Published on 2013/06/10

Market Differentiation and Cost Savings: The Value of Competency-Based Assessment

Market Differentiation and Cost Savings: The Value of Competency-Based Assessment
Focusing on student assessment rather than instruction is one way institutions can reduce their operating costs and find success in the commoditized higher education marketplace.

Market differentiation is as important in higher education as it is in any area of commerce. Universities continually strive to build competitive advantage even though within sectors (e.g. Ivy League) their brand differences are relatively minor. But even small differences in the higher education marketplace can translate into enormous sums of money, so institutions compete at multiple levels and they compete hard.

For much of the time since the Second World War, schools competed mainly over the academic content of their programs. Curricular breadth, niche programs and institutional curricular focus were all ways institutions tried to build competitive advantage. Starting in the 1990s and through the first decade of the 21st century, many institutions chose to use online delivery as a means of separating themselves from peers and for building market share. These efforts were not unlike efforts by manufacturers to repackage existing products and restructure distribution systems to reach new markets. The focus wasn’t on changing the product; it was on changing the way it is consumed and sold. For example, most online programs are structured just like face-to-face ones: semester-based, same class size limits, similar homework assignments, class projects, readings and the like. The main advantage of online programs is they can reach markets the institution was previously unable to reach.

By 2010, significant social, economic and technological forces began to impact higher education in ways in which it had not been impacted before. Not only was higher education reaching the limits of decades of tuition increases, it was also beginning to undergo revolutionary changes in instructional technologies. Massive Open Online Courses (MOOCs) and other open learning technologies suddenly made the bread and butter of higher education — teaching — a nearly free and widely-available commodity. A new wave of market differentiation and positioning began.

For those institutions that chose to use the new market disruption to their advantage, most followed Stanford University, MIT and Harvard University in building MOOCs. They saw MOOCs as relatively inexpensive advertising to give new customers a taste of their products, not unlike the Saturday morning trip to the grocery store where food samples are available right next to the shelves on which they are sold.

A much smaller number of schools, including Southern New Hampshire University, Northern Arizona University and the University of Wisconsin System, began to focus on assessing how students learn and on providing students with the services they need to be academically successful. Instead of growing enrollments by teaching more content to more students, these schools focused on student competency and mastery as the main sellable product. MOOC providers that were competitors before suddenly became potential cost savers for the assessment schools. The latter could take advantage of MOOCs and other open courseware to replace, or at least supplement, instruction for their students. This has changed the traditional budget model by significantly reducing one of the main costs in higher education — instruction — and replacing it with a scalable process that measures knowledge and mastery.

In the traditional higher education model, the expense budget grows proportionately to enrollments: for every x students, y faculty members must be hired. The competency model is different. Because faculty do not focus on teaching, they can develop competency structures and assessments that are then administered by less costly staff, and students are directed to open learning resources for content. Faculty continue to oversee academic quality by developing competency-based curricula and the assessments that test competency, but they do not have to be in front of classes (face-to-face or online) repeating the same information semester in and semester out. This new approach in higher education closely resembles similar cost-saving processes in healthcare. Doctors continue to provide healthcare quality assurance, but many healthcare procedures are done by less expensive staff.

There is tremendous pressure inside higher education to maintain the status quo as much as possible; after all, the positions of those who work in the field depend on it. However, for the first time in many decades, there is also great pressure from outside higher education — employers, students, parents — for higher education to become more cost effective and more relevant in terms of leading directly to well-paying jobs. Whether truly scalable competency-based approaches to higher education become the prevailing model is yet to be seen. In this early phase of development, however, competency-based programs seem to hold considerable promise.

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Readers Comments

Ravi Narayan 2013/06/10 at 10:48 am

I want to take Schejbal’s idea and run with it a little further. Suppose small- to medium-sized institutions looking to differentiate begin to focus on assessment rather than instruction, as he suggests. Would it not follow that the MOOC and other low-cost content providers, now providing the instruction, would shape their content to align with those assessments? I foresee partnerships developing between the lucky few institutions and MOOC/low-cost providers, for the benefit of both. However, most institutions — the ones without these partnerships — would continue to struggle with the challenge of differentiation.

Dan Jones 2013/06/10 at 3:40 pm

Schejbal’s discussion of institutions shifting their focus from instruction to assessment could potentially address the ongoing concerns over the quality of education being offered by the new entrants to the higher education space. Institutions’ assessments of the content and instruction from MOOC and other low-cost providers could act as needed oversight to ensure students are learning what is necessary and appropriate. The benefit of keeping content delivery in the purview of these low-cost providers is that they often have more flexibility to change the curriculum than do traditional institutions. Thus, they would be able to take feedback from institutions (the assessors) and adapt their content.

WA Anderson 2013/06/10 at 4:29 pm

This is a good overview of the struggle institutions are facing to redefine their roles in the new higher education marketplace. If the model Schejbal describes is widely adopted, this will mean a major repurposing of faculty roles.

RitaJ98 2013/06/13 at 5:13 pm

I just enrolled in Northern Arizona University’s Personalized Learning program! I’m already loving the competency-based program. Why did I ever let myself sit through a boring lecture in a classroom?

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