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Effectiveness Over Efficiency: How to Succeed in Today’s Higher Ed Market

The EvoLLLution | Effectiveness Over Efficiency: How to Succeed in Today’s Higher Ed Market
Operational effectiveness needs to be a priority for all institutions trying to accomplish long-term viability, but it’s especially important for institutions that serve non-traditional students.

The higher education space is in flux, but it has yet to face a true crisis that forces wholesale changes industry wide. That said, given the massive changes in demographics, the only barriers truly standing in the way of such a crisis are the quickly diminishing state subsidies that allow institutions to maintain their status quo operational models—and those walls are tumbling down. The majority of today’s students are non-traditional and expect to be treated as customers. This means institutions can no longer be successful trying to serve everyone everything; finding a niche and being the best at serving that niche is the name of the game. In this interview, Hunt Lambert expands on that idea and shares his thoughts on what that truly means for today’s colleges and universities.

The EvoLLLution (Evo): What impact should the emergence of consumer-minded students have on university business processes and practices?

Hunt Lambert (HL): It’s important to define whom your institution serves. As we all know, somewhere less than 25 percent of all higher ed students today are 18- to 22-year-olds pursuing credentials in the traditional way. If you’re dealing with the other 75 percent of students, in the context of their working and family life, school constitutes less than 10 percent of their time. During that other 90 percent of their time, they’re customers and the reasons they don’t continue are usually customer problems, not student problems.

Those sorts of customer problems for an adult include the ability to continue financially, a change of job, job location, an illness—issues along those lines. Helping them through those problems are really customer service solutions, not student service solutions. If you want to serve the breadth of the market today and certainly the adult, you have to be able to treat them as customers, distinct from treating them like students in their academic environment.

Evo: Why is it so important that higher education leaders maintain a focus on effectiveness?

HL: Effectiveness is not a term that is used in higher education as much as “efficiency.” Peter Drucker, the greatest management guru of the last century said, “To be effective is the job of the knowledge worker.” In higher ed, we employ knowledge workers, we train knowledge workers, we’ve come out of the industrial revolution now and what we’re doing is preparing people for knowledge and information economies. He goes on to say, “For manual work, we need only efficiency, that is the ability to do things right rather than the ability to get the right things done.” The manual worker, whether machine operator or frontline soldier, was once predominant in all organizations. Few people of effectiveness were needed, mainly those at the top who gave the orders that others carried out.

Drucker continues, “If effectiveness were a gift people were born with, the way they are born with a gift for music or an eye for painting, we would be in bad shape.” Here he’s pointing out that effectiveness is something that can be learned. He talks about the effective person by saying, “The effective people I’ve seen differ widely in their temperaments and their abilities in what they do and how they do it in their personalities, their knowledge, their interests, in almost everything that distinguishes human beings. All they have in common is the ability to get the right things done.”

This is my point of emphasis. Effectiveness in an industrial economy wins the game hands down. As we’ve seen today, even with huge efficient companies like Nokia, if you are not making the right thing, if you are not delivering the right service, no amount of efficiency solves your problem. Nokia did not make the transition to the smartphone fast enough and they were rendered all but irrelevant on a global scale after being the dominant cell phone company. It wasn’t because of lack of efficiency; it was because they were making phones that nobody wanted anymore.

This is exactly the example for higher ed today. Clayton Christensen has talked about disruption. This often happens when effectiveness moves to a new market. In the Christensen model of higher ed, disruption has already happened. After all, 75 percent of the market is now composed of non-traditional students; that’s the disrupting segment. Adapting to serve this market won’t happen exclusively by being more efficient.

The University of Phoenix was successful at adapting to this disruption because they chose not to build campuses or recreation facilities, and they chose not to have a research infrastructure. While some of us on the non-profit and public side might not like the University of Phoenix, we should all applaud them because their for-profit model, adapted to serve this new market, is what has enabled the range of Internet-based technology we’re all trying to leverage. We’re playing an effectiveness game against them. We’re observing how effective they were and asking how can we be more effective.

Evo: What is behind the lack of differentiation between traditional, public institutions?

HL: Early in the history of U.S. higher ed, the Carnegie Foundation published the Carnegie Classification of Institutions of Higher Education—colloquially known as the Carnegie Ladder—as an identification of the different types of universities that serve different types of students. The Ladder was never meant to be climbed, but it very quickly became a race to the top. Everybody thought they needed to climb that ladder. Harvard, 200 years ago, made the strategic decision that it would be the best at everything. It’s been fortunate enough to have the resources to be able to invest towards accomplishing that goal, but there are almost no other universities on Earth that can do that.

What most universities need to do is look hard at their mission, try to get clarity about who they serve and get very clear about what they are not going to do. Most importantly, they need to get very clear that they aren’t climbing the Carnegie Ladder. Instead they’re trying to serve a specific population of students with a specific piece of excellence, extraordinarily well. I predict that the universities that figure out their niche market and focus extremely well on it are going to survive. Much like Christensen says, those that try to be a bit of everything to everyone will neither be effective nor efficient and they’ll fail.

What I see happening is more and more universities chasing efficiency. If you do this, it means your budget model is to say, “Everybody cut 10 percent.” As soon as you say that, you are negatively impacting the group that is serving the right students in the right way and you are protecting those that aren’t.

A much more effective process would be to say, “We are closing this entire college because we are not, and probably never will be, competitive and we want to mean something different.”

Evo: How can focusing on effectiveness at the administrative level impact the experience of today’s non-traditional student?

HL: I am a huge believer in serving niche markets. I did a pro-bono project for independent bookstores back in the 90s on the changing structure of the bookstore business. It was at a time when Amazon barely existed and superstores were just being built.

What we concluded was that 100 percent of independent bookstores would go out of business unless they identified a very narrow niche, worked to understand that niche, and then served it better than any competitors. I was booed out of the conference center when I presented my report findings, but it played out exactly that way. The stores that embraced the idea of “who do you serve?” succeeded, and continue to succeed.

Higher ed has got to adopt that mindset. When I look across the state system, what role do I want my institution to play as distinct from all the other institutions in the state system? They need to reorganize around that and focus on that so they can be really effective. Community colleges have been reasonably good at this because they focused on the local employer base as part of their economic development mission, but most public universities haven’t been very good at it.

Evo: What are some of the most significant roadblocks standing in the way of these effective process changes?

HL: Only crisis causes change in large organizations. In the telecom industry, where I spent a large chunk of my career, the breakup of AT&T created the impetus for change and then deregulation created an extraordinary existential external threat. In those circumstances, we were willing to experiment with an old way. We’ve seen what happened with the telecom industry in terms of the technologies, the services and the innovation since.

Higher ed hasn’t had a crisis yet. It would have happened a decade or two ago, but the regulatory infrastructure shields it. What’s happening to taxis now with Uber is probably about to happen with higher ed’s industry structure because disruption has already happened.

Right now, state schools that are doing well are doing so on out of state tuition boosts and international students paying full fare. All that’s doing is swapping one subsidy for another. It’s not sustainable. Schools still need to decide who they are, what they mean, what they are trying to accomplish and then seek to attract the best students they can get in those narrow areas. Frankly, that means a medium-sized regional university might have to decide to close half of their programs in order to be really good at the ones where they can be industry-dominant.

This interview has been edited for length.

This is the first installment of a two-part Q&A series with Hunt Lambert on institutional effectiveness. In the second part, Lambert discusses the true nature of agility in the higher education context and share the central mindset shift necessary for institutions to operate effectively.