Evolving Higher Education Business Models

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Evolving Higher Education Business Models In their paper Key Challenges in Higher Education: An Economic Models Perspective, authors Jacalyn Askin and Bob Shea of the National Association of College and University Business Officers build on their work in the New Economic Models project to identify key leadership issues as the financial model of higher education transforms in response to changing economic and policy environments. The convening and commissioned papers further pushed us to seek out fresh insights on how financial transparency and leadership could be aligned to enhance higher education academic and business models. For this, we looked to the business literature, particularly business model and networked organization theories and analysis. A business model frame provides a simple means to abstract from the complexity of education delivery into four categories—value proposition, resources, processes, and profit margin—that allow us to see where financial transparency can be helpful. The networked organization frame posits a way to align incentives in distributed value chains to encourage participants to deliver value that serves consumers and leverages each other’s strengths. This seemed well aligned with a need to improve upon shared governance for a time of financial constraints and innovation imperatives. — 4 —
Evolving Higher Education Business Models BACKGROUND Understanding how institutions can evolve as networked organizations requires a deeper look at the conflicting priorities and driving pressures U.S. colleges and universities face in the current landscape. The Demand for More Public policymakers, students, and their families are pressuring colleges and universities to do more, and to do more for a more diverse population of students. Demand for higher education continues to grow—enrollment immediately following high school continues to rise, adults enroll or re-enroll in college later in life, and people seek out more training throughout their careers. Higher education is under pressure to cost-effectively educate this increasingly diverse and growing population of students. There is pressure at one end of the spectrum to continue to fulfill higher education’s role in preparing students to think critically and express themselves through a traditional liberal arts curriculum, and pressure on the other end of the spectrum to provide students with professional and marketable skills, with an emphasis on employability. While the spectrum is at some level a false dichotomy, colleges and universities are nonetheless under pressure to fulfill both. In order to serve more students, particularly students who come from disadvantaged backgrounds and who are underprepared for college-level work, institutions make investments to expand the capacity of their institutional infrastructure. Among other decisions, institutional leaders may choose to invest in online or virtual presence technologies that allow them to serve a greater number of students, or they may invest in physical classroom or laboratory space, student services, or in the size and quality of the faculty who deliver instruction. All of these avenues for increasing institutional capacity require both upfront investments and ongoing costs. In addition to the demand for capacity building, postsecondary institutions face performance criteria by policymakers and the public alike, who want to see more students completing their degrees and to see those degrees translate into career opportunities. Students and families expect that the educational investments they make, including any debt they may incur, will yield a degree with intrinsic and market value that justifies this investment. States are also zeroing in on performance. For example, instead of allocating — 5 —
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