Lessons From a For-Profit: The Big Secret

In 2006, after 15 years at a public institution in Michigan where I went from assistant professor to dean, I decided it was time to move on. Maybe a bit disillusioned with the traditional institution, I wanted to experience the leading edge of innovation and learn the secrets of the for-profit schools that were springing up all over the country. Eight years later I’m back from the leading edge and ready to report my findings.

So, what’s the secret of the for-profits?

It’s surprisingly simple: they beat us at our own game. The strategies and models that the for-profits turned into growth and profit were all pioneered by a handful of very creative, very student-oriented — and for the most part very traditional — institutions. That last part may surprise you; so let me expand. More correctly, it was the continuing education units at those traditional institutions who were figuring out how to meet the needs of non-traditional learners back in the 1970’s and 80’s. Schools like Regis University, Central Michigan University, Excelsior College, and many others mastered serving non-traditional students — operating efficiently, treating students as customers, etc. — and paved the roads for the for-profits to succeed.

The for-profits simply adopted those models, added an emphasis on operating more as a business than as a social undertaking, and then filled a niche on the continuum of educational opportunities that traditional schools preferred to ignore: adult learners.

There were traditional institutions that figured this out pretty early and took action, such as the University of Maryland University College and Excelsior College. But even those have failed to find the type of stratospheric success of the for-profits. No, the days of explosive growth are likely over, and with them have gone the opportunity for those pioneers to be the next Capella University, Grand Canyon University, or University of Phoenix, with their hundreds of thousands of students and hundreds of millions — no, billions — of dollars.

Everybody points to the Internet as the disruptive technology, but it really isn’t. The University of Phoenix originally grew as a campus-based institution and was actually a bit late getting into online (that’s OK, they made up for it). But let’s face it; most online education even today is little more than the old Correspondence Courses from back in the day before the Internet anyway.

No, the disruptive technology was, and still is, the management practices of the for-profits; running an institution as a business.

And while there is considerable controversy surrounding for-profit education, I propose we set aside the moral discussion and focus instead on the lessons each sector can learn from the other. You’ll hear more about this over the course of this month’s Special Feature on Operational Efficiency in Higher Education, and throughout my own personal series (which is launching today), where I’ll explore various functions and approaches that could be useful for traditional institutions to secure existing market share or even expand into new markets.

If you’re interested in where the opportunities might be for your institution to step up its game, so to speak, stay tuned.

This is the first of a multi-part series by Terry Rawls discussing different management strategies and tactics higher education institutions — both public and private — can capitalize on to enter into and succeed in new marketplaces. To read the next installment of the series, please click here.

To be reminded of when a new article in the series goes live, click on the button below.