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Online education can solve all the world's problems: Really?

Students play JA Virtual Finance Park video game in school.
Source: JA Virtual Finance Park
Students play JA Virtual Finance Park video game in school.

Education—like all industries before it whose products can be digitized in whole or in part—is now having its Internet moment.

The Internet really only does two things: distribution and data mining. A $7 trillion industry, education is both uniquely large and uniquely needing improvement in these two areas.

Improved distribution is already well underway in the U.S.

The shift to digital materials for use either in blended learning courses or as a replacement for printed textbooks is the first step. Before long, there won't be any printed textbooks.

Next will come a shift of every student's coursework to primarily online formats. Clayton Christensen, a professor at Harvard Business School and the father of disruptive innovation theory, famously predicted that half of high school classes will be online by 2019.

This means that half of students' classes will be traditional bricks-and-mortar courses—including blended-learning courses—and the other half will be video classes streamed over the Internet. This prediction strongly aligns with what Knewton teams are hearing from schools across the country. The steadily increasing numbers of for-credit online courses, massive open online courses (MOOCs) and archived video lesson repositories like Khan Academy speak to this coming reality.

(Read more: Death of the textbook, and 50-pound bookbag)

The uptick in MOOCs is incredibly exciting—not because of what they are now, but because of their potential for social good. Education has always had an access problem. Even in well-funded areas, students are limited to the materials and classes offered in their schools and communities.

MOOCs, Khan Academy and other digital offerings will solve this problem by providing increased access to teachers, quality and choice. Khan Academy is infinitely scalable. MOOCs are hugely scalable as well. Both will make it possible to deliver world-class lectures and content to the masses at extremely low cost.

Thanks to advancements in data mining, the quality of digital educational materials will improve at the same time that distribution increases. Personalization has transformed countless other industries—commerce, music, communication, advertising, information. Now, it's education's turn. The question is not whether it's happening, but how to evolve with it.

Education has always produced a tremendous amount of data. Every learning product today supplies data on engagement, student activity, attendance, etc. But only recently has technology progressed far enough to harness this data fully.

Knewton can now produce concept-level student proficiency data by tagging every content item down to the concept level and using algorithms to passively norm assessment data. To get this data requires serious effort and expertise, but the benefits are worth it.

Student proficiency data can identify each student's strengths, weaknesses and learning style, in order to ensure that the student progresses through the course material in a way that maximizes his or her learning individually, with peers, with teachers and with parents.

(Read more: Meet 50 of the most disruptive companies in the market)

Advanced data mining also makes possible a number of other innovations—everything from concept-level analytics for teachers to use, to real-time "adaptive tutoring" for better peer-based learning, to content personalization based on a student's optimal learning modality.

Digital education means that developing regions will be able to leapfrog heavy education infrastructure, much as they leapfrogged landline telephony for cellphones.

This doesn't mean developing countries won't build schools. Of course they will and of course they should. But they will expand access by relying heavily on high-quality online education—by connecting to each other and to the world's best instructors, materials and online peers.

The ultimate impact of these innovations in distribution and data mining—more students, learning more things—will be game-changing for the entire human race.

After all, quality education creates curious, deep thinkers who can tackle anything. Pick an issue: AIDS in Zimbabwe, human rights, poverty in inner cities. The data clearly show that as education increases, that problem recedes or disappears.

Solve the global education crisis, and a generation later you'll have made enormous progress on virtually every other problem out there.

By Jose Ferreira, Founder and CEO of Knewton.

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