If you’re like the vast majority of private higher ed institutions, you may feel overwhelmed, uncertain, and concerned for the future of your college or university. Are you experiencing:
- Unpredictable enrollment year over year?
- Operating costs increasing faster than revenues?
- Anemic endowment funds to supplement operating budget?
For those courageous enough to think and act differently, there’s a way out of this negative cycle, turning disadvantage to advantage. Unlike schools with generous endowments, these institutions are hungry enough to try new things. Unlike large schools, they can move quickly.
It’s an opportunity for forward-thinking higher ed leaders to find new ways to thrive as they live their mission.
Most Private Higher Education is Under Pressure
Higher education suffers from a similar cost disease as healthcare. When you combine the massive investments in facilities with a high-touch delivery model from highly paid, expert faculty, it’s difficult to keep costs from growing steadily every year.
Before the Great Recession, many colleges and universities compensated for the rising costs by raising tuition faster than the rate of inflation. Those days are over as most schools have been constrained to raising tuition by roughly 3% per year over the last decade.
With employers exploring alternative ways to prepare workers for roles in their organizations and the real cost of higher education eating up an increasing share of family incomes, students and their families are asking whether an investment in private higher education is the best value for their money.
These pressures – and others – make it increasingly likely that private colleges and universities will face unprecedented change in the coming 5-10 years.
It’s also an opportunity for forward-thinking higher ed leaders to find new ways to thrive as they live their mission. Unlike schools with generous endowments, these institutions are hungry enough to try new things. Unlike large schools, they can move quickly.
Anyone who cares about the future of private higher ed must start to think more like an entrepreneur than like a committee member. The key difference: entrepreneurs use intensive efforts to identify and explore usable alternatives to traditional ways of thinking and acting rather than methodically imitating existing models.
Every university can crack the code on new ways to thrive by adopting five entrepreneurial practices.
5 Code-Cracking Entrepreneurial Practices
1. Get Off Your Campus
It’s easy to spend weeks or months in conference rooms on campus, trying to identify the strategies that will change your institution’s trajectory. But for most institutions, the right answers are most often outside your building and off your campus. Start by exploring your broader environment.
Much of the exploration must be done with external stakeholders – employers, other institutions, and alumni. Universities fit into complex and shifting ecosystems. If you want to increase the current and potential value of your institution in those ecosystems, develop a deep understanding of what these stakeholders are experiencing.
While it’s tempting to ask simplistic (and self-serving) questions such as, “What do you want our institution to do for you?” you learn more by focusing your questions on these stakeholders. Ask about trends shaping their organizations, problems they’re trying unsuccessfully to solve. Of course, ask about talent and idea gaps, two core value propositions of most universities.
Regardless of what you ask, do not proceed until your key leaders really understand the core themes from external stakeholders.
2. Tap Alternative Currencies
Exploratory efforts often start with modest funding. Many traditional organizations struggle to engage influential faculty and staff in disruptive work with little or no financial backing.
You have to invent non-financial currencies to engage influential people.
Discover alternate currencies by interviewing representative members of internal stakeholder groups and discovering what they value. Useful questions include:
– What do you like best/least about your job?
– What problems do you regularly encounter in your work?
– How do you tend to solve those problems? What resources do you have/need to solve those problems?
The answers to these questions give you clues to what might motivate your best people to join an exploratory effort with uncertain outcomes. For example, some faculty may be motivated by interaction with the best students, exposure for their academic agenda, or a course release to focus on a pet project they want to pursue.
One universal currency is
3. Identify and Test Hypotheses
The early days of any exploratory effort must focus on learning. While it’s tempting to build something immediately, the first focus must be on getting the operating model right before you scale it. Scaling a bad model wastes resources and precious political capital. Here are the key steps to identifying and testing hypotheses behind your model:
Paint a picture of the desired Happy Ending. Ask, “What outcomes would have to happen to make this effort worth pursuing?” Be as vivid, specific, and quantifiable as possible.
Safety Tip: This model is not a forecast, a budget, or a promise. It’s simply an imagined future that key stakeholders can say, “Yes, if you could do that it would make a meaningful difference to our university!”
Surface assumptions. The prime purpose of any draft model is to surface underlying assumptions. You do that by asking “What would have to be true for us to achieve that happy ending?”
Rank those assumptions by which ones have the most profound effect on achieving the happy ending. Each assumption can then be turned into a hypothesis worth testing.
Test hypotheses. All successive efforts are then aimed at testing the most critical hypotheses as quickly and inexpensively as possible.
Safety Tip: Remind everyone that this season is about learning more than earning. They’ll forget this. Repeatedly.
4. Be Frugal
Any entrepreneur tells stories about their lean approach to running the organization in its earliest days.
Entrepreneurs don’t staff up a big organization during the exploratory phase since founders are the ones best suited to discovering a model that works. They don’t move into expensive office suites when a garage will do. They borrow or scavenge wherever possible. They rent when they can’t do that. They only buy when absolutely necessary.
Entrepreneurs are keenly aware of the ticking clock. They have limited cash to burn before they discover and start to scale the model. This drives a strong sense of urgency and pragmatism.
Safety Tip: Don’t starve entrepreneurial efforts of initial funding. But only provide additional funding as they demonstrate tangible learning from their hypothesis testing.
5. Change the Scorecard
Mature efforts focus on results. They demand scale. Exploratory efforts need to be patient on financial impact and scale while being impatient for learning.
You will have to constantly remind your board, your senior administrators (especially the CFO), and your key opinion leaders in faculty/staff that success is learning fast and at the lowest possible cost. They will find this unnatural and uncomfortable, particularly if they are under pressure for results.
Have weekly, crisp status meetings with clear documentation. We recommend these meetings last no more than 30 minutes.
At your status meetings, try asking these questions:
- “Which of our top five hypotheses have we tested? What have we learned? How confident are we in our answers?”
- “Which of our top five hypotheses have we not tested yet? What stops us from doing that?”
- “How has what we’ve learned changed our model and hypotheses? Are those changes a tweak or a whole-scale pivot?”
- “How much longer until we can confidently scale, tweak, pivot, or disengage from this effort?”
- “What will we learn in the coming week?”
We can’t promise that adopting these entrepreneurial practices will solve all of your challenges. But we’re confident they will help you develop your unique organizational capabilities so that you can thrive in the future.
We selected Noonday over 12 different firms to guide one of the most important strategic journeys in our history.
Ted’s leadership was catalytic, collaborative, and elevating. He worked well with trustees, administrators, faculty, and staff, gaining the trust of each group. Noonday made all of us better and our work more effective.
Noonday helped our leadership and organization through a transformation that went beyond just process; they helped our leaders and managers think and operate differently.