Using What We’ve Learned from the Pandemic to Succeed in the Future

As terrible as the pandemic has been, it has also provided some very valuable insights. In fact, no organization should get through the pandemic without a comprehensive post-mortem on what worked, didn’t work, could have been done differently, and was learned through the entire process. In what ways is the organization stronger? What fault lines were revealed? What are the greatest risks and opportunities going forward? What problems weren’t fixed or are worse? At the very least, a key responsibility of organizational leaders at this point is to carefully inventory everything they have done differently as a result of the pandemic, then assess what changes and interventions should be preserved and potentially optimized going forward. This includes processes and procedures, policies, applications of technology & automation, and ways of thinking and being. It is strategic, operational, and cultural.

One of the most interesting takeaways from the COVID crisis is the extent to which things that many believed were simply not possible beforehand became possible! The pandemic demonstrated the power of context on perspective (and proved that we have likely overstated the significance of time and place). Many people became less risk-averse and more open to experimentation. Many of us also embraced the notion of “good enough” relative to the alternative. We also discovered that, when time is of the essence, we can make decisions much more quickly than we ever did in the past. This may be a watershed for higher education in particular, which has historically been deeply risk-averse and unable to act quickly and nimbly.

A silver lining of the pandemic is not only the realization that some things, both in terms of services and educational delivery, that we previously did not think were possible or advisable, are not only possible, but in many cases have proven advantageous and even preferable. As institutions begin to assess whether or not a change/intervention merits preservation in the next normal, there are multiple potential criteria for such an evaluation. These include outcomes like convenience, time, accessibility, cost & efficiency, efficacy, accuracy, quality, ancillary benefits, and others. If you’d like a free consult on how to formulate and implement such an assessment reach out to us at the Transformation Collaborative™ and we’ll lend a hand.

Lastly, we also need to be cautious about misconstruing the nature of the interventions we have made during the pandemic. The vast majority of change has been incremental and transactional and the product of crisis management rather than genuine reinvention. We have achieved phenomenal things in the face of unprecedented challenges during the pandemic, but we also need to guard against misunderstanding the extent to which what we’ve embraced is a change in how we do something, than changing the something itself. For example, shifting financial aid to an online, self-service modality might be convenient, faster, cheaper, and preferable, but it doesn’t change or improve anything about the tuition model or how students pay for school!

The Three Most Important Things Research Has Discovered in the Last Few Years about Successful Organizations

Photo credit: PNW Production

Gallup, originally a public opinion polling company from the 1930s, has been gathering data on the U.S. and global workplace for 50 years. Their combination of reputation for independence and quality, as well as their unrivaled database of workplace data, has allowed them to mine significant conclusions about what matters in organizations. Three of the most salient discoveries of the last several years, right up through 2021, relate to the criticality of 1) employee engagement, 2) organizational purpose, and 3) coaching as the single most productive activity a manager can do. In fact, there are likely not three more powerful causative variables for success than these three.

Engagement

Why does employee engagement matter? Engaged employees are far more productive and the work they do tends to result in greater performance, particularly around outcomes that are most important to the organization. They also tend to be more resilient in the face of challenges, have a greater sense of their own efficacy, are able to work with less direct supervision, manifest a more internalized sense of accountability, and are more likely to feel that they are an important part of the organization. Unfortunately, 50 years of research by Gallup suggests that only about a third of employees in the U.S. regularly display behaviors associated with “engagement.”

Fortunately, there are traits and behaviors associated with engagement, which can be observed in both employees and leaders. They include things such as intentionality, planning, collaboration, internalized motivation and accountability, resilience, and a tendency to play to strengths to get the job done—including accepting challenges that stretch one’s capabilities. Engaged workers are also comfortable working for extended periods without supervisor feedback, but do not hesitate to request input when they believe the boss might have an insight that would be helpful. In other words, they don’t reach out to a supervisor for approval or permission, they reach out for support.

Purpose

It’s widely accepted that culture plays a powerful role in determining how people in organizations behave, but we rarely talk about an organization’s purpose in the context of its success. While there are many cultural values that support the achievement of strategic objectives and operational KPIs, purpose turns out to be at the top of the list, as reported by Gallup in the fall of 2021.

This trend has been at play for years, but the pandemic has accelerated a seismic shift in how people, both employees and consumers, feel about purpose in the companies they work for and buy from. In fact, majorities of both millennials (now the single largest consumer group in the U.S.) and Gen Zers, evaluate alignment in values as an element of buying decisions and there is a growing expectation that companies don’t just deliver a quality product at a fair price, but that the world is, in some way, better off because the company is in business. And, as Gallup notes, unlike their Gen X and Boomer elders, younger employees have no compunction about publicly protesting their own companies if they feel leadership is failing to meet ethical obligations. One might argue that the flip side of businesses abandoning any pretense of loyalty or commitment to their employees has freed employees of any sense of obligation to the company—even to the extent of protecting an employer’s public image. A genuinely purpose driven culture is one powerful way for management to address that challenge.

This notion of “net-positive” organizations, in which all stakeholders benefit directly and the collective “we” benefits at least indirectly, while aspirational, is becoming part of how both internal and external stakeholders evaluate institutions.

Coaching

Gallup recently used AI algorithms to process millions of personnel data files and interviews and what they discovered is that the single, number one most important thing managers can do to support success in their employees is to engage in regular coaching.

“Gallup has discovered — through studying what the best managers do differently — that great managing is an act of coaching, not one of directing and administrating.”

In fact, coaching is so powerful that Jim Clifton, Gallup Chairman, recommends getting rid of all performance rating activities and shifting to regular, goals based coaching conversations. Yes, this would be a transformational cultural and operational change for most organizations, but the performance outcomes would be greater than from any other single initiative an organization could pursue.

So, if you are in a leadership role, the evidence suggests that engagement, purpose, and coaching should be on your list of prioritized initiatives regardless of the nature of your organization. If you want to engage in transformative change that generates game-changing results, you know where to start.

If you’d like to talk about transformation, reach out to us at the Transformation Collaborative™, and we’ll help you plan for a relevant, robust, and sustainable future.

Risking the Future Because You’re Too Busy Now

Image credit: vectorstock.com

The vast majority of the 1,500 or so higher education institutions that merged, were acquired under duress, or simply closed since 2010 did not explore or implement options for reinvention. Some engaged in deep expense cuts, layoffs, elimination of programs, or launching Hail Mary new programs, etc., but those were band aids on gaping flesh wounds. They were last ditch attempts to manage liquidity rather than efforts to transform themselves to meet the structural challenges of a declining market and huge shifts in buying decisions by students.

Even before the pandemic, many, many college administrators were engaged in fire-fighting and crisis management—admittedly exhausting work—but not work that solves systemic problems and a diminishing value proposition for customers.

In my work and dialog with a wide-variety of higher education leaders, one very disturbing trend that I see permeating all sectors of higher education, is the decision to delay or simply avoid initiatives that will increase the likelihood of thriving in the future due to challenges faced in the present. In short, most institutions are genuinely risking their futures because they are too busy with the present. While this same phenomenon resulted in the outright closure of over 1,200 institutions between 2010 and 2020, the risk is even higher now because[1]:

  • The number of post-secondary alternatives available to consumers in the market is greater.
  • Public opinions about traditional higher education and its related ROI are worse.
  • Average institutional financial health is worse.
  • Demographics are less favorable.
  • The number of potential students who can or will pay or borrow for credit-bearing, degree programs are fewer than in the previous decade.
  • In fact, the enrollment decline between 2020 and 2021 alone is approximately half a million students, taking the ten year total over 3,000,000.

Tragically, over the last ten-plus years, the vast majority of schools that merged, were acquired in distress, or closed, met their fate without engaging in any transformative initiatives. They simply rode a dying horse into the ground. Potentially more tragically, because we should know better, I see the same dynamic in play today.

Of course, managing through disruption and crisis consumes huge amounts of energy and bandwidth. Moreover, most leadership teams had no previous lived experience of running the daily operation, managing through disruption, and planning for a transformed future all at the same time before the pandemic. However, my greatest fear is that many colleges and universities will win the battle (survive the short-term crisis) and lose the war (enter a state of irrelevance and fiscal paralysis or simply cease to operate) because they were too busy in the present to ensure relevance, sustainability, and prosperity in the future.

In effect, many leaders are currently on a path in which their legacy will be that they kept the doors open during the crisis, but were at the helm when the ship foundered and sank.

A Call to Action

When thinking about transformative opportunities for the future, if you’ve heard yourself or your leadership say things like, “We’re just too busy,” “There is too much on our plate,” “We don’t have the resources,” “We’re too tired from the pandemic,” “We need to fix other things first,” or other versions on a similar theme, BEWARE: you are rehearsing your excuses for when it’s too late. Just change each of the statements above to the past tense and you’ve moved from today’s lost opportunity and leadership failure to tomorrow’s regret.

What I’ve also observed—and this is equally critical—is that although few higher education institutions are both willing and able to engage in the kind of reinvention that will greatly increase the likelihood of surviving and thriving now and into the next normal, for those that are at least willing, there is a path forward. There are ways to “borrow” bandwidth, resources, expertise, etc. for assessing the current state, identifying the highest ROI initiatives, and executing on those opportunities. The Transformation Collaborative™ was designed from the ground up to be an embedded partner, with access to many individual and organizational affiliates, who, unlike typical consultancies, share accountability for execution and results. At least talk to us. Even if you’re busy. There is no obligation and you may be just in time to save your future.


[1] https://www.chronicle.com/article/undergraduate-enrollment-continues-its-slide-dipping-3-2-percent-from-last-year?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_3087091_nl_Academe-Today_date_20211026&cid=at&source=ams&sourceid=

https://www.highereddive.com/news/moodys-lowers-higher-ed-outlook-to-negative-amid-coronavirus-crisis/574414/

https://hechingerreport.org/analysis-hundreds-of-colleges-and-universities-show-financial-warning-signs/

Game Changing Leadership in a Time of Profound Change – Webinar

Recorded Wednesday, October 20, 2021

Higher education is at a critical inflection point. The traditional financial and operational models that have sustained us for decades and that are designed to largely perpetuate the status quo are broken. The depth and breadth of current challenges requires a major rethinking and reinvention of the higher education system. And yet, most colleges and universities and their leaders have little or no core competency in what can be a really difficult and complex change process. What’s more, there are many structural impediments to change including the academic culture and high fixed overhead to name just a couple. That’s a tough leadership challenge!

In this webinar, Wallace Pond, experienced transformational change leader, will discuss how we got here, why transformation is the required path forward for many institutions, and what execution of transformative change looks like in practice.

Wallace Pond has been a transformational change leader for decades, serving in multiple CEO, executive, and partnership roles. Wallace is a founder of Idea Pathway and the Transformation Collaborative, supporting transformative thinking and operational excellence across all segments of higher education and the private-sector. He is also author of the recently released book, Leadership in the Real World: Hard Won Lessons from Twenty Years as a Chief Executive in Turbulent Times (2020).

Get Out of Your Lane

Dr. Joel English, Exec VP at AIM, Centura College, and Tidewater Tech, and Advisor at the Transformation Collaborative™, just published a new blog post on the importance of being willing to frequently step outside whatever you’ve been led to believe is your “lane.”

He astutely notes that, “Stark dividing lines might be good for street traffic. Lanes may be good for bowling. But I don’t think they are great for institutions, nor for impactful leaders within institutions.”

Excerpt

I’m not a fan of the phrase, “Stay in your lane.”  It’s certainly an easy phrase to say, especially when you’re feeling criticism or conflict from someone outside of your department.  “Stay in your lane” is a common phrase used in many different situations—that’s what makes it a cliché.  And using clichéd phrases, because they are familiar, punchy, and commonly accepted, can make us feel like we need no further justification.  When we tell someone to stay in their lane, we have the sense that we need no other argument:  They should stay out of areas where they have no business, authority, or experience.

Continue Reading…

A Critical Key to Your Leadership Success: Keeping Your Best People

As organizations become more complex and the success of leaders becomes more tied to what their employees accomplish than to their own technical skills or task completion, building and retaining your human capital is becoming central to the viability and success of all leaders. And, unlike technology or fiscal capital, human capital (and teamwork) is a competitive advantage that cannot be commoditized. If you care about your own success as a leader, you’ll care about keeping your employees and particularly your best people! If you need a financial argument, replacing employees can cost as much as 200% of annual their salary.

There is a spectrum of commitment to employee retention across organizations, with some basically ignoring retention as a purposeful activity and others investing significant effort and resources. What is interesting is that most employers misunderstand what employees actually value most. As a result, even where there are employee retention efforts, they often focus on the wrong things. Most typically organizations believe that compensation and benefits are core to employee retention. While the research confirms that employees need “adequate” compensation and appreciate generous benefits, actual employee retention is usually driven by other factors. And it seems that we fail to get this right early on because over 30% of new hires quit their jobs within six months! Likewise, at any given time, about 25% of all employees are “retention risks.”

What the research shows is that while employees will leave a job for improved compensation and benefits, those are actually lower on the list of importance of what they want from work than other items. Most studies put compensation anywhere from number 4 to 8 on employee lists of priorities.

So, what should you do to keep more of your employees?

Assuming that compensation and benefits are “adequate,” your leadership focus needs to be on the work environment and the work experience. There will always be turnover, but it’s become clear what factors limit the loss of employees over time.

Crunching lots of data, Facebook recently found that people stayed with the company when the following three things were true: They enjoyed their work, they used their strengths more often, and they believed they were growing professionally. All of these factors superseded compensation and benefits. As Lori Goler, Head of People at Facebook says, “If you want to keep your people — especially your stars — it’s time to pay more attention to how you design their work.”

Although there is some variability in the research, there is also a strong consensus about what factors support employee retention over time. The most important variables tend to be:

  • Flexibility and Autonomy
  • Appreciation/Recognition
  • Professional Growth and a Visible Career Path
  • Engagement and Purpose
  • Compensation and Benefits
  • Rewarding Relationships
  • Job Security
  • Ethical, Transparent Managers

Even though the prioritization is often somewhat different from individual to individual, compensation almost always shows up in the middle of the list or lower. As a manager, while you must compensate people equitably, it is liberating to know that your retention efforts are not only about money. On the other hand, creating an environment and work experience that will retain your people is a lot harder than just writing bigger checks!

The good news is that much of your effort toward employee retention also applies to other leadership imperatives around healthy organizations, empowering employees, sustainability and a number of other things you need to be doing anyway. And, in the end, improving retention is a win-win proposition that provides a positive, re-enforcing cycle for everyone involved.

Collaborative Launches Initiative to Support Transformation of Universities, Colleges, and Schools

FOR IMMEDIATE RELEASE                                  Contact: Tony Bieda, 703.399.9172, anthony@transformationcollaborative.net

AUGUST 9, 2021 – Colorado Springs: A new professional collaboration comprised of seventeen prominent practitioners and consultants in the post-secondary education sector was launched today in response to the crises in colleges and schools driven by pandemic shut-downs, demographic forces, new economic realities, and a strong awareness that the demand for quality education that is relevant, accessible, and distinctive is stronger than ever.

Dubbed “The Transformation Collaborative™” by one of its founding partners, Dr. Wallace Pond, the organization includes advisors, functional experts and thought leaders with a common purpose: helping institutions of higher education survive and thrive, now and through the next normal.

“The Transformation Collaborative™ is focused on colleges and schools reinventing themselves for the world they’re in rather than the one in which they were founded,” Dr. Pond said.

Functional expertise of the Collaborative includes leadership and governance, strategic planning, enterprise development, data analytics, compliance and risk management, quality assurance, academic programming, non-traditional instruction, student achievement best practices, student-based admissions and enrollment practices, and organizational health.

“Higher education is facing great challenges,” Pond said. “Even before the pandemic, the industry was in the ninth year of consecutive enrollment and revenue declines precipitating nearly 1,500 reorganizations, mergers, and closures. The traditional, credit-bearing, degree granting sector of the post-secondary education ecosystem is shrinking and will continue to decline for the near future.

Pond is convinced that when the current seismic shakeout is complete, the market, though smaller, will be more dynamic, nimble, customer-centric, and better integrated with other elements of the post-secondary ecosystem.

“There is a critical role for higher education to play in the ecosystem, but only if there is broad transformation, leading to a compelling value proposition and concrete ROI across multiple stakeholder groups.”

Pond said the list of deficiencies confronting status-quo colleges and schools is well-known and acknowledged, including reliance on a business model that relies on traditional tuition-driven liquidity (with high up-front cost), rigid curricula, poor transferability of academic credit or prior learning, exorbitant time commitments, a short shelf-life of learning content, and a “one and done” credential.

“Although the traditional higher education market is shrinking, the post-secondary market is growing. In fact, four of the six main components of the post-secondary ecosystem are expanding and the fifth, government, will begin to grow again post-pandemic, particularly via workforce development and professional development for public employees,” Pond said.
“For most IHEs, growth will come from expansion into non-credit, non-degree program areas. This will likely include industry partnerships and other business to business opportunities, combined credentials (degrees and certificates), and post-graduate re-training and upskilling programs,” he said.

The TC has developed proprietary assessments, interventions, research algorithms and evidence-based best practices to support timely and effective organizational transformation, which becomes the foundation for institutional transformation and success, Pond explained.

“Bringing those resources and expertise to bear on client institutions is our next endeavor.”

Members of TC include co-founder Anthony S. Bieda, Alan Walker, Anda Goseco, David Leasure, Celia French, Diane Auer Jones, Guy Bell, Jim Hendrickson, Joe Sallusito, Linda Baer, Lou Pugliese, Melissa Morris-Olson, Nam Pham, Nathan Hoffman, Tonya Henry, Yolanda Gallegos, Don Tuttle.

For more information go to www.transformationcollaborative.net

END

People Strategy as Business Strategy

Image credit: Lattice

By Anda Goseco & Wallace Pond

“When you get people right, you get the business right.” Guy Bell

Most organizations claim that people are their greatest asset. When those claims are actually true, those businesses, schools, institutions, etc. benefit from the single greatest competitive advantage possible—an advantage that cannot be commoditized or easily adopted by competitors.

So, what sets apart businesses and other organizations for whom human capital is their greatest resource?

First of all, those organizations are led by people who understand that human capital is as valuable and usually more valuable than any other kind of capital or asset. As such, they are as strategic about people as they are about the business itself. They invest purposefully in human capital development, which includes both professional development and personal wellbeing.

Such leaders focus on people before numbers because they know that whatever the organization’s key performance indicators are, none will be achieved without the commitment and productive engagement of people. The simple truth is that there are always people behind the numbers.

People-focused leaders have also discovered that in addition to achieving strategic and performance objectives, focusing on human capital provides direct, tangible benefits such as increased employee retention and much greater engagement by those retained. In effect, these organizations get the trifecta of experience (long tenure), engagement (productivity and quality), and dedication (loyalty and advocacy) from their employees. Specifically, when people are engaged at work there is 21% higher productivity, 37% lower absenteeism and employee turnover, and 22% higher profitability.

When leaders see people as their most valuable assets, they find ways to support them and bring out their strengths, but what is required for the many leaders who are not yet as people-focused as they need to be?

Who Are You as a Leader?

The first task requires taking a good look at your current strengths and purpose as a leader to determine to what extent those strengths actually support people. Do you understand human capital? Do you see employees as an investment to be maximized or a P&L expense to be minimized? Is your emotional intelligence well developed? Can you express empathy and compassion? Do you pursue success through self or through others? Do you always have to have the answer? Do you listen to respond or listen to understand? Do you hoard information or share it? Do you micromanage others or empower them? The answers to this short list of questions can paint a picture of the extent to which your current leadership profile is people focused or process focused. You can see a more comprehensive lists here.

Do You Have a People Strategy, and if So, What Is It?

Do you invest in individual experts or highly effective teams? Are your primary HR activities designed to measure behavior and rate performance or support personal and professional growth in your employees? Do you encourage diverse opinions and healthy conflict? Are you strategic and purposeful about Equity, Diversity, and Inclusion (EDI) or is it a “side bar” initiative? Is your organizational culture aligned with your professed values or is there a “hidden”culture that drives behavior? And maybe most importantly, do you actually know what your people need to feel connected, engaged and successful or are you projecting onto them what you think they need?

Maslow’s Hierarchy of Needs

Although common in education and psychology, a very famous developmental/motivational model of human needs that is rarely used or understood in corporate or other organizational settings is Abraham Maslow’s Hierarchy of Needs. Maslow described his theory as a hierarchy of ascending needs, with the most basic at the bottom of the list and the highest-level human need at the top. This can actually inform inquiry into the extent to which the needs of people in the organization are being met or not. We have developed an instrument for assessing these needs in an organizational setting and invite you to contact us at either of the email addresses below for more information.

While the most basic physiological needs are typically not the direct purview of an employer, even the second level of safety and security needs may apply in many organizational settings and enlightened organizations recognize that the employees desire for belonging and esteem can also be fostered in the workplace. Of course, the highest level need in Maslow’s hiearchary is growth focused and addresses realizing one’s full potential through self-actualization. This is powerful for both the employee and the employer because it not only takes the individual far beyond the basic knowledge, skills, and abilities of their role, but according to Gallup, it supports a much deeper level of job satisfaction, engagement, and productivity. It feeds internal reward and an evolutionary kind of personal development. Some might ask, is supporting self-actualization really the role management in the workplace? Historically, it rarely has been, but as with a focus on human capital in general, supporting an employee’s full potential as a human being is a means of creating insurmountable competitive advantage for the organization. And the good news is that most of the heavy lifting comes from the employee. Leadership just provides the right environment and resources.

A Silver Bullet – Yes, There is One

Interestingly, supporting employees is actually a lot less complex than it seems, and, in fact, there is a single thing you can do that will drive greater results than any other activity. A recent meta-analysis by Gallup of data from 100 million employees worldwide determined that the single most powerful tool for increasing employee engagement is regular coaching, which can also be the primary vehicle for strategizing self-actualization opportunities. In fact, all the other stuff managers do is fine and often helpful, but coaching by itself accounts for up to 40% of the difference between engaged and disengaged employees. Most of the administrative stuff is of little consequence to engagement and performance.

One significant challenge that many leaders face related to “people strategy as business strategy” is that it is contrary both to what they were taught and what their organizational cultures actually value. Managers are rarely, if ever, rewarded for developing people or building teams or even achieving high levels of EDI. They are typically rewarded for short term KPIs, growth, and profitability. The irony, of course, is that a sound people strategy will support all of those objectives, plus sustainability and human capital as a core competency and competitive advantage. It just takes perseverance and a genuine belief that it is the right thing to do.

Lastly, as noted earlier in the article, we are not advocating an either or approach, but the evidence is overwhelming that whatever else you focus on (finance, planning, technology, P&L, product strategy, etc.), you will achieve much greater results if you lead with a strong people strategy and build out human capital as your greatest organizational asset. As Patrick Lencioni so astutely observes, you can’t fake it, buy it, or replicate it. You can only build it, but once you do, it is powerful.

About the Authors

Anda is an ICF PCC credentialed Executive Coach with 1,800 hours of coaching, who has been coaching for over a decade. She is a Certified Professional Coach (PCC) with the International Coaching Federation (ICF) and has been coaching and creating workshops for teams for over a decade. Her goal is to give her clients value by being effective and efficient– pinpointing root causes and providing solutions in a short amount of time. Her ideas on LinkedIn made her recognized as one of the top 100 Influential Filipino Women on LinkedIn.

Anda Goseco

As a recovering C-suite executive and educator, Wallace has come to understand that high performance and respect for humankind are not mutually exclusive. His primary motivation is for people who associate with him to be better off because of that association and that the world be a better place as a result of his efforts.

Wallace K. Pond, Ph.D.

Higher Education Has Yet to See the Worst, But There is a Path Forward

Image Credit: Insurance Journal

As awful as the pandemic has been for higher education, some of the worst-case scenarios have not yet come true, which may have led some in academe to think that the worst is over. That would probably be a mistake.

In one of my earlier articles, way back in 2017, I identified three tipping points that suggested troubled times for colleges and universities. All three are still in play. In a more recent publication I identified several external factors (demographics, negative public opinions, cost & debt, the economy, and alternatives to traditional degree programs) that were conspiring to suppress enrollment and drive down revenue. Unfortunately, four of the five are getting worse and one, cost, is flat. And all of these were in play well before the COVID crisis.

At least as importantly, a substantial numbers of institutions were experiencing significant financial stress before the pandemic, with almost a third operating in the red. This is significant, because it means that many colleges have been operating at a deficit for up to several years and have already employed many of the options at their disposal to preserve liquidity. They were laying off staff, borrowing money, deferring maintenance, delaying accounts payable, and spending down endowments prior to the current crisis, which has further stretched compromised institutions.

A False Sense of Security

Although enrollment declined about 4% and revenue fell 14% overall in 2020, it was 10% in community colleges and the drop in first time enrollments for students of color was approximately 30%! Surprisingly, these numbers are quite a bit better than the worst case estimates for enrollment declines overall, which has contributed to a false sense of security. A bigger factor, however, is the recent emergency federal aid for higher education, totaling about $77 billion, close to $40 billion of which were direct payments to institutions with the balance going to students. As a result, the depth of the financial stress in higher education has been temporarily masked. The problem, of course, is that these are temporary payments that have helped colleges and students stay afloat. The federal relief funds also masked substantial state-level cuts in funding that are not likely to rebound soon. There will be no equivalent rescue next year or in coming years, yet enrollment will be even lower than it is now and years of financial stress that was temporarily papered over will come back quickly for many institutions. We might think of the federal funds as an overdraft line on an already empty checking account.

Of equal concern, recent research by Strada Education Network found that disruptions to education plans from early in the pandemic have not only not subsided, the number of people who say their plans have changed has actually increased over the last year. And of critical interest to colleges and universities, of those adults, 18 and older, who intend to pursue some kind of post-secondary education, over 50% said they will choose employer based or online non-college training options. In fact, only 33% said they would choose a community college or four year institution, suggesting that the pandemic has dramatically accelerated the move away from traditional higher education to other post-secondary alternatives.

One potential advantage from the pandemic is that many institutions made cuts to expense that they found impossible to make before the crisis. In fact, higher education in the U.S. laid off 13% of the entire workforce, totaling about 650,000 people! Schools also cut academic programs, sports teams, cancelled construction projects, refinanced debt and engaged in other expense reductions that will provide longer term decreases in overhead. While this may be helpful in some institutions going forward, it will be inadequate for the most distressed.

In short, neither 2020 nor 2021 are meaningful measures of the likely reorganizations, mergers, and closures to come. Ironically, the COVID crisis provided significant and unexpected emergency funding that has delayed insolvency for many institutions, but none of the structural challenges, other than modest reductions in overhead, have been addressed, leaving many schools uncompetitive in a shrinking market.

The Need for Transformation

About 85% of all traditional institutions of higher education are on a spectrum of risk from “some things need to change,” to “we can’t make payroll next month.” Because almost all traditional colleges function on a model that is structurally built for a different time and market, surviving and thriving will require far more than preserving liquidity. In fact, even before the pandemic, higher education was facing an existential moment in which the market was no longer capable of supporting all of the providers vying to enroll students and even those that had fairly stable enrollment were operating with unsustainable business models—and still are. When the emergency federal funds are used up, some material number of institutions will find themselves insolvent.

So, we will continue to see the higher education market shrink as fewer institutions serve fewer students overall. Some colleges are too far gone to recover and some will technically survive, but function as “zombie” schools, unable to grow or innovate. Those on the more dangerous end of the risk spectrum that survive and thrive will do so because they make a purposeful decision to reinvent themselves. Again, with the exception of the most exclusive and wealthy institutions, the current business, revenue, and operating models are so compromised that incremental change will simply not suffice. For institutions that are up to the challenge, the future could be incredibly exciting and innovative. If you’d like to chat about how we can support transformation in your post-secondary education click here or email wkp@ideapathway.com.

Transformation is the Required Path to Surviving and Thriving for Most Colleges and Universities. Is Your School Ready?

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 wkp@ideapathway.com or call 719-344-8195.