If Harvard Business School's Clayton Christensen is right, half of all instruction will take place online within the next 10 years--and schools had better get into the online-learning market or risk losing their students to other providers.

Christensen was at the American Association of School Administrators conference in San Francisco Feb. 19 to discuss his book Disrupting Class, which looks at why schools have struggled to improve through the lens of "disruptive innovation."

Disruptive innovation is the business idea that, every so often, a new innovation comes along that completely changes the marketplace, knocking the old market leaders from their perch and giving rise to new ones.

Disruptive innovations transform products or services into something so simple that anyone can use them, creating what Christensen called "asymmetric competition."

Because they take advantage of these radical innovations, new entrants to the marketplace are essentially competing against "non-consumption"--that is, they're getting customers who didn't exist in that market before--while the innovation continues to improve.

Once the new innovation has matured, these companies are in a great position to compete with the established market leaders, Christensen said--and therefore they nearly always win.

To illustrate this idea, Christensen brought up the example of the personal computer in the 1980s. At the time, mainframe computer manufacturers such as IBM, Wang, and Digital Equipment Corp.--which made a smaller mainframe called the "mini-computer"--were the clear market leaders.

When Digital was thriving, people attributed its success to sound management practices--and when the company suddenly collapsed in the 1990s and was bought by Compaq Computer Corp., one of the new market leaders along with Dell, some of these same people attributed its collapse to poor management, Christensen said.

"How can smart people suddenly get so stupid?" he asked. His answer: It wasn't management's fault; it was disruptive innovation. "It's actually the principles of good business management that assure each company's ultimate demise," he said.

The early PCs weren't very good, Christensen explained, which is typical of the first wave of products to take advantage of any innovation. And as all good companies do, Digital listened to its customers, who were saying this very thing. As a result, Digital decided it wasn't worth changing its business model.

In effect, the company's managers had to choose between making good products with a high profit margin, using a well-established business model; or scrapping that model--an extremely risky move--and making flawed products with a much smaller profit margin. Of course, sound business management practices said they should choose the first option...and the rest, as they say, is history.

A few companies have broken this model and continued to thrive after a disruptive innovation has occurred, but they've done so only by setting up a completely independent business unit, Christensen said--in effect, giving it a charter to compete against (and kill off) the parent company.