Higher Education Strategy

Business Model of Higher Education: The Differentiated and Integrated Strategy

The landscape of higher education is rapidly changing. One thing that is becoming vital to competitive positioning is the ability to build partnerships and collaborations with businesses, nonprofits, government agencies, military, K-12 schools, and foreign entities for the purpose of designing an integrated education model. 

The business model of higher education is shifting and to remain relevant in the future will require, redefining the value proposition of todays education model and the leadership to challenge archaic thinking. The model of the future will be centered on two core elements: 

  1. The ability to differentiate based on an area(s) of specialty or niche programming
  2. The ability to integrate niche programming by restructuring internal operations (academics, careers, and development offices) and building strategic relationships with external partners and employers.

Colleges and Universities will differentiate on their brand or their program niche in the market. Harvard University has a premier brand name, but will that be enough in the future? Is the value proposition of higher education shifting to career readiness and ability to secure employment? If that is the case, then is it more valuable to enroll in a university that has a world-class reputation for an industry specific focus or program. 

For example, can a small university in Vermont compete with Harvard on brand? No! But can they differentiate themselves in a way that allows them to have the #1 cyber security program in the country? Yes! This is an example of how schools that do not have a marquee name must compete to survive and grow.

Determining how and where to compete in this global education market is going to mean the difference between being relevant in 10 years or going extinct. Small to mid-size colleges and universities can not compete with the Harvard, Yale, and Stanford brands. However, given the shift in the markets, the future will base the value of education on career readiness or job preparation within a niche area, which allows room to compete based on niche market focus.

What is the strategic relevance of your careers department? Where is it positioned in your strategic plan in terms of importance and budget allocation? We want colleges and universities to become too integrated to fail. Integration means entrenching your school with employers and external partners around your niche programming to build a model that adds value in multiple areas.

If the value proposition is moving away from a degree and more towards career readiness, that will impact the way universities are organized and structured. Careers departments become strategic partnership departments bringing jobs, internships, externships, curriculum changes, corporate training, and multiple levels of relationships. The challenge will be to bridge all external relationships to internal departments. Even the development office will benefit, as a school becomes more of an integrated partner with outside organizations, the level of corporate giving and philanthropy should increase in parallel with the value of the programming and relationship.

The business model of higher education is ready to transform and will require strong leadership to drive those changes. Strategic planning is a great way to move a university towards the future, but part of that process must be designing strategy for differentiation and integration.

Are Customers redefining your business model?

Are Customers redefining your business model without your knowledge? Non-profit business models are in the midst of a massive shift and most organizations are not prepared for the imminent changes to come. Higher Ed is an excellent example.

Higher Ed has been focused on producing degrees in a liberal arts setting because that is what academia has always done to prepare students. That historical mindset does not satisfy current demand from customers who have more power than ever before.

  • Students want to graduate with good paying jobs in their fields of interest
  • Parents want their kids to obtain jobs that will launch their professional careers.
  • Employers want to hire graduates with good skills, character, and the ability to hit the ground running.

All three customers have one thing in common - they are career focused.

Historically, we could argue that students and parents were degree focused; and that it mattered more for a student to earn a degree verses obtain a job but those days are over. In response, the business model of higher education is shifting its focus to fulfilling career objectives.

This seemingly small shift in end-results drastically challenges the current business model, culture, and philosophy of higher education. Many college majors could be misaligned with the future, which is why we are starting to see a rise in “centers of excellence.” These centers are ways to build educational programming geared towards career placement and employer partnerships. But the evolution of the Higher Ed business model is happening too slowly and many schools in their race to relevancy will fail because they were not able to change quickly enough to meet this new type of demand.

Bottom line – shifts in customer demands/expectations are forcing shifts in business models across all nonprofit sectors, not just higher education. Crafting strategic plans, evolving business models, and successfully implementing changes will be the key to future relevance and viability.