I find myself using quotes from former General Electric chairman, Jack Welch, more often than one might expect, but he definitely has a way of cutting to the point. I see he now is involved with the Jack Welch Management Institute, which is part of Chancellor University and is offering an MBA. I find that especially curious. The increasing enrollment at for-profit institutions forces us to pay attention, but I find the idea of delivering an MBA that is tied to a person’s “star power,” uncomfortable.
Nevertheless, I came across a quote the other day that resonated for me: “I’ve always believed that when the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight.” I thought about this in the context of disruptive change and my concern that many higher education leaders do not fully understand the implications of being in such an environment. The Jack Welch quote may capture an important aspect of why it is that established institutions tend to lose out, in the face of disruptive change.
One hears nearly trite statements, such as “the only constant is change,” which seem to miss just how profound disruptive change may be. We expect what one might call evolutionary or incremental change, brought about as we improve teaching technology, say, or serve more adult learners. But if the emerging business models create true disruption, in the way they combine the use of technology, focus services and marketing, and approach pricing, then the rate of change will be far beyond the ability of most traditional institutions to adapt.
I doubt that anyone will argue with an assertion that the rate of change inside most traditional universities is slower than that occurring in the for-profit sector, in community colleges, or in a small number of entrepreneurial universities. I hear university folks talking about how much faster they are moving than they used to move, but they still are far slower than truly entrepreneurial institutions.
If that is so, then I’d take it as further evidence that the “end” is in sight for many institutions. In some cases, it will literally be the end: They will cease to exist, at least in their current form. For others, it may be a matter of dramatic restructuring, almost unrecognizable changes in governance and decision making, or mergers with other institutions.
Surely, Welch is right. If you can’t run as fast as or faster than your competition, how can you not lose? I suppose you can argue that there still will be those who want what more traditional institutions offer, but as accepted quality and lower cost grab more and more of the enrollment, the number of traditional institutions will decline. I do wonder exactly how public funding of state institutions and the hurdle-erecting behavior of government and accrediting agencies might slow or distort the future I see coming, but the ultimate outcome would seem to be determined, regardless.
One of the observations from Clayton Christensen, regarding disruptive technology, is that some large institutions will try to cope by creating independent entities and empowering them to do what it takes to succeed in the new environment. The principle is that the “big dog” can continue doing what it has always done successfully, while being a player in the new environment and more or less hedging its bets.
Unfortunately, as the new entity pushes the boundaries, it makes the larger organization nervous, and there is a tendency to begin putting controls in place to “rein them in.” Someone wants to reduce costs in the new entity and requires them to follow the same procedures as everyone else. HR begins to insist on hiring processes that are inconsistent with a fast-moving entrepreneurial effort. Central administration approvals are required that slow things down with typical political compromise, and the important knowledge of the new unit’s leadership loses impact, in favor of more traditional thinking.
I’ve seen a lot of exactly that sort of thing happen in universities that set out to pursue online education. Even if they manage to get things launched, institutional leaders will find that the success of new programs is threatening, and instead of protecting their independence, committees are created and compromises are made. The practices of the larger institution tend to triumph over real entrepreneurship, and the leadership fails to reinvest adequately in the upstart organization. Not smart, maybe, but understandable in organizations led by human beings.
Will some institutions of higher education get all this and not only survive, but thrive? I’d bet yes, but right now it is hard to identify which ones. I still think flagships and the best privates will be okay, because I don’t think they are in the same market as the rest of us. I’d predict that so-called “research universities” that, in fact, have modest research capacity will be hurt most severely, because they are “pretenders,” not able to compete with major institutions, but pursuing objectives that are expensive, yet inconsistent with generating the level of enrollment and revenue required to be healthy.
I think some of the most successful institutions will be strong regional universities that have visionary leadership and a solid understanding of themselves as teaching institutions. For sure, institutions that support growth at their branch campuses, especially in combination with a commitment to online education, will have an advantage.
The more I see and read, the more convinced I am that the tipping point is upon us. I hope I have opportunities to work with entrepreneurial leaders, who are willing to empower creative approaches that energize faculty and staff, while expanding access and opportunity. I am excited by the possibilities. It may become more difficult for most to experience four years of residential education, beginning at the age of 18, or whatever, but the real democratization of higher education will be all the greater for it!