Part 7: Strategy for the great disruption
This is the seventh part of an eight-part essay, ‘So, You Run a University?’. This essay is authored by Darcy W.E. Allen, Chris Berg, Sinclair Davidson, Leon Gettler, Ethan Kane, Aaron M. Lane and Jason Potts. Previous parts: Part 6, Part 5, Part 4, Part 3, Part 2, Part 1.
The 1980s are back, baby!
The 1980s are remembered for its great music, the Rubik’s cube, the Sony walkman. They were the years of deregulation and free market reforms. It was the decade of greed, of junk bonds, financial scandals, and black Monday. It was the decade when Gordon Gekko told us that lunch was for wimps. Lee Iacocca had just saved Chysler from bankruptcy and Donald Trump was a respected businessman. Competition was raw. Competition was, in that Darwinian phrase, red in tooth and claw. For many universities the near future will feel like going back to the future (also a great movie from the 1980s).
In a 1990 article, Andrei Shleifer (almost certainly a future Nobel prize winner) and Robert Vishny described the 1980s as being a decade of fundamental change.[1] The corporate world was characterised by takeovers. Many of these takeovers were friendly but many were hostile. These takeovers (and management buy-outs) saw many conglomerate corporations bought out and broken up. It was a decade of specialisation. The previous merger wave of the 1960s was reversed. As Thomas Peters and Robert Waterman recommended in their 1982 bestseller In Search of Excellence, companies returned to their knitting.[2]
The parallels for universities should be obvious. Many universities are inefficient conglomerates that should be broken up. Others are efficient and should expand.
There are some 200 million university students. These paying customers are out there for the taking. Competition for them will be intense. But the competition looks different for each university type.
The Elite Universities won’t be competing for the entire 200 million. They don’t want them all. Elites only want the ‘best’ ones (by their criteria). The Elite Universities will compete with the other Elite Universities, as they always have. The Specialist Universities will only be competing the ‘brightest’ ones (by their criteria). In many ways the Hart Assets of these universities mean that tha don’t need to compete at all. The ‘best’ and the ‘brightest’ will come to them.
Where things get interesting is for the Networked Universities. They will be competing for students on a scale never seen before. For many of these networked universities this will be a Darwinian struggle. The Hunger Games will be on.
Now beyond the obvious retail politics of middle-class voters wanting nice things for their children, higher education policy in the 20th century has been dominated by the economic prerogatives of industrial planning. The ‘linear model’ saw investment in basic science in universities turned into industrial technologies to power economic growth.[3] Higher education policy is fundamentally innovation policy, which is fundamentally economic growth and development policy.[4] Innovation researchers these days call this the ‘Triple helix model’ of industry-university-government interactions.[5]
And so it’s easy to forget that universities are also creatures of the market. They can respond to incentives and devise new business models. Of course this varies across countries and structures, but what we’re about to see is entrepreneurial dynamics pushed back into university decision making. We haven’t seen much of this over the path millenia. Universities have grown, but they have all grown in the same ways. The sector is too homogenous. Specialisation is coming. The 1980s are back, baby! So what should you do?
Well, that depends who you are.
So, you’re the VC (or want to become one)
It has been a long road for you, but you finally made it. You have carved out a leadership career in higher education. You’re in the C-suite with your corporate-pegged salary and holding the reins on a billion-dollar organisation.
Over the years you’ve implemented some big strategic decisions. Perhaps you’ve shifted the focus to particular disciplines, purchased research teams, and crafted a five year vision. Rip up those plans.
The next decade could be the most challenging time to manage a university at any time in history. Most universities will need to fundamentally change. You need to pivot. Universities are hard to kill, but they are difficult to run at the best of times. When all 15 sides are caught in a zero sum game, it’s deathly grim.
The good news is that at no point in the past 900 years have the opportunities been greater for a clear strategic vision. That vision must be well conceived and executed. Most of your colleagues will think you’re crazy. But it’s you who’s in the chair. You will need to act decisively, or at least offer a clear idea of what you’re going to do and why. You must be devastatingly persuasive.
The bad news is that a poorly devised and executed strategic vision will drive your university onto a terminal path. Business-as-usual is deadly too. You will be eaten. ‘Will this impact me?’ is not part of your strategic decision set. Wake up. Of course it will.
Step 1. What type of university do I have?
First, you need to figure out which of the three types of university you’re running. Open your window. Look out at your campus. What do you see? Ivy and serenity? Bluestone arches and cranes? Shiny new hybrid-electric cars, effortlessly parked in the Nobel-Prize winner reserved spots, next to expensively-named buildings made by award-winning Spanish architects? Protests and smoke grenades?
Trick question.
All universities look the same from your window. You’re looking at an industrial era university. What you see is the result of the great convergence. Academies, colleges, institutes and polytechnics all became universities. Over time they all came to resemble one another. They converged. Evolutionary biologists call this convergent selection.
Keep looking out your window and try and see your Hart Asset.
That’s another trick question. Hart assets are intangible. To be clear, that means that if you can see it then that is not your Hart Asset. It might be some other asset that you are very proud of, or spend lots of money on, or have lots of meetings about. It may be listed high on your University Board papers. But that isn’t your Hart Asset.
You will find your Hart Asset in the answer to this question: what asset(s) does the university need to own in order to develop a viable business model? You cannot trust others to own them. Remember from Part 5 that ownership of the Hart Asset per se is not the business model. The Hart Asset will be a specific asset to the university but it may not necessarily be the highest earning or most conspicuous asset, or even be at the point of sale in the business model. There are really only three things you can identify as your Hart Asset: brand (and you’ve got an Elite University); specialised focused expertise (and you've got a Specialized University); and administrative systems (and you’ve got a Networked University).
As an Elite University you’re basically a high-end fashion company. Your business model is that of an exclusive club. You are selective in the extreme. You have high hurdles to entry. You are defined as much by who doesn't get in, which is of course most people. Your students care immensely about telling other people they went to you. The logic of this model is costly signalling to solve the problem of asymmetric information about quality. Every university wants to be this, or the local variant (“we’re the Harvard of Elbonia”). But statistically, you’re probably not, so let’s move on.
As a Specialist University your Hart Asset is focused expertise and you’re basically a guild workshop. You are industry forward, practical, integrated into industry and investment funding (both public and private) about a particular domain of useful knowledge. Students come to you for this and only this. You’re a vibrant, brilliant, grungy, entrepreneurial part of industrial knowledge capitalism. Every university wants to claim specialist expertise assets. Of course every department in your university thinks that they’re special. And so the Specialist University will be the most overdiagnosed university type in the new era.
It is nice to be an Elite or a Specialist university. It is still hard to run these universities well. But these categories are familiar from the romantic and industrial era.
The most likely scenario is that your Hart Asset is administration and you have a Networked University. This is a much harder idea to get your head around than the other categories. It is also a much harder proposition to sell to your board and stakeholders.
Few of the 15 sides of your market will be happy when you front up to any executive meeting of your Networked University and argue that the university’s most strategically important asset is administration. Elevating the most unglamorous, despised and ignored part of your university will not go down well. You can reassure them that you mean administration is the most important asset and not the most valuable asset, but they still won’t like you. Nevertheless, the rapidly approaching digital era means that the ability to effectively use and deploy these assets will shape productivity and performance going forward. It gives you strategic options.
Let us give you three strategic options. First, for your university to transcend geography and to go to where students or clients are. You may have been talking about expanding into a nearby region. Now you can go much further across the world. Second, scale that important digital infrastructure to add new schools and units to your platform. People will want to pay you for your administration, and that can expand the side of your multi-sided market. Third, harnessing new digital technology to build on these platforms. You can leverage AI, blockchain, IoT, 5G and AR/VR to build new products, services and tools for your customers. Each of these are growth strategies, and interdependent. They all derive from the same key strategic resource of effective administrative infrastructure and processes.
Step 2: What type of university do we want to be?
Is it the same as the answer to Hart Asset diagnostics? If yes, then go on to step 4.
If not, then we have a problem. Do you have a massive endowment or a lot of political protection? Do you have a significant trove of gold buried in the quadrangle? In the absence of special powerful friends you’re probably making a mistake. You should go back and align your Hart Asset with the university you want to be. Maybe resign. Otherwise your most likely future is to fragment, whither and be reabsorbed into a growing Networked University.
Your problem is that most of the 15 stakeholder groups you deal with each day are strategically invested in the industrial era full service model. They are wrong. They like to think they’re in some kind of elite or specialist club.
You need to tell them that they are wrong. And you need to be persuasive about it. Because the real disruption will be when all of the complex delicate bargains struck between the 15 sides fall apart as you start to use someone else’s administrative infrastructure.
The internal bargains for Elite Universities won’t change much. For Specialist Universities, this is simplified further, as the tighter focus means fewer or less complex bargains to be made. But for Networked Universities, as Tancredi Falconeri says in The Leopard, ‘For things to stay the same, everything will need to change.’
Step 3: What’s best for my university?
The hard choice ahead is that a lot of existing university architectures will be non-viable, unless they are competitive in providing administrative infrastructure. The test is if others are joining it. But those others will be coming from the fragmentation of universities that are administratively uncompetitive.
If you lose control of your Hart Asset, your university will begin to unravel. Now maybe you need to let that happen. That might be what’s best.
Our prediction is that we will transition to a new equilibrium where some Networked Universities are much bigger than even the biggest universities are now. These are the enormous gains to be had, but not everyone can win that. Digital platform economics tells us that the Networked University market will verge on winner take-all.
The industrial era model had a clear sense of the top 100, top 200, and top 500 rankings that VCs could benchmark against. That is over. That’s a game for elites, who will only care about the top end.
There is also a distinct possibility that your university will be more valuable in parts. If that’s the case, then your job is to extract that value and facilitate the carve up, the unbundling, and unpicking all the trades made in the diagram above.
Step 4: Implementing Hart Asset consistent strategy
Okay. We’re doing this. You’re going to be one of three types. Here is your playbook.
Elite University Strategy Playbook
Your Hart asset is your brand. Protect and control it at all costs.
The best students will always come to you. Reject most people that come to you, and never explain why.
Do not merge. Never open foreign campuses. Never partner with anyone except entirely on your own terms. Brand dilution is your major risk.
Run your own University Press. Hold original manuscripts of famous texts in your library’s vault. Coddle your professors. If full professors want to ride ponies in the hallways, let them.
Your main client is alumni and donors. Be loyal to them above all. Be secretive and maintain your traditions. Call ordinary things by weird names. Control the sale of your own merchandise. Think on 1000 year cycles. And never, ever, ever sell land.
Your model is British Royalty, Italian fashion houses, and Walt Disney. Maybe change the locks on your endowment every so often for security reasons.
Specialist University Strategy Playbook
Your Hart Assets are your specialist core capabilities at the leading edge of a particular but important thing. Everything you do is about that thing.
The thing must be applied and useful. You must be bold and staggeringly competent explorers and experts of the thing. You are a medieval guild.
Get a supercollider and do cool things with it. You can lease the supercollider if you want (you don’t need to own it because it is not your Hart Asset). Launch rockets and stay geeky cool. Look down on people who don’t understand the thing. Also feel sad for them.
Students come to you, but they don’t need to tell anyone else. Who would they tell? Your brand is vaguely known by people but probably not, except for people who are into the thing. They know your brand to 23 decimal places.
Everyone at your university is obsessed with the thing. Blur where the university ends and where the startups and spin offs begin. Get all the grants for the thing. You don’t need donors because you have finance. You talk in code and have your own rich thing-based language. Your students speak it. And employers compete hard for them.
You opened a satellite campus in Elbonia, but only because a bunch of serious people are there who are really into the thing too. You publish the main journal about the thing and host the serious conferences about the thing. Your merchandise has the thing on it. Your opinions about the thing shapes how everyone else thinks about the thing.
You think in 10 year cycles because that is how fast the thing moves. Your model is Tesla, SpaceX, The Boring Company, Hyperloop, and Scientology.
Networked University Playbook
Your Hart Assets are your administrative systems. No one thinks this is awesome except for you. You now understand that this is The Way.
You know that your administrative systems didn’t just get good by accident. When other universities were having offsite school meetings, you mastered integrated digital teaching and learning systems. They built new football stadiums and played with their rockets. You developed a modularised credential stack across two continents. They invested in global brand marketing, you built an integrated internal digital identity system.
And now that the universities are on fire with digital competition, now that their precious foreign fee paying students have deserted them, you know that when they come wanting to plug into your systems, that you can own them all. You knew that one day they would come knocking.
Step 5: Protect your core (quality assurance)
A standard trope of branded strategy-based business consulting is the question ‘what business am I really in?’ You gather your senior leadership team around a whiteboard, with sharpies and post-it notes, take a few hits of Ayahuasca (you can skip this step if you’re East Coast), and with steely eyes look bravely into your company’s soul and identify your core competency and value add.
Ignore your leadership team. The answer to this question is your administrative processes, and the reason is that the business you are in is not education per se, but quality assurance over a very complex production process of a credence good (See Box 1 above).
Universities do research (in fact, to legally call yourself a university, you must do research). But the ultimate (rather than proximate) reason you do research is to solve the problem of quality assurance under asymmetric information for the main revenue-earning product you offer, which is teaching. Students pay money to receive the service of education, but because quality is hard to observe, students and governments look to reliable hard-to-fake signals of quality (research).
So universities do research in order to sell education. That’s all well and good. But things get weird because students aren’t actually at university to buy education. They are also trying to solve a similar ‘quality assurance under asymmetric information’ problem. The quality they are trying to show to others is themselves (employers, business or romantic parents). These qualities may be ‘am a member of the elite’, or ‘know how to do the thing’, or ‘have a skill or capability in X’.
So students are buying a bundled product from us: education and proof of that education, or certification, or quality assurance. That quality assurance is the base product. It is what your high quality administrative systems deliver. It is why this is your Hart Asset. And it’s why even though you can safely contract out teaching (but not research), you should never contract out your administration.
Step 6: Fire all the faculty (unbundle)
Once you understand the significance of Step 5, then it becomes safe to outsource anything from your university that is not your Hart Asset. At first this seems insane.
This is the classic ‘make or buy decision’ in strategic management that we explored in Part 5. Maximise value creation by economising on costs. Transaction costs are the costs of contracting, monitoring, bargaining and administration. These are the costs of coordinating the university. Coase argued that where the costs of using hierarchical organization are less than using markets, firms are the most efficient way to organize economic activity.
The observation that the enormous complexity of universities is actually a way to reduce coordination costs. You and your management team search for and find all the side deals and internal trades and cross subsidies and managed spillovers that enable a complex skein of arrangements to minimize the cost of production. That is your job, and you’re good at it.
But what about when the costs of contracting are less than the costs of internal management? The efficient and strategically rational choice becomes not to make, but to buy.
Let us illustrate this with an extreme case, which we will over-dramatise to make the point. Consider firing all your teaching faculty, then selectively hire them back on the market at piece rate. Allow them to form their own companies that plug into your administrative platform to connect them to students wanting to purchase units of education.
You’re unbundling the education part (teaching) from the administration part: matriculation, administration and scheduling, timetabling, quality control assurance, identity management, dispute arbitration and resolution, transcripts and certification, examinations, awards, scholarships, payments. The faculty might even be happy for being fired, they no longer have to do the things they’ve been complaining bitterly about being required to do.
This is a general point about the prospects of unbundling a university. Anything that is not a Hart Asset can be potentially unbundled and then organized using market relations rather than organised within the firm.
Today each university runs its own administrative platforms and produces everything in-house by coordinating a 15-sided market. It’s a quasi-stable equilibrium. But it’s about to unravel. And with the powerful scale economies of Networked Universities leveraging new technologies, the full service industrial business model of the university is over.
Step 7: Defend against attack (digital post-MOOC)
Soon we will see an increasing voley of friendly and hostile mergers and acquisitions. Networked Universities with better administrations will seek to acquire other units, freeing those units from less efficient administrative platforms. And so now that you know your Hart Assets and the university you want to be, you should also be ready to defend against attack.
The best defence against attack is to have a strong, effective and efficient administrative platform. That makes it hard to leave. If you seek to go on the attack, you will need a strong, effective and efficient administrative platform. That makes people want to join. Neither strategy requires superstar research or teaching teams. Both require good administration. You get the idea.
Don’t make the mistake that building world class administration in a digital world is the same as getting really good at digital delivery (ie. MOOCs and affiliated programs). To be sure, there are some overlaps. Effective MOOCing will certainly test your own digital administrative competency. But MOOCs are the sort of thing that only Elite Universities can really do. They probably shouldn’t even do them (it’s the opposite of exclusive), but they are the only ones that can make them work.[6]
A much better defence focuses on what we call the post-MOOC university: a university-centred technology platform that will reliably replicate the interactions of the old university model. The printing press and the MOOC didn’t destroy the university. The university will still organise and coordinate the production of education and its quality-assuring certification. See the Epilogue for a more detailed analysis of the post-MOOC university.
But it will do so based on a digital technology stack. The base of that stack is an administrative infrastructure. Built on top of it are virtual and augmented reality interactions, webinars and digital-mediated interactions, and so on. You need to defend from attack by building a better stack.
So you’re the Minister (or you advise one)
It has been a long road. Over decades you’ve carved out a public policy leadership role. You or your boss are elected to develop education policy. You think you need to act fast because your term is only three years and soon you’ll be preparing for the next election. No reform even gets achieved in an election year. But trust us: you need to act fast for a whole different reason.
There has never been a more important time to get higher education policy right. How universities are regulated, how they are subsidised, how they are licensed, and how they are governed will shape how successfully universities can navigate the great disruption.
You probably think about higher education as an international export market. Your domestic universities sell education services to foreign students that enter on special immigration visas. Yes, education is a global business. The market for students is an international one (at least in the developed world). In 2017 there were 5.3 million international tertiary students globally, up from 1.9 million in 1997.[7] Some countries rely heavily on foreign students. In Australia, for example, more than 21 per cent of students in higher education are international students. In the United Kingdom more than 17 per cent are.[8]
The surface-level policy problem you face is that the COVID-19 pandemic showed the risks of that international business model. But that business model has always been vulnerable to geopolitical risks, such as domestic anti-immigration sentiment and concerns about ‘brain-drain’ in students’ home countries that might hinder travel. The risk has always been there.
Thinking about international student risks is deeply infused with the industrial vision of education. Behind all of this is the idea that universities take the input (students) and produce skilled workers. In this industrial vision universities are factories. And we know that when factory inputs are harder to obtain the factory shrinks or changes its business model. Similarly, universities that can support a large production of students will have to shrink or change their business model. And as a policymaker, if not enough skilled workers can be obtained (or there are too many workers with the wrong skills for your economy) you tweak the policies to ensure the factories are better aligned to national needs. As a good education policymaker you will shift all of the dials on the industrial university system to produce jobs, innovation and growth.
You’re thinking about it all wrong. You’re trapped in the industrial vision. You must think bigger. Our understanding of the university as multi-sided markets and the three models in the new era suggest a much bigger opportunity for policymakers. A global opportunity.
Don’t think of university as an export market where international students are the customers.
Think of the university itself as an export. That is your global play.
In the new era, successful export-oriented university systems won’t export degrees. They will export their high quality administration. A successful Networked University will export a set of administrative standards to partner universities in other jurisdictions. They will become the digital infrastructure on which a host of education and research multi-sided markets operate right across the globe.
Your government has been talking about national competitiveness for decades, and here is a significant new opportunity to achieve it. But you must move fast. The higher education landscape will feature only a small number of global Networked University platforms. There will certainly be a magnitude fewer than there are current higher education institutions. Whoever establishes these platforms are in a position to shape higher education standards globally. Their home countries in turn will be in a position to set global standards.
It is a truism of international cooperation that countries which set standards can set those standards in a way that supports their competitive advantage. When the world was developing a regulatory framework to govern international banking in the 1980s, the countries that were first at the table (the United States, Japan, the United Kingdom) were in a position to influence that framework so that it was in their interests. Countries that joined the framework later had no choice but to adopt the already mature rules.
The same standards-setting dynamics will play out in the higher education sector. Influence over global coordination means the chance to export standards for all 15 sides of the market. You can set standards around education quality frameworks, how research is governed, the publication access, recognition and management of credentials, student qualifications and equity, industry support and contracts, industrial relations and quality control.
The few Networked Universities that expand and control the digital platforms will be those that control the standards. Their home country—your jurisdiction—will be in a position to influence those standards.
The future of the university offers a new dimension for global education competition. No longer is global competition solely about selling to 5 million international students. Global competition is about capturing a market of more than 200 million students enrolled in higher education worldwide. Those students might be studying domestically in their home countries (and so you haven’t really cared about them before). But in this new era those students are being educated in a university that sits on some digital infrastructure. That infrastructure likely isn’t built in their country. It could be built in yours, influenced by your standards.
Stop thinking about credentials as exports. The winner of this competition will export regulations.
Global Networked Universities will be quasi private sector regulators around standards and quality. And your country has the opportunity to influence that. Historically, the university sector has been a key player in geopolitical power. Some of that power—and more—is up for grabs.
This is a massive opportunity for your university sector. You can facilitate it, or you can impede it.
Over the next decade there will be many universities that fail to make the transition, that discover their business models are no longer suitable for the new environment. We have tried to lay out steps to make the right choices. Not every university President will read them and follow them faithfully. And some who do will not succeed regardless. So you’re going to be faced with two related but distinct problems that we will now step through.
Step 1: How to respond to rapid reorganisation among universities
A thriving market economy is one that is constantly reorganising itself. One of the strangest features of the university sector is its stability. The scholar Kieran Healy points out that a typical list of the top universities of the second decade of the twentieth century looks a lot like the top universities of 2011.[9] It’s also true further down the list. A vanishingly small number of institutions down the league table go out of business or merge (even if that number has increased in recent decades).[10]
Stability will not remain. Sure, the elite universities will remain as the massive global brands that they are. But there will be enormous disruption (read: destruction) everywhere else. Destruction is good. When the great economist Joseph Schumpeter coined the term ‘creative destruction’ he pointed out that business failure is part of the natural upheavals of market competition. Destruction is part of the evolutionary process.
But destruction is costly. If history has shown us anything, companies that face destruction inevitably beg the government for help. Think banks, airlines, automotive manufacturers.
As a policymaker throughout these destructive times: please don’t bail out failing universities.
Bailing out universities is not helping the sector. You will definitely not be helping the cause of productivity growth and national competitiveness. This is a once in a century moment for the university system to restructure, to reorientate, and to rebuild. Let it.
The demand for the services of a university that we have outlined here have not diminished. They are projected to grow in coming decades. Universities form a vital part of the national economy and they need to be productive, not protected. This means actively encouraging universities to merge or close if necessary, and resisting the political pressure that might protect uncompetitive institutions.
The flip side of declining to help universities when they fail is ensuring they are best placed to succeed, which leads us to the next step.
Step 2: Ensure your universities are best placed for platform supremacy
A university sector that is heavily controlled—heavily regulated—will struggle to make sudden market changes. You must ensure that this is not the case.
A very real risk for your sector is having domestic university leaders smart enough and entrepreneurial enough to recognise the opportunity. They may have even read this essay dutifully identifying their Hart Asset and ready to follow the steps into the new era. But then they can’t grasp the nettle because your government’s regulations make it impossible to adapt. Don’t let this happen.
Globally the higher education sector is a mess of regulatory complexity. Public and semi-public rules govern the quality of education offerings. For professional qualifications (think law, medicine, accounting, and so on), universities have to contend with both government regulators and government-empowered professional regulators. Many systems subject higher education to strict price controls, claiming to finely balance government and student contributions against the needs of the future workforce and a desire to study.
Complex rules and funding arrangements are the direct result of the romantic and industrial visions of higher education. They’re regulating universities like they are factories with special inputs and outputs. Despite their intentions, they have perversely reduced the productivity of the sector. Perhaps you could afford this in normal times. These are not normal times. Read Part 4 again. Universities need to adapt to change.
Regulations and rules designed for the discrete unitary universities of the twentieth century will not be appropriate for the Networked Universities of the twenty-first. Rapid adaptation requires flexibility in regulation. The constituencies for regulation are everywhere. But there is too often a direct trade-off between the viability of an industry under stress and regulation for favoured constituencies.
Don’t let your industry collapse because just because the special interests that have built up over the last century want to fix the old world in place.
Part 7 takeaways
The new era for universities will be a competitive and dynamic process of mergers and acquisitions, bundling and unbundling, destruction and creation. And so you need strategy.
If you’re a University President or VC you have seven steps.
Determine what type of university you are. What is your Hart Asset?
Decide what type of university you want to be. If this doesn’t match your Hart Asset, panic.
Think long and hard about what is best for your university
Implement a Hart Asset consistent strategy. This will be different depending on whether you are an Elite, Specialist or Networked University.
Protect your core. Ensure quality.
Unbundle. Start by firing all of your faculty (they are not your Hart Asset)
Defence against attack. Start building your digital stack, but don’t confuse this with online delivery.
If you’re an education minister, or you advise one, you have two steps.
Respond to destruction but don’t inhibit it. Don’t bail universities out. This should be a rapid process of destruction and creation, so let it be.
Encourage adaptation to platform supremacy. Cast off some of the shackles of the university sector that were made in the industrial era. We’re in a new era now, and universities need to be able to aapt.
Consider yourself briefed
The university sector is about to enter its biggest period of disruption in 900 years. Some parts will be barely touched, other parts will come through more lean and focused, and other parts will be radically, fundamentally transformed. There will be creation and destruction.
We have described the forces driving these transformations, and the configurations that we expect to emerge on the other side.
We are optimistic. You should be optimistic too. With a clear diagnosis of the situation and a well-formed and powerfully-implemented strategic vision, you have an unprecedented opportunity.
But don’t be complacent, the new era could also kill you.
The single most dangerous thing a university can do right now is to continue as if nothing has changed. Unless you’re one of the very few Elite Universities, this is certain death. Or, more accurately, suicide. Even Specialist Universities will need a tightened focus and regrouping.
For most universities, however, the transformation will be profound. Some will lean into administrative platform capabilities and seek to grow, pulling other modules and schools into them. These will be the dominant Networked Universities of the new era. They will run the digital administrative platforms and control the standards.
This is kind of what happened in the banking system though the 1980s and 1990s, with mergers of many small and regional banking branches and operations into mega banks. Similar things have also happened with telcos, radio and tv stations, as well as supermarkets and newspapers, all in living memory and driven by the same logic of technological and administrative economies built through network consolidation. This will also happen to universities. Indeed, it has already begun.
Consider yourself briefed.
[1] Shleifer, A., Vishny, R. 1990. The Takeover Wave of the 1980s, Science 249: 745 - 749
[2] Peters, T and Waterman RH 1982. In Search of Excellence. Harper and Row.
[3] https://www.nsf.gov/od/lpa/nsf50/vbush1945.htm
[4] The leading scholarly journal in this field, tellingly, is called Research Policy.
[5] Leydesdorff, L. and Etzkowitz, H., 1996. Emergence of a Triple Helix of university—industry—government relations. Science and Public Policy, 23(5), p. 279-286.
[6] Indeed, if you look at where MOOCs have succeeded it’s Stanford (Coursera), Harvard (EdX), etc.
[7] http://data.uis.unesco.org/Index.aspx?queryid=172#
[8] https://data.oecd.org/students/international-student-mobility.htm
[9] https://kieranhealy.org/blog/archives/2014/08/06/persistence-of-the-old-regime/
[10] https://jhupbooks.press.jhu.edu/title/consolidating-colleges-and-merging-universities