Image Credit: eSchool
I have written many articles on the current state (and decade long decline) in higher education, identifying what external factors have precipitated the deep contraction, even before the pandemic, and, importantly, what successful institutions are doing to navigate the incredibly difficult landscape. However, one reality that deserves more attention is the extent to which most traditional institutions of higher education (credit-bearing, degree granting) must pursue truly transformative thinking in order to remain relevant, let alone to thrive going forward.
In terms of enrollment and the number of providers, the higher education “industry” is about 20% smaller today than it was ten years ago. If current trends continue—and some, such as demographics, are already baked in for years into the future—the industry will likely be another 20% smaller in 2030. What this means is that the market for credit-bearing, degree granting post-secondary education will include fewer institutions with fewer students overall, and that will fall primarily into a trifurcated market of 1) a small number of extremely wealthy and exclusive institutions, 2) another small number of “mega” universities with six figure enrollments, and 3) the remainder (majority) of colleges and universities, existing somewhere on a spectrum of risk to their operating model and even their very existence.
The reality is that for most colleges and universities in the U.S., the incrementalism of the past, and even the short-term crisis management changes of the pandemic, will not be nearly sufficient to maintain relevance and sustainability over time in the market as it exists now.
Why is this?
Quite simply, higher education is at an existential crossroads in which a combination of external factors has conspired to render the traditional financial and operational models obsolete for a majority of institutions. In fact, about a third of all colleges and universities were operating in the red even before the COVID crisis and roughly 1,300 closed or merged between 2010 and 2020. Of potential greater importance, however, is that traditional colleges and universities are built on a model designed to perpetuate the status quo. That same model represents severe structural impediments to addressing both internal and external threats, and thus has to be completely restructured in order to meet the depth and breadth of the current and future challenges putting so many colleges at risk. In short, a majority of colleges and universities must re-evaluate even the most basic and long-standing elements of what they do, such as delivering content over academic terms, credit-bearing courses, grades, degrees, faculty control of curriculum, tuition as the primary revenue source, credit transfer and prior learning policies, accreditation as an imprimatur of “quality,” the “one and done” relationship with graduates, and a host of other examples. Institutions that have the capacity and the courage to engage in transformational change will dramatically increase their likelihood of surviving and thriving going forward. Frankly, those colleges in the 85% or so of at-risk institutions that aren’t willing or able to reinvent themselves are likely to end up on a spectrum from marginally relevant to zombie institutions to merged or closed.
So, what next?
The mega institutions have already engaged in forms of transformative change, the super wealthy and exclusive schools (less than 10% of higher ed) can do mostly what they want, and the remaining 85% or so will be in a street fight for enough students who can pay the bill, either themselves or via some third-party mechanism. Although it is anathema in higher education to say this, the industry has become a retail business on the consumer side and that is one area of necessary reinvention for most institutions. Most students will simply no longer pay exorbitant rates for a poor, high-friction customer experience that requires many years of deference to often irrational institutional rules, and results, even when successful, with a degree that often has marginal relevance and comes with long-term debt!
The good news is that millions of people will still want (and need) a college degree for the foreseeable future and many millions more will need some form of ongoing post-secondary education. Although traditional higher ed is shrinking, post-secondary writ large, is growing, and will continue to do so for at least the next couple of decades. It’s obvious then, that a big part of the necessary transformation for many colleges and universities is to completely redefine how they think of the market, whom they serve, and what they sell. In some cases, this means abandoning very long-standing notions about what is “sacred” in the institution. And from a cultural perspective, many colleges and universities have to learn to want to avoid failure more than they want to avoid change.
Ultimately, we will hit an equilibrium point in which fewer colleges are enrolling more students and the supply and demand equation will become more balanced. Colleges who get into new markets will be well positioned to serve both degree and non-degree students (individually and through B2B engagements), potentially with shared content, learning experiences, credentials, partnerships and other synergistic opportunities that provide a value proposition that enough customers will choose such as to support a robust business model and sustainability for the institution.
Lastly, in my work with and visibility into hundreds of institutions of higher education over my career—and dozens during the pandemic—it has become clear that many colleges and the people in them misunderstand what transformative change is. They often think that a change in process or technology reflects transformation just because it was hard or expensive or took a long time or resulted in automation, etc. While such initiatives may provide innovation in the sense of a new way of doing something, the something itself rarely changes in a fundamental way. As an example, one institution viewed the adoption of a mostly automated document imaging system for admissions and financial aid as “transformational.” While it was a big difference from students mailing and emailing and faxing documents, which were previously manually put in analog files, then copied digitally one by one, nothing in the admissions or financial aid processes themselves changed. More importantly, nothing changed in what the students were applying for—hundred-year-old model degree programs on the same academic schedule with the same credit-bearing courses, the same multi-year time commitments, the same atrocious credit transfer and prior learning policies, the same faculty-controlled curriculum, etc.
Fortunately, for the few institutions that do understand and have engaged in transformative change, the process itself can be incredibly energizing and validating, particularly in a time of crisis! One client-institution of mine in the Mid-west chose to engage in a completely new strategic planning process that focused on the future, new markets, technology for the student experience, M&A, industry partnerships, diversified revenue streams, non-degree programs, and other items during the heart of the pandemic. What they discovered was that not only did the process and focus energize the university community, it also made them less stressed and anxious about the current crisis!
At Idea Pathway and the Transformation Collaborative™, we understand that among the population of post-secondary institutions that need to pursue transformation, many do not have the bandwidth, expertise, or experience to do so on their own. That’s where we come in. Our approach to supporting reinvention includes partner level experts, industry leading advisors and functional area experts that collectively support foundational change and operational excellence as a path to long term relevance and sustainability. If you’d like a confidential conversation about how we can support your institution through unprecedented disruption and change, please go to this contact form or reach out directly to Dr. Pond at firstname.lastname@example.org or call 719-344-8195.