Education is (not) a Business

“Higher Education is not a business.”  That’s a pretty simple and straightforward phrase, right, but is it true?  Your assessment of this question and the level of conviction behind it likely correlates strongly with the nature of your interaction with the American higher educational system.  In our experience, the vast majority of academics would argue strongly that education is not a business and should not be.  Talk of the common good and the intangible benefits of education are the lexicon of faculty much more than ROI, customer acquisition costs, customer satisfaction, and or other business metrics.  Of course, it is the business of education that provides us with some undisputable truths.

  • The postsecondary market as a whole is nearly half a trillion dollars.

  • Endowment size and alumni giving contributes greatly to a school’s ranking.

  • One of the key taxonomies of colleges and universities in the US is whether they are “for-profit” or not. 

  • Universities routinely speak of competition for students and grant/research dollars.

  • Major athletics programs have budgets to rival all but the largest US companies.

And now, the business side of the education is making its move.  It is starting to put the customer at the center; not the ivory tower.  It is a relatively recent phenomenon that programs or departments actually are being cut if they are not serving a significant number of students.  It is also only recently that some institutions have started charging differential tuition for different degree programs, typically charging a premium for more popular programs as a concession to the market forces of supply and demand.  Look at the consolidation in Georgia’s state system of higher education in just the past 5 years.  Or, read about the possible closure of South Carolina State University or the downward spiral of many of the Pennsylvania state schools (PASSHE).  The drumbeats of the market are getting louder, and the only question is whether they will be heard in the hallowed halls of academe in time to do something about it. 

Although the business of higher education is starting to drive change, it is important that firms wishing to do business with educational institutions recognize and respect these opposing dynamics.  Just because a university has stated publicly that it wishes to accomplish some goal, that does not mean everyone at the university—even those in positions of decision-making or influencing power over the specific area or initiative—is on board with that decision.  An example of this can be clearly seen in the online learning space over the past few years.  While some universities have recognized the tremendous potential that online degree provision offers for expanding access (and revenue) and have tapped into a wide range of enabler companies to plan, build, and recruit for those online dollars, others have avoided doing so completely or tried to skirt the issue by offering a course or two via one of the MOOC platforms such as Coursera, edX, or Futurelearn.   There is a place for these free, non-credit bearing courses, but to confuse these with the meaningful, credentialed education that becomes part of the academic and business fabric of an institutions is misleading.  The customer has more choices than ever, and their criteria is increasingly business focused.  This “toe in the water” approach won’t keep the real business of education at bay. 

The good or bad news (depending on where you sit) is that the business is increasingly coming to education.  There are still opportunities to follow the lead of innovators such as Arizona State (ASU Online) and Georgia Tech (mass Master’s in Computer Science), but university leaders must be willing to listen to the business side and provide the leadership necessary to put their customers first.  If not, you can be sure that their future will be dictated to them.