Published on 2015/04/09

Staying Above Water: Changes Critical to Institutional Competitiveness in the Modern Era

The EvoLLLution | Staying Above Water: Changes Critical to Institutional Competitiveness in the Modern Era
Transforming the institution to more nimbly respond to marketplace changes and growing demands is a critical step for colleges and universities that hope to remain viable in the long-term.

The announcement of Sweet Briar College’s closing has added to the ongoing discussion about the future of many colleges. Headlines on the unsustainability of higher education and college closures abound. Some higher education economic experts are predicting that more colleges will be forced to take the step that the Sweet Briar College trustees chose to take.

According to Nathan Harden in The American Interest, “In fifty years, if not much sooner, half of the roughly 4,500 colleges and universities now operating in the United States will have ceased to exist.” And, in a recent interview in The Economist, Harvard Business School professor Clay Christensen, said, “[the] vast majority of traditional universities … have no wiggle room. So I’d be very surprised if in ten years we don’t see hundreds of universities in bankruptcy.”

With undergraduate and graduate enrollment in the U.S. declining, many higher institutions are scrambling to attract and retain more students. The National Association for College Admissions Counseling recently listed in their “College Openings Update” that 470 American colleges at the time of publication had not filled their freshman classes.

Concern about the overall financial conditions of many colleges is growing and as we move toward an increasingly fierce competitive environment, and the higher education space is now ripe for a shakeout. Those institutions that survive will have to rapidly adapt to market and environmental changes in productive and cost-effective ways. This agility means adjusting to and taking advantage of emerging opportunities as a result of shifts and changes in such things as demographics, student demand and needs, and technology.

To gain competitive advantage, agility is the ability to predict, adapt to, and to be proactive with respect to change. Those institutions that are not prepared to do that will find themselves in dire circumstances. With that, higher education institutions should adopt a long-term agility plan to ensure survival and growth. Five changes in the institutional game plan should be considered.

1. Adopt New Innovative Business Models

The balancing act of costs of institutional operations and tuition price can no longer be sustained. Higher institutional operating costs and lower productivity, combined with price increases at rates far beyond that of general inflation, suggest certain doom for many institutions. This suggests the need for radical changes in the higher education business model.

For an example of another industry that was forced into similar changes, we can look to the healthcare space. In the 1980s, the industry underwent a paradigm shift driven by changes to the Medicare and Medicaid reimbursement system. Hospitals responded through massive configurations resulting in new business models and delivery approaches. Higher education leaders would do well to take that cue.

Consolidation, mergers and new ways of doing business must occur for many institutions to survive.  Does every institution need its own IT, HR, finance and library? Can services be consolidated or outsourced? Many services that are traditionally centralized and managed at the institutional level might be outsourced to third parties. This trend can be demonstrated by the growing number of third parties who manage online enrollment and retention. With the new skills required for recruiting students in a digital world as opposed to traditional campus recruiting, opportunities for partnerships with companies for these services could be an important part of an overall agility plan as institutions attempt to rein in higher costs and capture new markets at the same time.

Creating new business models that create new market spaces might also include merging parts of the higher education sector with other sectors such as venture capital, media and innovation centers. This would bring together leading-edge creativity that could produce new adaptive learning methods for institutions to adopt—ultimately resulting in better student performance and higher retention.

2. Get Past Traditional Higher Education’s Mindsets and Models

Transcending time and place through technology-enabled learning and unbundling the elements required to earn degrees and credentials can create a competitive advantage over those institutions still mired in a higher education mindset long past its time.

As learning technologies make place-based institutions less relevant and potentially bring down the cost and time of a college education, online learning and electronically mediated education provide alternative methods for delivering accelerated degrees, competency-based programs and 4+1 programs. Alternate credentialing and certifications relevant to vocations must also be considered as part of the institutions portfolio. These initiatives demonstrate programmatic agility and, more broadly, the capacity for an institution to respond quickly to market demand.

The unbundling of a college degree and credits must also be considered part of a long-term agility strategy. Consider the innovation of iTunes—selling single songs in addition to albums as analogous to higher education. Imagine in the not-too-distant future where students will customize the approach to their education and choose different components from different institutions. Credits will accumulate very differently than in the traditional model. Those institutions that figure out how these credits will aggregate and transfer will increase their agility and will ride the swelling demand for options that extend and deliver learning.

3. Expand the Institution’s Global Footprint

With students becoming increasingly mobile, the globalization of higher education is here. Those institutions agile enough to capture a portion of the global market will move towards a more sustainable business model. Decreasing enrollments, the shift of tax dollars away from public education, and fierce regional competition means lost revenues for many institutions—those revenues must come from somewhere—and that is the international market.

Financial considerations aside, moving toward internationalization provides four significant additional advantages for the institution:

  1. Increases global awareness for students;
  2. Bolsters research and knowledge production
  3. Fosters international collaboration
  4. Creates a “global university” brand that strengthens the institution’s reputation, relevance and reach

No longer constrained by distance and physical boundaries, institutions who leverage technology to facilitate access to the benefits of internationalization will take advantage of emerging opportunities, respond to changing markets and position their institution in this new global environment.

4. Focus on Outcomes

Most savvy 21st-century higher education consumers are single-minded in their demand for value and return on investment. The agile institution adapts to changing student demographics and needs by fine-tuning the notion of the “traditional college education” experience. The idealized version of a “typical college student” has no real connection to today’s higher education landscape. The modern typical college student in America has a job, a family, is enrolled part-time or some combination of all three.

Reflecting that new demographic, the recent Zogby Analytics survey the “University of the Future” reports the new “typical college student” demands that their institution be accessible, flexible, innovative and job-focused. This requires an institutional dexterity that provides students with courses at all times of the day or night, schedules that accommodate student needs around their work and learning on-the-go. Most importantly it requires a commitment clearly focused on outcomes that lead to career goals and aspirations.

The “new vocationalism” movement that integrates vocation and employment-oriented goals in academic educational programs provides the impetus for higher education institutions to be more agile in their offerings as these institutions build collaborations with industry. Leveraging their combined knowledge of labor markets, skills and pedagogy can provide the tangible outcomes the typical college student demands today.

5. Consider Modularity, Not Just Degrees

Institutions must have the readiness and capacity to capture those students who do not necessarily seek full degrees, but instead require “just-in-time” on-demand knowledge. Rather than declaring majors, those students might declare missions: education with a specific purpose in mind.

This new incentive of giving students real world applications and building offerings around a specific competency goal is particularly suited to modularization of learning content. Breaking down education into different components and filling the need for knowledge in bite-size chunks gives students the freedom to race through core concepts on their own schedule, freeing up face-to-face time for more in-depth work.

Finding multiple uses for the same content, and breaking courses down into smaller modules that can be taken on their own or shuffled and rearranged into a more personalized experience requires a commitment to adopting new models of blended learning. Examples of modularity might include online certificates in specific skill areas or alternate credentialing such as conferring digital badges for successful learning of chunks of knowledge.

With career placement rates, outcomes and career relevance playing an increasingly significant factor in decisions on where to enroll, on-demand knowledge and just-in-time education in modular form fills an important and growing space. This flexible architecture enables institutions to offer an array of stackable credentials or programs and scale them for a wide variety of needs.

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