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The 'Business Model' Is the Wrong Model

February 16, 2009

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In their honest desire to satisfy the current demand for “accountability” in higher education, many academics have begun to worship at the altar of the “business model,” believing that it provides the answers to student success that they seek. The business model is imposed, for example, when otherwise worthy academic programs are eliminated based on low enrollment alone since they couldn’t possibly be academically valuable if they don’t attract throngs; when professors are evaluated more on their popularity with students than on their teaching abilities (see Inside Higher Ed's coverage of a particularly chilling example from Texas A&M University); or when institutions shun teaching high-risk students who might require more time and attention to graduate.

However, the business model, which prizes “customer satisfaction” or “efficiency” above all else, has led in higher education to an imbalance in the relation between student and institution, has led to a culture of entitlement and instant gratification, and has causal ties to the current fiscal crisis.

Businesses operate for a single fixed purpose: to generate profit. This does not make businesses either intrinsically evil or intrinsically good. Although the purposes it serves might have moral value, the pursuit of profit, in and of itself, is a morally neutral end. It is rather the means to the profit that determines its moral nature.

In this highly competitive education market, customer (student) satisfaction has become paramount. The more satisfied the student, the argument goes, the more he or she is willing to persist at the institution, the greater the graduation statistics, and the more enhanced the reputation of the institution.

In the first 18-22 years of life, huge numbers of American citizens spend anywhere from 6 to 10 hours a day in some sort of school environment. That school is a major formative experience is a fact so obvious that I am reluctant to repeat it. However, although having a profound faith in the efficacy of education and believing that enough of it delivered in the right way can provide a student not only with technical competence but also address and mitigate the effects of a variety of social issues, educators seem ambivalent at best and blind at worst to the effects of the behavioral models that schools at all levels seem to support.

This is perhaps nowhere more the case than in the environment of higher education. Driven by the desire to satisfy external agencies regarding “accountability,” many colleges for some 30 years have effectively altered the relationship between student and institution by defining students as “consumers” who are asked to evaluate instruction in much the same way as banks ask their depositors to rate their services. Driven by the student “revolutions” of the 1960s, colleges have effectively placed the responsibility for determining the quality of instruction and curriculum in the control of those -- the students -- who are least competent to judge. This is not to say that students should have no input regarding the instruction they receive, but is rather a criticism of student evaluation instruments that often are poorly constructed and which often hold faculty hostage to student opinion. This practice runs the risk of turning faculty members into supplicants for student approval and creates a dangerous imbalance in the power relationship between faculty and students, one which might have a deleterious impact on the very thing -- teaching -- which it is supposed to improve.

Further, when colleges follow the business model in order to bolster enrollments or to compete for the “top” students, the results over time can also have serious consequences for the society as a whole. When rigor and purpose are replaced by luxury dormitories, state of the art health spas, haute cuisine cafeterias, and inflated grades, what is created is a culture of entitlement and a demand for instant gratification.

Historically, one reason for going away to college was to dislocate the young man or woman from their otherwise familiar environs to such an extent that they would be ready to “re-invent” themselves as, ideally, independent and responsible members of society. When colleges attempt to replicate -- and in many cases even exceed -- the conditions of the student’s pre-adult existence, one might well ask what it is they are teaching the students. Ideally, children are the center of their parents’ world and are indulged accordingly. What, however, does it mean to be an “adult”? Surely it can not be age alone which determines adulthood in contemporary society.

While it is true that 18-year olds have been awarded certain rights and privileges -- the vote, for instance -- which an earlier era restricted, American society has a very ambiguous understanding of what adulthood is. The extension of childhood well into a person’s 20s has been a growing and generally accepted trend. The identification of “helicopter parents,” that is, parents of college-age children who hover neurotically over their offspring even as they “send” them off to college, is becoming the bane of many college administrations.

Given that parents generally want “the best” for their children, they have begun to demand more for their money in the form of material improvements and services. While no one would argue that we should return to the ascetic conditions that existed on many campuses in the 20th century, it might be useful to remind ourselves what the rationale for those conditions was.

Why, then, do colleges engage in these practices? It is unlikely that they believe that it enhances learning. Rather, in the same way that a for-profit consumer business recognizes that it must satisfy those who are paying for their services, colleges do not wish to “offend” the people -- parents -- who generally pay the tuition bills. Again, it is precisely this sense of “profit,” and a skewed idea of customer satisfaction, which is an expression of a business model which is inappropriate to higher education.

That the “business model” works for business if of course an arguable proposition. One might well ask “Which business model are we talking about?” Is it the Enron model? Adelphia? Lehman Brothers? You get the idea. As academics we owe it to ourselves to be more precise about the terms we use.

We should stop our unexamined admiration for something we do not understand and concentrate on the “education model.” The “business model” is the wrong model for education. We need to reaffirm what it is, beyond “technical” knowledge of a subject, that we wish our students to learn.

Higher education ought to involve dislocation. That is, we owe it to our students to help them to understand that they are not the center of any universe except perhaps their own; that their unsupported opinions and subjective feelings will carry little weight in the “real world”; and that gratification does not always occur on demand.

College ought not to be merely a place where someone learns “skills” and racks up credentials, but rather an environment and an experience in which students learn, in addition to history and literature and mathematics, also how to begin to navigate the adult civilized world in an adult, civilized, and responsible manner. Their naïve assumptions about life and nature should be tempered by the rigors of discourse, debate, and discussion. Higher education should be training for life as it is -- not as it is imagined by the child’s mind.

When colleges adhere to the “business model” they create dangerous expectations for their students and do no service to the larger community.

Currently the nation faces an economic crisis the likes of which most of us have only had nightmares about. We as a nation have the lowest savings rate and highest personal debt of any industrialized nation. We have been taught for more than 30 years that we are entitled to get what we want when we want it. The sub-prime horror has been a result of a sense of this entitlement which pervades society at all levels: the top, the middle, the bottom.

It is time that our colleges return to their traditional mission of educating the populace for the long haul. And that means teaching them to live and serve within a context of responsibility, prudence, and care.

Peter Katopes is vice president for academic affairs at LaGuardia Community College of the City University of New York.

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Comments on The 'Business Model' Is the Wrong Model

  • Choice -- not customer service
  • Posted by Frank on February 16, 2009 at 6:35am EST
  • The real issues are (1) choice and (2) standards.

    When the central tax-collecting authority mandates the taking of taxes, then refuses to allow the public the right to use that portion for higher ed at whatever college they deem appropriate (e.g., private) -- there is no choice, there is unhappiness. That will not change until there is choice.

    Two, standards: the brutal truth is that they have been declining for years. All kinds of employers (e.g., for-profit, non-profit) do not enjoy applicants without certain basic skills (and manners, another topic).

    If objective, third-party testing (e.g., GRE, ACT) were required of graduates, much would be revealed. But, like the USA's real economic problem -- high debt and inability to repay in a timely fashion -- such testing resides in ignorance, deception, and bureaucracy.

  • Posted by GEne on February 16, 2009 at 7:25am EST
  • Businesses and the business model operates for many reasons, only one of which is to make a profit. All institutions, public or private, have to make good use of resources. All institutions need capital. Capital is capital whether the source is a bond levy, legisature handout or private capital. It doesn't help to provide overly simplistic analyses to what are complex phenonomena. Perhaps it would help if you started at the beginning with a detailed definition that reflected the true and complex nature of the 'business model' if there is agreement even on that.

  • Students as a business product
  • Posted by Cindy on February 16, 2009 at 8:56am EST
  • I was in an elevator in the Florida statehouse in the late 1980s when I overheard a Florida Chamber of Commerce member talking about improving education by treating it as a business, and how the chamber was going to push that idea through the Florida DOE. Later at a meeting in Gainesville, Florida, I listened to this same mantra at a convocation for the implementation of Florida's "Blueprint 2000" -- the 1980s plan for making Florida's school system the best possible by the dawn of the new century. The presentation was slick, with all kinds of bells and whistles from the Chamber and the DOE, trumpeting how great this idea would be, and how students as customers would become top-notch productss. To achieve this lofty goal, we had to sit through numerous planning sessions. The first was called "Getting ready to plan to plan." The next was "A plan to plan" -- I actually still have the materials that went along with that meeting, that say "A Plan to Plan" right on them. The actual plans went on and on. In the midst of these meetings I determined that for the most part the business model being proposed wasn't much different than what they already had, including the accountability part. The only difference was going to be what financial punishment each school was going to suffer for not achieving the business model in a proper amount of time. What I found most interesting was that nowhere did they have a plan to inform students that a change was coming, and that they would be expected to learn and accomplish more. When I pointed this out during an assembly-wide discussion, likening the idea to helping the students form a sort of self-fulfilling prophecy in their own minds, so they would expect this change in themselves and work toward it, the group leaders ignored the comment and called a a session break. When we came back the meeting continued without addressing my concern, as if I'd never brought it up. The point is, we are well beyond the turn of the century, and K-12 -- or now it's pre-K through 12 -- really hasn't gone any farther than it was before they decided to treat Florida schools, as well as every other state's, as a business. I find it interesting that the great constructionists of higher ed now think that they can be successful at pawning off the same ideas for college-level work. My personal opinion is, get business out of the business of education and allow educators to do their jobs, from the professor in the classroom to the department heads who determine the coursework, to the school administration that decides what to offer at their own institutions.

  • yes, but...
  • Posted by Theron on February 16, 2009 at 9:20am EST
  • Although I agree that the "business model" is inappropriate for higher education, I think the premise of this article misses the point. This is a process not driven by the '60's whatsoever; it is driven by the basic market need to commodify all things and all people. Most of the movements (plural) in the 60's railed against the trend toward commodification..and lost the battle as even their struggle was commodified (hence the applicability of MArcuse's warning about co-option.)

    Even my official ID card at my unnamed university has the Master Card logo on it. This is a business practice providing income to the school, to Master Card, and commodifing me and the students in the process. It is not much of a leap to measure academic programs by enrollment, instructors by grants written and students by time served. Surely customer satisfaction stems from the need to maintain consumption!

  • The "Education Model"
  • Posted by Festus on February 16, 2009 at 9:20am EST
  • This is an interesting article on several levels but I'm particularly struck by the notion that the traditional "education model" is somehow immutable. One only has to go back 100 years to see a very different picuture of higher education. Why is that model no longer viable? Also, virtually everyone agrees that the education model for K-12 is essentially broken but we struggle to fix it because we are not willing to admit its failures.

    The real intent of the accountabilty movement is not to simply create satisfied customers but rather to demonstrate that higher education is indeed value addded. This is especially true today where the costs continue to outpace inflation (and businesses generally are producing higher quality products (we measure this) at subtantially lower cost). The successful institutions of the future will figure this out and run with it. Take a look at the for-profits and see what they are starting to focus on.

  • Heartily agree: Business model not appropriate
  • Posted by Lee Griffin on February 16, 2009 at 9:20am EST
  • I respectfully disagree with GEne, who said that businesses do many things other than turn a profit. They are engaged in many other activities, but all of them including public relations such as donating funds to local arts groups, are in the end done in the service of enhancing the bottom line, whether through raising the public image of the company or accumulating tax deductions.

    It must be difficult for business people to think about a world in which no single numerical measure can be used to judge success, but that is the world educators live in. Adopting the business model, in which all the little minds are molded into interchangeable parts that can be measured, somehow runs deeply contrary to the idea of American individualism and independence. The classic notion of liberal education, freeing ourselves from preconceived notions and unexamined beliefs, moves students toward individuality, not standardization, and is more in keeping with the core values of democracy.

  • Here's to Dislocation
  • Posted by Willard M. Dix , President at College Access Counseling, Ltd. on February 16, 2009 at 9:20am EST
  • Bravo for the best rationale for opposing the "business model" of education that I've read. It presents the arguments clearly and forcefully. My one quibble is that I might acvtually argue for a little asceticism along with the dislocation. It's the excesses that students bring with them that can take up most of their time; why not put forth a philosophy of "less is more" that could help students focus on their academic lives rather than spend it on video games and so on? Bring less with you to campus and see how a true dislocation can open your eyes. In any case, thanks for this excellent article.

  • Sometimes it is, sometimes it isn't
  • Posted by sibyl on February 16, 2009 at 9:55am EST
  • Sometimes a university is, and ought to be, a business: when it contracts with vendors, when it processes payments and refunds, when it removes snow from roads and parking lots, when it rents or donates space to outside groups, and when it contracts with faculty and other employees. (On payday, I am sure, we are all relieved that the university operates like a business.)

    You can even make the case that shared governance does not alter the business model. Most business institutions do not share command and control functions as a university does, but the objects are the same -- avoiding waste, reaching people, ensuring that core processes continue.

    In fact, the core process -- the classroom -- is the only place that the business model deserves to be entirely out of bounds. When students pay tuition they are purchasing only the right to attend class and receive a grade; doing the work remains up to them.

  • business model - how Gradgrindian...
  • Posted by StringsAreFalse on February 16, 2009 at 10:20am EST
  • I would direct anyone who favors the "business model" in education to pick up a copy of Hard Times and see how well it worked for Bitzer and the Gradgrinds. Funny how the same ideas seem to crop back up every 150 years or so...

  • And Yet...
  • Posted by Edward Winslow , A tired "refired" Business Professor on February 16, 2009 at 10:20am EST
  • It seems that Mr. Katopes is reluctant to look inside the field of "higher education" and examine the "business products" such as external publications and books, that are necessary to create and develop as part of achieving rank and tenure in an institution of higher learning. Or...to create the appropriate "philosophy" and "business" relationships necessary to create the correct political atmosphere to achieve tenure, even in a public institution.

    I'd suggest a bit of internal "navel-gazing" on his part before criticizing the outer world of the business of higher education

  • Respecting what is complex
  • Posted by An Old Goat on February 16, 2009 at 10:51am EST
  • Simplicity draws attention but educated people know matters are rarely simple, including what 'business' is & does (thanks, GEne). Katopes' college no doubt has many, many students well beyond 22 years, so his moralizing about 'navigating the adult world', 'naive assumptions about life and nature', and 'training for life as it is' seem out of context for a community college administrator. But because education does indeed involve dislocation (if only from ignorance if not from illusions), then a key question about reaching our goals as educators is knowing if the learner has indeed been changed. Is there any more direct way than asking the learner directly? Maybe, contrary to Theron's simplistic assertion that customer satisfaction stems from the need to maintain consumption, that surveying students also has to do with whether we have met our goals. It is nonsense to equate the asking of such questions with creating a 'dangerous imbalance in the power relationship between faculty and stuents.' Unlike Frank who thinks standardized tests are an answer, this is a matter of asking for opinions, not for assessing a grasp of revealed knowledge. Katopes comes right to the threshold of a solution, though--rather than colleges' bread & circuses in celebration of extended adolescence, maybe right from the start colleges should expect 18-year-olds to live & serve responsibly & civilly (taking care to honor the many who already do). Those students who cannot need to get knocked about by Life until a measure of humility settles in. That would finally be the right time to ask students if they are satisfied with their dollars spent for health spas and haute cuisine cafeterias.

  • The McUniversity
  • Posted by T-bone on February 16, 2009 at 11:20am EST
  • I do not believe that accountability is the driving force in the driving of the business model. Research I've read tends to focus instead on changes in how students, parents, and other stakeholders perceive higher education.

    Interested readers might read Ritzer's (1996) McUniversity in the Postmodern Consumer Society (Quality in Higher Education, 2(3)), or Aurthur Levine's (2001) chapter, How the Academic Profession is Changing in Graubard's The American Academic Profession.

  • Posted by Another Viewpoint on February 16, 2009 at 11:55am EST
  • HAH! Before professors in higher education could ever "teach" students not to expect entitlements and instant gratification, they would have to learn it themselves. I have NEVER seen a bigger bunch of people who feel entitled to everything and anything and who are so full of themselves that they believe they are not only the center of their own universe, but should be of everyone else's too; exclusively. No matter what you give them, it is never enough. Wait, I take that back, there is ONE other bigger bunch of liberals that think that way, they are called Democrat Politicians. No, how could one EVER expect faculty to teach students how to live in the "real world" when they have absolutely no idea in general how to live in it themselves!?! Thaks to a bunch of hoodlums in Washington DC, this effort has just gotten harder, if not made entirely impossible. The whole country is now being taught that EVERYTHING should be FREE! Don't worry, SOMEONE ELSE will pay for it! I agree with the author's premise, but I fear we have long lost that battle.

  • Posted by Dadie Perlov , Founder & Principle at Consensus Management Group on February 16, 2009 at 12:45pm EST
  • Three words: Brilliant! Overdue! Listen!

  • Current Respondents Excepted, Of Course
  • Posted by Frizbane Manley on February 16, 2009 at 1:15pm EST
  • I am invariable struck by how few academics who are caught up in discussions of business and business models give every appearance of having very little knowledge of what a business model might be ... not to mention what the objectives of such models are.

    But let’s not stop there. I would love to see a comparative analysis of the “knowledge of business” of those who pass themselves off as academic leaders practicing business management on the one hand and straight business managers running companies on the other. Aside from the fact that there will be damned few in either group who would have impressed Peter Drucker with their knowledge of business – and I will studiously avoid those management giants Lee Iacocca and Jack Welch – there would probably be very significant differences between the two groups.

    Business models indeed!

  • Having the Resources and Justifying the Expense
  • Posted by dm on February 16, 2009 at 1:15pm EST
  • In its simplest and most defensible form, the business model reduces to making sure that there are adequate resources -- many of which are financial -- for achieving the mission of the institution, whatever that mission might be. Certainly few universities include profit in their mission statements, but more are starting to include such concerns as financial sustainability.

    Universities continue to see their tuition increases outstrip inflation at the same time that they recognize the need for greater accessibility for all citizens. These changes will make it increasingly likely that the value-added referred to by previous commentators will have to include a significant financial dimension. Try to explain to even middle-class students and parents why they should incur significant debt at schools that view the students' future employability as too philistine of a concern for them to consider.

  • The Business Model
  • Posted by Hans Isakson , Professor at University of Northern Iowa on February 16, 2009 at 2:36pm EST
  • Whether we like it or not, universities share a great deal with business, especially the non-profit businesses. The problem occurs when students are assumed to be our customers. Students are NOT customers of higher education, they are CLIENTS! A student is more like a client who goes into a law firm or doctor's office, seeking the expertise of a profession to cure some sort of problem (i.e. insufficient education). Faculty act more like agents who treat our student's aliments.
    Also, business administration can offer universities a great deal of insight to understand things such as activity based accounting, strategic planning, cost containment, etc. Indeed, if universities were more like a business, I doubt that they would be funding intercollegiate athletics, wellness centers, performing arts centers, etc. as much as they do now.
    I believe that the lack of universities to prioritize during an economic downturn, such as we are currently experiencing, will lead to disastrous results. If universities would simply recognize that class room instruction is the very heart and soul of any university, then perhaps we would all be better-off.

  • Posted by Janet Giacoma on February 16, 2009 at 8:45pm EST
  • A mixture of business and real life is the ideal platform to invoke.

  • re: Frank
  • Posted by PS on February 17, 2009 at 5:00am EST
  • Frank - There already is choice. A lot of it, in fact. Students can redeem a multitude of federal, state, and local grants, scholarships, or other aid (Pell, SEOG, state awards, loans, etc.) at any public or private college of their choice, including private colleges that operate for-profit (Univ. of Phoenix) and religious institutions that can openly discriminate (Notre Dame will not hire a female for president). In fact, the whole multi-billion dollar financial aid system is built on the principle of choice.

  • Posted by Skinner on February 17, 2009 at 8:20am EST
  • Hans Isakson has it exactly right. It's a *bit* of a generalization for Katopes to blame the "business model"-- but the "customer model" is the truly pernicious part.

    As for getting people to recognize the "value added"... we shouldn't HAVE to. And in the years to come, the multifarious upheavals in our way of life will likely remind those who need the reminder of why a liberal education, even a less-than-ideal final "product," is valuable. (Sometimes I wonder if the only folks who need a reminder are those affiliated with for-profit institutions....)

    Of course, I'm betting that the aforementioned upheavals will be accompanied by a probable drop-off in enrollment-- and even if they're not, belt-tightening will still ensue. In that way, institutions clearly do need a better understanding and implementation of "the business model."

  • Posted by Stewart Trickett on February 17, 2009 at 12:05pm EST
  • There are some good things about the business model. It might encourage universities to reduce the administrative bloat that has infested them in the last few decades (and not always to the benefit of the students or faculty). It might also encourage them to trim faddish programs put in place to appease political factions within the university, but which otherwise make little sense.

    Thus if not a business model then what model? In recent decades universities often appear to have been run for the sake of administrators and political factions. A new approach - of almost any sort - would be refreshing.

  • More on students as customers
  • Posted by Ashley at National Association of Scholars on February 18, 2009 at 3:15pm EST
  • For additional debate, see these articles on the question, "Are students customers?"

    Yes - http://www.nas.org/polArticles.cfm?doc_id=319

    No - http://www.nas.org/polArticles.cfm?doc_id=320