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UNITED STATES
A game-changing year for American higher education?
Leading thinkers in and outside of the academy are bullish about higher education, although many are frankly worried about the future of American universities and colleges. Higher education faces unprecedented challenges, but many institutions are better prepared to meet these than their critics imagine.

Gone since 2008 are the remedies for Baumol’s cost disease – tuition fee hikes, state appropriations, bubble-boosted endowment returns and a growing research portfolio. Subsequent cost-cutting continues, but many universities are gasping for revenue.

Then in 2012, Harvard and MIT made very public announcements about EdX, their online learning platform. On the other coast, Stanford birthed Udacity and Coursera after professors successfully developed and delivered Massive Open Online Courses, or MOOCs.

Taken together, these announcements heralded the coming end of the monopoly of information held by professors in classrooms, and challenged the traditional model of higher education. These financial and existential threats will test the creativity and ingenuity of higher education.

Many institutions are up to the task. Already most have instituted major initiatives to improve efficiency. Many have accepted that they will have to go further, and will either have to grow or focus on competitive niches in order to capture new revenue sources.

In 2012 traditional universities decided they could remain true to their missions and yet think about the tools and techniques of upstarts in the for-profit world. Many institutions rushed to join one consortium or another, and some began to consider the implications of innovative educational technology to their traditional models.

Entering the competition

In 2013 this openness to institutional innovation and the necessity of new revenues are the ingredients for transformative change.

Since the undergraduate applicant pool peaked in 2009, institutional growth is, at best, a zero sum game. For the first time universities seeking to grow their student numbers must either enter foreign markets or win share from other American institutions.

Expect to see a handful of universities look beyond their own community for students, discover a global higher education marketplace, and decide that it is time to compete and to win. Today few US universities have any experience with either of these competitive behaviours. That will now change.

Critics who charge that universities are too complex to take up this challenge are wrong on two counts.

First, if only a few universities work their way through these challenges and successfully plan for growth, others will either join them or lose their students. Transformation, after all, does not come from uniform growth.

Second, universities are far more innovative than their critics imagine and more than a few are quite up to this difficult task.

Look for two things.

Expect institutional leadership to focus on the strategic positioning necessary to win in this competitive context. New technologies and business models – largely but not entirely in the online learning space – are the tools they will use.

Also expect leaders to create new stakeholder processes to socialise the issues (agree on the questions), contextualise the options (see what others are doing), decide what matters most (prioritise), and share in the planning.

There are many issues to consider and the process itself will be messy, but expect 2013 to bring significant and strengthening change to American higher education.

* Edwin Eisendrath is a managing director and James DeVaney is a director in the Global Education and Advisory Services practice of Huron Consulting Group.
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