By Bob Shea
This blog is the third and final in a three-part series introducing three background papers prepared for a roundtable on financial data in higher education convened by ACE and the TIAA Institute. The report from the convening, Evolving Higher Education Business Models, is also available for downloading.
Recently, I was asked to represent the National Association of College and University Business Officers (NACUBO) on the panel “Higher Education Business Models: Leading with Data to Deliver Results,” during ACE’s 2016 Annual Meeting in San Francisco. NACUBO, which represents over 2,100 colleges and universities, recently launched our Economic Models Project (EMP) in an effort to advance higher education’s economic viability and business practices.
As a former college vice president for finance and administration and now senior fellow at NACUBO, I was honored and privileged to engage with presidents, provosts and deans in these deep and meaningful conversations about higher education business models. Most of us have learned that for organizations to make good decisions, leaders must be open to considering others’ varying ideas and positions.
During the question-and-answer period following the panel discussion, this central theme emerged: “How do we get started on the difficult work of moving to a sustainable economic model?” The stakeholders, my colleague Dr. Jackie Askin, EMP project manager, and I were not surprised by this reaction.
Based on our experience over the past year, as part of the EMP, we have some suggestions how colleges and universities can begin this difficult task. We have met with more than 300 higher education stakeholders through focus groups that yielded over 1,300 data points that inform this related question: “What strategic issues, spoken or unspoken, on your campus are inhibiting you from moving to a sustainable economic model?”
Roadblocks to institutional viability fall into five broad areas: scarce-resource allocation, labor-intensive organizations, high-capital operations, competitive external environment, and leadership. For the purposes of this discussion, we’ll focus on the critical importance of leadership. Without strong leadership, we cannot meet and overcome other challenges. It goes without saying, although we are saying it, that the competent leader must use data to analyze and diagnose organizational and economic issues.
With each stakeholder group we convened, the consensus on where to start the journey toward economic sustainability pointed to top leadership. That is, the president, provost and chief business officer must all be on the same page concerning the direction of their organization—and they must be capable of bold and courageous leadership.
This leadership triad’s ability to work as a team is essential for organizations to maintain or move to a sustainable business model. Jim Collins’ Stockdale Paradox, described in Good to Great, maintains that a leader must simultaneously (1) retain faith that he or she will prevail in the end, regardless of the difficulties; and (2) confront the most brutal facts of the current reality, whatever they might be.
What are those brutal facts that leaders must confront as they begin the work of economic model or business model transformation in their organization? In today’s environment, hundreds of challenges await—across the domains of resource allocation, capital, labor and the external environment. The leadership domain is charged with prioritizing those challenges and developing effective improvement strategies.
Our Economic Models Project focus groups’ results further suggest the following priority issues, which represent a few key places to begin the overall assessment for change in your organization.
The character of the leadership team. Do you have leaders of character in your organization? Will they stand up to pressure from different constituent groups within your organization that are protecting the status quo? Can those leaders engage in difficult conversations with smart, talented people who may be looking out for individual or departmental agendas while you and your leadership team are charged with the financial and organizational health of the entire organization?
If the answers to these questions are negative, your most effective role will be to encourage dissent among the various leaders during strategic discussions so the consequences of “groupthink” can be mitigated or avoided. That also may mean assigning (or taking on the role of) a devil’s advocate to inject such dissent when everyone seems to agree.
The ability to make tough choices. Do you have leaders in your organization who have the ability to make difficult decisions, or do they fail to act out of fear of poor outcomes, no confidence votes, or other unintended consequences?
A trend we’ve been noticing is the development of tools and systems that provide the kind of data that can better inform decisions and reduce the risks associated with bold moves and new initiatives. When such information is at hand, leaders can project outcomes with an eye on the long-term benefits to the organization—and, at the same time, counter the loud and vocal minority opinions based on anecdotal evidence.
A vision-oriented organization. Do you have leaders on your campus who operate with a solid vision in mind? Are your leaders comfortable with the ambiguity and complexity that define a modern college or university?
If not, your role may be to encourage the cabinet to commit to an enhanced version of shared governance using networked leadership principles. In a networked leadership approach, leaders increase transparency, empower frontline community members and guide performance standards and metrics. This helps the team develop a dynamic that moves the institution forward rather than continue with the kind of disjointed governance that puts the brakes on any substantial change.
Building on Prior Work
Moving to a sustainable economic model is hardly a new discussion. The 1947 report of the Truman Commission on Higher Education, Higher Education for Democracy: Establishing the Goals, addressed many of the same issues we grapple with today. In 2012, the Davis Educational Foundation published a report, An Inquiry into the Rising Cost of Higher Education: Summary of Responses from Seventy College and University Presidents, that highlights many of the same issues identified by our focus groups and stakeholder outreach. One president stated, “I think all of us who work in higher education understand that the financial model for most universities and colleges in our region is no longer feasible.” If this statement is true, and many of our NACUBO members have told us that it is, we have a duty as leaders to move our organizations to economic sustainability.
The authors of Evolving Higher Education Business Models: Leading with Data to Deliver Results call for analyzing how processes, technology, and resources are used to deliver value. But all the best data, processes, technology, and money will not overcome leaders who do not exhibit character, courage, competence, communication, and compassion to the people they are charged to inspire.