Changing Higher Education

The breakdown of the price-productivity-cost model of private research universities

I have learned a lot recently  participating in a project on Global Higher Education led by Paul Jansen and Debby Bielak of McKinsey &Co.  The project is sponsored by the Forum for the Future of Higher Education. Paul and Debby have collected a group of university CFO’s, a college president, and an old provost (me) together to apply a McKinsey sector-wide analysis to higher education. It is fascinating to see what such an analysis tells us about our world.

The team recently made a presentation entitled Higher Education Trends and Risks: Implications for Leading Institutions and Sector Performance  at the annual Aspen Symposium of the Forum.  My assignment was to talk about trends and risks for private research universities - in 15 minutes.  I approached this impossible task by first apologizing to the audience for the egregious simplifications that I would have to make in order to describe the situation in 15 minutes, and then introduced my simple one-parameter model to describe the problems facing the research university.  Since this model met with some approval at the Symposium, I thought it might be worth repeating here.

I began by describing what I called our Mission Box. Excellence - as defined by us in a very self-referential way - has become the visible driver of our mission.  Our mission, in a very general way, focuses on traditional undergraduate education, graduate and professional education, and research.  Focusing on excellence means that if it is worth doing (i.e. one of our mission foci), it is worth doing better.  Doing it better costs more money, so at some point the customer can’t, or won’t pay for it, so we lose money.  As a consequence, over time, losing money has become our very visible surrogate for excellence (my one parameter model). (Clayton Christensen, who also spoke at the symposium, has pointed out the often catastrophic outcomes of making your product better than the customer wants or needs. See also Disruptive Technologies:when great universities fail? March 3, 2006)

Is “excellence” a useful mission for higher education?

I have commented on the essential “nation-state” identity of universities, and how globalization-driven changes in the nature of government are leaving universities without a clear sense of future mission (see e.g.A nation state institution in a market state world, 3/28/06).  Michael A. Peters, in Knowledge Economy, Development and the Future of Higher Education, makes some excellent points about the “default” university  mission that has evolved.

He begins (p.166) by quoting B. Readings (The University in Ruins) regarding some of the consequences of the break-down of the link between the university and the nation state:

The economics of globalization mean that the university is no longer called upon to train citizen subjects, while the politics of the end of the cold war mean that the university is no longer called upon to uphold national prestige by producing and legitimating national culture.

Peters goes on to write:
Readings suggests that excellence has become the last unifying principle of the modern university.  When Ministry policy analysts or university administrators talked about excellence, unwittingly they bracket the question of values in favor of measurement and substitute accounting solutions for questions of accountability. As an integrating principle excellence has the advantage of being meaningless: it is non-referential.

Societal Expectations

In a recent post (Who are our customers for education:II Society as customer. April 22, 2007) I discussed possible societal expectations for higher education in an increasingly globalized world.  In this, I drew some parallels with societal expectations for American corporations as they expand globally.   Interestingly, the most recent McKinsey Quarterly (unfortunately subscription only) has an extended look at societal expectations regarding corporations.  Insofar as these expectations may be pertinent in understanding the societal expectations for universities as they expand, it is useful to review some aspects of what they found.

Interestingly, globally, 84% of executives of large corporations and 89% of consumers believe that corporate obligations to shareholders must be balanced by contributions to the broader public good. However, when executives grade themselves in their performance on this scale, only 68% of them say that corporations make a  “generally”or “somewhat” positive contribution to the public good.  The consumer’s view of the success rate of corporations is much less positive: 48% believe that corporation are making a “somewhat” or “generally” positive contribution to the public good.  However, although the executives grade themselves on this measure with some consistency around the world, the consumer’s viewpoint varies radically according to geographic location. Only 35%-40% of consumers in Europe, Japan, and the US say that large business makes a generally or somewhat positive contribution to social issues, while consumers in China (76%) and India (78%) view large corporations as positive on these measures.

The UC Berkeley Energy Biosciences Institute - a link in the knowledge supply chain?

There has been a lot of conversation and concern over the proposed Energy Biosciences Institute at UC Berkeley.  The UC description of EBI puts it directly into Pasteur’s quadrant of research that is both fundamental and applied to problems of importance to society:   

The Energy Biosciences Institute (EBI)  is a new research and development organization that will bring advanced knowledge in biology, physical sciences, engineering, and environmental and social sciences to bear on problems related to global energy production, particularly the development of next-generation, carbon-neutral transportation fuels.

However, the controversy stems not so much from the nature of the research, but the partnership behind the project, which involves an unusually close university-corporate relationship:

EBI represents a collaboration between the University of California, Berkeley, Lawrence Berkeley National Laboratory, the University of Illinois at Urbana-Champaign, and BP, which will support the Institute with a 10-year $500 million grant. EBI's multidisciplinary teams will collectively explore total-system approaches to problems that include the sustainable production of cellulosic biofuels, enhanced biological carbon sequestration, bioprocessing of fossil fuels and biologically-enhanced petroleum recovery.

EBI will educate a new generation of students in all areas of bioenergy, and will serve as a model for large-scale academic-industry collaborations. By partnering with a major energy company, EBI will facilitate and accelerate the translation of basic science and engineering research to improved products and processes for meeting the world's energy needs in the 21st century.

This relationship will involve both the presence of 50 or so resident BP scientists on the campuses of UC and the University of Illinois, and a shared governance (and funding) process involving both BP and the academic institutions.  Details are still being worked out, but faculty, understandably and appropriately, have raised numerous issues relating to commercial influence on research and academic freedom, and the impact of this new entity on university internal issues of shared governance.

From my perspective, this partnership is another step for Berkeley towards a leadership role in what I earlier described (What business are we in? March 1, 2006) as management of the knowledge supply chain. In that earlier post, I suggested that one of the roles for universities in the future could be to both create new knowledge, and to see that that knowledge moves swiftly and effectively to the end users.  This would involve new types of close partnerships -process networks (see What has offshoring got to do with research universities? Feb.22, 2006) - between knowledge producers and users working towards a common goal.  Such partnerships need not be either exclusive or permanent, but would focus on an area where the partnership could bring mutual benefit. Of course, many partnerships already exist between academe and industry, but this EBI arrangement, through its scale and aspirations (including creation of the new discipline of Energy Biosciences), would seem to move to the next plane.

Who are our customers for education? II. Society as customer.

(Continuing the discussion of Who are our customers for education? I. The employer as customer.)

"Society" has traditionally been a major "customer" of higher education.  At different times and places, higher education has been called on by society to do such diverse things as help create and/or maintain national identity, display national cultural and intellectual excellence, create societal mobility,  preserve the societal status quo, contribute to economic growth and improved living conditions, fend off and counteract  foreign ideas and influences, and provide critical expertise in times of war.  Thus,  the expectations of society as customer have and will vary according to time and place.  In return for meeting these expectations, higher education (at least the non-profit side) generally has been well rewarded by society. Much of higher education globally traditionally has been run by the state, and thus received the great majority of its support from the state.  Private non-profit institutions have received de facto state support through tax breaks of a variety of types, and are typically eligible for some types and levels of state support.  Thus, the challenge is not to determine whether or not society is one of the customers of higher education- it is - but to define in this rapidly changing and globalizing world what "society" is, and what it expects (and will expect) of higher education.  Further complicating the issue is that "society" has many levels, ranging from governmental structures at one end of organizational complexity to individuals at the other, and the relationships between these, and intervening, levels is also changing rapidly.

Who are our customers for education? I. The employer as customer.

My son Wade has an MBA, which often leads (and enables) him to look at issues with a somewhat different perspective than I.  He recently suggested that it is possible that we in higher education were defining our customers incorrectly.  Perhaps, instead of viewing students and their parents as our customers for education, we should view the future employers of our students as our real customers.  Since I am always advising groups for which I consult to move up one level in abstraction in their thinking, I recognized that this really what my son was suggesting to me.   In this post, I want to follow up on this suggestion, with one addition to his definition of customers: I want to define the real customers of higher education as both future employers, and society generally.  This addition of society to the list of customers enables a broader discussion of the role of higher education in a changing world.

THE EMPLOYER AS CUSTOMER
Let me begin by focusing on the “future employers” component of this definition, turning later to the “society” component.  This customer focus is quite consistent with my earlier post that described higher education as being in the knowledge chain management business(What business are we in?, March 1, 2006).  In that post, I argued that a role that would take on increasing importance for higher education was that of moving new knowledge quickly to potential end users. (That post also discusses other critical aspects of knowledge chain management, such as creation of new knowledge.)  And the best known way to move information, skills and knowledge from one place to another is through an educated person.  Thus, this view changes our relationship with our students, because our graduates become a key part of the knowledge supply chain which moves knowledge from the creators and explicators to the users. In addition, it may create a different kind of long-term relationship with our graduates than now exists.

Modularity in university higher education: Education

(Continuing the discussion begun in Modularity in university higher education, June 16, 2006)

Education, as a module or modules, is a lot more complicated than research.  Choosing the appropriate definition for a module is not a sure thing since globalization may cause us to rethink our organization of education, and therefore of the appropriate definition of modules.

One example of the way in which educational modules are being redefined by the forces of globalization is given by the Bologna Process.  The Bologna Process describes a truly immense and courageous educational reform movement encompassing most of Europe.   In the past, most European countries had a first higher education degree that took of the order of six years to obtain, and was at a level roughly equal to that of an American Master’s degree. That, therefore, probably would have been a reasonable module for European education.  However, characteristics of these degrees varied significantly from country to country, thereby making student movement between countries difficult, and the long time to degree kept students out of the workplace for a long period.  Lack of uniformity in degree definitions, and the long time to degree significantly decreased the desirability of these programs to non-European students.  Increasing global competition made those undesirable consequences.  In order to get around these difficulties, the Bologna Process set out to have in place by 2010 a European Higher Education Area.  Within this area, the old six year programs will be divided into a 3-4 year Bachelor’s program, and a 1-2 year Master’s program, thus moving into closer alignment with the typical Anglo-American approach.  The resulting bachelors will in many cases be less “professional”and broader and more general than was the original longer degree, with professionalization coming through the Master’s.  The stated goals of this process are twofold: 1) to create an intellectual community that will help to define the identity of the new Europe; and 2) to attract the best students from around the world to the new European education.  Thus, at least in this instance, forces of  globalization have pushed one important region into a set of educational modules similar to those that would be most reasonable to define for the United States, but it need not always be this way.

De-fragmenting the university

From time-to-time I check the Millennium Project website to see what Jim Duderstadt, former president of the University of Michigan,  is writing and talking about.  He is one of the most visionary and articulate leaders of higher education today, and you can count on finding a new set of thought-provoking articles whenever you check in. 

A recent article Fixing the Fragmented University: A View from the Bridge is simply excellent. Any attempt to summarize it does it (and the reader) a tremendous disservice.  Suffice it to say that in a few pages he describes the forces of fragmentation in the modern research university, and approaches that leadership can take to rein in those forces just the right amount, providing some focus and flexibility to meet change without stifling the intellectual ferment that under girds the institution.  He emphasizes the necessity of building approaches that build on the legacy of the particular institution.  Much of what he says is drawn from the experience at Michigan, but it applies beautifully to a broad range of institutions.

A Nation-State Institution in a Market-State World

The other day I Googled Amarket-state higher education Bobbitt@, and came up with several interesting hits. One of these was a 2004 speech by Peter Scott, Vice Chancellor of Kingston University entitled The Impact of Globalization on Universities.

Scott begins by addressing the very pertinent question Awhy are universities afraid of globalization?@ He describes the present situation as one in which Amainstream university response to globalisation ..(ranges).. from reluctant acknowledgment that globalisation is inescapable...to a steely determination to resist its alleged corruption of the university=s core academic and public-purpose values.@ After providing a convincing list of reasons for this fear, Scott then goes on to describe what he believes will be the impact of globalization on the university. His analysis on all points is very useful, and well worth reading.

For me, Scott=s most thought provoking point begins with the statement that most universities have been created as a consequence of policies of States. As such, he argues, the university=s identity is ultimately aligned with the interests of its State. Of course, those interests have changed over time as constitutional organization has moved from the Princely State through the Nation-State, and universities have changed in response. Consequently, he concludes, the modern university is in myriad ways closely defined by the aspirations and organization of the Nation-State, and, in particular, its own Nation-State.

Our issue, then, is that the university of today is a Nation-State institution in a world transforming into a Market-State!

Competitive Higher Education

Research universities have traditionally been protected by a “moat” created by a value structure that produced very high barriers to entry for new players, and discouraged rapid change. Although that moat is still deep, there are numerous developments taking place that could ultimately remove the moat and introduce real multi-player competition into higher education.

I presented a keynote address at a conference at USC in November 2000 that was organized by our Center for Higher Education Analysis entitled A New Game in Town: Competitive Higher Education. That talk later was expanded and revised and published by Information, Communication & Society, 4:4 , p. 479-506 (2001), and in a companion book Digital Academe: the New Media and Institutions of Higher Education and Learning, eds. Dutton, William H. and Loader, Brian D. Chapter 6. (Routledge, 2002). Interested readers should consult the later, more complete versions of the manuscript. 

What business are we in?

A key question for every corporation over the recent decades of turbulence in the national and international marketplace has been "What business are we in?" As conditions changed, those corporations that really understood their business were best able to emerge in a strengthened situation. Often, companies decided that their existing understanding of their businesses were too restrictive. An oft-cited example of such a case is UPS, which realized its business was not simply delivering packages in its familiar brown trucks, but rather provision of logistics processes to a diverse spectrum of customers.  They are supply chain managers for companies of all sizes worldwide, working intimately with companies to design every aspect of their supply-chain.  In doing so, UPS moved from being a simple shipper of goods on request for corporations, to being a partner with corporations in the production and sales (and repairs) of their products. This partnership enables the corporations to better focus on their core businesses, and has enabled UPS to flourish. (A nice description of the UPS role in the changing world is given by Thomas Friedman in The World is Flat, p 141-150.)

Universities have tended not to ask what business we are in. Or perhaps the answer seemed to be too obvious - " what we are doing now is our business." As we look to the future of universities, however, this obvious answer simply will not enable us to imagine a broad enough spectrum of possible futures. As conditions change, what opportunities should we embrace, which should we ignore? What components of what we do today are to be strengthened, and which might be phased out?

This will be my first take this important question, and is intended to begin exploration of various models rather than provide a proposal for action. The model that I discuss here might be called the “UPS model”, or, more specifically, the Knowledge Chain Manager model.

Metrics of Academic Excellence for the 21st Century

What metrics of excellence will society use in determining the quality of research universities in the 21st century?  Will they be the same as those used to define the great universities of the 20th century? That is the question I addressed in a piece I wrote as input for our 2004 strategic planning process. It is  called Change and the Research University.

What has offshoring got to do with research universities?

Globalization is a fact of life for almost every large sector of the world economy. How this globalization will affect higher education is an ongoing theme of these blogs. One very visible component of globalization has been the outsourcing and offshoring movement. One generally thinks of this as a way to cut costs, and as such, this seems like a movement unrelated to the research and teaching missions of the university. However, a very interesting new book by John Hagel III and John Seely Brown, The Only Sustainable Edge, presents a different take on outsourcing and offshoring that could well have major implications for the way universities think about globalization.

For Profit and/or Non Profit future?

How do views on the future of higher education held by for-profit and non-profit universities differ? What aspirations do they hold in common, and where do their differences lie? Where do for-profits have an advantage over the non-profits?

I was very fortunate to have the opportunity to discuss some of these and other issues with Douglas Becker, Chairman and CEO of Laureate Education, Inc. as part of our joint presentation of the 2004 Earl V. Pullias lecture at USC.  The title of our presentation was Higher Education and the Global Marketplace: Entrepreneurial Activity in a Dynamic Environment.

 

How do views on the future of higher education held by for-profit and non-profit universities differ? What aspirations do they hold in common, and where do their differences lie? Where do for-profits have an advantage over the non-profits?

I was very fortunate to have the opportunity to discuss some of these and other issues with Douglas Becker, Chairman and CEO of Laureate Education, Inc. as part of our joint presentation of the 2004 Earl V. Pullias lecture at USC.  The title of our presentation was Higher Education and the Global Marketplace: Entrepreneurial Activity in a Dynamic Environment.