should take proper and reasonable fees from the students and then invest these funds in the correct manner, which will get the maximum financial benefits.

How to Translate a Small Scale School to a Larger Educational Institution?

There are many small scale schools and educators in the world.

Sometimes, what they lack to translate themselves into larger educational institutions is a proper business model and vision for the next few years.  They should study the market well and recruit only those professionals who can add value to their already existing system.

Final Thoughts!

Starting an education institution is not a cakewalk. You need proper resources and a well-drafted plan. For that, you have some experts on board who can guide you through that.

In addition to that, the tips mentioned above will help you design the best business model for your educational institution.

Are you also thinking of starting an education-related business? Then feel free to share with us about your expertise and niche so that we can suggest the right business model of education for your target audiences.

Liked this post? Check out the complete series on Business Models

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About Hitesh Bhasin

Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

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Free Business Education Boosts African Economy

• Seventy percent of Africans are under 30 years old, and 83 percent of those entering the labor market are unemployed.
• ESMT Berlin’s Ghana1000 program provides recent university graduates with skills in data analytics and business intelligence that will make them more valuable to employers.
• Because the program is offered online and facilitated by local instructors, graduates are more likely to stay in Africa and contribute to the local economy.

  Regions frequently experience economic success when they boast populations with high levels of expertise in the STEM fields of science, technology, engineering, and math. According to research from the Brookings Institute, STEM-oriented economies perform more strongly on economic indicators such as innovation, employment, and export capabilities.

STEM-dependent areas include manufacturing, energy, pharma, artificial intelligence (AI), and the Internet of Things , among others. Each of these sectors continues to be a driving force behind the Fourth Industrial Revolution and the future of work.

A focus on STEM fields is particularly important for emerging nations, so it’s crucial for these countries to provide youth populations with access to higher education in high-tech subjects. As learners develop their skills and knowledge, they create a more capable and competent workforce, which leads to an economy with increased productivity and innovation capacity. Learners who both pursue business education and acquire STEM skills will gain the knowledge to launch successful enterprises, thus creating new jobs and economic development opportunities across sectors.

In regions across Africa, where the youth population is already large and expected to grow, training is especially critical. Currently, around 70 percent of the African population is under 30. According to estimates from the United Nations, Africa will experience the largest relative increase in population size of all continents by 2030, with young adults accounting for more than 40 percent of its inhabitants. Not only that, but young people in Africa are also predicted to make up 42 percent of young people worldwide. At the same time, 83 percent of young workers entering the labor market in Africa each year remain jobless.

That’s why it’s essential to provide the youth of Africa with access to education, particularly in the STEM fields. In pursuit of this goal, ESMT Berlin is partnering with Industry Immersion Africa (iiAfrica), a nonprofit organization dedicated to bringing together the worlds of academia and industry. The organization, which is based in Cape Town, was established by two members from the school’s leadership team and a Ghanaian mathematician from the African Institute for Mathematical Sciences (AIMS).

iiAfrica is singularly focused on closing the employability gap for STEM graduates in Africa by providing relevant upskilling programs and internship opportunities.

Training in Place

A key aim of iiAfrica is to create STEM-related programs that keep graduates in Africa. Too often when students pursue education abroad, they never return. This means that while individual students benefit from inbound scholarship programs, their home countries lose out on their talent and skills.

Here’s an example. Since 2012, there have been 52 MBA and MSc candidates from developing countries who came to ESMT Berlin when they were awarded Kofi Annan Fellowships, which provide full tuition and living stipends. Of this group, thus far only 30 percent of the MBA graduates have returned to their home countries after completing their studies in Germany. Of the MSc graduates, the figure is just 5 percent.

Too often when students pursue education abroad, they never return. This means that while individual students benefit from inbound scholarship programs, their home countries lose out on their talent and skills.

On the one hand, ESMT Berlin is committed to supporting talented African scholars who follow their professional aspirations wherever their passions take them. The school also strives to build a student base that reflects the diversity of the world’s population. On the other hand, school officials also see the value of designing programs that encourage learners to employ their new knowledge closer to home.

If developing economies are to benefit from the knowledge that students acquire through higher education, more in-country programs are needed. In many cases, such programs can be delivered online by established business schools from developed nations. As students in emerging economies have a chance to study personalized, world-class material, they enhance their transferable skills, boost their job prospects—and become valuable resources for local industry.

The Ghana1000 Program

To increase the number of STEM graduates who stay in Africa, iiAfrica currently offers two programs: the Industry Immersion Program and the Ghana1000 program. A third, the Entrepreneurship Immersion Program, is in development.

Ghana1000 is a National Immersion Program launched in September 2023 in partnership with the Government of Ghana’s National Service Scheme (NSS). The NSS program provides work experience for new graduates while ensuring important sectors in Ghana do not lack the human resources necessary for continued national development. All university graduates in Ghana are required to enter the NSS.

The Ghana1000 program is open to all recent STEM graduates of Ghanaian universities. By providing students with eight weeks of virtual training in data analytics and business intelligence skills, the program enables graduates to contribute more to their host organizations during their required year of national service. The program’s secondary aim is to increase the number of graduates who are retained by their host organizations once they’ve completed their time with the NSS.

Faculty from ESMT Berlin provide academic content for Ghana1000 under a free license agreement. The program covers core subjects such as leadership, organizational behavior, entrepreneurship, and data analytics. Local academic tutors are hired by iiAfrica and trained to teach the content by volunteers from Academics Without Borders , a Canadian nongovernmental organization. Because the program is taught by local talent, it also builds capacity in the region’s educational sector. The live and virtual classrooms are facilitated through a Zoom campus.

Ghana1000 is entirely free for candidates, in part because of generous support from partners. The Mastercard Foundation Ghana is sponsoring the pilot year. Global online learning platform insendi is providing its platform license and Harvard Business Publishing is providing learning materials, both on a pro bono basis.

The Ghana1000 program, which is open to all recent STEM graduates of Ghanaian universities, provides students with eight weeks of virtual training in data analytics and business intelligence skills.

The Ghana1000 program is based on the Industry Immersion Program (IIP), a pan-African initiative that has run since 2017 as a cooperative venture between ESMT Berlin and AIMS. The IIP, which utilizes teaching materials and faculty from ESMT Berlin and the University of Victoria in Canada, has annual cohorts in South Africa, Ghana, Rwanda, Cameroon, and Kenya. Through internships and postgraduate employment, the program develops business links between African graduates and both German and local businesses that operate in Africa.

The academic content of Ghana1000 is complemented by a work-readiness program delivered primarily by alumni of the IIP. This part of the training emphasizes skills such as critical thinking, empathy, and good communication. After the program, STEM graduates can learn about different options for professional development by attending regular webinars with alumni and other business leaders from across Africa.

The First Cohorts

While Ghana1000 officially will launch in Accra during the Industry Engagement Forum in late May, it already graduated its first cohort of 750 students in November 2023. The second group of 410 participants began in March 2024, which means the program will achieve its target of training more than 1,000 graduates in the first year.

Participants in the first cohort were pleased with the opportunity to expand their abilities and connect with business professionals. One of them was Adama Yussif, who praised the program for helping students acquire soft skills, data analytics skills, and the knowledge to be “effective and efficient at their workplaces.”

Another one was Adom Yaa Afrakomaa Amponsem, who said that, in addition to mastering specific skills such as the ability to use Microsoft Power BI, she became a better team player and built a solid foundation for transitioning from academia into industry. She added, “The most valuable aspect of Ghana1000 for me was having access to world-class professionals and lecturers to guide me along my journey.”

A Model With Impact

When professionals understand and can interpret data, they gain vital insights into the business world. STEM graduates who can work productively with data will contribute to the success of their organizations. Because the Ghana1000 initiative provides participants with up-to-date knowledge in an international learning environment, it delivers significant value to Ghanaian industry. The initiative also supports Ghana’s adoption of the Fourth Industrial Revolution, ensuring that the country embraces and benefits from rapid technological developments.

At ESMT Berlin, the hope is to significantly grow the Ghana1000 program over the next five years and extend the model to other African countries. By 2035, iiAfrica aspires to train one million graduates through its programs. The impact on Ghana—and all of Africa—could be profound.

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Improved AI process could better predict water supplies

PULLMAN, Wash. — A new computer model uses a better artificial intelligence process to measure snow and water availability more accurately across vast distances in the West, information that could someday be used to better predict water availability for farmers and others.

Publishing in the Proceedings of the AAAI Conference on Artificial Intelligence, the interdisciplinary group of Washington State University researchers predict water availability from areas in the West where snow amounts aren’t being physically measured.

Comparing their results to measurements from more than 300 snow measuring stations in the Western U.S., they showed that their model outperformed other models that use the AI process known as machine learning. Previous models focused on time-related measures, taking data at different time points from only a few locations. The improved model uses both time and space into account, resulting in more accurate predictions.  

The information is critically important for water planners throughout the West because “every drop of water” is appropriated for irrigation, hydropower, drinking water, and environmental needs, said Krishu Thapa, a Washington State University computer science graduate student who led the study.

Water management agencies throughout the West every spring make decisions on how to use water based on how much snow is in the mountains.

“This is a problem that’s deeply related to our own way of life continuing in this region in the Western U.S.,” said co-author Kirti Rajagopalan, professor in WSU’s Department of Biological Systems Engineering. “Snow is definitely key in an area where more than half of the streamflow comes from snow melt. Understanding the dynamics of how that’s formed and how that changes, and how it varies spatially is really important for all decisions.”

There are 822 snow measurement stations throughout the Western U.S. that provide daily information on the potential water availability at each site, a measurement called the snow-water equivalent (SWE). The stations also provide information on snow depth, temperature, precipitation and relative humidity.

However, the stations are sparsely distributed with approximately one every 1,500 square miles. Even a short distance away from a station, the SWE can change dramatically depending on factors like the area’s topography.

“Decision makers look at a few stations that are nearby and make a decision based on that, but how the snow melts and how the different topography or the other features are playing a role in between, that’s not accounted for, and that can lead to over predicting or under predicting water supplies,” said co-author Bhupinderjeet Singh, a WSU graduate student in biological systems engineering. “Using these machine learning models, we are trying to predict it in a better way.”

The researchers developed a modeling framework for SWE prediction and adapted it to capture information in space and time, aiming to predict the daily SWE for any location, whether or not there is a station there.  Earlier machine learning models could only focus on the one temporal variable, taking data for one location for multiple days and using that data, making predictions for the other days.

“Using our new technique, we’re using both and spatial and temporal models to make decisions, and we are using the additional information to make the actual prediction for the SWE value,” said Thapa. “With our work, we’re trying to transform that physically sparse network of stations to dense points from which we can predict the value of SWE from those points that don’t have any stations.”

While this work won’t be used for directly informing decisions yet, it is a step in helping with future forecasting and improving the inputs for models for predicting stream flows, said Rajagopalan. The researchers will be working to extend the model to make it spatially complete and eventually make it into a real-world forecasting model. The work was conducted through the AI Institute for Transforming Workforce and Decision Support (AgAID Institute) and supported by the USDA’s National Institute of Food and Agriculture.

Media Contacts

• Kirti Rajagopalan , WSU Department of Biological Systems Engineering , 509-335-0174 , [email protected]
• Ananth Kalyanaraman , WSU School of Electrical Engineering and Computer Science , 509-335-5055 , [email protected]

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‘It Is Desolate’: China’s Glut of Unused Car Factories

Manufacturers like BYD, Tesla and Li Auto are cutting prices to move their electric cars. For gasoline-powered vehicles, the surplus of factories is even worse.

By Keith Bradsher

Reporting from Chongqing, China

On the outskirts of Chongqing, western China’s largest city, sits a huge symbol of the country’s glut of car factories. It’s a complex of gray buildings, nearly a square mile in size. The thousands of employees who used to work there have moved on. Its crimson loading docks are closed.

The facility, a former assembly plant and engine factory, had been a joint venture of a Chinese company and Hyundai, the South Korean giant. The complex opened in 2017 with robots and other equipment to make gasoline-powered cars. Hyundai sold the campus late last year for a fraction of the $1.1 billion it took to build and equip it. Unmown grass at the site has already grown knee high.

“It was all highly automated, but now, it is desolate,” said Zhou Zhehui, 24, who works for a rival Chinese automaker, Chang’an, and whose apartment looks down on the former Hyundai complex.

China has more than 100 factories with the capacity to build close to 40 million internal combustion engine cars a year. That is roughly twice as many as people in China want to buy, and sales of these cars are dropping fast as electric vehicles become more popular.

Last month, for the first time, sales of battery-electric and plug-in gasoline-electric hybrid cars together surpassed those of gasoline-powered cars in China’s 35 largest cities.

Dozens of gasoline-powered vehicle factories are barely running or have already been mothballed.

The country’s auto industry is near the start of an E.V. transition that is expected to last years and eventually claim many of those factories. How China manages that long change will influence its future economic growth, since the auto sector is so big and could transform its work force.

The stakes are great for the rest of the world, too.

China, the world’s largest car market, became the largest exporter last year, having passed Japan and Germany. China’s auto sales abroad are exploding.

Three-quarters of China’s exported cars are gasoline-powered models that the domestic market no longer needs, said Bill Russo, an electric car consultant in Shanghai. Those exports threaten to flatten producers elsewhere.

At the same time, China’s electric vehicle companies are still investing heavily in new factories. BYD and other automakers are expected to introduce more electric models at the opening of the Beijing auto show on Thursday.

Electric car sales in China are still growing. But the pace of growth has halved since last summer, as consumer spending has faltered in China because of a housing market crisis.

“There is a slowdown trend, especially for pure electric vehicles,” said Cui Dongshu, secretary general of the China Passenger Car Association.

China also has overcapacity in electric vehicle manufacturing, although less than for gasoline-powered cars. Price cutting for electric vehicles is common. Li Auto, a fast-growing Chinese manufacturer, reduced its prices on Monday. Tesla did the same a day earlier, and on Tuesday reported a large decline in profits during the first three months of this year. BYD, the industry leader in China , made price cuts in February. Volkswagen and General Motors have also lowered E.V. prices in China this year.

Automakers with factories close to China’s coast are exporting gasoline-powered cars. But many of the endangered factories are in cities deep inside the country, like Chongqing, where high transport costs to the coast make it too expensive to export.

Almost all of China’s electric cars are assembled at newly built factories, which qualify for subsidies from municipal governments and state-directed banks. It’s cheaper for automakers to build new factories than to convert existing ones. The result has been enormous overcapacity.

“The Chinese auto industry is experiencing a revolution,” said John Zeng, the director of Asia forecasting at GlobalData Automotive. “The old internal combustion capacity is dying.”

Sales of gasoline-powered cars plummeted to 17.7 million last year from 28.3 million in 2017, the year that Hyundai opened its Chongqing complex. That drop is equivalent to the entire European Union car market last year, or all of the United States’ annual car and light truck production.

Hyundai’s sales in China have plunged 69 percent since 2017. The company put the factory up for sale last summer, but no other automaker wanted it. Hyundai ended up selling the land, the buildings and much of the equipment back to a municipal development company in Chongqing for just $224 million, or 20 cents on the dollar.

The municipal company said this year, while seeking insurance on the site, that it did not have a new tenant.

Other multinational automakers have reduced output in China. Ford Motor has three factories in Chongqing that have been running at a tiny fraction of their capacity for the past five years .

Hyundai is one of the very few automakers, mostly foreign, that have halted production entirely at some locations, although the company still has three factories in China.

“There doesn’t seem to be a concerted effort to shut down excess capacity, but more of a shift from foreign owned to Chinese owned,” said Michael Dunne, a former president of General Motors Indonesia.

The longstanding benchmark is that car factories should run at 80 percent of capacity, or more, to be efficient and make money. But with new electric car factories opening and few older factories closing, capacity utilization across the entire industry fell to 65 percent in the first three months of this year from 75 percent last year and 80 percent or more before the Covid-19 pandemic, according to China’s National Bureau of Statistics.

Without a big burst of exports last year, the industry would have operated even further below full capacity.

Chinese manufacturers, many of them partly or entirely owned by city governments, have been reluctant to reduce output and cut jobs. Chang’an, a state-owned carmaker, has a factory just a 20-minute walk down pink-bougainvillea-lined lanes from the former Hyundai complex. The factory’s many acres of parking were completely full of unsold cars on Sunday.

Cities that are particularly dependent on gasoline-powered car production, like Chongqing, face a jobs dilemma. Assembling electric vehicles requires considerably fewer workers than making gasoline-powered cars, because E.V.s have much fewer components.

Workers with strong technical backgrounds, particularly in robotics , can easily and quickly find jobs if they’re laid off, autoworkers in Chongqing said in interviews. But semiskilled workers — including those who are older and have not taken training courses to develop their abilities — are now finding it more difficult to obtain work.

Mr. Zhou said that when he applied for his job at Chang’an, “it was a fierce competition.”

Still, it is extremely hard to find unemployed former Hyundai workers in Chongqing these days, even in the neighborhood of the former factory.

Most factory workers in China are migrants who grew up in rural areas and have few connections to the communities where gasoline-powered cars have been built. So they can easily move to other cities or industries when they lose jobs.

Yet a tinge of gloom hangs over the car industry in Chongqing, as demand slows and less skilled workers have fewer opportunities to earn overtime pay. Hyundai’s signage is still visible in many places at its former factory, but a large shadow on the front gate shows where an optimistic slogan used to hang: “New Thinking, New Possibilities.”

Li You contributed research.

Keith Bradsher is the Beijing bureau chief for The Times. He previously served as bureau chief in Shanghai, Hong Kong and Detroit and as a Washington correspondent. He has lived and reported in mainland China through the pandemic. More about Keith Bradsher