Higher education in the USA is in trouble. Media reports are rife with stories about escalating tuition rates. Educational outcomes are being questioned. A liberal arts foundation for the baccalaureate degree—a hallmark of US higher education—is under attack. Increasingly, we hear: “Is college worth it?” Statistics support the increased earning power of college graduates, but debt loads threaten to delay the payoff advantage.
All of these problems are hallmarks of financial unsustainability. Simply put, many US universities are either financially at risk or are moving in that direction because the cost of the traditional model is outpacing the middle-class family’s ability to pay for it. Tuition-dependent universities, in particular, are vulnerable. This book outlines why that is the case.
There is hope, however, for at-risk institutions—a lot of hope. US higher education continues to be a unique social institution that not only fuels the economy but also provides civic and cultural values that shape the fabric of who we are as a people. But moving from at-risk status to financial sustainability requires a fundamental reexamination of assumptions about what a college should look like, how it operates, and whom it serves. Only this type of strategic thinking can result in an institutional transformation that meets the exigencies of troubled times.
Because universities are complex organizations, there are many obstacles that prevent fundamental change. Three endemic problems create organizational inertia in higher education.Colleges and universities have changed a lot over the past three centuries, but fundamental assumptions about what constitutes the essence of quality higher education remains unchanged. There is hope, however, for financially vulnerable institutions if the following issues are addressed.If these realities are addressed in a way that builds upon an institution’s mission and values, there is the chance of creating a transformational moment. But this type of substantive change takes courageous leadership.
- 1.The Intransigence of Tradition . Despite the financial unsustainability of many institutions, there tends to be unwavering dedication to the primary cause of escalating costs—the traditional university model. The traditional college experience is still the gold standard that fewer and fewer people can afford.
- 2.Insufficient Reform. Institutional reforms have made peripheral changes in university operations, but those adjustments have not addressed fundamental problems that cause financial instability.
- 3.Organizational Blindness . In many at-risk universities, there tends to be self-imposed institutional blindness—a form of scotosis —in which fundamental problems are either ignored or dismissed as being temporary.
- 1.Critical Realism . A critical evaluation of the current socio-economic environment that threatens financial sustainability will not change for the better in the foreseeable future. The creation of realistic alternatives to the traditional university organizational structure is necessary for the survival of many institutions.
- 2.Value Preservation . Transforming the current model of higher education into a different type of structure does not equate with abandoning the intellectual values and outcomes of a university education. Alternatives to the traditional college experience must provide educational outcomes that are highly valued by students and society in general.
- 3.Strategic Action . Institutional transformation comes about only as the result of successful strategic planning; and effective planning is dependent upon authentic organizational strategic thinking. Substantive change requires a comprehensive assessment of the current situation and an unbiased evaluation of reasonable alternatives that lead to responsible action. Avoidance of this type of critical self-evaluation is likely to leave an institution mired in inaction.
A primary purpose of this book is to outline a strategic thinking process that enables transformational change. This methodology is dependent upon a thorough assessment of the current socio-economic environment as well as a clear-eyed evaluation of a university’s finances, internal structure, and operation.
As comprehensive as this approach may be, not every aspect of university life is included in this book’s analysis. Tactical issues like interscholastic athletic programming, fund-raising, specific approaches for information technology (IT) support, optimal campus design, and myriad other micro-concerns are not examined in detail. Likewise, I do not focus on how to fine-tune financial ratios, income statements, and balance sheets in order to better position a university’s valuation. This book emphasizes strategic analysis of an institution’s viability as a whole and offers ways to enhance it.
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Part I: Fundamental Problems (Chaps. 2, 3, and 4) explores problems in US higher education from three viewpoints: historical perspectives, deep contemporary problems, and an analysis of the traditional university structure. Too often attempts at higher education reform focus on micro-strategies that fix the exigencies of the moment. It is important to use an historical perspective to sort out how institutions came into being, flourished, and now, find themselves in trouble. There is no retreat from historical consciousness, but it takes courage to act on it.
Chapter 2, How We Got Here, contextualizes contemporary problems in higher education by presenting key developments from the Colonial Period through the latter part of the twentieth century. This brief review provides insight into the origins of how and why today’s traditional university structure has become anachronistic. The review highlights the role government has played in making US higher education a worldwide archetype and the negative impact that current funding cuts are having on universities and their students.
Chapter 3, Foundational Problems, explores economic problems that plague present-day universities. Financial instability is simply a barometer of overall institutional health. Universities find themselves in trouble because of deep systemic issues that question their very fabric and purpose. It is an inescapable fact that higher education has moved from the status of unique social institution to that of an industry.
Chapter 4, Financial Sustainability in Troubled Times, examines the financial situation of highly endowed universities as contrasted with inadequately financed institutions. An at-risk situation exists when an institution’s self-understanding is intimately connected with the traditional university model, but without the funding to support it because of a rapidly changing socio-economic environment. Indicators of economic fragility are explored to help institutions recognize their probability of becoming financially unsustainable.
Part II: Exemplars (Chaps. 5, 6, and 7), outlines how some universities increased enrollment through their awakening to a substantial new student constituency that previously had been overlooked—part-time adult learners. Meeting the needs of these students saved some not-for-profit institutions from financial peril. The discovery of the size of the adult learner market also created the for-profit higher education industry.
Chapter 5, The Adult Learner: An Awakening, reveals the story of how adult learners disrupted the traditional university way of operating, putting into question almost universal assumptions about the process and outcomes of higher education. The popularity of andragogy (adult learning theory) in the 1970s gave rise to innovative ways of educating and set the stage for the emergence of new types of campuses, including the first steps into online learning.
Chapter 6, A New College, chronicles the development of colleges primarily devoted to adult learners. This change in university structure furthered the andragogical movement and supported the creation of fully online degree programs. For-Profit regionally accredited universities emerged during this same period, proving that a university can accommodate thousands of working adult learners in cost-effective ways. This for-profit university disruptive innovation would encounter serious operational problems when these institutions became publically traded because of stockholder expectations for annual increases in profits. Similarly, not-for-profit universities expected their colleges dedicated to non-traditional learners to fund deficits caused by their inefficient traditional colleges. These successful adult-oriented colleges tried to separate from the traditional university structure. But only a handful of them were able go their own way.
Chapter 7, University Transformations, drives home the point that the source of financial unsustainability often is a traditional undergraduate college structure and operation. Examples of ways in which some colleges reinvented themselves are featured. These fundamental changes came about only after overcoming significant conflicts within each institution.
Part III: Transformational Strategy (Chaps. 8, 9, 10, 11, and 12), emphasizes the need for strategic planning rather than a process of simply adopting models that have been successful at other institutions. Strategic thinking as a transformational methodology that underlies strategic planning is not only the primary theme of Part III, but also a central message of the book.
Chapter 8, Strategic Thinking for Transformation, introduces philosopher Bernard Lonergan’s Generalized Empirical Method as the foundation of reliable strategic thinking. Lonergan’s experientially-based epistemology is ideal for assessing the current situation and developing unique solutions that make sense for at-risk universities. The overall objective of the methodology is innovation that constitutes a transformative moment for these institutions.
Chapter 9, Transformational Leadership in Higher Education, presents the origins of different management styles and leadership theories that currently exist in higher education. Connections are made between incremental change and transactional leadership as differentiated from transformational change and transformational leadership. Traits of the transformational leader are discussed as necessary elements of the strategic change process.
Chapter 10, The Case of Bon Sens University, presents a realistic scenario of a fictional university that finds itself in a financially unsustainable situation. This narrative is a composite of events I have witnessed at many institutions over the past 30 years as well as what colleagues have told me about their own personal struggles and successes. Administrators and faculty m...