The following is an edited form of a Tweetstorm from Saturday, July 6th, 2019. https://twitter.com/refuturing/status/1147601200189194242
Interesting to see Kansas State refusing to raise in-state tuition and cutting back as a result. Their strategy appears to be to try and draw students from Colorado, Oklahoma, Illinois, Missouri and Texas to counter Kansas’ population decline. https://www.kansascity.com/news/state/kansas/article232259532.html
I’ve said it before and I’ll say it again: competing for a shrinking pool of 18-22 year olds is not a winning strategy for most institutions going forward. Universities and colleges in areas of demographic & economic decline are going to have to radically change business models in order to survive. If you are Kansas State, you have to ask yourself: can I assemble enough endowment money to provide enough scholarships to draw enough students from Colorado & Texas? Does that help keep the lights on in a sustainable fashion? Maybe, but likely not.
The Path of Disciplined Reduction
One path is to begin a disciplined reduction in programs. But universities taking that route need to think carefully. If you go the all-STEM, all-Healthcare route, you’re competing with a lot of other institutions trying to attract students to similar programs. How does yours differ? Why would they choose you over, say, Texas Tech or San Diego State? [And no, your brand value is not an acceptable answer for most institutions, regardless of what your marketing people tell you.] By jettisoning programs of potential differentiation, you could be inadvertently accelerating your collapse by adopting a copycat strategy that doesn’t make economic or strategic sense.
If you’re at all inclined to take the Disciplined Reduction approach, you had better start NOW. Waiting too long, until you absolutely have to reduce scope, is going to kill you too. Other, less risk-averse, more economically imperiled institutions will not wait (they don’t have the luxury) and this will narrow your options going forward. You make bad decisions when you’re panicked and hungry. Starting now, while you still have time and some slight cushion, is going to allow you to do better scenario work that engages your field of institutional stakeholders (students & faculty, staff, politicians, alumni, the local community, etc.). This will allow you to develop new business models with an understanding of how your new positioning fits within the larger #highered ecosystem, avoiding a copycat strategy, building programs for a dying or dried up market. Basically, steering clear of a red ocean approach.
Big Online and Other Doomed Paths
Another path is to go all-in on Big Online like the University of Massachusetts System. But it takes a lot of resources to Go Big. Contrary to what some fly-by-night consultants will tell you, setting up a significant online program is not as simple as just shoveling in some content to Coursera or edX, letting them handling the marketing and watching the money flow in. I won’t take time to go into the OPM approach (and there are many fine partners out there for that, e.g. iDesign) but for various political or economic reasons, that may not be an open path for your institution. Going Small Online (lower enrollments, limited programs) means you’re working to draw students from the same geographical area as your F2F offerings, since research indicates that most students enroll in an online program delivered by an institutions within 100 or so miles of their location. If your institution is in an area of declining demographics already, you can see where this could be a problem from a revenue standpoint.
You might be thinking: why not attract more full-freight international students? Well, that pool is declining for the foreseeable future. Our current political environment is leading to many of those students staying home or attending Canadian, European, and other friendlier countries’ institutions. Completion programs? Possibly, depending on the numbers within your likely face-to-face recruitment area pool, but this is likely a lower number than you think (the Total Addressable Market is indeed significant, but not all members of that pool are likely recruits, for a number of reasons). Also, as you’ve probably already figured out, success in this pool means that it will run out eventually. And then you’re back to square one. So pursue this for social goals, but not for revenue.
So What Next?
The point here is that outside of the major state flagships in population-gaining states and R1s and private nonprofit 4-year institutions with significant endowments or well-established online offerings & positioning, enrollment-based strategies are largely a dead-end. Perhaps state funding returns to the Cold War-era highs, but there’s nothing in our current political environment that would seem to indicate this as a strong possibility. And Hope is not a Strategy.
A lot of postsecondary institutions are going to go away before too long. It’s sad but inevitable. Some will survive through well-considered and executed Mergers and Acquisitions (M&A) strategies. Some will reduce offerings in a thoughtful, disciplined manner, while others will transform into something altogether Weirder and different. The question is: will your institution be brave enough now to look in the mirror and consider how you’re going to deal with demographic, social, technological, economic, environmental and political change? Because the future is going to be a lot different than most institutions envision. They’re looking at the future through what Jim Dator has called a Continuation model (i.e., the assumption that, from a STEEP perspective, the future will look very much like it does today). How will your institution be different?
If you’d like to explore how your institution can look at the future differently and begin preparing now, let’s talk!