Digital Disruption of Learning and Foundational Economics

The incidences of digital disruption are continuous and expanding. Before the last one is played out, the next disruption comes faster, creates bigger effect and strengthens the VUCA factors. While the whys of digital disruption is a critical question to ask, I am concentrating on the what of digital disruption – specially the factors that enable it. If one observes the progressive disruption of classical commerce to the current digital commerce state, a look back into the economic theories, particularly, transaction cost economics (“TCE”) and principal-agent (“PA”), offer valuable basis to appreciate it.

TCE, which forms the basis for classical commerce, is built on the assumptions of inefficient markets like – anonymous actors, atomistic actors, rational actors, perfect information, homogeneous goods, no transaction costs, and the absence of liquidity constraints etc. As the digital world emerged, it drove the first wave of transition by highlighting the need to challenge these assumptions enabled by/enabling digitization. This has resulted in making individualized transactions more advantageous to classical commercial transactions. For example, Blockchain – the technology behind Bitcoins, is fast replacing trusted third parties. Digital networks of trust have begun proving its worth and are seen worthy of emulation beyond commerce into security, health, governance, and ownership etc. To see “packets of learning” holding transaction value is fairly established. However the application of diminishing TCE assumptions needs a push. This would enable similar digital transfer of knowledge break the constraints of classical learning interfaces and enable digital learning.

The other aspect that digital developments have challenged is the PA or “Agency Theory” – a relationship that necessitates one or more individuals (principals) to need others (called agents) to effectively conduct commerce. The three key pillars (real world inefficiencies) supporting the agency relationships – adverse selection (incomplete information), moral hazard (conflict of interest) and bounded rationality (incomplete processing) are also fast disappearing in the digital world. This is enabling the next generation of disruptions going beyond the use of digital media to creation of digital ecosystems. Learning has possibly run the digitization marathon – using digital medium for the content access, management, and its retention by the learners, long enough. It is about time to see the next surge in the transition by attempting to drop the dependencies on agents (and the related PA inefficiencies) and build a digital learning ecosystem that connects learners to the learning directly.

Both these changes need a rediscovery of the fundamental learning constructs. It entails identification of a set of metrics that could enable learning to be transacted in a truly digital manner. This has implications for learning needs definition, design, delivery, assessment and continuous development. It is important to ask if learning can be transacted without any exchange costs and can learning be freed from human cognitive limitations (for e.g. learning paradox), coupled with other direct and indirect inefficiencies? Can the basic assumptions associated with true realized value and its limited appeal to every adult learner (unless an agent facilitates this process) be challenged? The typical view of education is of a black box process where the end value is either not established or is made contingent to the learner’s contribution. While there is a dependency on learner efforts, it is important to understand that the “contract” in question does not often shielded by an incomplete view of the design side or agent side inefficiencies. There is a need to offer the learner a menu with more than just the offerings name, place or origin or the name of the chef. There is a need to engineer shifts not only in who learners interact with for learning, but also how and when they interact, to expand the interaction beyond the current non-smart eLearning platforms.

For the digital learning to truly work and be attributed the crown of “value enhancing disruptor”, a few critical elements need to be irrefutably established:

  1. Deconstructed real value of learning for each interaction in terms of the whetted outcomes that a learner seeks
  2. Objective connection to the relevance of the learning outcomes to the end goals for learning, backed by evidence gathered using the digital footprints of learning interactions
  3. Smart learning assistants (digital twins) that facilitate the refinement of overall learning needs, goals for each learning interactions and intelligently enable active engagement on the lines of conversational systems like Chatbots
  4. Complete and clear value of the minimum guaranteed outcome being offered as formative and summative learning done using analytics
  5. Cumulative offerings of complementary or supplementary type that the learners could seamlessly add to reach multiple learning goals as in the modular stack design in digital world
  6. A “smart contract” between the learner and the learning providers as in the Blockchain, offering multiple levels of outcomes depending on the chosen transaction path
  7. A learning support path that assures the learners of meeting the outcome though alternate methods in case they missed the outcome by one method
  8. Continuing access and support to renew and refresh the learning to keep their knowledge relevant and valuable
  9. Clearly defined outcomes as learning value units that translate into a secure freely exchangeable asset like the Bitcoins in the digital world

It is a matter of time that the smart juggernaut of digital world propelled by – Decision intelligence (Analytics), Network Intelligence (Blockchains) and Interaction Intelligence (ChatBots), will challenge the boundaries of the conventional arenas. It is up to us to align the rules of engagement in a way to harness the value of this juggernaut in learning.