Then globalization and the Internet changed everything. Customers suddenly had real choices, access to instant reliable information and the ability to communicate with each other. Power in the marketplace shifted from seller to buyer. Customers started insisting on ‘better, cheaper, quicker and smaller,’ along with ‘more convenient, reliable and personalized.’ Continuous, even transformational, innovation have become requirements for survival.”

Steve Denning, “The Management Revolution That’s Already Happening,”
Forbes Magazine, May 30, 2013.

 

 

ChangeIsOptionalDanielChristian-evolllutionDotcom-June2013

 

.

PDF of article here

 

 

College branding: The tipping point — from forbes.com by Roger Dooley

Excerpt:

Change is coming to this market. While there are multiple issues of increasing importance to schools, two stand out as major game-changers.

 


From DSC:
Important notes for the boards throughout higher education to consider:


Your institution can’t increase tuition by one dime next year. If you do, you will become more and more vulnerable to being disrupted. Instead, work very hard to go in the exact opposite direction. Find ways to discount tuition by 50% or more — that is, if you want to stay in business.

Sounds like the scene in Apollo 13, doesn’t it? It is. (i.e. as Tom Hanks character is trying to get back to Earth and has very little to do it with. The engineers back in the United States are called upon to “do the impossible.”)

Some possibilities:

  • Pick your business partners and begin pooling resources and forming stronger consortia. Aim to reduce operating expenses, share the production of high-quality/interactive online courses, and create new streams of income. Experimentation will be key.
  • Work with IBM, Apple, Knewton and the like to create/integrate artificial intelligence into your LMS/CMS in order to handle 80% of the questions/learning issues. (Most likely, the future of MOOCs involves this very sort of thing.)
  • Find ways to create shorter courses/modules and offer them via online-based exchanges/marketplaces.  But something’s bothering me with this one..perhaps we won’t have the time to develop high-quality, interactive, multimedia-based courses…are things moving too fast?
  • Find ways to develop and offer subscription-based streams of content


 

Moody’s gives colleges a negative grade — from the NYT by Andrew Martin

Excerpt:

The credit reporting agency Moody’s said on Wednesday that it had revised its financial outlook for colleges and universities, giving a negative grade to the entire field.

For the last two years, Moody’s Investors Service gave the nation’s most elite public and private colleges a stable forecast while assigning a negative outlook to the rest of higher education. (Moody’s assigned a negative outlook for the sector in 2009, but it upgraded the most elite ones to stable in 2011-2012.)

 

Nowhere to turn — from insighehighered.com by Kevin Kiley

Excerpt:

If colleges and universities thought they could ride out the current revenue challenges by becoming more like some other institution, Moody’s Investors Service has a bit of bad news for them: The grass isn’t greener on anybody else’s quad. Not even Harvard University’s.

In a report released Wednesday, the ratings agency outlines how every traditional revenue stream for colleges and universities is facing some sort of pressure, a finding Moody’s uses as grounds for giving the whole sector a negative outlook. The agency has been pessimistic about much of the sector since its annual outlook in 2009 after the economic downturn began, but Wednesday’s report contains a downward shift in how analysts view even market leaders, the elite institutions with high demand and brand recognition.

 

Originally saw thes graphic below on the Education Stormfront blog (thanks Andrew) — also see Will Hanlon Pop the Higher Ed Bubble?

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Higher Ed Inflation.jpg

 

From DSC:
As you know if you are a regular reader of this blog, I believe the higher ed bubble has already popped — but I have it that it will pop at different times for different institutions.

 

Addendum on 1/22/13:

 

Addendum on 1/24/13:

 

 

Colleges lose pricing power — from the WSJ by Michael Corkery

Excerpt (emphasis DSC):

The demand for four-year college degrees is softening, the result of a perfect storm of economic and demographic forces that is sapping pricing power at a growing number of U.S. colleges and universities, according to a new survey by Moody’s Investors Service.

Facing stagnant family income, shaky job prospects for graduates and a smaller pool of high-school graduates, more schools are reining in tuition increases and giving out larger scholarships to attract students, Moody’s concluded in a report set to be released Thursday.

.

From DSC:
To me, this is just another way of saying the higher education bubble is popping.  I think the bubble may pop at different times for different institutions, but the overall picture is clear: Higher ed will either reinvent itself — and hopefully quickly — or it will lose a portion of its relevance and place in society (how much is ultimately lost depends upon how much higher ed can experiment, innovate, and reinvent itself).

Also relevant here:

 

Combine the trends listed in this graphic:

.

Trends-ReportFromDeptOfEdu-2012

— from The Economics of Higher Education, Dec 2012 (pg 2)

 

…with the next several graphics…

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Surging college costs price out middle class -- from CNNMoney.com on June 13, 2011

 

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The middle class falls further behind

 

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Daniel S. Christian: My concerns with just maintaining the status quo (from 2009).

From 5/21/09

 

 

…and you can see that the Perfect Storm in Higher Ed has been amassed.  Massive change is in the air. People will find a way to achieve their goals/objectives — one way or another. College is still a good call — but what “college” and “university life” will look like in 5 years will likely be very different from what they look like today.

There is no returning to the “good ol’ days” — things are not going back to the way they were 5-10 years ago.  It’s time for massive — but controlled/intentional — experimentation within higher ed, to find out how best to use the Internet in order to promote learning (and, hopefully, to still make a living!).

.

 

asdfsadf

 

 

 


Some examples that illustrate that change is in the air…and that the conversation continues to move outside traditional institutions of higher education (I mention these not to dog higher ed, but to get us to innovate, to reinvent ourselves, and to stay relevant!)


 

Big idea 2013: College becomes optional — from LinkedIn.com by Ben Smith

Jailbreaking the degree: The end of the 4 year diploma — from onlineuniversities.com by Justin Marquis

Excerpt:

What’s wrong with getting a college degree? According to the grassroots movement, “Jailbreaking the Degree,” being pushed by radical education startup Degreed.com, quite a bit. The organization has identified several fundamental flaws with the long standing college degree process. It aims to overcome them and dramatically change the nature of learning and credentialing in the process. In order to justify their initiative they present some dramatic numbers on their website…

Degreed wants to jailbreak the college degree — from techcrunch.com by Rip Empson

Saying no to college — NYT.com by Alex Williams

Do a Google search on uncollege.org and see what you get

The rise of college alternatives— from huffingtonpost.com by Dan Schawbel

educreations.com: Teach what you know. Learn what you don’t.

Higher education and the fiscal threat -- from The Parthenon Group - November 2012

 

Addendum on 12/14/12:

  • Big construction costs, MOOC disruption mean ominous cocktail for higher ed — from educationdive.com by Davide Savenije
    Dive Summary:

    • After years of aggressive expansion efforts, higher education is facing the consequences — according to Moody’s, overall debt levels for rated institutions more than doubled from 2000 to 2011 while donations and investments shrank by more than 40% relative to the debt.
    • While debt has swiftly reached a tipping point for universities, they are not alone —  the total amount of student debt currently exceeds $1 trillion and nearly one in every six borrowers’ student loan balance is in default.
    • Experts and school officials are predicting an imminent reshaping of the field of higher education — Harvard’s annual fiscal report claims “the need for change is clear” as institutions face a decreased “ability to generate […] new resources”.
    • As prospective students become aware of the decreasing value of the higher ed degree, the sudden emergence of MOOCs are becoming an increasingly viable and economically-friendly alternative.

 

From DSC:
We had better step up the pace of innovating/experimenting – and move to do so quickly. But the problem is, moving quickly is not in the cultures of most of the more traditional institutions of higher education.

 

Also relevant:

The end of middle class growth: What it means for the future of work, family, and the economy — from theatlantic.com by Jonathan Rauch
There is no modern precedent for America’s stalled middle class — or for the double detachment from work and marriage among low-earning men. So, what do we do now?

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Infographic

 

 

Excerpt:

With the public’s continued focus on value and affordability, higher education finds itself at a critical juncture. Cost pressures and increased global demand for access have given rise to innovations that have unleashed new delivery models into the education marketplace. Such innovation is required if universities are to thrive, compete, and bring new relevance and meaning to the value of college in the 21st century.

Also see:

  • Americans believe higher education must innovate — from Northeastern News
  • President: Witt must adapt to survive — from springfieldnewssun.com by Tom Stafford
    Excerpt:
    Liberal arts colleges that ignore market realities “absolutely won’t exist in the next decade,” Wittenberg University President Laurie M. Joyner told Springfield Rotarians on Monday.  But the practical or applied liberal arts education that she predicts can sustain Wittenberg will encourage deeper connections with Springfield, she said while speaking at the Hollenbeck-Bayley Conference Center, because “our students learn better when dealing with real-world problems.” A shrinking pool of price-sensitive high school graduates has combined with a bad economy to produce “the equivalent of a perfect storm for some of us,” said Joyner, who succeeded Mark Erickson on July 1.
  • Surviving disruption — from hbr.og by Maxwell Wessel and Clayton M. Christensen
    Excerpt:
    …to meet disrupters with disruption of their own, but also to guide their legacy businesses toward as healthy a future as possible.
  • Sanjay Sarma appointed as MIT’s first director of digital learning — from MIT by Steve Bradt
    Mechanical engineering professor will shepherd efforts to integrate elements of online education into traditional MIT courses.

From DSC:
Experimentation. Innovation. Experimentation. Innovation. Fail. Fail. Succeed. Fail. Succeed. Fail. 

 

Classroom of 2020: The future is very different than you think — from theglobeandmail.com by Erin Millar

U.S. debt $417 billion below the debt ceiling — from CNN.com by Jeanne Sahadi

Excerpt:

The debt ceiling is currently set at $16.394 trillion. At the end of August, the amount of debt subject to that limit — which excludes certain types of debt was $15.977 trillion, roughly $417 billion below the cap. Since the government typically borrows between $100 billion and $125 billion a month, that means it’s on track to hit the ceiling sometime in December. But the Treasury Department will likely be able to use “extraordinary measures” to keep the debt just below the legal limit for a couple of months.

Bottom line:
Congress will likely need to raise the ceiling in early 2013 or Treasury will risk defaulting on the country’s legal obligations by failing to pay all of its bills in full and on time.

From DSC:
At some point, if we don’t turn things around, the vast majority of our tax dollars will go to pay for interest on our debt…and. nothing. else.

 

The Washington Monthly - The Magazine - The Siege of Academe [Kevin Carey]

Excerpt:

The ongoing carnage in the newspaper industry provides an object lesson of what can happen when a long-established, information-focused industry’s business model is challenged by low-price competitors online. The disruptive power of information technology may be our best hope for curing the chronic college cost disease that is driving a growing number of students into ruinous debt or out of higher education altogether. It may also be an existential threat to institutions that have long played a crucial role in American life.

.

From DSC:
If higher ed doesn’t respond more forcefully/significantly to the perfect storm it finds itself in, people will find other ways of getting employed and staying employed. The conversation continues to move away from institutions of traditional higher education (here’s but one example). Control is an illusion.

The financially sustainable university — from bain.com, a Bain Brief by Jeff Denneen and Tom Dretle

Excerpts (emphasis DSC):

Still, at the majority of institutions, the pace of change is slower than it needs to be. Plenty of hurdles exist, including the belief that things will return to the way they always were. (Note: They won’t.) But the biggest obstacle is more fundamental: While leaders might have a sense of what needs to be done, they may not know how to achieve the required degree of change that will allow their institution not just to survive, but also thrive with a focused strategy and a sustainable financial base.

Too often, stakeholders believe that the current cash crunch and need for change is a temporary phenomenon that will subside as the economy continues to improve. But those who see things this way probably haven’t been exposed to the data presented here and in other reports that show convincingly that this time is different. Faculty and other key stakeholders must be shown clear and compelling facts to disprove the “return to the status quo” notion and to clarify the corresponding negative implications and consequences of inaction.

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The Financially Sustainable University - July 2012 - a Bain Brief by Denneen & Dretle

Student debt hits the middle-aged – from the NYT by Josh Mitchell

Excerpt:

Student debt is rising sharply among all age groups, but middle-aged Americans appear to be struggling the most with payments, according to new data released Tuesday by the Federal Reserve Bank of New York.

The delinquency rate—or the percentage of debt on which no payment has been made for 90 days—was 11.9% for debt held by borrowers aged 40 to 49 as of March. That compares with a rate of 8.7% for borrowers of all ages.

.

Student debt hits the middle-aged


From DSC:
My cousin helps Fortune 500 companies innovate and deal with change management-related issues.  Something he once said is rather haunting to me now…

“Often when organizations start feeling the pain, it’s too late at that point.” (Think Blockbuster, Kodak, Borders, and many others.)

So that has been the question I’ve been pondering these last couple of years — are we already too late to the game?


 

Public universities see familiar fight at Virginia — from the NYT by Tamar Lewin on 6/25/12

Excerpt (emphasis DSC):

The tumult at the University of Virginia …reflects a low-grade panic now spreading through much of public higher education.

But the 10-point outline she offered — listing state and federal financing challenges, the changing role of technology, a rapidly changing health care environment, prioritization of scarce resources, faculty workload and the quality of the student experience, faculty compensation, research financing and the like — was almost generic, and would have applied to nearly every public university in the nation.

Rebuilding Mr. Jefferson’s University — from insidehighered.com by Kevin Kiley

Excerpt (emphasis DSC):

In a statement before the vote, Dragas said the events of the past two weeks have actually unified the campus around a series of questions it needs to address. “Prior to these events, there seemed to be a roadblock between the board’s sense of urgency around our future in a number of critical areas, and the administration’s response to that urgency,” she said. “Also, many of our concerns about the direction of the university remained unknown to all but a few. This situation has now keenly focused the attention of the entire university community on the reality and urgency of the specific challenges facing the university  most of which, once again, are not unique to U.Va. – but whose structural and long-term nature do require a deliberate and strategic approach.”

University of Virginia: Only the Beginning — from The American Interest by Walter Russell Mead

Excerpt (emphasis DSC):

What we see at UVA this month is just a foretaste of the storm that is coming — a few early raindrops and gusts of wind before the real storm hits. The country needs more education than the current system can affordably supply, and the pressure on the educational system will not abate until this problem is resolved.

Fixing college — from the NYT by Jeff Selingo, editorial director at The Chronicle of Higher Education, who is writing a book on the future of higher education

Excerpt:

Other information industries, from journalism to music to book publishing, enjoyed similar periods of success right before epic change enveloped them, seemingly overnight.We now know how those industries have been transformed by technology, resulting in the decline of the middleman newspapers, record stores, bookstores and publishers.

Colleges and universities could be next, unless they act to mitigate the poor choices and inaction from the lost decade by looking for ways to lower costs, embrace technology and improve education.

 

Ousted Head of University Is Reinstated in Virginia — from the NYT by Richard Perz-Pena

Excerpt (emphasis DSC):

CHARLOTTESVILLE, Va. — Facing a torrent of criticism, the University of Virginia trustees made a stunning turnabout on Tuesday, voting unanimously to reinstate the president they had forced to resign over concerns that the university was not adapting fast enough to financial and technological pressures.

7 things colleges worry about – from CBSNews.com by Lynn O’Shaughnessy

Excerpts from “What’s worrying college administrators?”

  1. After peaking in 2008, the number of high school students has been declining slowly.
  2. While high school grads in the West and South have remained mostly stable, the number of teenagers has declined significantly in the East and Midwest.
  3. Between 2000 and 2010, the real median income for families dropped nearly 11 percent.
  4. High unemployment remains persistent.
  5. Many families owe more on their mortgages than their homes are worth.
  6. With flat and falling income and high unemployment, many American families are poorer now than they were five years ago.
  7. Looking further into the future, the financial reality for younger families (ages 25 to 34), who will eventually be sending their children to college, is grim.

Also see the below items from Lawlor.com

From DSC:
Just looking at the title one of the above items — “When Market Conditions and Public Perception Collide: A Looming Crisis for Higher Education” (by Amy Foster) — those of us working within higher education don’t want to be in the “Have you driven a Ford lately?” mode. That is, once we lose the public’s confidence and trust in our products and/or services, it will be very hard to get those things back. Not impossible, but difficult.

Two additional thoughts here:

  • Reputation, like china, is easily cracked and hard to mend.
  • There is tremendous and lasting power in the ideas and perceptions that reside within people’s thoughts. Once an idea catches hold, it’s hard to stop.

 

 

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