Published on 2015/01/20

Adapting to Higher Ed’s Change from a Public to a Private Good (Part 2)

The EvoLLLution | Adapting to Higher Ed’s Change from a Public to a Private Good (Part 2)
The changing higher education marketplace is forcing higher education institutions to change gears and serve new customers.

The following is the second installment of The EvoLLLution’s interview is with David Collis, professor of business administration at Harvard University’s Business School. In the first installment of this two-part interview, Collis discussed higher education’s transformation from a public to a private good and explained what that means in terms of institutional positioning. In this conclusion, he explores the value of technological advances and the opening global marketplace for institutions in this more competitive postsecondary space.

Click here to read key takeaways.

1. How are technological advancements supporting the industry’s transformation into more businesslike operations?

There’s obviously two parts; there’s the administrative side and then the educational side. On the administrative side, it’s underway with the various enterprise systems and so on.

The more interesting thing around technology is around the educational pedagogical process that’s happening. At Harvard now, in the undergraduate courses, [we’re looking at] the notion of flipped classrooms, of gamification, of trying to build or take into account different learning styles and have course materials adapted to different learning styles. All of those things are enabled by technology in a way that probably wasn’t true even a decade ago. The bigger impact of technology going forward potentially is on the educational pedagogical side, not so much the administrative side. We are going to see very different courses and pedagogies employed even in the classic liberal arts school as they take advantage of some of the new technologies.

2. Following on this switch of higher education from a public to a private good, how important is the global marketplace?

The number of foreign students coming into the U.S. continues to go up. The other advantage of those students typically is they’re full-fee paying. By and large they’ll rely much less on tuition support and scholarships and so on. Even the percentage they contribute to the revenue of an institution is higher than the percentage of students coming.

The world is global and students continue to see the benefits of getting an American education and American degree. For the institutions themselves, now there are the global rankings of higher education institutions done by various people. The concern now is that the market for education is global rather than local, so Cambridge University and Oxford compete with Harvard and Yale. The choice a Chinese student has is to go to Australia or the U.S. or the U.K. to study.

The language side of things drives a certain part of it, but institutions now have to think of their marketplace as being global. If they’re no longer funded by the state locally with the objective of improving the economic environment to the state then people can now begin to think about how do we best serve or best make money in a global economy relative to our global competitors.

3. As public funding has declined, as international competition has risen, do you think that higher education institutions still have the responsibility to serve their local communities or should they be focusing on out-of-state enrollments as a way to remain viable and competitive?

The implication is where you are in the higher education space. Cambridge University competes for Nobel Prize winners with the University of Texas Austin. If you’re a community college who’s still serving primarily a local market, you’re going to be less attractive to the Vietnamese students coming over because you’re not necessarily going to get the credential to work back in Vietnam; there you still have more of a local market.

Even at the lower end, the more certificate, skills-based education, a number of nationwide employers (like Wal-Mart) would prefer to do a nationwide deal with a set of institutions or an institution that can provide the education they want for their workforce across the United States. There is still a need to begin to think beyond just the local community. Building a relationship with a big employer in your locality can be a way to expand the footprint and start offering the same courses for their employees nationwide. The scope of the served market for all institutions is probably increasing. At the higher end, it now absolutely is global and even at the historically more local level it’s the relevant served market that we need to think about developing this distinctive value proposition for.

4. Is there anything you’d like to add about the changing business model of higher education in the modern era and what it really takes to succeed and remain viable over the long term?

A lot of the participants in higher education still have it in mind that this is or this should be in a normative sense a public good that is publically funded. It’s happening across the world, [this idea that] if there really is a deep-seated philosophical shift, that no, this is really a private good and it’s better provided more economically. If society is moving in a different direction then it’s better to acknowledge it, embrace it, see the implications we’ve been talking about and try and navigate your way through it.

This interview has been edited for length.

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Key Takeaways

  • The globalizing higher education marketplace is creating international competition between elite universities for students across the world.
  • For local institutions, they need to turn their focus to nationwide employers and other such major clients that could help them expand their reach nationally.
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