The 10 Rules of Strategic Management That Can Help Higher Ed

My school has embarked on a strategic planning process this Fall – it’s first in a long while. This is a good thing, and it has gotten me thinking about strategic thinking in organizations. After all, I’ve got a Ph.D. in strategic management and taught it to MBAs for years. I ought to know something about it. The thing is, I haven’t seen true strategic thinking applied much in higher ed, and that may be one reason that many schools are in trouble now.

Oh, I know – most schools don’t believe that a lack of strategic thinking is their problem. They think the woes of higher ed are all due to environmental changes – the economy is poor, declining number of traditional students, high costs, intense competition. All of those things are true, but it is also true that companies manage to survive and thrive in adverse economic conditions, even long term ones if they are able to innovate and change.

And this is what got me thinking. What if, instead of worrying about MOOCs or what ever the “disruptive” technology du jour is, or panicking when the smart MBAs from Silicon Valley tell them they’re about to become obsolete, colleges and universities actually applied the information contained in Strategic Management textbooks? There are many lessons they could learn. I think the following would be among the most valuable:

  1. Without a strong and relevant mission and vision that is constantly applied and reinforced by senior management, it is impossible to ascertain the logic behind strategic moves.
  2. Good strategic planning is a process that takes place both from the top down and the bottom up. Good ideas can come from the executive suite or from front line employees. The process has to stimulate discussion at all organizational levels and capture the results.
  3. Good strategic plans are operationalized by goals and objectives that are S.M.A.R.T. – Specific, Measurable, Achievable, Relevant and Time-bound. Ambiguous goals and objectives lead to ambiguous results.
  4. Private universities have intrinsically higher costs than other types of educational institutions, and if they attempt to compete on price with true low cost providers, they will lose.
  5. If you aren’t a low cost provider, your only successful strategy is to differentiate yourself from the competition in a way that is meaningful to your customers.
  6. Unless you are a large public research university, you cannot be all things to all people. You had better find a niche in which you can dominate your competition.
  7. Unless you are an Ivy or the equivalent like Stanford or Duke, you can’t compete primarily on educational prestige. Trying to play the rankings game is not a winning strategy for most universities.
  8. Companies succeed because they solve a problem for their customers. A company cannot be successful unless they understand what problem they are solving, and can articulate it in a concise value proposition.
  9. Companies compete successfully due to unique resources and capabilities that they possess that create value for their customers and cannot be easily imitated by their competitors. These resources/capabilities are often tacit and deeply embedded in the company’s culture. Senior management must find and nurture them, and not inadvertently weaken them in a rush to change things as fast as possible.
  10. The critical resources of knowledge-based organizations such as universities always stem from the skills and abilities of the employees. They are the major assets of the firm, and their loyalty and creativity will be the major determinant of the firm’s success.

I am going to expand on each of these 10 lessons and how they particularly apply to higher ed in the coming weeks. In the mean time, let me know if I’ve missed any.

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The Cost of Textbooks

I found an industry besides healthcare whose prices are rising as fast as college tuition! Not coincidentally, it is the textbook industry. According to the GAO, textbook prices are increasing at twice the rate of inflation, lagging tuition by only a bit. The report projected textbook costs of $1000/year for college students, and that was in 2006. It was enough of an issue to spur new federal regulations in 2010 aimed at driving down textbook pricing by disallowing bundling of other materials with textbooks and mandating price disclosures to professors.

Why have textbook publishers been able to continue jacking up prices regardless of overall economic conditions? As Anya Kamenetz pointed out in an insightful post in the NYT, the issue is not rising costs, it is the publishers’ business model. Students are a captive audience, and are forced to buy whatever books their professors assign. This makes textbooks a cash cow for publishers who are being severely squeezed in all of their other markets.

This is an issue that is relatively easy for faculty to address. As Kamenetz points out, there are a large and growing number of alternatives to textbooks. I personally haven’t used one in my classes for years. I make do with my own course materials supplemented by articles, blogs, and other readings. I haven’t used them yet, but I’m intrigued by Flat World Knowledge, who provide open source textbooks for college professors. These online alternatives not only reduce costs to students, but they are also more relevant to them than boring tomes that become outdated as soon as they are printed.

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The Cost of Higher Education

I always enjoy @fredwilson’s blog (A VC), so I was intrigued yesterday when he deviated from his usual topics of technology startups and the venture capital industry to comment on the costs of higher education. He made some good points about technology not being the answer – I believe technology will prove to be more of a pedagogical tool than a cost saving tool – and then he quickly focused on finding creative ways to finance higher ed.

Developing new financing models for students ignores the root problem – higher education in the US has gotten way too expensive. According to a recent report by the College Board, tuition and fees at public universities increased 5.6% per year above the rate of inflation during the decade of 2001 – 2011. Private universities did a little better, outstripping the rate of inflation by a mere 2.6%. This is not a new trend – the costs of higher education increased well in excess of inflation throughout the 1980s and 1990s as well.

There are many reasons for these cost increases, and the problem won’t be resolved overnight. However, those of us in higher ed administration need to realize that this is a real problem and it’s not going away. The high cost of education is a key factor in student retention, and saddling recent graduates with crippling debt loads doesn’t help anyone. I haven’t seen stats on this, but I’m guessing healthcare is the only other industry that has racked up comparable real cost increases over the past 30 years.

One of my goals with this blog is to highlight good ideas to reform higher education. If you know of innovative new ways to contain higher ed costs, please pass them on.

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Welcome to my New Site

This is the continuation of a blog I started a few years ago on Blogger, then migrated last year to my own site. I’ve been pretty haphazard about posting, and it hasn’t gained much traction. Hopefully, I’ll be more consistent moving forward so I can find an audience. I use Twitter to make brief comments about things that interest me (follow me – @profkenc), and I use the blog when I need more space to make a point.

Originally, I was focused on entrepreneurship and entrepreneurial education, but as I transition to my new role as Dean of the School of Business, Public Administration, and Information Sciences at Long Island University in Brooklyn, I will expand my comments to include all aspects of business and higher education.

I believe that my position and background give me a unique perspective on business and higher education that may be of interest to some. For one thing, roughly half of my career has been in business and half in academia. That means I understand and can speak to both of those constituencies. It is a unending source of amazement to me that businesspeople and the academics who dedicate their lives to studying them have so little to say to each other. This is especially true among entrepreneurs, who often believe that no one who hasn’t been through what they have can possibly understand them; and business scholars, who sometimes resort to arcane econometric models that serve no practical purpose in order to publish in top journals and advance their careers. I understand both of these perspectives, but don’t fully agree with either. One of the things I hope to do with this blog is to argue for a type of business research and business education that is both useful to practice and provides practical knowledge to our students in order to prepare them to take their place as leaders in society upon graduation.

Secondly, I would like to focus on what entrepreneurship is, which is a specific way of thinking and viewing the world (I will post exactly what I mean by this in the near future). Our views of entrepreneurship tend to be economic – jobs and wealth created, industries destroyed or transformed, etc. There is nothing wrong with this, but it does get away from the actual act of being entrepreneurial, which is just as creative an act as any artistic endeavor, and often does not involve a profit motive at all.

Thirdly, I strongly believe we are in a disruptive period for higher education, and those of us in academia will be faced with increasing competition from a variety of sources. We must respond by ensuring that we are relevant to the students we serve, and that we are adding value to all of our many and varied stakeholders. I know I am not alone in this view. I don’t pretend to have all of the answers, but I do believe that we need new thinking and entrepreneurial action in order to survive and thrive. The old ways of operating will not be sufficient in the future.

Finally, I’ve been looking around for a while and I just haven’t found other blogs that address these issues. Maybe I’m not looking in the right place. If you know of any, let me know and I’ll gladly link to them.

As I get rolling with this thing, please feel free to comment on anything I post, good or bad. Assuming I don’t get ridiculous amounts of spam or hate mail, I’ll post all comments without moderating.

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