The Urge to Merge

For more than a decade, I had a running debate with “disruptive innovation” guru Clay Christensen, though he didn’t realize he was participating.

Christensen predicted in the early 2010s that half of all colleges could close or go bankrupt within a decade, done in by failure to respond to competitive forces and the digital pressures transforming other industries. Christensen, who died in 2020, wasn’t wrong to see significant threats to the higher ed business model, but I found his prediction absurdly exaggerated. I often called him out in speeches. He didn’t seem to notice. 

I also had actual conversations with Michael B. Horn, a former student of Christensen’s who co-wrote his education books and in a 2019 op-ed in Inside Higher Ed warned of “perilous times” for many small colleges. Horn never echoed his mentor’s most extreme prediction, but the first time he and I talked about this topic, about a decade ago, Horn said he thought a quarter of all colleges could fold. My counter: “5 percent max.” 

While I still think Christensen’s, and even Horn’s, numerical predictions are high, hundreds of colleges face financial peril. Not necessarily “close in the next three years” kind of trouble, but they will struggle and perhaps fail if they don’t make fundamental changes now.

Look around: in situations like those involving the College of Saint Rose, Delta State University, and countless others, we’re seeing evidence of institutions struggling now because they tinkered at the margins or kicked the can down the road three, five or seven years ago. They treated financial problems as a short-term emergency amid signs that they were systemic and probably permanent.

If the signs were faint a few years ago, they’re flashing in neon now. Higher education is, as the futurist Bryan Alexander has been saying for years now, past its peak in terms of enrollment and influence. That doesn’t mean most colleges will struggle or fail. But the unfettered growth of the 1990s and 2000s are gone for most colleges and universities, and the sooner their leaders understand and accept that, the sooner they can begin reimagining their missions to align with that reality.

What that means will vary by institution, resulting in changes in which students they serve, the programs and credentials they offer, how they employ and use instructors, and whether they continue to operate independently. It will be up to the trustees, administrators and faculty leaders at each college or university to judge for themselves how they continue to best serve their students, communities, and missions. 

Those will not be easy conversations, and will require hard decisions about what institutions should do (and not do). Leaders will need courage, and boards that actually back them. But more, today’s and tomorrow’s leaders will need creativity to fashion a compelling, positive vision of a 21^st century form of their institution that makes faculty and staff members willing to consider new ways of doing their work. 

Many of the leaders I speak to privately acknowledge this, but I am struck by others who think things are going to go back to the way they were. Before leaders can persuade others that their institution needs to change, they have to believe it—really believe it—themselves. That can be difficult for people who came of age in higher education’s go-go era, and who are confident in their own ability to spin gold out of straw. Yes, you have to be optimistic about the future, but hope is not a strategy.

I’m not so arrogant to believe I know what that might look like at any particular institution. But the menu of likely options across higher ed includes more non-degree offerings, a focus on adult learners, sharing of academic programs and administrative operations with other institutions, and greater differentiation in faculty roles.  

Clay Christensen may have exaggerated the potential impact of the factors he cited more than a decade ago. But few institutions are immune from them, and the best thing many leaders can do for their college or university right now is to acknowledge the trends, be honest with their employees about the short- and longer-term outlook, and set a path for a sustainable financial future. Let us know how we can help.