In previous articles I have noted that higher education enrollments are declining, institutions are merging and closing, and that higher education as an “industry” will look quite different in the near future. Those things are already happening and the data is fairly stark. On the other hand, some institutions will thrive. Some, in fact, have already utterly reinvented themselves and are assuming leadership roles in the move toward what higher education will look like in the future. Some are very large, consumer-driven models like Southern New Hampshire University, Western Governor’s University, and Arizona State. They are true outliers and may, in some ways come to dominate some elements of education. Other examples are well funded, well connected public and private institutions that have the resources to experiment with educational and business models such as MIT, Purdue, and Grand Canyon. There are also what we might call “niche” players that are thriving on a much smaller scale. Examples include Evergreen State College, Colorado College and a host of proprietary career colleges that are experiencing unusual success, typically with non-traditional curricula and instructional models.
Interestingly, despite profoundly different size, structure, mission, resources, profit status, history and other factors, all of these institutions share some things in common and point to a road map for navigating our turbulent present to thrive in the future.
One thing these institutions tend to have in common is leadership that embraces risk and is willing to make bold bets, particularly in ways that are purposely outside the expected status quo–they also tend to have high tolerance for ambiguity, complexity, and all around turbulence. Purdue University, for example, leaped into the deep end of the pool and acquired one of the largest, most established for-profit online operators in the U.S., immediately going from zero to sixty in terms of their ability to reach outside of the typical state university model of educational delivery and dramatically broaden their enrollment market. It would be difficult to overstate the boldness of this move relative to the political and financial blow back, accreditation challenges, etc. Grand Canyon built a Christian University with a for-profit tax status, in a large, combined residential and commuter campus model, then split the university into an academic component that is not-for-profit and an administrative and service component that is for-profit. Small institutions like Upper Iowa University, with a campus population of less than a thousand students, avoided closure by making a full throttle commitment to serving the military and international markets, as well as nearly two dozen U.S. locations outside of Iowa, which are now magnitudes larger than their home campus. Colleges like Vassar and Evergreen State committed to very non-traditional educational models that serve a small, but passionate group of students who choose those colleges because they are different. Relatedly, institutions that provide a pathway to professional licensure required for employment will also have an advantage—at least for a while. Good examples are vocational colleges that provide credentials for trades requiring licensure and just about anything in the health sciences that leads to careers as clinical practitioners. And importantly, the greatest outliers experiencing the greatest success, not only have the right institutional leadership, they also have boards that are equally up to the task—willing to take risk and endure the criticism that inevitably comes from being on the leading edge of any meaningful variance from the status quo.
Value Proposition for Customers
Another commonality in these outlier institutions is a willingness, if not enthusiasm, to see multiple stakeholders as customers, then to figure out how to meet those customers’ needs and desires on their (the customers’) terms. The historical higher education model has always been a sort of “my way or the highway” approach to students. When demand outstripped supply and education was a highly exclusive endeavor, that model worked fairly well. In the current and future reality of higher education as a commoditized endeavor in which supply exceeds demand, the “my way or the highway” approach is a ticket straight to irrelevance and obsolescence for most institutions. Arizona State and Colorado College, for example, at extremes of the educational spectrum, are both customer-centric institutions at which very different versions of flexibility attract students who want those experiences.
A third commonality tends to be an openness toward partnership, collaboration, and entrepreneurialism. IHEs have historically been purposely-isolated institutions (the ivory tower). Outlier institutions that are thriving or poised to thrive despite the overwhelming challenges facing higher education today, tend to actively pursue mutually beneficial and value-added partnerships with other IHEs, industry, the community, government, highly skilled vendors, and other entities that help them generate alternative revenues, improve efficiencies, improve quality, provide relevancy to students, grow enrollments, expand technology, and many other benefits that are only possible through partnerships or even joint ventures. This often requires that institutions look very differently at traditional notions of “ownership” of the higher education process. It also often requires an acceptance that other entities and industries may do some things a lot better than higher education institutions do those things and that even constructs as sacred as the degree itself may be only one of many potential credentials available to students.
Culture that Embraces Change and Improvement
There are cultural commonalities as well among institutions that are structured for success. These institutions tend to be wired to embrace rather than fear change–even highly disruptive change–and their leaders tend to be good strategists and change managers. In fact, they tend to accept and anticipate change as an on-going dynamic that is woven into normal operations. These institutions also have good clarity around a shared vision and they act rationally to achieve the vision. Interestingly, the most enlightened IHEs are also beginning to understand that survival in the marketplace is becoming more about accountability to stakeholders—students, parents, employers, the community, taxpayers, and others than it is to the traditional input driven and largely irrelevant system of regional accreditation, rankings, and Department of Education oversight. Institutions that can deliver value through solid outcomes and affordable cost will be stronger in the market and more likely to survive and thrive.
As a bonus, some institutions are also committed to assertively addressing challenges of access, affordability, support for diverse learners, creative and effective applications of technology, and the notion of the university as an incubator for robust thought leadership. Some institutions will survive well into the future simply by their exclusivity, but that is a small sliver of the academy overall.
Finance as a Core Competency
Lastly, outlier institutions that will lead the way going forward generally have figured out a sustainable financial model. They typically are supported by non-tuition and/or high margin revenue streams and actively manage institutional P&L. They understand the relative return on investment for one decision vs. another and have accepted that they simply cannot ignore financial realities. Despite the gnashing of teeth that typically accompanies any discussion of “business” in the academy, a requisite of survival for IHEs now and in the future is an active, purposeful commitment to manage themselves as businesses. This is not about profit vs. not-for-profit. It is about the reality that regardless of profit status, IHEs can only survive if they are financially sustainable and that does not happen as a passive activity. As an example, Southern New Hampshire University, the fastest growing, and arguably most innovative, not-for-profit, public university in the U.S., has staffed much of its non-academic senior management with professionals from outside of higher education who are experts in marketing, sales, technology, finance, and operations among other areas. Their strong profit margins in online education subsidize the main campus and finance a host of investments, and even acquisitions, that would not be possible otherwise. Arizona state has a similar financial model in which high margin operations subsidize lower margin ones and make it possible to offer highly discounted tuition to the employees of a corporate partner such as Starbucks.
Yes, many institutions will not survive the next ten to twenty years and fewer still will truly thrive. Fortunately, there is a model for both surviving and thriving, which a growing number of enlightened colleges and universities are slowly adopting.