UPDATE: Stephen provides more commentary on the Coffee Shop Future on the Transparency Revolution.

Phil and I ended last week’s FastForward Radio show discussing how higher education will change in the coming years. My conclusion:

Universities Will Become Coffee Shops

We’re faced with an education bubble. Tuition and other costs associated with a college education have been outpacing inflation for decades. It’s a trend that simply cannot continue. It has continued, so far, because the demand for education has proven to be somewhat inelastic. If you want a good job (the thinking went) there really wasn’t much of a choice. You went and you paid whatever price they put in front of you.

But what’s the advantage of a good job if the salary difference between that job and a non-college-level job is lost servicing student debt? It’s a reasonable question that has become more pressing as the amount of student debt required to get an education has risen.

At the same time several universities with world renown branding have begun offering online courses for free. MIT has been the pioneering institution in this. They were first to make practically all classes available online. Now they are beginning to offer some level of credential for completion of online courses through a new program they’re calling MITx.

Imagine a personnel manager at a mid-sized industrial corporation in Kansas who’s looking for a candidate with a particular set of knowledge. There are two candidates: one from the local state school with an appropriate college degree, a second with relevant MITx certificates of completion.

Let’s say all other things between the candidates are equal. Which should be chosen? It’s true that an online education is not the same as the college experience. The candidate who went to college probably enjoyed his experience more, but how much is that experience worth to a potential employer? Unless he’s a member of the same fraternity, probably not as much as the college candidate would hope.

And here’s the reality: the student debt of the college candidate controls, to some extent, his salary requirements. Since the MITx candidate appears to have the knowledge required, and has no student debt, he probably can be hired cheaper.

There is a tendency to go with the college candidate because: “that’s the way its always been done.” But cheaper ultimately wins. Repeat that story a million times over the next few years and you begin to see how the local colleges – which already are overcharging for their product – begin to suffer in favor of free programs like MITx.

Eventually you could have local campuses becoming places where MITx students seek tutoring, network, and socialize – reclaiming some of the college experience they’d otherwise have lost.

Phil thought this sounded like college as a giant coffee shop. I agree. Every education would be ad hoc. It would be student-directed toward the job market she’s aiming for.

This trend toward… coffeeshopification… is changing more than just colleges:

Book Stores Will Shrink to Coffee Shops

Ebooks are coming of age – for many reasons. You can keep your library in your pocket. You can annotate and share your thoughts within social networks. Writers can publish more directly to their audience. Once completed, the unit cost of each ebook sold is essentially $0. Those savings can (and sometimes are) passed on to the customer. Also, an ebook doesn’t have to be limited to the written word. An ebook can incorporate video, audio and other methods of presentation. Your book store is always with you and has every book ready to sell. Nothing ever goes out of print because there are no print runs.

Compare that with your local Barnes and Nobel. Those stores are huge but can accommodate only a small fraction of the titles available in the Kindle store. They require expensive real estate, buildings, and employees.

If you don’t like reading from an ereader, there are new on-demand printing options like the Espresso Book Machine that can print a book within minutes.

Between ebooks and print-on-demand, Barnes and Nobel sized stores shrink down to just their coffee shops – or maybe Starbucks takes over their business. Either way, custormers keep the experience of reading with coffee and those big comfortable chairs.

The Coffee Shop Will Displace Most Retail Shops

My Christmas shopping this year was 90% through Amazon Prime. Not having to fight the crowds and having it delivered free of charge to my home is a big plus, but as with the Kindle store, the online retail selection is much better that even the largest retail outlet.

Which is more enjoyable: Starbucks or Walmart?  For the sane: Starbucks.  So if you can accomplish your Walmart shopping at Starbucks, why do it any other way?

Also, imagine the 3D print shop of the future. You put in your order, probably from your smart phone, and then go pick it up. What does the lobby of such a business look like?  Again: a coffee shop.

Offices Become Coffee Shops… Again

We’re going back to the future: the modern office was birthed in 17th century coffee shops. Steven Johnson has argued that coffee fueled the enlightenment. It was certainly a more enlightening beverage than the previous choice of alcohol.

The need for offices grew as the equipment for mental work was developed starting in the late 19th centuries. That need appears to have peaked about 1980. It was a rare person who could afford the computers, printers, fax machines, and mailing/shipping equipment of that time.

Now a single person with $500 can duplicate most of those functions with a single laptop computer.  So the remaining function of the office is to be that place that clients know to find you… and that kids and the other distractions of home can’t.

Going forward the workplace will need the same sort of flexibility that I described for education. Groups for one project will form and then disband and then reform with new members for the next project. What will that workplace look like? Probably closer to Starbucks than Bob Par’s cubicle.

What Doesn’t Become a Coffee Shop?

I’d say the last holdout will be houses of worship, except that the church I grew up in now has a coffee shop. They buy Land of a Thousand Hills coffee to aid war ravished Rwanda, and the profits go to missions. Just as important, I suspect, is their desire to be a community hub: a place where people – most especially those who don’t normally go to church – are comfortable.

"The Well" at my home church.

What will remain other than coffee shops? Upscale retail will remain – people paying as much for the experience as for the goods purchased. Restaurants remain. Grocery stores remain.

Brick and mortar retail stores will be converted to public spaces. Multi-use space will be in increasing demand as connectivity tools allow easy coordination of impromptu events. Some large retail stores will be converted to industrial 3D printer factories. These heavy-duty fab labs will fabricate products that are too big or complicated to fabricate at home.