I love the word “transformation”, but perhaps that is because I like the challenge of change. I enjoy looking at a problem, understanding the limitations around resources, evaluating the people and the culture, and developing a plan that works while pushing but not breaking boundaries.
I often wonder if higher education is on the verge of a transformation.
[tran(t)sfərˈmāSH(ə)n] NOUN. a thorough or dramatic change in form or appearance
or if it is more of an evolution:
[evəˈlo͞oSH(ə)n] NOUN. the gradual development of something, especially from a simple to a more complex form
I suspect that it very much depends on the institution. Over my many years of providing CFO outsourcing services, I have worked with several financially challenged institutions and nonprofits. I have seen that those who underwent transformation rather than evolution were the ones who survived and thrived. When you are financially challenged, you are forced to make dramatic changes and take chances. That is because you are keenly aware that what you are doing is not working.
Financially stable institutions tend to be slow and deliberate, not wanting (or needing) to take chances without a great deal of calculation. With a continued decline in the number of students and questions around the demonstrated value of education, perhaps institutions will consider more transformations?
I was watching an interview recently with Hubert Joly, a Harvard Business School faculty member, who served as chairman and CEO of Best Buy during its turnaround. In 2012, Best Buy sales and stock prices had both plummeted and it seemed that the company was well on its way to closing its doors. When Joly was hired as CEO, he had zero retail experience. What he did have was knowledge about the importance of engaging people during the transformation process.
As he shared his insights, I thought about higher education and the current dilemmas we face. Here are some takeaways:
During a transformation, the easiest lever to pull for many organizations is to grow revenue. If you grow, you need more people. This is true in any business, but especially true in a service business like education where our people are our product.
Ask those closest to the customer for ideas
While cutting costs is important during a transformation, focus first on cutting costs in non-salary areas. Hubert spent his first several weeks as CEO of Best Buy working at a store. He asked the other employees how they would make things more efficient or save While cutting costs is important during a transformation, focus first on cutting costs in non-salary areas. Hubert spent his first several weeks as CEO of Best Buy working at a store. He asked the other employees how they would make things more efficient or save money. What he said is exactly what I say in my consulting role. The people who work there every day know how to fix the problems; they just need to be asked. They’ve probably been thinking of ways to grow revenue, cut expenses, and navigate obstacles for a long time. Put their ideas together and create an action plan. Can you get to the ground level at your institution to learn where to increase efficiency and save money?
As I shared earlier, we are in a service industry. Our people are our product. How can you maximize engagement with them while controlling costs?
Invest in your talent
We all know we have a shortage of people, and this will only get worse with the predicted population shifts. What can we do now to build skills and talent, reinvent work to respond to changes in technology, and re-engage onsite or remote teams? (See last month’s article on this topic – Succession Planning with Intentionality)
Create a culture of innovation without fear
If we set a target and commit to hit it at all costs, we intimidate people. However, if we create a culture that seeks new ideas and ways of delivering value, and we are willing to accept some risk, we are likely to see the innovative changes necessary to transform our institutions
Hubert also shared that he was comforted to know that “we have no one to blame but us. This is all self-inflicted. That means we have the power to fix it.” He is right. The Best Buy-related examples he shared apply to us in higher education as well. What is the perceived value to our customers?
- Tuition prices are high for many families and job salaries do not always justify the debt associated with a degree, while some degrees have substantial ROIs.
- Customers may not be getting what they want.
- There is little flexibility around what students want or need to learn in many programs.
- The structure of curriculum, hours, semester timing, and mode (online, in-person) does not stretch to accommodate all student situations.
- Degrees do not guarantee high-paying careers. Only 35% of the population seeks a degree and 40% of them are underemployed (have a degree that is not required for their job) after graduation. This means that 80% of the population does not derive monetary value from their education.
In our roles, we need to ask ourselves, “If we truly believe education is important, how can we meet the needs of this 80%?”
All of us in higher education believe there is a substantial value to education, but do our customers (students, parents, employers, government) believe the same?
If we answered these questions honestly, would we conclude that higher education is on the verge of a transformation or just an evolution?