Lessons from Business School: How to Stay Competitive in Today’s MarketplaceRussell Winer | William Joyce Professor of Marketing at the Stern School of Business, New York University
Today’s higher education market is competitive, crowded and evolving. The range of competition has grown enormously, from other institutions within a 10-mile radius to every college and university in the country. To be successful in this environment requires a significant shift in thinking from college and university leaders, from a more academic mindset to one that incorporates business best practices. Fortunately for many higher education institutions across the United States, they have centers for business best practice and thought leadership on their very campuses! In this interview, Russell Winer shares his thoughts on how business-minded management would look in the postsecondary context and reflects on how the opposition to this new way of thinking might be overcome.
The EvoLLLution (Evo): Why is there so much distaste across the postsecondary space at the notion of managing the higher education institution with a business mindset?
Russell Winer (RW): This is true. As an example, NYU’s recent past president, John Sexton, was an unusual academic in that he had a clear vision for the university and actually executed it. His vision for NYU was for it to be a globally networked university with campuses in different parts of the world, but all interconnected so students at each campus would take at least a term at another. As a result, we have established campuses in Abu Dhabi and Shanghai. However, many faculty only saw this strategy as a diversion of resources from the main campus in New York City, and not as a way to differentiate NYU from other top universities with which we compete, such as Columbia. Faculty are not trained to think “big picture” and, instead, think very parochially about their department or school. While managers have to be focused on their business units, of course, they also have to think about the company as a whole.
A second area they do not understand is the need to spend money on marketing, particularly on brand building. Faculty are very much of the “if you build it, they will come” philosophy. They do not fully understand that students today have lots of choices so we are in a very competitive environment.
Forward-looking colleges and universities understand this and are working on shaping their “products” (campuses, programs, etc.) to try to develop a unique niche in this competitive marketplace and also spend money on marketing so potential applicants and their parents understand the brand.
Evo: How would a businesslike management approach impact access to postsecondary programming and quality of offerings?
RW: A more businesslike approach would be what we call in marketing “customer centric,” where we try to satisfy customer needs the best we can and better than competitors.
Now let’s be clear: A university is not exactly like a company selling a product. The latter must fully tailor their offerings to changing customer tastes and needs. A university, on the other hand, has an obligation to straddle both educational and business worlds. With respect to the former, we know what the students need in terms of courses and curricula for them to be educated and we try to supply that.
As a result, we do not do any marketing research to ask students what they would like to have in specific courses—we are paid to know that and to keep the material current. However, we are also concerned about demand for different courses and often survey students to determine what other courses they might like to have. In addition, we have data on course enrollments and actual demand, which gives us a lot of information about the popularity of courses we already offer.
Thus, colleges and universities should be constantly monitoring course ratings and enrollments, the external environment in terms of changing employer and societal needs, and student interests to adapt their offerings where appropriate.
Evo: What, to your mind, are some of the most important lessons being taught by educators in the business school that should be applied to the management of institutions?
RW: I am a strong believer in marketing and brand building. I think that many of the concepts that I teach in my core marketing course can be applied to the management of higher education institutions. Other than brand building, all organizations need a strong marketing strategy and what we call a value proposition: why a student would come to, say, NYU rather than another university. Other key marketing principles are distribution and communications. For example, with respect to distribution, many universities are not adding online educational offerings beyond traditional bricks and mortar.
Other than marketing, key skills taught by management departments are leadership and negotiations. The reason that there are many weak leaders in higher education is that they have learned on the job to be leaders rather than having studied it formally. Just about all the other areas of business such as economics, accounting, finance, and operations management are highly relevant as well.
Evo: From a marketing perspective specifically, what are a few key changes institutions could make to their marketing efforts to improve reach and applications?
RW: Many universities are using social media like Facebook and Instagram to reach their target populations, normally, 16-18 year olds. These are the media that the target audience are using to receive and send information so they must also be used to reach them.
The biggest change affecting the marketing of institutions of higher learning is what is usually referred to as Big Data. There is a lot of pressure on universities to look more selective and decrease their acceptance rates. This makes them more attractive to ratings publications like U.S. News & World Report. However, it is easy to increase the denominator of the acceptance rate, that is, the number of applications, by attracting unqualified applicants. What is more difficult is to increase the number of qualified applicants. As a result, the key indicator the ratings should be using is the yield rate, that is, the percentage of students that are admitted that matriculate. This requires that more attention be paid to sifting through a lot of data that is available on potential applicants, building models predicting which students will accept, and making decisions based on those models. In other words, Big Data can be used to improve the quality of applicants rather than the quantity.