TeslaI read recently an article in USA Today describing how the Iowa Department of Transportation shut down a weekend of Tesla test-drives in Des Moines. For those of you that are not familiar with Tesla, the company is revolutionizing the auto industry through the development of an electric car that is capable of going over 300 miles on a single charge and performs like a high-end sports car. Another key difference in how Tesla is revolutionizing the auto industry is how their customers buy their cars. Instead of using costly dealerships, Tesla sells directly to customers online or at one of their store locations in upscale malls across America.

So why did the Iowa Department of Transportation stop Tesla’s test-drives in Des Moines?

Two reasons: 1) Iowa does not allow automakers to sell directly to the public and 2) Tesla is not a licensed dealer in Iowa. The state of Iowa considers test-drives as a “dealer activity.”

And who ratted Tesla out? The Iowa Automobile Dealers Association.

This reminds me of higher education. Instead of the dealers adapting to the changing marketplace and working with the automakers to build similar cars to compete with Tesla, they are simply using arcane and outdated laws to limit an innovative alternative to traditional car options.

Higher education has relied on the Department of Education and regional accreditors to limit competition under the auspices of ensuring quality education. However, they truly cannot measure quality and are simply relying on the old system to protect the status quo. Like the Iowa Department of Transportation, the entities that oversee higher education believe they are protecting the consumer (student), however their over-protection is forcing innovators to find a “work-around.”

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