Peak Academia
Peak Academia
Knowledge must be liberated from the shackles of gowns, tuition and ideology
There is a lot of talk about the rise of coercive culture in academia today. Whether it’s the suppression of freedom of speech or outright discrimination through the lens of affirmative action and DEI (diversity, equity, and inclusion), US universities are allegedly entrenched in indoctrination. This is a topic very dear to my heart. Education and university have been my ticket to personal development, success, and most importantly, freedom. I’d be devastated if the allegations are actually true. To find out, I’ve been touring several academic institutions around the world, attending seminars, conferences, and classes, and interviewing faculty as well as students. My goal is to assess the quality of knowledge creation and the severity of ideological coercion in science.
Here are some of my findings:
Knowledge creation is severely inhibited by the rigid structures of academia.
Ideology seeps through everything, even in science.
Government interference through grants is turning academia into a branch of the state.
There is an increasing level of hypocrisy and Orwellian double-talk among academics, investors, and even entrepreneurs, further obscuring true intentions and inhibiting progress.
The concentration of money and power in Silicon Valley is a serious threat to innovation and economic growth the US.
Even entrepreneurs are getting softer.
China has a more pragmatic approach to knowledge creation. Areas of priority such as robotics and material science are fostered, and large numbers of students are thrown at the problem.
Conclusion
We must find a way to free knowledge creation from the shackles of gowns (academic hierarchies), tuition (exploding cost of higher education), and ideology (collectivist tendencies among leading academic institutions). If we don’t find a way, China will find one for us.
The purpose of this essay is to outline the current state of academia, identify weak spots, and suggest ideas on how to fix the system. First, I describe a brief history of the institution of the university. It’s always helpful to look back at the origins to understand where we are today. In the second part, I discuss some of the more serious problems of the current academic system by illustrating shortcomings with examples. Third, I conjecture that the only way to fix the current academic culture is to innovate through disruption. I start with a discussion of disruption as described by the pioneer of the topic, Clayton Christensen. Then I offer some perspective on how this could happen today in academia. The key to a better educational system is to align the incentives of universities, students, businesses, and government. This can only happen if the appropriate institutions are set by the government. I, therefore, conclude that academic innovation will only be possible in territories like Texas or Florida in the US, or Singapore or Switzerland internationally, where there is a genuine interest in aligning the incentives of all stakeholders.
Part 1.
The Birth of the first modern University in Bologna
A women dares to challenge the status quo in medieval Bologna
The idea of the university, an institution devoted to freedom of thought in the pursuit of truth, stretches back nearly a millennium. Its origins can be traced to Bologna, when a daring and powerful woman, Countess Matilda, heiress to vast tracts of land in Tuscany, invited a famous scholar to teach Roman law to a small group of ambitious young men.
The school at Bologna eventually drew teachers and students from all over Europe and from other disciplines—medicine, theology, philosophy, the liberal arts—and organized them into an academic profession. This spontaneous experiment marked the birth of the university, the oldest in the world, and the first institution to establish academic requirements and award degrees. The principle of academic freedom had taken root.
Bologna introduced a completely novel approach to education in the West. Before the eleventh century, formal education in Europe occurred almost exclusively in monasteries. In the emerging cathedral schools, education was supervised by ecclesiastical authorities, charged with upholding the doctrinal teachings of the Catholic Church. The desire to ensure orthodoxy intensified as tensions mounted between church and state.
Bologna served as a counterbalance to the doctrinal tendencies of monasteries. Knowledge should be freely learnable independent of the orthodoxy of the Catholic Church. There was a spirit of innovation and freedom at Bologna, where the city and the university collaborated to preserve their independence and advance a common educational vision. The city of Bologna, under the slogan libertas, sought to escape feudal rule and become a free commune. For the first century of its existence, the university was free to establish its own academic priorities and operated independently of the church. Bolognese jurists could support opposing views about the extent to which Roman law supported papal or imperial claims. Students were encouraged to do the same.
Indoctrination, Intolerance and Inertia - the three I’s of doom
Indoctrination
Two interesting factors led to the establishment of the first modern university in Western Europe. Both are rooted in what might be best summarized with the word “doctrine.” It was the dominant position of the Catholic Church in the business of knowledge creation and preservation that led Countess Matilda to invite the scholar to teach at Bologna. A counterbalance was needed. The church became entrenched in a constant battle with the Christian rulers of Europe. As a consequence, the atmosphere in the monasteries became increasingly suppressive. Knowledge creation was subordinated to the overarching goal of keeping a grip on power.
In order to keep the upper hand, the Church became increasingly intolerant of different points of view, whether related to the teaching of scripture or the application of knowledge to contemporary affairs. Not surprisingly, the first subject taught at Bologna was Roman law. Inspired by the general applicability of Roman law to issues of justice, scholars embraced Roman law as a counterbalance to the doctrinal coercion of the Catholic Church. So it was doctrine and intolerance that led to the establishment of a new form of teaching, a form we call the university today.
Intolerance
Throughout the history of Christianity in Europe, the church had to deal with a fundamental problem of having neither the power of the sword nor the purse. In other words, the Catholic Church had to find its legitimacy through the rulers, who did possess both those powers. This arrangement worked well for centuries. The deal was simple: The ruler gets his legitimacy as a representative of God through the blessing of the church, and the church gets protection from the ruler. It was a quid pro quo.
But as it often happens in such arrangements, the side with the sword and purse got greedy. Rulers wanted more. One thing they particularly resented was the church telling them what was right and wrong. So the situation heated up.
In order to maintain its status, the church did what most institutions would have done in such a tricky situation. It became increasingly intolerant of opposing viewpoints. Tolerance is essentially an optimization problem. The church had no incentive to become extreme. However, when confronted with greedy rulers who questioned its legitimacy, the church had to narrow its scope and become increasingly intolerant of opposing viewpoints.
Inertia
One consequence of this rising intolerance was inhibition. New knowledge requires alternative approaches to thinking. It necessitates debate, confrontation, and dissidence. In an ideal world, these forces are allowed to thrive. Intolerance acts as an antidote to that. Consequently, knowledge creation in monasteries stagnated. Preservation of the status quo and inertia were preferred over progress.
Knowledge creation is like energy. It can’t be destroyed - only diverted.
Given this backdrop, it was only a matter of time until something, somewhere had to give. The church was not able to keep a lid on knowledge creation. Countess Matilda opened the floodgates in Bologna in the 11th century. Knowledge creation cannot be stopped, neither by doctrine nor by intolerance. Stagnation is too costly and eventually leads to revolutions. Whether they are violent or not depends on the circumstances. Fortunately, the establishment of the first university in Bologna was not accompanied by violence.
Part 2.
The state of academia has many parallels with 11th-century monasteries.
Today’s top research universities behave like the medieval church
Fast forward to today, and we find ourselves in a similar conundrum. Academia is hijacked by the priests, and knowledge faces strikingly similar obstacles like in the 11th century. Doctrine and intolerance dominate most elite universities. History doesn't repeat, but it certainly rhymes.
Let's unpack this. What do I mean with "priests"? What exactly are universities intolerant about, and why is doctrine a concern? I will focus on the US because it's here where most of the global elite universities are situated and where most of the money is spent on academic research.
Today’s top research universities are obviously not populated by monks. But the culture is similar. Just look at the funny gowns they wear during graduation ceremonies. Cloth and culture typically come as a package. People dress the way they feel. And today’s academics feel strongly that they are different from the rest, that they hold a special position in society. This perceived privilege inspires them to preach about most things, not just science.
Unfortunately, we witnessed and felt this overreach of competence during the outbreak of the recent Covid pandemic, when bureaucrats like Anthony Fauci took it upon themselves to preach about what science is and what it isn’t. Any objection to the doctrine was censured, and science was relegated to a subservient role for policymakers to push their agenda. The shocking thing about this is not that bureaucrats like Fauci enjoy power—that’s what bureaucrats do. What’s scary is that the academic establishment supported Fauci and his associates in this endeavor. Merely questioning the Covid doctrine led to professional and personal repercussions for anybody in academia, regardless of their prior achievements in the field.
Science is not a fact. It’s something you believe in.
Science is a process of truth-finding. It is precisely the dissonance within the ranks of fellow scientists that makes science work. Science relies on identifying errors in the prevailing set of accepted truths and attempting to correct them. Censoring dissonant views is equivalent to opposing science. This is what happened during Covid. The silver lining here is that most academic institutions showed their hand. By ducking their heads and sheepishly adjusting to the Orwellian rhythm of intellectual oppression, almost all top research universities in the US revealed their true intentions. They are less interested in truth-finding and much more concerned about status and influence.
Intellectual intolerance is widespread in today’s academia, and it’s not just about Covid. It permeates everywhere. I've encountered intolerance and coercive behavior in almost all departments I've studied, whether it’s Economics, Physics, Philosophy, or even Engineering. Here are a few examples:
Economics
The academic discipline of economics has always been political because it’s about money. But recently, the cadre of academic scholars has become a suppressive force. Particularly sensitive is the question of government debt and the interference of the Federal Reserve.
At a recent seminar about finance populated with economists from top-ranked US and global universities, the discussion was almost exclusively focused on some sort of perverse application of Keynesian interference and its consequences. When I asked about the role of the Federal Reserve in manipulating the bond market, the lack of market price signals, and the devastating effects of high government debt, I was treated like an outcast.
Philosophy
Here, the questions of truth and ethics are increasingly politicized. For example, at a recent seminar, I raised the question of whether fairness in society can be viewed as a Kantian optimization problem, where society aims to achieve a certain optimality. Viewed through this lens, fairness could mean that a society is considered unfair if it can improve the position of the most unfortunate without harming anybody else.
Again, I felt like this point of view wasn’t even considered worthy of discussion, and my fellow seminar attendees started to treat me as if I had the plague or something. In modern philosophy departments, fairness seems to converge on the idea of discriminating against anybody who is successful.
Physics
Often touted as the mother of all natural sciences, even physics is subject to political wrangling. To my surprise, I encountered two topics where despite the rigor of mathematics, physics seems to be indoctrinated with ideology. One instance was at a seminar about nuclear fusion. When I questioned whether the vast sums of money allocated to this extremely expensive and highly questionable project could be better utilized for more immediate energy alternatives such as solar, battery storage, and improved transmission technologies, my viewpoint was met with dismay.
Another example of intolerance in physics is the story of Hugh Everett and his interpretation of quantum physics. Everett is considered the father of the multiverse interpretation of quantum physics. For this, he faced significant pushback, which some argue contributed to his suicide. Even today, asking about interpretations of quantum physics often elicits smirky reactions in classrooms. The prevailing doctrine remains ‘Shut up and calculate!’
Robotics
Who would have thought that a hands-on engineering discipline like robotics could be entrenched in politicized intellectual warfare? Well, it is. When Elon Musk declared that Tesla would use nothing but cameras for its FSD (Full Self-Driving) technology, most academics turned their backs on Tesla. The reasons are too complex to elaborate here, but let’s just say he went against the prevailing doctrine of so-called experts, which arguably angered them.
It’s mind-boggling how even today, after FSD 12 has been launched, academics in the robotics community pretend it doesn’t exist. FSD is not just about the cameras; it’s also an end-to-end trained robot, which means there are no or very few heuristics programmed into it. This aspect is particularly contested in engineering circles, where control theory and safety heuristics are still considered state-of-the-art. Whether this is valid or not is not the question here. What strikes me is the contempt and refusal by the academic community to engage and even discuss these ideas. At the recent NeurIPS in New Orleans, I did not hear the word Tesla or FSD mentioned, neither in the general sessions nor in the specialist robotics workshops.
These examples illustrate how doctrine, intolerance, and sometimes even coercion have hijacked modern academia.
When money rules, innovation cools
But the 800-pound gorilla in the room isn't just intellectual suppression; it's finance. 'When things don’t make sense, follow the money,' they say. Well, US academic institutions have become potent money-makers. Tuitions are through the roof. When I did my MBA at the University of Chicago, I paid roughly one third of what students pay today. My starting paycheck today wouldn’t even be double what I made twenty years ago. This illustrates that even for a top MBA candidate from Chicago, like myself who went to Wall Street after school, the math is stacked against the student and in favor of the university.
High tuitions are not just a financial strain; they also produce side effects such as corruption, favoritism, and exclusion. Inequality increases, and dissatisfaction among regular people rises.
Increasing tuition is not just a social issue; it’s an existential problem because high inflation in academia hinders the creative process of knowledge creation. When people pay hundreds of thousands of dollars for an education that is almost free in other parts of the world, something is wrong. It also changes the culture within universities. They become more arrogant, less tolerant, and more imposing, with coercion taking over.
US elite universities have morphed into high-end country clubs with labs attached to them. Knowledge creation, discourse, and truth-finding are still on the menu, but make no mistake—US top universities are primarily interested in money.
Part 3.
Where are the disruptors?
So, why then are universities still on top of the academic game? Where are the disruptors? The late Clayton Christensen, creator of the disruption theme, jokingly predicted that his own institution, where he taught, Harvard, would be the first to be toppled by disruptors. Unfortunately, he has been proven wrong so far. Hopefully, he only got the timing wrong.
Disruption
Let’s analyze the question of disruption. What does it mean?
As described in Clayton Christensen’s seminal book “The Innovator’s Dilemma,” disruption follows a sequence of events. First, new market entrants come to the market with low-cost offerings. Typically, they have a new technology that allows them to offer similar products and services at a lower cost. These offerings are often of lower quality. Clayton uses the steel industry as an example. Recycled steel is of lower quality and can only be used for certain low-end products. Incumbents let the new market entrants take the lower end of the market and focus on higher-end products with higher margins. Over time, the lower end gets better and better and starts eating into the market of higher-end suppliers. Eventually, the low end catches up and disrupts the industry. As a result, the legacy suppliers fold and the disruptors dominate the market.
A similar dynamic is at play currently in the auto market. When Tesla entered with the Model S and later the Model 3, incumbents didn’t care because those products were not directly competing with their ICE cars. Eventually, Tesla managed to create an EV that has all the advantages of an EV and almost no disadvantages compared to ICE cars (no range anxiety, no high service costs, etc.). Incumbents like BMW and Mercedes chose to go up market and offer more expensive high-end vehicles decorated with fancy wooden panels and crystals. Eventually, Tesla will eat into this market because the cost structure of Tesla is much lower than the cost structure of BMW, Mercedes, or Toyota. Eventually, the company with the lowest cost structure wins. Let me be clear: it’s not about being cheap. It’s about being able to deliver a similar or better product at a lower cost. That makes a winner.
Clayton Christensen’s answer to peak academia
Can we apply disruption to academia? When will it happen? Will Clayton Christensen be proven right? We certainly hope so.
To answer these questions it’s best to follow Christensen’s methodology as described in “The Innovator’s Dilemma”.
What is being disrupted?
In order to disrupt something, there has to be an industry in place. In other words, before we even discuss disruption, let’s be clear about what we’re disrupting. In the case of steel, Christensen walks us through the disruption of legacy blast furnace steel manufacturers by new market entrants.
Integrated steel versus scrap electric arc furnaces
Traditional American steel companies, like American Steel, historically relied on integrated steel mills with blast furnaces. This process is capital-intensive, less flexible, and typically involves higher operational costs.
Nucor pioneered the use of electric arc furnaces (EAFs) to produce steel from scrap metal. EAFs are more flexible and cost-effective compared to traditional blast furnaces, which rely on iron ore and coke.
There are two main factors always accompanying disruption. One is a bloated legacy industry, and the other is innovation. The latter is typically technological. To change a business model, reduce the cost structure, and innovate across the value chain, market entrants must be able to use new engineering concepts to change how something is done. In the case of steel, it was the successful transformation of scrap steel into high-quality products.
Now, let’s look at academia. What are we disrupting here?
The bloated state of US legacy academia
Established academic institutions in the US check all the boxes of bloated industries. Prices and status are high, access is restricted, employees are coerced into one-dimensional thinking, and corruption is rampant. Let me illustrate each one of these points with an example.
Price
Average tuition at top US research universities has increased much more than general price inflation. More importantly, tuition has increased much more than the starting salaries of graduates. This is direct evidence of the power shift away from customers (students and employers) toward the institutions that provide education.
Status
When institutions become overly concerned with status, something is wrong underneath. There is good status and bad status. The good kind occurs when individuals work hard and earn respect among their peers. The not-so-good kind is when members of a group gain status simply by being admitted to the group, without contributing anything beforehand. Unfortunately, the latter is increasingly prevalent among US elite universities.
College athletics is a good indicator of how the status equation in US universities has been completely reversed. Young kids choose sports not for athletic excellence or passion, but solely to "get in." The vast majority of college athletes are neither skilled in sports nor academically strong. As a consequence, top US universities are populated with students who have spent more time on sports than on academic preparation. Once admitted, they often choose questionable majors and prioritize displaying university logos on sweaters and caps over studying. To compensate for the academic gap, universities are increasingly relying on importing immigrants from Asia, who serve as low-cost graduate school labor.
Corruption
One corollary of status-driven institutions is corruption. Whether in prestigious country clubs or elite universities, whenever access is sought purely for the sake of status, corruption often follows. In the US, there are two main areas of corruption: affirmative action and college athletics. Both started out as well-intentioned programs to enhance the college experience but over the years have morphed into sources of tacit corruption.
Affirmative action is supposed to help underprivileged kids gain access to high-quality education. It particularly focuses on kids from certain racial groups and those with disadvantages such as mental illness. Unfortunately, this well-meaning cause has been hijacked by profiteers to advance the status of their offspring. Examples include wealthy families exploiting mental illness as a pretext to secure preferential treatment in standardized tests such as the SAT or AP exams. To obtain these advantages, parents often spend fortunes on "experts" who classify their children into categories that unfairly give them an edge over other kids.
The abuse is even more appalling in college athletics. American kids are notorious for pursuing all kinds of sports. When I first moved to the US, I thought this was just another sign of sports obsession among Americans. Little did I know that the college athletic industrial complex is a massive manifestation of institutional corruption for access to elite colleges. Kids choose sports based on their chances to get into college, not because they're necessarily skilled at them. Of course, there are always a few talented individuals among the herd of aspirants. Undoubtedly, from time to time, a successful tennis player or fencing prodigy rises through the ranks of college athletics. However, let's not deceive ourselves—most of the kids pursuing these sports are motivated by one reason alone: to enhance their college admissions prospects. The problem with this tacit corruption is that most kids end up empty handed. They neither get a proper education nor are they good at sports. However, this situation does not seem to concern the army of coaches, technical staff, and the rest of the college athletic industrial complex, who benefit handsomely from this arrangement.
Perhaps college athletics once served a genuine purpose: providing opportunities for students to test themselves in competitive environments, excel in their sport, and foster camaraderie. Unfortunately, today's college sports culture has strayed far from this ideal.
In both cases, well-meaning policies are being hijacked by profiteers whose actions make a mockery of the policies.
Restricted access
From a professional perspective, this is the most concerning aspect of US elite academia. Restricting access based on well-defined criteria of performance and probability of success is acceptable; in fact, it’s a crucial component of the success formula that has propelled these universities to their current status. However, restricting access to enhance status and inadvertently facilitate corruption is a recipe for disaster.
How to disrupt the system?
New entrants must focus on cost
To disrupt the establishment, new entrants must simultaneously find ways to lower the cost structure and improve the product.
Here is a list of possible disruptors:
State Universities
For state universities to truly contend for disruption, state politics must be aligned. For example, UC Berkeley and UCLA are elite universities, but due to the bloated state politics in California, these institutions are entangled in the same obscure web of convoluted policies as their private peers.
But there is hope. States like Texas and Florida offer an alternative to citizens who are fed up with corrupt politicians in their state capitals. That’s why migration into those states from less transparent constituencies such as California or New York is rampant. One positive side effect of more transparency and fairness in state politics is that state universities have a better chance to establish themselves as bastions of truth-seeking and fairness. They can freely choose to focus on what really matters — providing a high-quality education for ambitious students regardless of race, gender, or income.
Private Universities
The same applies to private universities. They have a much higher chance of success in states that nurture a culture of truth and liberty. Ultimately, universities rely on innovative employers to hire their graduates.
Academic curricula must be designed with the real world in mind. No matter how you analyze it, graduates must be able to secure well-paid, highly productive jobs with opportunities for career development.
Disruption in academia can occur, but it depends on factors beyond academia itself. The job market in business and government, along with the societal context of the communities where universities are located, must align with a performance-driven academic environment.International Universities
This is why we also see opportunities internationally. Countries like Singapore, Switzerland, or even the UK are demonstrating that universities, whether private or public, can be performance-driven and cost-effective.
New forms of eduction
Why even bother with universities in the first place? Why rely on an institution that was invented a thousand years ago? We often ask ourselves why companies like Space X, Tesla or Nvidia, which prefer to handle all critical work in-house, still rely on the traditional institution of academia to recruit their most valuable assets—their people. The answer is simple: inertia. These companies face so many complex challenges that they are reluctant to innovate in education as well.
But maybe they should. It’s a long shot with potentially high returns on investment. Imagine a Tesla University in Texas where applicants are tested for specific skills that Tesla and SpaceX need to solve their problems. History has seen such attempts before; there was an internal school at IBM in the middle of the 20th century, and Swiss and German manufacturing companies often educate their workforce through a combination of internal schooling and external education. New models must be tried and innovation nurtured in the education space.
Disruptors must be low cost
No matter how this new world of education unfolds, one thing is certain: it must be affordable. High tuition rates are the most significant impediment to innovation, progress, and upward mobility. Even for those benefiting from government subsidies, studying in an environment where full-paying students face exorbitant tuition fees is detrimental to creative work, innovation, and risk-taking.
Low cost education must rely on two key pillars.
Focus on knowledge creation - not prestige. Prestige is the result of your work, not the work.
Innovation in education must embrace experimentation. Why do we spend eight years to get a PhD? Why not fewer or even more years? Why do students get tested on the same things year after year? Don’t skill sets change with technology? Iterate, error correct, repeat.
Accept lower quality at the start and then improve
New institutions will inevitably face lower initial quality because they won't be able to attract the best talent right away. In fact, they must solve the chicken-and-egg problem inherent in any networked organization: how to attract the first batch of talent so others join and enhance the overall quality. There are two ways to achieve this: one is to offer competitive salaries, and the other is to attract potential employers who will hire their graduates
Crypto could offer a solution here. Universities could tokenize their wealth and instead of charging tuition, sell tokens to new students. These tokens could then be used by potential employers to access talent as well. The key idea is to align the incentives of the university, the students, and the employers. When incentives are aligned, institutions are motivated to effectively serve their communities.
Contrast that with today, where most of the money goes to the university's wealth and their endowment. Neither students, professors, nor potential employers benefit enough from knowledge creation. US elite universities are extracting money from the system instead of recycling it back to the community, often using their wealth to build extravagant buildings and even more spectacular football stadiums
Increase quality more than cost
Once incentives are aligned between the university, students, and potential employers, the flywheel is set in motion. The goal is to increase quality at a faster rate than cost.
Decrease disadvantages (accreditation, network, government involvement)
Beyond the quality of education, students prioritize the ability to secure jobs after graduation. This is a cornerstone of the current system. Elite universities promise prestigious employment opportunities post-graduation, which is the primary source of their prestige and elevated status in society. For instance, obtaining a degree in anthropology or art history from Yale can lead to a career as an investment banker. Meanwhile, students earning more challenging engineering degrees from less prestigious institutions often struggle to access similarly lucrative job opportunities. Why does this disparity exist?
Sal Khan recently spoke at a Stanford event about AI and education. When asked what he would wish for if he had one silver bullet for education, he said: 'Universal accreditation for education.' What he means is that you should be able to acquire knowledge from anywhere, be tested for it, and upon passing, have access to the same job opportunities as anyone else, regardless of whether they studied at Stanford, Yale, or elsewhere.
To achieve this type of dynamic, two problems must be solved. First, a credible accreditation system must be established. Second, employers must have an incentive to hire based on the knowledge individuals possess, regardless of where they studied. Both of these challenges can be addressed. We believe the best approach is to begin in states or countries actively working to develop better, more transparent, and performance-driven institutions. Examples include Texas in the US, and Singapore and Switzerland internationally.
What will the incumbents do. Disruption is ultimately about competitor’s response
Disruption is fundamentally a theory of competitive response. In other words, it analyzes how incumbents react when new innovations threaten their position. The extent of disruption in a market can be gauged by observing the behavior of these incumbents. A prime example is the EV industry. When Tesla entered the market and posed a threat to dominant players like BMW, Mercedes, or GM, the response from the incumbents followed a predictable pattern, akin to what Clayton Christensen would have anticipated. Initially, they dismissed Tesla because electric vehicles were not seen as a significant threat to their established ICE luxury sedans. Subsequently, they criticized Tesla, questioning the quality of their products. Eventually, they escalated to more extreme measures such as seeking regulatory favoritism. For instance, in the US, the car industry successfully lobbied for subsidies for hybrid electric vehicles, which undermines efforts to accelerate the transition to clean transportation. Tax breaks for hybrids effectively subsidize incumbent ICE manufacturers.
They also moved upmarket. New BMW EVs are equipped with luxurious interiors and decorative crystals, commanding much higher prices than comparable Teslas.
Christensen would have predicted exactly this sequence of behaviors. First, ignore; then ridicule; then fight; then move upmarket. Eventually, the disruptor overcomes these obstacles and dominates the market. In the EV market we are only a few years away from that scenario.
What about the universities? Here we see similar patterns. Incumbents have gone upmarket to the extreme. Top US universities charge exorbitant tuition fees for education that can be obtained almost for free elsewhere. They offer luxurious housing, extravagant cafeterias, and massive sports facilities. While some invest in real infrastructure such as advanced physics labs or robotics research facilities, the majority of elite US universities are better known for innovating in architecting trophy buildings (see MIT) than for recent innovations in science and technology.
The bottom line
Disruption must occur in the education space, likely in conjunction with innovations at the state level. For instance, Texas is positioning itself as a jurisdiction promoting institutions grounded in freedom, accountability, performance culture, and fairness. This environment is poised to cultivate a more dynamic education landscape. We anticipate that educational innovations will emerge from regions like Texas. The key to success lies in aligning the incentives of universities, students, and potential employers.