Click here and here to learn what happens when a higher education rapidly transitions from a sellers’ market to a buyers’ market, a shift made possible by a bad economy, high tuition costs, limited job availability for graduates, outsourcing, and oversupply of educational institutions.
I’ve commented numerous times on the shift in higher education from a sellers’ market to a buyers’ market (see Visions For Change, Dear Business School Dean, Competition in Higher Education, and Who Needs to Improve?).
The existence of a sellers’ market over many decades means that the management, faculty, and staff become complacent as a result of being insulated from competition. They have developed mindsets, processes, and policies that make it very difficult for them to quickly adjust to competitive buyers’ market. So they scramble and do what everyone else does; budget cutting and price cutting. The most effective solution to the problem, as they see it, it to lay off faculty, staff, close campuses, utilize shared services, bundling degree programs, discount tuition, increase value and number of scholarships, and so on. They weaken themselves in the hope of remaining strong.
Notice, however, they will do anything and everything except improve the product: courses and degree program(s).
It seems possible that the U.S. and Europe will experience a long-term stagnant economy as Japan has for the last 20-plus years. That means more degree programs, colleges, and universities will flip from sellers’ to buyers’ markets. The transition is already well under way.
Instead, universities will need to improve productivity, reduce costs through process improvement, limit the quantity of courses and programs offered, substantially improve quality (see What is Good Quality Teaching?, Are You Satisfied With 10 Percent?, 45 Teaching Errors, and The Value of Higher Education), and expand the value proposition for students, payers, and employers. And, they must do all of this without harming people: students, payers, employers, staff, faculty, communities, and so on. How can that be done?
Organizations that face dire conditions have choices. Broadly speaking, they can do what everyone else does and hope to be one of the survivors. Or, they can take actions that assure they will will be one of the survivors. The conventional approach to management delivers the former possibility, while Lean management virtually guarantees the latter.
So, it would be wise to abandon the conventional management practice that has left so many institutions unprepared to compete and being the transition to new system of progressive management practice designed to serve buyers’ markets.