Why consolidation, closures and partnerships are expected and why branded top tier Universities have not only an opportunity to survive but to thrive if their business model is changed…
Bite-Size thoughts by Dr. Constantine “Dino” Kiritsis, Founder StudySmart, CEO, easyStudies.gr
Universities are facing numerous problems. Many still do not know if and how they will begin classes. Many have announced only online courses like Cambridge and Oxford. Others will follow a hybrid method. Campuses will never be the same.
Educators are adapting to online education, learning the tips and tricks of online teaching while students and parents are wondering if the fees have to be the same. Students are also contemplating if they should start now or at a later stage. Many are considering if the whole process is worth it.
Whatever the case and whatever the outcome, University education is changing – and changing fast. COVID 19 has been more of an accelerator of change rather than a force. Solutions are required as quickly as possible.
Can Universities survive in terms of the way they have been set? After all, they have been operating in the same way in the past 100 years. If one argues that there are the ‘branded Universities”, the ones that top the rankings and each country has a small number of them, these are expected to have the most opportunities, especially if they change their business model from differentiation to low cost.
I have a feeling that they have started to realize that disruption has hit them harder than ever and the high costs without the campus life cannot be justified any longer, especially when lots of education is free. Therefore, imagine Harvard lowering their fees, still be selective but accept more applicants, and offering numerous entry points throughout the year. The brand itself is expected to sell on its own, and the strategy will switch to volume.
When students realize that they have more options than it seems, top Universities like Harvard may set curriculums and globalize further. Not through offices, but through learning platforms. It may become more accessible for students to study at Berkeley, Wharton, LBS, Yale, INSEAD, IMD and other top tier Universities if they – and I expect they will – capitalize on this opportunity.
This is partly why big corporations like Microsoft and CISCO, and others are investing substantially in education. There is an opportunity for partnerships, as well.
What will happen to the non - branded Universities? Good question. According to Scott Galloway, professor at NY Business school in New York, among 2800 schools this fall in the USA, 20 – 30% of students are expected not to show up creating a huge cash flow problem given campus costs. Furthermore, as all Universities will either be going FULL online or partly online, Sir Anthony Seldon, vice-chancellor of the University of Buckingham in the UK, wrote (FT, May 2020): “We will see more shorter courses, more life-long learning, more accelerated [undergraduate and postgraduate] degrees, more multiple starts around the year, more blended degrees. The international student market will never return to where it was in 2019.”
Ø Top Universities – branded Universities – will grow stronger;
Ø Small / niche Universities with a unique selling proposition may survive due to their niche and controllable costs
Ø Middle to low tier non branded Universities will be forced to ask for help (government funding, partnerships with corporations, consolidate or may even have to shut down).
Ø Corporations will find ways to partner with Universities and get more involved. It will not only be tech companies. Big multinationals need graduates that are ready for their 1st job, not their 5th (I have written about this in my book “Are you serious”, 2019).
As in the tech industry with Google, Apple, Facebook, Amazon and Microsoft, the Education Industry may start to consolidate and be represented by much fewer institutions…(maybe an oligopoly in education?)…
A report by Strategy& (PwC, 2020) from its series “What’s Next in Education” reinforced the above by stating: Higher education institutions (HEIs) must also remember the threats that pre-dated COVID-19. These haven’t gone away, and the need to address them may be even more urgent because of this pandemic. Rapid technological developments and a rise in automation are raising questions about whether a university degree can equip people for the jobs of the future.
A stubborn skills gap and concerns around productivity have led to fears about the relevance of traditional qualifications.
What were the threats before COVID 19?
Ø Escalating University fees not being justified;
Ø Supply of institutions greater than demand;
Ø A significant number of top technology jobs not requiring a university degree;
Ø Professional Qualifications challenging Masters degrees;
Ø Universities not guaranteeing a job;
Ø Loans reaching 1.5 trillion in the USA;
Ø Declining enrollments (in some parts of the world, i.e. the USA);
Ø Skills not being practical for the market;
Add the above to what is going on today and expect technology companies like Microsoft or CISCO to take part in the future of University Education by creating digital campuses in partnership with Universities…