Costco U., Adapting to Change in the 21st Century: Making the University a Lean, Mean, Discounting Machine

If public universities are going to be a business, at least be a good one.

August 22, 2012

The defunding of public higher education can be traced back to the 1970’s, and even with the economy moving out of recession, no one thinks that we’ll return to anything close to the peak, or even the previous pre-recession levels of government/taxpayer funding.

During this election season, both parties are signaling a future where government is going to do less and private industry more.

The trend is clear.

Maybe the era of the public university is coming to its end and what’s next is the inexorable rise of the for-profit sector and the only public universities that will survive are the ones that adapt most quickly and readily.


If universities are going to be viewed as a consumer experience, and will be competing head to head with for-profits, we should be more like Costco, less like Wal-Mart.

I’m hard pressed to think of another store where people actually enjoy the shopping experience as much as Costco. Maybe Brookstone, except that no one ever buys anything in Brookstone. You just go in for five minutes in the massage chair and a quick marvel at the 67-piece barbecue set and then slink out pretending you can’t hear the edge in the salesperson’s voice when he tells you to “have a nice day.”

When you encounter a fellow Costco shopper, their eyes light up as they eagerly tell you their favorite aspects of the store, the giant bags of limes, the cheap name-brand clothes, the spinach dip. We are also happy to evangelize as to its virtues, encouraging the uninitiated to become fellow Costco shoppers who are not even accurately labeled “shoppers,” but should instead be called “fans.”

If we’re going to embrace business principles, Costco’s seem pretty good:


Member not Customer: As most well know, Costco requires the purchasing of a membership, for which you receive a card that you must show at the door and again at checkout. In reality, the card check at the door is cursory, but even so, the notion that you belong to this place, and that you have already invested something before the experience has even started engenders both loyalty and duty, loyalty in that you’re not going to go to some other warehouse club. Duty, in that you’ve already paid for the membership, you might as well make use of what it has to offer.

Most traditional colleges and universities do this pretty well already, through orientations ending in rituals like convocation where the new class is introduced and inducted into the community. This is a distinct advantage over the for-profit schools. You don’t see people running around in their University of Phoenix hoodies.

Dazzle Them in the Beginning: After showing your membership card, the first thing you see in a Costco is the great wall of televisions. The largest screens are near the front, and they’re always playing Blue-Ray movies that show off their clarity and definition. I literally feel my jaw muscles go slack at the sight. Then you see the prices, expensive, but also, quite obviously cheaper than you’ll get elsewhere. I imagine that in terms of sales volume, 72-inch televisions rank relatively low, but those large, pricey consumer goods signal exactly what Costco wants to communicate, that this giant building is stuffed with bargains.

This is another area where universities do pretty well with programs like my current employer, College of Charleston’s, First Year Experience, where incoming students are grouped into learning communities focused on specific topics of interest and taught by some of most distinguished faculty on campus. Programs like this and others tell students they matter, that they are the focus of our attention in a good way.

Keep in Contact: One of the things universities tend to do less well is sophomore year, leading to the proverbial sophomore slump. There is a similar letdown following your first Costco experience, but six weeks or so later, you receive your first copy of Costco Connection, the magazine for members, and your monthly coupon book arrives, reminding you that laundry detergent is half the price as compared to the grocery store and comes in a container heavy enough to double as a suitable weight for bench pressing.

Duke now holds a Sophomore Convocation to remind students of the excitement that greeted them at the beginning of their college educations. You want to remind your old members that they matter just as much as the new ones.

Focus on What You Do Well: The Costco warehouse club décor is exactly that, a warehouse: high, girdered ceilings, concrete floor, utilitarian shelving. But there’s lots of light, the aisles are wide and you can actually see and therefore assess the merchandise, unlike Wal-mart, where you have to dig through seven hundred copies of Backstreet Boys and 98 Degrees to find that one discounted copy of Nirvana’s Nevermind.

For colleges and universities, it’s important to assess what your community does uniquely well. For Costco, this has led them to specialize in certain basic staples, like papergoods, but they also provide a ready supply of less common items that have become incredibly popular, like the Kim Crawford sauvignon blanc, or Marcona almonds from Spain. Rather than relying on the old “give the customer what they want” saw, Costco, “shows the customer what we have.”

It is an offering, and through this offering, Costco has created demand for something most people didn’t know they liked or needed.

(Marcona almonds?)

Not all universities need to reach for R1 status or cultivate the stats that show well in the U.S. News rankings. They need to find their inner Marcona almonds and then work at getting the word out.

Make Them Try Things: The savvy Costco shopper can do a month’s worth of stocking up and catch a full meal in a single visit by stopping at each food sample station along the way. Crab dip, cheese and crackers, barbecue sauce over chicken, frozen pizza rolls, energy drink, and low-fat chocolate were all on the menu during my most recent visit.

While the low-fat chocolate is an abomination that should be burned at the stake, a tub of the crab dip wound up in the cart. Did I know I wanted crab dip when I got there? Absolutely not, but the sample piqued my taste buds and my interest. Did I need that paper shredder, or the electronic toothbrush? Maybe not. Am I glad I have them and use them all the time? Darn straight.

While we should all be concerned about “curricular glut,” at the same time, cutting languages while expanding STEM fields strikes me as short-sighted from both human development and practical standpoints. By asking students to step outside a lockstep march towards a specific degree which will lead to a specific career, we are creating superior learners, who will turn into superior workers and employees ready for whatever the ever-changing world has for us next.

They may see the crab dip on the course selection menu and think they don’t like seafood, but how do they know if they don’t take a taste?

Finish Strong: As you approach the Costco checkout area, your heart may sink. The people are many, the carts bursting with goods. Surely this will take forever, except that it doesn’t. Just as college lasts four years (or a little more) and goes by in a flash, so too does your checkout experience at Costco.

And then, waiting for you on the other side of the cash register is the snack bar where you can get a ¼ pound hot dog and bottomless soda for $1.50, a meal that would cost you twelve bucks at the average ballpark, and the soda wouldn’t even be bottomless.

Obviously, universities rely on alumni giving as an increasingly significant part of their funding. By providing capstone courses that help contextualize their educations and demonstrate to the students the skills and knowledge they’ve acquired under your roof, you secure that permanent bond and that willingness to provide money that will secure the same opportunities for others in the future.


If you’ve read this far, this is where I tell you that I think everything I said up there is pretty much bullshit.

Maybe it sounds good to people, though. I could probably whip together a book proposal, “Costco U., Adapting to Change in the 21st Century: Making the University a Lean, Mean, Discounting Machine,” and try to turn myself into the latest fad. Six months of paid speaking engagements would probably be the equivalent of six years of my current salary. I could slip quietly away once the next fad comes along.

The truth is, though, to compile my vision for the 21st Century Costco University, rather than thinking about what Costco does well and translating it to universities, for the most part, I did the opposite, identifying what I see as some university best practices and showing how it may relate to what we find at Costco.

Really, you could pick a successful business at random and say how universities should be more like it. Apple’s constant quest to improve its products is a metaphor for university research. Google’s cozy business campus reflects the need to cater to student comforts so they can in turn be more productive.

That’s more B.S.

Not only are corporations not particularly good models for public universities, they’re often bad models for other businesses, because successful businesses tend to be successful for unique reasons. If there was a simple formula for business success, we wouldn’t be worrying about what’s happened to our Facebook stock following the IPO because we’d all be talking about MySpace.

I don’t believe that public universities should be viewed as businesses, and any governing philosophy rooted in that world is doomed to fail, to be a fad, quickly tossed aside once something shinier, buzzier arrives on the scene. We’ve been playing that game for years, and where has it gotten us?

It seems to me that colleges and universities (especially the public ones) behaving like corporations hasn’t suited them particularly well. Focusing on the bottom-line has given rise to the current adjunct labor crisis (not too strong a word). It has directed university energies toward marketing and promotion (U.S. News & World Report Rankings), rather than student learning. It has indirectly or directly led to recent scandals like the Penn St. cover-up of child molestation, or the rash actions of the University of Virginia Board of Visitors.

It has grossly inflated salaries for a handful of academic stars, while those in the trenches suffer wage stagnation, and it has signaled to the public at large that universities should be held to the same standards as a corporation, turning them into mills for training and credentialing, rather than being viewed as public goods worthy of support and necessary for a healthy republic.

Inside Higher Ed’s own Dean Dad is openly longing for a grant that will fund basic classroom instruction, that thing we’re supposed to believe is the core purpose of our enterprise.


In truth, I think most universities already have their strategies. They’re often expressed in Latin.

The College of Charleston’s is Sapientia ipsa libertas, which translates to: “Knowledge itself is liberty.”

Sounds like a plan to me.


Twitter is probably at least 90% B.S., but that doesn't mean it isn't fun: @biblioracle.


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