It’s Now or Never

College leaders seeking to survive and thrive in a post-pandemic environment have no choice but to reassess and redefine their value proposition, argue Scott Latham and Michael Braun.

June 1, 2020
 
 
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The COVID-19 pandemic has resulted in unprecedented upheaval across all industries, with higher education especially impacted. For almost 20 years, online education was more the exception than the rule, yet it took just a few weeks for most colleges and universities to migrate fully to the internet. This rapid transition has laid bare long-standing shortcomings in both higher ed’s value proposition and the means to deliver it.

While many university leaders are currently planning for a return to normalcy, the fact of the matter is simple: there is no going back. Already frayed at the seams after decades of inaction, higher education is now forced to dine on a banquet of consequences of its own doing. As the curtain falls on the operating model dating back at least 100 years, the scrutiny of a product that is saddling the average student with $35,000 in loans will be amplified as never before. Those university leaders seeking to survive and thrive in a post-pandemic environment have no choice but to reassess and redefine their value proposition.

That may be easier said than done, especially given the antiquated structure of higher education. The university model has been predicated on vertical integration, in large part out of a need for efficiency when physical proximity was central to an institution’s offering. The thinking was that by providing students access to a comprehensive array of services and products all in one place -- including educational programs, living and dining spaces, recreation and sports events, arts and entertainment, and medical care -- the university maximized delivery of its value proposition.

Today campuses continue to build on this one-stop experience, in many cases culminating in veritable industrial sprawls. Universities have been outcompeting one another by adding more events, programs, facilities and other features while remaining tin-eared to the actual benefits that students seek. Even worse, the integrated structure is being artificially propped up by student loans that, in many cases, won’t be repaid for years, if ever.

Yet students are quickly realizing they don’t need to be held captive anymore to the integrated structure. Instead, they are opting to devise their own experience with more cost-efficient and often more effective alternatives -- including third-party online providers, off-campus housing, instantaneous food delivery, job-search sites, live and virtual sports and entertainment, as well as even health insurance made available through their parents under the Affordable Care Act. With the rapid disaggregation of the student experience eroding traditional campus offerings, what is most perplexing is why universities continue to treat investments in operating units, such as athletics and dining services, as being on par to their institutional mission of delivering an education.

Higher education’s knee-jerk response to the preceding question has been to focus energy and resources primarily on providing and enhancing online learning platforms. However, that development only offers a short-term fix to a longer-term problem. The pandemic has resulted in a mad rush to layer online offerings on top of the existing campus infrastructure, pitting two vastly different business models and their resource needs against each other.

Whereas the face-to-face approach to education is predicated on getting at least enough students to cover the fixed costs of faculty, administration, staffing and buildings, colleges can develop, deliver and scale online classes at a fraction of the cost. Just as consumers are accustomed to paying less for a physical book’s digital version, it should come as no surprise that students and parents are balking at the unchanged sticker price of universities’ online offerings. In other words, the value calculus is broken, and simply appending online offerings will not provide the basis for future value propositions.

A Student-Centric Perspective

To begin to rectify this situation, we may be well served to follow Peter Drucker’s advice that the purpose of a business is to create a customer. And while we can hear the immediate pushback to this simplistic, business-centric and unidimensional approach, we will hold firm that value -- defined as something deemed useful, worthy and important -- begins and ends in the eyes of those paying for it. This means a student-centric perspective represents an essential first step.

With the foundation of tomorrow’s model based on who can best meet the demands of how, when, where and why students want to learn, institutional priorities will have to include how to reassemble and realign resources. This task may look different for each institution, but to help guide leaders’ efforts, we recommend that colleges consider the following:

  • Innovating delivery models. To what extent tomorrow’s university is physical or virtual is not an either-or proposition. Instead, true value may come from a distinct combination of synchronous and asynchronous online courses, adaptive learning technologies, and face-to-face encounters that best solve the learning needs of various and emerging customer segments beyond just the 18-year-old residential student.
  • Developing flexible credentialing. To respond to the needs of nontraditional students, including displaced workers, veterans and adult learners, universities will have to supplement their core degree offerings with shorter-term, bite-size certifications and microcredentials. That requires breaking down the existing menu of college majors and reformulating and repackaging their underlying ingredients into relevant short-term and lifelong-learning programs tailored to specific student needs.
  • Flexing faculty engagement. Tenured faculty members represent one of the most significant fixed costs in higher ed. Specialized faculty members often become engineered into curricula -- sometimes for life -- thus impeding institutions’ agility to respond to evolving market conditions. Tenure and academic freedom will retain some of their merits, but faculty members will need to become much more flexible and willing to engage in interdisciplinary appointments and team teaching that can help students make sense of increasingly complex issues in our society.
  • Standardizing experiential learning. To close a student’s gap between learning and doing, universities must enhance opportunities for co-ops, apprenticeships, internships and even life experience that can support students’ continuous learning, reskilling and training throughout the various stages of their career ladder. Now viewed as quasi-fringe pedagogy, experiential learning must be absolutely central to the new model. While the need for social distancing relating to the pandemic will challenge traditional experiential vehicles such as internships and co-ops, as with many occupational activities, they will have to prioritize virtual collaborations, remote teams and a higher degree of self-management.
  • Reinvigorating the humanities. COVID-19 is turning the spotlight on questions concerning society, nature and the human experience. To help students enhance their problem-solving and critical thinking skills, universities will want to promote fluency in the humanities as an integral competency in a technology-laden future. As artificial intelligence is ushered in to augment the limitations of our species, it is the arts and humanities that will show the way for humans to outshine machines.
  • Engaging economic clusters. Where does tomorrow’s higher education institution add value in its immediate and extended ecosystem? Savvy universities will take their place alongside economic clusters to build out strong ties to, and reciprocal relationships with, key stakeholders, including local and regional partners in the for-profit, nonprofit and government sectors. Incubators, accelerators, core research and co-working can help engage students while leveraging faculty expertise.

Each of these approaches will not only bring much-needed clarity to an institution’s value proposition but also help identify vital resource trade-offs to streamline colleges and universities’ antiquated structures.

In conclusion, shifting student expectations are forcing colleges and universities to revisit their value propositions. Many university leadership teams will argue in defense of continued focus on dormitories, dining commons and sports venues. Yet the anticipated and now quickening drop in enrollment, already stressing a predominantly fixed-cost infrastructure, will further underscore the deleterious characteristics of the vertically integrated campus.

The fact is that, for all the discussions about how universities and colleges should pivot during this period, the need to revisit higher education’s core value and its related resources has never been more imperative. While higher education currently views the pandemic as a crisis, it nevertheless provides a once-in-a-lifetime opportunity to ask that most pressing of questions: Why do we exist?

Bio

Scott Latham is associate professor of strategy at the University of Massachusetts at Lowell. Michael Braun is professor of management at the University of Montana. They have jointly studied and published on industry disruption, economic recession and the future of work in the top journals in the field. They teach strategy, organizational decline and business model innovation.

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