Image Credit: NBC
Recent research and work in the field have confirmed multiple factors correlated with the likelihood that a college or university will survive an existential crisis and thrive afterwards. These elements range from financial models to product strategy to organizational culture among other areas, but in virtually all cases, for institutions facing existential challenges, game changing institutional leadership and effective board engagement are unavoidable requisites for success.
While growing numbers of colleges and universities have become highly stressed and distressed, in a trend that began over a decade ago, the COVID pandemic has pushed, and will push, many more into insolvency over the next few years. Even before the pandemic, nearly a third of all private and public colleges were operating in the red, relying on layoffs, consolidations, deferred maintenance, delayed accounts payable, credit lines, and mergers to stay afloat. For many, those “tricks” have been exhausted and their fates are already sealed. For others, with enough liquidity to operate for the next two or three years, it is possible to survive, and ultimately thrive, but only under certain conditions. The two most critical are:
- Game changing executive leadership that is capable of running the daily business, managing through crisis, and laying the foundation for a very different future all at the same time.
- A board that is capable of recognizing even painful realities while fully leveraging its trusteeship obligations to support transformative thinking and action.
And, critically, both the institutional leadership and the board have to fear failing more than they fear change—even foundational change that might alter the nature of the institution itself.
Fortunately, in addition to what we know at a high level, the research identified seven critical success factors demonstrated by boards whose at-risk college or university was successfully transformed:
- The board recognizes that a crisis is imminent or looming.
- The board accepts that survival will require a departure from tradition.
- The board ensures that they have a president suitable for leading a turnaround.
- The board partners with the president to support change initiatives and actively works with the president to overcome resistance to change.
- The board intentionally recruits and develops board members who will understand and support the turnaround.
- The board works with and learns from outside advisors skilled and experienced in college and university turnarounds.
- The board uses its authority to take action.
Importantly, even in the absence of crisis, institutions that have realized significant success, particularly those that have experienced substantial growth, such as Arizona State, Southern New Hampshire, Western Governors’, Grand Canyon, etc., all had dynamic leaders and boards that were willing to support transformative change.
Institutional Characteristics that Support Success
Assuming capable executive leadership and an engaged board, the two most critical requirements at the institutional level for surviving and thriving through crisis are 1) ensuring a compelling value proposition for students (they have to have a reason to choose a given institution over another and stay there), and 2) a financial model that delivers revenue from diverse sources, with at least some high margin revenue streams.
As with board characteristics, in addition to the two high level realities noted above, we know what the traits are of the institutions that are managing to thrive in the current environment. Although every IHE has its own particular challenges and opportunities, there are common threads across the schools that are finding success, one of which is simply that they understand the reality and have a plan to address it. Several common factors in addition to dynamic leadership, value proposition, and a workable financial model are:
- Capacity to Innovate
- Deep Industry Collaboration
- Aggressive Partnerships
- Retention of Existing Students
- Differentiation in the Market (Programs, Services, Delivery, etc.)
- Licensure Programs/Programs Required for Employment
- Alternatives to Traditional Degrees
- Focus on Sustainability
- Finance as a Core Competency
- Being Really, Really Good at Basics
- A Culture that Promotes Success (entrepreneurialism, risk taking, collaboration, etc.)
A simple and more eloquent way to think about what’s necessary comes from Michael Sorrell, president of Paul Quinn College, who said, “In this new environment, higher-ed institutions that are less in love with tradition and more in love with their students will be the ones that thrive.”
In short, despite an overwhelming, unprecedented, and existential crisis, the good news is that we know what schools have to do to dramatically increase the likelihood that they will be among the group that survives and thrives post-COVID. You can see a comprehensive example from a webinar I delivered on the subject here.