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 / Winter 2012 / Issue 69(originally published by Booz & Company)


The University’s Dilemma

Know Yourself

These examples of disruptive applications of technology represent a threat or an opportunity, depending on how institutions of higher education react. An ordinary, second-tier college cannot compete if Stanford finds a way to cost-effectively monetize a 100-fold increase in its student population reached online. It isn’t clear whether Stanford seeks to do so, but someone almost certainly will — and institutions of higher learning must plan for that day.

Before taking action, universities and colleges need to take stock in their own positioning: “Know yourself,” as Sun Tzu advised. Using the language of business strategy, institutions must understand their “value propositions” from a set of four distinct benefits.

Selection. For employers, the admissions process of a top-ranked university generates tremendous value by culling applicants to create a select pool of potential employees. At top business schools, the recruiting process begins before matriculation starts; recruiters track the progress of those who have been accepted. In other high-demand fields and for the right undergraduate majors (such as finance, economics, and some engineering fields), hiring decisions can occur well before graduation. The value generated through the admissions process directly correlates to a university’s “brand value.”

Knowledge. The creation of new understanding and capabilities, for society as a whole (and perhaps for faculty egos), resides at the center of the mission of leading universities. Although imparting that knowledge to students may take a backseat, it offers a potentially critical value for employers. At a leading liberal arts college, an admissions director captured the essence of the philosophy: “We train you for nothing…but we educate you for anything.” A financially stretched parent may bristle at the thought of paying $200,000 for that four-year education; however, in a fast-changing world, the ability to build on foundational knowledge and adapt can be a highly prized asset — if you can afford it.

Certification. Many university leaders balk at the idea of providing training in technical and problem-solving skills, but it should be a critical part of their value proposition. In many of the STEM disciplines, employers seek technical skill certification. A few short tests in a typical job interview process cannot validate the breadth and depth of technical skills typically sought.

Immersion. First-generation college students may not realize the worth of this factor, and it may seem less tangibly valuable than the fast track to employment that can come with selection or certification. But immersion can yield the most lasting and meaningful benefits.

The college experience offers an opportunity for creating rich connections among like-minded peers pursuing stimulating activities independent of the pursuit of higher grade-point averages and a job upon graduation. Parents who blossomed during their own college years often maintain deep loyalty to their undergraduate institution and may willingly place a high value on immersion despite its less-measurable return on investment.

Together, these four benefits provide a basic way to think about the value proposition for higher education. Different institutions compete along different dimensions. Community colleges highlight certification; many large state universities with top-ranked basketball and football programs emphasize immersion. Secluded liberal arts colleges offer a different form of immersion built on long-term networking value. Research universities often stress knowledge, whereas the Ivy League schools achieve excellence in selection. Few schools do well on all four dimensions.

In the emerging disruptive environment, all universities should start with an explicit articulation of the customer value proposition and design a path forward that leverages technology to deliver it. Simply put: Which of these four benefits should you emphasize, and which should you put aside? And how can you leverage the Internet to deliver that value proposition more widely and cost-effectively?

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