Yes. Traditional bachelor’s degree programs compete on prestige and confer their graduates with a degree from an accredited institution. Lambda School does not intentionally compete on institutional prestige, is not accredited, and does not provide a degree.

3. Is the innovation simpler to use, more convenient, or more affordable than existing offerings?

Yes. In terms of simplicity and convenience, Lambda School wins. It can reach students anywhere, as long as they have an internet connection, and both the full-time and part-time programs are substantially shorter than a four-year degree.

In terms of affordability, the use of ISAs requires a closer look. If an employed graduate earns an annual salary of $50,000 or more, Lambda School charges 17% on pretax income for two years, up to $30,000. The total payout therefore ranges from $17,000 to $30,000 once a graduate’s salary exceeds the minimum threshold and is $0 otherwise.

The cost of college varies as well, depending on the institution and the student’s financial situation. Lambda School could be more expensive than a public institution for an in-state student that receives generous financial aid packages, but might be less expensive than a private, non-profit university for a student that receives little financial assistance.

That said, Lambda School students take on substantially lower risk. Graduates who earn low salaries or who aren’t able to find jobs will owe nothing—which is far from the case with student loans. Further, their opportunity cost is six months of employment, not four years. If all goes well, Lambda School grads start earning a competitive salary years before debt-laden graduates of traditional institutions even get started.

4. Does the offering have a technology that enables it to improve and move upmarket?

Yes. Lambda School has worked out a 100% online solution that can accommodate monthly cohort sizes of over 100 students. With that flexibility, they already offer a machine learning program in addition to the computer science program. Online learning, when done well, allows expansion into many of the disciplines that traditional colleges currently teach, if Lambda School chooses that route.

6 ways Lambda School disrupting the traditional computer science #bachelor'sdegree #college

5. Is the technology paired with an innovative business model that allows it to be sustainable?

Yes. The first cohort just graduated in January, and outcomes data should start rolling in soon. Until Lambda School starts receiving tuition money from its employed graduates, it’s difficult to make strong claims on sustainability. However, the use of ISAs does align Lambda School’s incentives with those of its students, motivating the program to craft its curriculum around employers’ needs and to create a network of 75 hiring partners.

6. Are existing providers motivated to ignore the new innovation and not feel threatened by it at the outset?

Yes. Traditional institutions are still locked into the four-year degree paradigm.

Programs like Lambda School do not directly threaten them on the prestige axis.
It hasn’t all been smooth sailing for Lambda School, with initial cohort completion rates under 60%. That rate is improving, however. “It’s challenging when students have no skin in the game upfront,” said Allred. “But our last graduating cohort had a completion rate of 80%, and we are aiming higher, with dramatically improved first month retention numbers.”

Lambda School has already brought several innovative features together. If Lambda School consistently helps its students graduate and get hired, it will have also brought together all the ingredients of a disruptive innovation.

[Editor’s Note: This article originally appeared on the Christensen Institute’s blog.]

About the Author:

As a research assistant on the Christensen Institute’s higher education team, Richard Price helps investigate novel business models in postsecondary education, professional development, and lifelong learning.


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