Academic dinosaurs?

A strand of the public discourse around higher education, since the coalition’s funding reforms in 2010, has been about how alternative providers (ie the private sector) will enter the market, compete with established universities and force those ‘academic dinosaurs’ to improve their offer to students, to compete on successful terms.

Two friendly academic dinosaurs

Now no doubt there is a market – you can see some evidence for this in the UCAS data – but I’m not sure that it’s as simple as the ‘more competition = better all round” narrative might have you believe.

Markets are segmented. There are different types of customer; and different types of supplier. This is true for all markets; and hence true for higher education.  Higher education differs in that price is not only about money, but also about entry tariff: you aren’t able to go to some universities unless you have the right qualifications.

On the supplier side (and for simplicity let’s focus on undergraduates only here), you have differentiation by

• length of study (accelerated degrees versus ‘traditional’ degrees; foundation years; part-time study)
• range of subjects (specialist institutions versus multi-faculty)
• mode of study (distance learning versus campus based; daytime versus evening)
• focus on teaching versus focus on research
• qualifications needed to gain entry
• price
• location (near home; another city; a rural location; a different nation)

On the ‘customer’ side, you have differentiation around:

• Price sensitivity (in relation to living costs; total fees; willingness to commit time)
• Confidence (in their own ability)
• Focus (are they looking for ‘the student experience’ or for a qualification?)
• Willingness or ability to travel to university
• Instrumentality (that is, are they focused on the career options open to them, or looking only at the educational aspects)
• Flexibility (that is, how flexible a university must be in the facilities and options it offers the student: think childcare on campus; 24/7 library opening)

This isn’t a simple marketplace. It also strikes me that the alternative providers are seeking out particular niches – a particular subject or a rigorous focus on the learner – and that only one private provider – the University of Buckingham – seeks to play on level terms with other universities.  Not a surprise, but also not a revolution.

My prediction (and it is just that! no value judgments are made here!) would be that private providers will compete mostly with some of the newer universities: attracting students with less familiarity with higher education; focusing on the learner; offering flexible study.  The older universities will continue to be popular with students who have familial experience of university, and for whom ‘going to university’ has been part of their life plan since before they knew it, in short, who come from ‘traditional’ backgrounds..

If this is right, the effects of competition won’t be on the sector as a whole, but on a subset of existing institutions only. And not, noticeably, on those institutions with a strong focus on research, which I’ve heard as a particular bugbear of the alternative providers (why subsidize research with fees? they ask).

Back to the dinosaur metaphor, this is consistent with what know – evolution is a slow process, impacting on particular ecosystems and subspecies; changing a food chain here and there; but passing almost unnoticed from one generation to the next. In the absence of a metaphorical meteorite hitting the UK university sector, the dinosaurs may be successful for some time yet.

MOOCs ado about nothing?

I've blogged before about MOOCs and whether they are the approach which will disrupt the traditional university business model. An article on the BBC website which I saw today adds an angle to the discussion.

First of all, what do I mean by disrupting the traditional business model? It’s like what Apple did to the market for CDs – they took a bundle of different technologies (mp3 players; the internet) and by selling iPods and setting up iTunes changed the whole business of selling music. Goodnight record shops. Ben Hammersley writes about this in his (very excellent) book, 64 things you need to know Now for Then. His argument (it kind of grows out of the different chapters in the book, rather than being explicitly stated) is that disruption via digital technology to an existing business model is inevitable – a question of when not whether.

At the moment MOOCs don’t seem like the disruptive model – there are real questions about non-completion rates, certification and standards on the one hand, and how to make it pay on the other (but see also my blog post about this, and the University of the People idea). And this is where the BBC story comes in.

Sean Coughlan reported in April about learning centres for people studying MOOCs. Basically, these are organised and facilitated sessions (classes, if you like) for people following a particular MOOC in a given locale, to meet together help them study. The article reported that there’s a much lower drop-out rate for students who attend a learning hub. And also, interestingly, that the classes become something else:

"When students are gathered for their Mooc classes it becomes a focus for other spin-offs, such as firms wanting to recruit staff or to get students involved in developing commercial projects."

This gives more options for ‘monetizing’ (to use the business jargon) the education process via MOOCs – if innovative companies or recruiters can find a way to gain economic value from a learning centre, they might pay, leading to more learning centres, more people gaining educational value from MOOCs, and possibly MOOCs becoming a realistic alternative to registering as a fee paying student at a university. It probably won’t mean the end of the motivation to go to a campus university for UK students (if that were the case the Open University would have taken everything over years ago) but it might tip the balance for some international students. And that would nibble away at a really important part of the business model for many UK universities.

Just a straw in the wind. For now.

The heart or the head?

Idealism and reality seem currently to be clashing in higher education, and the turbulence is bringing some interesting things to the surface.

On the one hand, there’s an idealism inherent in the notion of higher education, which sees it as a liberating force for the individual and society and that there is a moral duty to deliver the enlightened world which could arise if more people benefited from a higher education. And in the UK context, that strand of thinking was given a boost by the introduction of considerably increased tuition fees for undergraduate study in England in 2012. The notion that access to higher education should not be rationed by affordability, as well as provoking riots in Trafalgar Square, led to some radical initiatives, such as the Social Science Centre in Lincoln, which enables people to access a ‘free co-operative higher education’ and the Free University of Liverpool, which has now wound up.

And on the other hand, the gritty reality that the traditional form of higher education in the UK (ie full-time, attending a campus away from home) is an expensive business to deliver, with a spiral of expectation created by higher fees, a focus on the non-academic aspects of the student experience, leading to phenomena like the ‘athletics arms race’, on which Paul Greatrix has blogged, and a yearly cycle of what-more-have-we-got-to-justify-high-fees?. Sustaining a large sector, which employs over 450,000 people in the UK (HESA staff return 2012-13, table A), requires a lot of money. Which means you’re straight back to the argument about where the money comes from, who pays, and whether it higher education funding is more like a progressive tax or a means test which in itself acts as a barrier.

(This reminds me of a chant during a late-1980’s demo against student loans:

"Education should be free
For the sons and daughters of the bourgeoisie!")

The BBC flagged another interesting initiative – the University of the People. This claims to be free if people need it; to be online (but not dependent upon high specification technology); to be international; and, crucially, to offer US accredited degrees. If it is what it seems to say it is – voluntary, humanitarian – then it clearly sits with the heart not the head. And if it is offering proper degrees of a high standard, then it will surely attract a lot of students.

It’s too early to declare that this is the shape of things to come: the challenge of supporting a few hundred students online is different from the challenge of supporting tens of thousands, and the initial enthusiasm may wear off. But what if the University of the People accepted credit transfer from completed MOOCs? A lot of business models might be seriously disrupted, and the heart-versus-head question might become starker still.

Happy Birthday, Janet

(Or, five things you need to think about to make a shared service idea work)

Janet – the Joint Academic Network – is thirty this month. There’s a website giving some of the history of Janet, and fascinating it is. (I particularly like the second upgrade to a whopping 256kb/s. At the time this would have been spectacularly fast – but my! how things have changed.)

It’s a good example of a shared service. Undoubtedly Janet provided staff with connectivity on a uniform and high quality basis which they wouldn’t otherwise have had, and thereby enabled collaboration between universities. This makes it very important: the UK’s universities are very impressive internationally, and it’s only by making the most of our strengths that they can continue to be so.

Janet’s just one of the shared services in higher education which makes a positive difference. Other examples of sector-wide shared services include UCAS and the Leadership Foundation for Higher Education. And smaller groups of universities collaborate: internal audit services such as UNIAC or the Kingston City Group; and there’s a fascinating development in Wales: the Wales Higher Education Library Forum (WHELF), which includes all HEI’s in Wales, the National Library of Wales, and NHS libraries in Wales, is jointly procuring a library management system. These are all good things which grow the capacity of individual universities, and which enable more value to be had for less money – what’s not to like?

And for this reason shared services have been very popular with governments and funding councils. But it’s felt to me that the promise has never been fully realised. The 2012 Finance Act included provision for cost-sharing groups to have VAT exemption, which removed one barrier. But there are others, more practical, about managing the transition to a shared service. Here are five things which you should think about, if considering whether a shared service approach might work for you.

How core is the service to your operation? If you share the service you inevitably lose some control, whether it’s over the details of things are managed and prioritisation when things get tough, or whether it’s in the specification and working out what matters in designing the shared service in the first place. If the service that you’re thinking of sharing is critical to your offer – because it’s a fundamental building block, or because the specific quality, price or location matter to those who you serve, think hard about whether sharing is right for you. It’s an expensive mistake to rectify later.

How stable is the environment for the service? Sharing is a long-term activity, and if there’s foreseeable disruption round the corner, you need to factor this into your considerations. Many shared services have at their heart a common database or IT system for managing processes. How would the model look if the technology underpinning it changed completely? In the same way that cloud computing changed fundamentally the business model of many organisations in the field, so other technological (or legislative) changes will make a difference too. This need not be a show stopper, but time spent thinking about the core of the shared business model and how stable this is will be time well spent.

What is the business model? There are many activities in universities which get cheaper and better by being larger – think about the many processes which involve bulk handling of data, and once you’ve got the workflow it doesn’t cost much for a computer to repeat a calculation or a process. But if this is true for universities it is true for other sectors as well. Take payroll, for example: if several universities shared their payroll operation then the unit cost of managing a salary payment would certainly be cheaper. But banks and other commercial providers are managing payroll systems which pay millions of people every month: that’ll be cheaper still. Unless a shared service provides a benefit which is unique to the sector, then it’s quite likely that the financial savings will be outweighed by those available by looking at a different sort of provision. And that’s a big impact upon the business case.

Are you doing it for efficiency or for service quality? Shared services can deliver either, but if you’re thinking of sharing an existing service then you need to be very clear about this. You’ll have staff, buildings, customers and systems involved in what you currently do, and thinking about the change that a shared service will mean for them, thinking about how you’ll manage this, and whether the efficiency savings will really materialise is an important exercise. You’ll get more buy-in from staff and customers if you’re talking about making things better; you’ll have a stronger business case if you’re talking about efficiencies and cost saving. And it’s really hard to do both at the same time.

Do the sharers have the commitment to learn to trust each other? The human dimension is really important, and easy for management teams to overlook. Put simply, the people who will make this work come from all of the different sharing organisations, and unless they trust each other enough to work openly, honestly, and without a hidden agenda, then even mighty efforts can be frustrated. Time spent at the outset of a shared service project in bringing teams together, letting them get to know each other, and learning to work well, is critical to the project’s success. Remember the forming, storming, norming and performing model for team-building? You need to go through all four stages, and do so consciously. Make sure that it’s someone’s job to see that this happens, and listen to their concerns.

Don’t let these issues put you off – the benefits of good shared services are real and long lasting. But if it was easy, there’d be more of them.

Bigger is better?

Every now and then there’s a splash about the sheer number of administrators in higher education – see, for example, Registrarism’s post in February 2014 picking up on a scare story in the Chronicle of Higher Education.  If you set aside the nostalgia for imagined lost days of senior common rooms, pliant students and No Administrators, there is a an interesting question about how much universities actually spend.

In the UK at least this is public data, from HESA.  I looked at the proportion of staff spend by UK universities which was not on academic staff.  I excluded staff spend on premises (ie estates and facilities management) and residences because these are sometimes contracted out, which would skew the data.  And I plotted this data, for 2011-12, against total income of institutions in that same year.  The resulting chart can be found via the Resources page on hughjonesconsulting.co.uk, here.

And what do we see?  Well, there does seem to be a correlation between scale and less spend on professional service staff.  (Remember – correlation does not imply causality, although as Edward Tufte observes, it sure is a hint.)  But what a variation there is too – spend is pretty much all over the place.

It’s important not to jump to conclusions about this.  Importantly, there’s no data here about the quality of the service provided, and maybe you get more and better if you spend more.  And UK universities aren’t all the same, and don’t operate in a vacuum.  So, I’d want to look at subject mix; location; research-intensiveness; and history (because patterns of spend tend to lock themselves in over the years; and because many universities saw their unit of resources squeezed by late 1980’s and early 1990’s public funding mechanisms).

But there’s also food for thought.  Are you above the line or below it?

The disruption that is to come

Registrarism's blog post Surviving an avalanche - which reminds us of the hype a year ago by IPPR about The Massive Changes To Come in higher education - got me thinking about what the real disruptive digital approach to higher education will be.  

MOOCs have a lot written about them, and there's serious money behind them, but that says that they are a business proposition, not an educational one.  I think the disruptive technology is on us already, and it's not happening to universities, its happening in universities.  It's the use of social media by academic staff to interact with students.

My Twitter feed includes a couple of lecturers who tweet well, and whose account is clearly part of their day-to-day engagement with their students.  There's the expected ups and downs.  Some great conversations which show how Twitter in the classroom can qualitatively change students' engagement with the topic and the class.  And some exchanges where the immediacy of Twitter enables a student to express their frustration very directly to the teacher.  It's obvious that the quality of how the lecturer responds to the latter - quickly, openly - contributes a lot to the positive uses that Twitter can have.  It enables a lecturer to be visibly personally authentic, and who couldn't like that?

This is the revolution, I think.  As the use of social media becomes part of the everyday fabric of life, those in universities who don't use it, or who don't use it well, may find themselves less noticed, and less able to make a difference.  And the qualities for personal authenticity in social media are quite different to some of the norms of university life: social media isn't hierarchical, and it isn't always serious.  

If this is the disruptive technology for higher education, then it won't be an avalanche that buries us, it will be a slow rise in sea level.  Like the good citizens of High Brazil in Terry Jones' Erik the Viking, we may be up to our waists before we notice that things have changed for ever.