Udacity, the online education company, recognized an inefficiency in the supply chain for highly technical labor that many firms face today. This inefficiency is rooted in the existing upstream suppliers of that labor (e.g. universities) and has been exacerbated by the increasing digitalization of the workforce. In 2013, Udacity purposefully pivoted to a strategy that explicitly addressed this inefficiency by offering alternative education programs and credentials that cut the lead time in the supply chain for highly technical talent significantly.<\/p>\n
Context: Digitalization and \u201cSkill-Biased Technical Change\u201d<\/strong><\/em> Take for example artificial intelligence and machine learning specialists \u2013 a highly technical occupation experiencing impressive demand today (growth in job postings for these positions was up 16% from the previous year in 2016) [2]. When many firms believe it\u2019s a strategic necessity to acquire AI\/machine learning specialists and the pool of workers that have that specialized skill set is limited, firms will compete with each other to acquire that talent. The outcome of this competition is higher compensation for AI\/machine learning specialists and higher labor expenses for firms.<\/p>\n The Challenge Firms Face with Their Supply Chains for Labor<\/strong><\/em> But why the long lead times for technical talent? In a large part, it comes back to the upstream suppliers of that technical talent: colleges and universities. The number of graduate degree programs focusing on AI\/machine learning methods is limited, and where they do exist the time from acceptance to graduation is typically over two years. With only one type of upstream supplier of AI\/machine learning specialists, there is a 2-3-year lag from when the \u201corder\u201d is put out into the labor market (i.e. the increased hiring demand) to when it can be \u201cfilled\u201d by the upstream supplier (i.e. graduates of programs).<\/p>\n Udacity\u2019s Insight and Its Shorter-Term Strategy<\/strong><\/em> The challenge that Udacity faced in its early days was figuring out a profitable business model that supported its massive online course products [4]. What if realized over the past few years is that there was an opportunity to essentially be a more efficient upstream supplier in the supply chain for highly technical labor and, in doing so, offer real value to firms, not just workers.<\/p>\n Starting in 2013, Udacity began to offer a fast way to educate highly skilled workers in the particular skills that firms demanded [5]. Now, instead of waiting 2-3 years for the next graduating class of one of the few official degree-granting programs, a firm looking for highly technical labor could source talent directly from the graduating ranks of Udacity\u2019s programs and reap the associated competitive advantages much quicker (conditional on Udacity\u2019s education programs being similar in quality to those of official degree-granting programs). Udacity\u2019s \u201cNanodegrees\u201d \u2013 a form of certification that doesn\u2019t meet official US degree standards but is increasingly recognized by employers as an indication of a quality education \u2013 takes only 6-12 months to complete. Udacity\u2019s current AI Engineer Nanodegree takes 9 months to complete a total cost of $2,400.<\/p>\n Thinking Ahead: Udacity\u2019s Longer-Term Strategy<\/em><\/strong> Questions That Remain\u2026<\/strong><\/em> (785)<\/p>\n <\/p>\n [1] Goldin, Claudia and Katz, Lawrence. \u201cThe race between education and technology\u201d Belknap Press of 性视界 University Press. 2008.<\/p>\n [2] \u201cThe Quant Crunch\u201d Published by Burning Glass Technologies. November 2017.<\/p>\n [3] Fuller, Joseph. \u201cBridge the Gap\u201d Published by Accenture, Burning Glass Technologies, and 性视界 Business School. November 2014.<\/p>\n [4] Gans, Joshua \u201cThe Disruption Dilemma\u201d MIT Press. 2016.<\/p>\n [5] Farhad, Manjoo \u201cUdacity Says It Can Teach Tech Skills to Millions, and Fast\u201d The New York Times. September 16, 2015.<\/p>\n","protected":false},"excerpt":{"rendered":" Udacity recognized an inefficiency in the supply chain for highly technical labor. Can it be the upstream supplier of talent that 21st-century firms need to stay competitive?<\/p>\n","protected":false},"author":9858,"featured_media":24933,"comment_status":"open","ping_status":"closed","template":"","categories":[3887,877,1077,3242,2198,2746],"class_list":["post-24911","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-future-of-work","category-human-capital","category-labor","category-online-education","category-online-learning","category-talent-management","hck-taxonomy-organization-udacity","hck-taxonomy-industry-education","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\n
\nNearly a decade ago, 性视界 labor economists Claudia Goldin and Larry Katz popularized a model called \u201cskill-biased technical change\u201d that helped explain why returns to labor in some parts of the labor market increase more than others [1]. As firms innovate and develop products and services that leverage advanced technical methods to stay competitive and grow, the relative importance of technically trained workers rises commensurately. The \u201ctechnical-change\u201d that has taken place over the past 30 years has prompted firms to increasingly demand labor that is highly skilled \u2013 particularly in terms of digital skills. The upshot is that the price of labor with the \u201cright\u201d technical skills is becoming relatively more expensive for firms.<\/p>\n
\nWhy is there a dearth of highly trained technical talent? In large part, because the lead times in the \u201csupply chains for labor\u201d that firms face are incredibly long. Human capital is similar to physical goods in that it needs to be sourced and procured in a way that aligns with the strategic aims of the firm. Any firm that employs workers has a \u201csupply chain for labor\u201d in the same way that a firm has a supply chain for the products it produces. When a firm uses this supply chain \u201clens\u201d to think about its pipeline of human capital it can reap competitive benefits [3].<\/p>\n
\nHow could this 2-3-year lead time be cut down? Enter Udacity.<\/p>\n
\nAs highly technical labor is increasingly demanded by firms because of digitalization (and as those firms increasingly apply the supply chain \u201clens\u201d to their human resource needs), Udacity should focus on both innovating with its education programs to further cut down lead times and securing relationships with firms downstream the supply chain for highly technical labor.<\/p>\n
\nDoes Udacity\u2019s value proposition (as outlined above) only make sense for certain types of skilled labor? How should Udacity think about which skillsets or occupations to focus on moving forward?<\/p>\n