Has COVID-19 accelerated and magnified the pre-existing inefficiencies in higher education? As a strong believer in the value of higher education, I can’t help but think that the effects of COVID-19 shined a light on the underlying issues that have existed in education for many years.
A decade ago, retail companies that relied on brick and mortar product sales blamed the Great Recession for their demise. In fact, the movement away from traditional brick and mortar stores to online sales was in play well before this economic decline—the Great Recession simply accelerated the inevitable. In reality, the failure of companies such as Blockbuster, Circuit City, Borders Books, and KB Toys was primarily due to their inability to adapt their business model to the future external impacts that were expected.
While I am hopeful there won’t be a list of 100-year-old universities that closed after the onset of COVID-19, I am fearful that will be the case.
I began teaching as an adjunct professor at two universities several years ago and was surprised by the limited amount of fundamental innovation in teaching. Sure, books were now online, PowerPoint replaced overheads, and whiteboards replaced chalkboards—but the core of teaching in many classrooms is strikingly similar to the 1980s. It seems like the pace of change outside universities has exceeded the change inside the classroom. Just like brick and mortar retail in the early 2000s.
There are several universities that have embraced the future of learning and are at the forefront of innovation in teaching. Georgia Tech offers an online masters in computer science that costs $7,000 (one-sixth the cost of the in-person program, according to The New York Times). It is now the largest computer science program in the country. Also, The Leeds School of Business at the University of Colorado, Boulder won the Excellence in Entrepreneurship Teaching and Pedagogical Innovation Award at the Global Consortium for Entrepreneurship Centers (GCEC) Annual Event in Stockholm, Sweden. (Full disclosure: I teach in this program.)
When looking at universities, it is apparent they rely on an in-person, real-estate rich model. Consider the sheer size of the buildings that house classrooms, dorms, dining halls, and campus recreation centers. What would the impact be on universities (and college towns) if students began attending classes from the comfort of their parent’s house just as consumers began shopping online? What will happen when there is a significant reduction in lucrative on-campus revenue streams, such as in-person tuition, athletic fees, and on-campus meal plans, when a larger portion of students take classes online?
The cost of public four-year education has increased by 245% over the last 35 years (see chart below). Comparatively, the average starting salary for a college graduate from 1986 to 2015 increased by just 100% (from $24,752 to $50,219, adjusted for inflation). From an economic standpoint, this is not a sustainable trend. Could online education be the answer?
Prior to the COVID-19 outbreak, I worked with universities on developing a strategic operating model, using the same tool I use with organizations: the Strategy Whiteboard. It follows a three-step process:
- Strategic Analysis
- Strategic Focus and Outcomes
- Strategic Execution
In these strategy sessions, we completed what I call the “External Impacts” block. The table below reflects what some universities outlined as the future impacts on their industry. These impacts were largely technology and online-focused, with emphasis on the shifts in what education would look like in the future. Unfortunately for universities, the future arrived overnight in March of 2020, with COVID-19. However, you could argue that these future trends have been known for years. COVID-19 simply placed a massive magnifying glass over it and sped up the need to change.
It is likely that universities will blame the decline in student enrollment and financial outcomes on COVID-19, but take a deeper look at the External Impacts identified. The same items could easily have been listed in 2015. So, is higher education the new retail?
Organizations (including universities) that do not lead in the future and turn a blind eye towards the obvious trends tend to be exposed when there is a shock to the system like the Great Recession or COVID-19. When these Black Swan events occur, organizations that have been at the front of innovation and lead with agility accelerate their connection to their customers (or students) and achieve greater outcomes.
I am confident that every university in America has a strategic plan, just as every retail company listed above that failed had a strategic plan. The real question is: Does the organization’s culture foster effective execution of the strategic plan? In leading any organization, there are three primary components that must be unified to analyze and adapt to the future: culture, strategy, and execution. If these three vital organizational dimensions are not connected, it is likely acceleration of anticipated trends will lead to extinction.
The future does not provide extra credit for participation. Regardless of its age or history, the need to create an agile strategic operating model, not simply a strategic plan, is fundamental to any organization’s ongoing success. A strategic operating model creates rigid strategic focus, clear strategic outcomes, and agile strategic execution—all of which rest on sound strategic analysis.
Based on my experience, university administrators have a clear understanding of what the future looks like and are capable of building a plan to embrace the trends, but the traditional culture and execution model within universities are not set up for agility and rapid adaptation. This is similar to retail prior to the Great Recession.
A decade ago, we lost many historically significant companies and many were in the traditional brick and mortar retail space. While their failure was widely attributed to the Great Recession, underneath that was a true failure in creating an agile strategic operating model that connected culture, strategy, and execution. As we begin to reopen businesses and universities prepare for the fall semester, it will be interesting to see which organizations take the necessary steps to create a nimble culture that quickly adapts strategic actions to connect to the market.
Clearly, the sudden shock of COVID-19 was nearly impossible to prepare for, but organizations that were already down the path of adapting their model have a much better likelihood of survival. Several universities were not on this path. I am concerned that we will be reading about them in the coming years as we have been reading about retail companies in the past decade.
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