This article is based on Ken Steele’s keynote presentation to the 26th Annual Chair Academy International Leadership Conference, held in Orlando, Florida in March, 2017. He sketched the “perfect storm” brewing for college leaders, reviewed strategies for “treading water” to remain viable, and suggested more strategic options to “chart your course” toward a successful future. (Throughout this article, “colleges” is used in its most inclusive sense to refer to the full spectrum of tertiary education institutions.) Figures capture the results from real-time polls of the delegates during the keynote.
The Perfect Storm
Figure 1. Conference delegates provided 322 answers to the question, “What are your institution’s 3 biggest challenges?”
As they attempt to steer their institutions toward a successful future, college boards and administrators are navigating a perfect storm of demographic, political, and economic change on all sides. As shown in Figure 1, delegates at the Chair Academy’s 26th Annual International Leadership Conference reported significant challenges balancing budgets against headwinds of funding constraint; managing student enrollment, engagement, and retention; improving campus morale and inspiring innovative thinking while facing rapid change and employee turnover; and preserving civility in polarized, tumultuous times. The two most fundamental challenges facing virtually all college leaders are shifting demographics and declining public funding.
The New Demographic World: In many regions of the developed world, and specifically across most of North America, the number of traditional-aged students will be in steady decline for the next decade or more. (Those hoping for demographic turnaround must realize that all the 17-year-olds the world will see between now and 2034 have already been born.) Many institutions that have sustained their budgets through steady enrollment growth since the 1960s are now facing, or will soon face, a new reality: “peak campus” (Steele, 2013). Unless your institution is fortunate enough to be located in a center of youth migration or growth, fewer high school graduates, more commuter and working students, and more online or hybrid programs will steadily result in plateauing or declining on-campus populations. Expectations of unending growth are being met with a sometimes abrupt reality check.
Buffeted by Government Policy: In most jurisdictions, legislators have steadily reduced per-student funding of public higher education for years (Oliff, Palacios, Johnson, & Leachman, 2013). Government debt to gross domestic product (GDP) ratios among advanced economies have risen to levels unprecedented since World War II, and it seems unlikely that reinvestment will occur in the foreseeable future (Kirby, 2015). Increasingly, state and provincial funding comes with strings attached, from burdensome reporting requirements to key performance metrics. The majority of US states have now implemented performance-based funding models for higher education, to some degree (NCSL, 2015). In New Zealand, the Tertiary Education Commission has even started to adopt “contestable provision” policies that amount to putting existing higher education programs out to tender, and awarding them to the public or private provider who offers the best value (New Zealand, TEC, 2017). Colleges are jumping through more hoops, for less government funding, than ever.
For decades, colleges have heightened their efficiency and uncovered new economies of scale in order to preserve their traditional delivery models. Their crews have been furiously pumping out the bilge to avoid drawing too much water. The industrial age ushered in campus massification throughout the twentieth century, and scalable assembly-line approaches to lecture halls and multiple-choice exams. Institutions have applied increasingly sophisticated software tools to manage enrollment through predictive analytics, optimize classroom scheduling and consolidate course sections to minimize expenses, and prioritize growing and profitable programs over those in decline. Like most sectors of the economy, colleges have increasingly resorted to adjunct and contingent contract faculty, “the new faculty majority,” to reduce labour costs and increase flexibility for future program changes. More and more institutions are moving away from traditional incremental budget formulas, and replacing them with activity-based, performance-based, or incentive-based budget models that reward innovative and growing programs, schools, or departments (eg.e.g. CAUBO, 2016). Colleges have been finding a vast range of new ways to outsource, collaborate, automate, and scale their operations to maintain viability.
Offloading to Others: Institutions have also been staying afloat by offloading the burden of non-core services to third parties, outsourcing food services, security, groundskeepinggrounds keeping, maintenance, parking, residence management, ESL English language training, and much more to corporate partners who can deliver acceptable results at lower costs, or with less capital investment. The largest such arrangements have created half-billion-dollar contracts for 50 years of parking at Ohio State University (Pelletier, 2012); for landscaping, maintenance, janitorial, and dining services across the Texas A&M System (Hamilton & Watkins, 2012);, or for managing almost 10,000 residence beds across the University System of Georgia (USG) (NCPPP, 2014). (Texas A&M projects $360 million in savings over ten years, while USG reportedly freed up $550 million in capital debt from its balance sheet..)
Joining Forces: Colleges are collaborating to provide shared services, from collective purchasing and employee benefits to supercomputing clusters and shared library, athletics, or research facilities. For example, nNine state universities share a single campus, the Universities at Shady Grove, in Rockville, Maryland (Douglas-Gabriel, 2016). Four institutions in Edmonton, Alberta share a programming and support team for Moodle, their open-source learning management system (LMS). Six public colleges in northern Ontario are collaborating on a $4 million recruitment marketing effort, “StudyNorth,” and have committed to design and deliver shared courses and programs (Ontario, MAESD, 2015). Across the provincial college systems in British Columbia and Ontario, institutions are providing a single shared platform to deliver online reference librarian services to their students, by text message or online chat (BCELN, OCLS, n.d.).
Leveraging New Technology: Beyond outsourcing and shared services, colleges are finding even more efficiencies through the application of new technologies. Even more cost -effective than contingent employees or outsourcing, robotics and artificial intelligence are becoming capable of automating a growing scope of campus tasks. The University of Alberta reports that its robot auto scrubbers, which look like self-propelled zambonisZambonis for swabbing hallway decks, use 70% less water, no chemicals, and pay for themselves in mere months (AASHE, 2014). Campus security will be transformed by autonomous robots too, like the Knightscope K5, a 300-pound roving camera capable of scanning 300 license plates a minute and running on a 24-hour charge (Knightscope, n.d.).
Scaling the Classroom: Of course, core functions like teaching are also being impacted by new technologies. Massive Open Online Courses (MOOCs) are unlikely to replace full undergraduate programs, but offer incredible economies of scale for continuing education and distance education courses. Some institutions can are offering their students a broader range of subjects by adding MOOCs to the course calendar. Amherst College students can enrolenroll in Harvard Business School MOOCs, pay tuition to Amherst, and earn Amherst credit for them (Kitroeff, 2015). Australia’s Deakin University likewise allows students to take FutureLearn MOOCs for credit (FutureLearn, n.d.). Class Central, a curated catalog of MOOCs, reports more than 250 program credentials that can be earned directly from MOOC providers, and most can be converted into credit from traditional bricks- and- mortar schools (Shah, 2016).
Blending Delivery: Online learning is clearly not ideal for every student, or every subject. In California, online students consistently underperform their on-campus counterparts, and in fact the performance gap for disadvantaged groups is widened in online courses (Johnson & Mejla, 2014). The small fraction of MOOC students who complete their courses tend to be professional educators, graduate students, and working professionals. A US Department of Education metastudy found that under ideal conditions, there is no significant difference between learning outcomes in a well-executed online course compared to an on-campus one – but that blended delivery, combining some face-to-face learning with some online delivery, resulted in better outcomes than either in isolation (Means, Toyama, Murphy, Bakia, & JonesMeans, 2010). Not only does blended delivery result in improved educational achievement, but it also saves institutions money, which will certainly not go unnoticed. Algonquin College reports that moving 20% of all program delivery online has allowed them to reduce classroom space by 39%, increasing enrollment capacity while saving an estimated $80 million in new construction (MacDonald & Gaudreau, 2014).
Augmenting Brainpower: Artificial intelligence (AI) has been steadily evolving, and while true generalized AI is at least 25 years away, narrow task-specific AI systems are already being tested in academia. In early 2016, Last spring, the Georgia Institute of Technology announced that students in an online graduate course wanted to nominate Jill Watson as their TA Teaching Assistant (TA) of the year (Korn, 2016). Jill was one of nine TAs for the course, but single-handedly answered 40% of their routine questions, and was virtually always accurate. Jill was not a human TA, however, but software running on IBM’s “Watson” cognitive computing platform. (Jill has apparently passed the Turing test.)
Figure. 2. Conference delegates were asked “What 3 approaches to treading water still have strategic potential for you?”
While most colleges have already exhausted explored many of these approaches to “treading water,” as shown in Ffigure 2, campus leaders still perceive strategic potential in blended delivery, inter-institutional collaboration, program prioritization, optimizing course sections, and additional public-private partnerships.
Charting Your Course
Higher education leaders that devote all their energies to treading water, preserving the status quo, or merely keeping their institutions afloat, risk losing sight of the horizon entirely, and losing momentum to explore new strategic opportunities. Despite ever-tightening budgets and declining local demographics, visionary leaders have at least five alternatives to merely treading water in piloting their institutions to a promising future.
1) Outspend Your Rivals: Many institutions have found that investing in enhanced campus facilities can be a powerful way to retain more share of the local market, and make a college more attractive to students at a distance. The campus facilities “arms race” in terms of plush residences, athletics facilities, modern laboratories, and climbing walls has been well documented in the US for years. Sault College, in Sault Ste. Marie, Ontario, underwent a massive campus modernization in 2012 that added 75,000 square feet of academic space, bright learning commons, and flexible classrooms – and contributed to a 30% boost in enrollment over just three years.
It may also be possible to outspend your rivals on brand advertising and recruitment marketing, depending upon their budgets. Ruffalo Noel-Levitz (2016) reports that the average cost of recruiting among two-year public colleges in the US is just $118, while four-year publics spend $578, and four-year privates $2,232. Colleges in remote, colder climates may find it extraordinarily difficult to spend enough, however: a consortium of six colleges in northern Ontario invested $4 million to recruit just 67 students from the populous south – working out to about $60,000 (Canadian) per student (Rutherford & Stranges, 2016).
2) Hoist a Distinct Flag: Academic culture tends toward conformity, and true differentiation of institutions is quite rare. Done well, however, a distinctive position can attract students nationally or internationally for decades. The University of Waterloo is known worldwide for its 60-year commitment to cooperative education and entrepreneurship. Colorado College has offered its programs on the “block plan” since 1970, attracting students who appreciate the ability to fully immerse themselves in one course at a time, and get that “school’s out for summer” feeling eight times a year. Brown University’s “new curriculum” is almost 50 years old now, but still attracts students who want to be the architects of their own syllabus, with the freedom to take credit courses outside their comfort zone without academic risk. These competitive advantages have proven sustainable over time, as the differentiations have permeated the campus cultures and attracted successive waves of faculty and students committed to the vision.
3) Launch Innovative New Programs: Two-year colleges in particular tend to be much more nimble at refining and launching new academic programs in response to changing labor market needs, and innovative new programs can be significant draws for out-of-region students. Many Canadian colleges have developed a new market offering graduate certificate and diploma programs to university graduates, half of whom now go on to pursue further education after graduating from a four-year program (Butlin, 2001). An increasing number of innovative new programs are interdisciplinary in nature, like McMaster University’s new five-year honors BHSc in Health, Engineering Sciences, and Entrepreneurship. In Ontario, a growing number of universities are developing new programs in partnership with community colleges, such as Queen’s University’s partnerships with St. Lawrence College and Northern College on new degrees ranging from Music and Digital Media to Biotechnology and Mining (OUCQA, 2015). Two-year colleges can develop a competitive advantage by launching new interdisciplinary programs, or degree programs in collaboration with four-year colleges and universities.
4) Refit to Serve Diverse Local Markets: Many higher education programs are designed and delivered based on traditions that may not serve emerging and non-traditional student markets, from the agrarian calendar to a reliance on lecture, essays, and exams. Institutions can attract and retain students by redesigning programs, curriculum, pedagogy, and support services to better meet the needs of non-traditional segments, from indigenous students to working professionals, from mature learners to students with disabilities. More and more colleges are experimenting with flexible timetables, weekend classes, micro-credentials, and low-residency programs. Stanford University’s d.School has theorized a radical model of “Open Loop” learning, in which students flexibly shift back and forth from campus learning to workplace experience over six or more years, instead of enrolling for the traditional four-year “one and done” degree (Stanford2025, n.d.). Colleges are increasingly customizing programs in business and other disciplines for large employers, like Grand Valley State University’s MBA for Spectrum Health (Sanchez, 2013) or the University of Victoria’s customized Telus MBA (University of Victoria, 2015). They are also striking volume deals with major employers, like Starbuck’s “College Achievement Plan” with Arizona State University (Blumenstyk, 2014), or Fiat-Chrysler’s “Strayer@Work” partnership with Strayer University (Zillman, 2015). Cornell University offers an intriguing Netflix-like subscription model for its online eMBA programs: employers pay as little as $40 per month per seat, and employees can take as many online courses as they wish (Straumsheim, 2013). There are many indications that curriculum modularization and online learning will feed demand for ongoing, lifelong learning and “just-in-time” education among working professionals.
5) Explore New Markets: Like the bold seafarers and adventurers of centuries past, when local markets run dry, many colleges have been exploring opportunities overseas. Again, the demographic trends have been clear for years: between now and 2050 the vast majority of middle-class wealth will become concentrated in India and China (Kharas, 2010). Institutions that have boldly built satellite campuses in China or the Middle East have met with mixed results, often signing disadvantageous contracts with local governments that have left them with multi-million-dollar deficits rather than profits. Some have established impressive worldwide sales organizations, like Thompson Rivers University’s TRUworld. Others have outsourced global recruitment to multinational providers like Australia’s Navitas, which has built a billion-dollar business in providing transitional “pathway” programs to second language students from abroad. The market opportunity in countries like India may wane as domestic capacity catches up with demographics. India’s infrastructure has grown at an astounding rate, from just 20 universities and 500 colleges in 1950, to more than 677 universities and 37,204 colleges today (India, MHRD, n.d.). At significantly lower risk, a growing number of colleges are establishing bilateral exchange, articulation, and collaborative programs with institutions in overseas markets, and this seems to be an increasingly popular path for globalization today.
Every institution finds itself in slightly different waters, facing different headwinds, carrying different
traditions and strengths, and confronted by a wide variety of competitors and privateers. The best route through stormy seas may well be quite different for each institution, and collectively they will experience greater success if they sail towards different destinations, rather than converge on a single port. As illustrated in Figure 3, campus leaders perceive exciting new frontiers for their institutions in delivering flexible education for working adults, improving student retention initiatives, offering interdisciplinary and collaborative programs, and more. Whether your institution is becalmed by demographic doldrums, faces political headwinds, is buffeted by fiscal gales, or besieged by ruthless competitors, the solution is NOT to batten down the hatches, lower your sails, make incremental course corrections, and hope you can wait out the storm. Decades-long trends in the demographic, political, economic, and social environment are NOT suddenly going to subside. Institutional leadership is not for the faint of heart. To survive this tempestuous environment, you need to confront the waves of change head-on, keep your best talent at the wheel, balance your cargo, and refit your sails. As you chart the course forward for your institution, find a bold vision and an innovative approach that captures the attention of prospective students and donors, and the imagination of your entire campus.
Figure. 3. Conference delegates were asked “What 3 new frontiers excite you most?”
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***(The complete slide deck, with links to videos and further information, is available here)