How can we preserve the world's boutique universities?

There is something enormously appealing in what I would call 'boutique universities' – small-scale institutions of higher learning. A place with maybe only a few hundred students.

It might not offer the range of disciplines, the variety of choice, the critical mass needed to reach excellence in research. But the satisfaction of the students, the experience of studying, easily compensates for that.

Studying at a place where everybody still knows you by name rather than registration number, at an institution that recognises individual requirements, clearly fulfils a niche in the higher education market.

Yet for the sake of efficiency and possibly also in order to achieve high positions in various rankings, universities have been getting ever bigger in size. Large is rapidly becoming the norm in higher education across the globe. But mass education clearly also has a downside.

The real problem is that boutique universities are not financially viable.

It is not that every university needs tens of thousands of students in order to survive, but in my experience in higher education, it is hard – even impossible – for a university to survive with less than 1,000 to 1,500 students.

Obviously costs and fees are different in the various economies, but these tend to compensate and hence I have the impression that this number of 1,000 to 1,500 students, albeit a rather crude benchmark, is rarely far off.

One therefore might assume that boutique universities are either on the way up, expanding into a full blown university, or on the way down, being swallowed up by a larger institution, subject to an M&A, or simply destined for a shut-down.

And that would be regrettable because there seems to be a role for such boutique universities, since not all students will prosper in mass education. So is there a way to achieve an even keel for the smaller scale institution?

Central costs

The main reason it is difficult for a boutique university to survive is the almost fixed burden of central costs. Marginal costs, such as building, teaching hours and support staff, are easy to manage. The real problem is those costs that are non-marginal and represent a big overhead.

Therefore many boutique universities seek shelter with a larger institution, offloading much of the burden of overheads.

An alternative is to join a group, which can operate like a co-operative when it comes to sharing the expenditure of (international) marketing, information technology, essential expertise and some other central services that are sensitive to economies of scale.

I have some experience that shows that the group structure can work extremely well because this is the set-up I introduced at my current company, Global University Systems, or GUS BV. I joined the company precisely two years ago, after having served as chief executive and rector magnificus of the Dutch leadership institution Nyenrode Business University.

GUS BV operates almost like a for-profit cooperative with a global reach and a diversity of providers. These providers range from traditional face-to-face teaching to online, from arts and business to languages, from widening participation programmes with competitive fees to highly selective programmes in the premium segment of the market.

The group structure allows a huge range of different providers to flourish, making use of collective marketing, recruitment and learning platforms. All this is possible within an environment where the providers maintain their own discreet identities.

Whatever model one prefers – for-profit, not-for-profit, charitable, regional, national or global – in my opinion the co-operative group or system structure is the most sensible arrangement for boutique universities to survive as quasi-independent institutions.

In a modern higher education landscape, where even successful people like Richard Branson recognise the importance of a degree, boutique universities have become an endangered species despite the appreciation of students, staff and parents – proof that it is worth seeking alternative models.

* Professor Dr Maurits van Rooijen is rector and CEO at the London School of Business and Finance or LSBF and chief academic officer at Global University Systems.