Sharpening Strategy, Improving Performance and Leveraging Change

1
Sharpening Strategy, Improving Performance and
Leveraging Change

• Higher Education in a Troubled Economy
• New England Board of Higher Education
• Federal Reserve Bank of Boston
• December 5, 2008

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Sharpening Strategy, Improving Performance and
Leveraging Change

• Economic and fiscal challenges can help higher
  education institutions hone their missions,
  competitive strategies and entrepreneurial
  instinctsand make them work smarter. With
  long-term and well-crafted strategies in mind,
  leaders can use present challenges as an impetus
  to create and manage internal change and to
  improve institutional performance and
  productivity.

Facilitator Peter J. Stokes, Executive Vice Presi
dent Chief Research Officer, Eduventures, Inc.
Panelists Kathleen Dawley, President, Maguire A
ssociates Christian McCarthy, Executive Vice Pres
ident for Administration Finance/Treasurer,
Assumption College Persis Rickes, President/Princ
ipal, Rickes Associates, Inc.
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Interesting Times Bankruptcies, Bailouts, and
Belt Tightening

• Experience is something you dont get until just
  after you need it.
  
• - Steven Wright, Comedian

• September
• Fannie Mae, Freddie Mac takeover
• Lehman Brothers bankruptcy
• Merrill Lynch sold, AIG bailout, Washington
  Mutual failure
  
• October
• 700 B federal bailout plan
• Iceland nearly goes bankrupt
• Dow ends worst week in its 133 year history on
  October 10, 2008 with 18 drop
  
• November
• 6.5 unemployment lowest in 14 years
• Citigroup announces 52,000 layoffs
• December
• Its official, weve been in a recession since
  December 2007

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Unprecedented or Precedented? Thats One of the
Questions

• Compare downturns of 2001, 1998, 1987, 1982,
  1973the Great Depressionmarket crash of
  1873panic of 1837. Lets test some hypotheses to
  assess how higher education leaders can think
  about risk and reward in a troubled economy and
  lets consider how well equipped experience is to
  be our guide.

• Identifying new and sustainable funding sources
  is the top priority
  
• Effective cost containment will require a mixture
  of tried-and-true practices alongside bolder
  innovations
  
• The competitive landscape will shift
  significantly in the coming months, creating new
  winners and losers
  
• Exemplary leaders will recognize that the
  question is not how the economy impacts higher
  education, but how higher education impacts the
  economy

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Identifying New and Sustainable Funding Sources
Is the Top Priority

• Some higher education programs will prove
  counter-cyclical and see increased enrollment
  while others will be negatively impacted by
  higher unemployment and the credit crunch.

• Expand offerings for adult learners, online
  learners, out-of-state students, international
  students, transfers
  
• Maximize net tuition revenue while being careful
  not to increase price more than the market will
  tolerate
  
• Refocus on alumni giving, technology transfer,
  grants
  
• Consider the disposition or acquisition of real
  estate, commercial use/rental of facilities,
  naming rights

6
Effective Cost Containment Will Require a Mixture
of Tried-and-True Practices Alongside Bolder
Innovations

• Strategic cost saving will require both cuts and
  investments.

• Hiring freezes, consortial purchasing, retirement
  incentives for faculty and staff, increased use
  of part-time instructors
  
• Close down under-enrolled programs, collaborate
  with nearby institutions in delivery of programs
  
• Reduce investments in collegiate sports
• Improve utilization of current facilities and
  address appropriate deferred maintenance
  
• Implement energy-saving measures and consider
  outsourcing additional services

7
The Competitive Landscape Will Shift
Significantly in the Coming Months

• Well witness a realignment of winners and losers
  within the higher education hierarchy and across
  market segments.

• Schools that are competitive on net cost (price)
  will be most attractive to cash strapped
  parents/students
  
• Wise institutions will focus on enrollment over
  rankings this year
  
• Four-year campuses with traditional full-time
  students may need to embrace more part-time
  students
  
• For-profit institutions and online providers will
  absorb a number of the students shut out of
  public four-year and two-year institutions
  
• Heavily residential campuses could have bed
  vacancies

8
Exemplary Leadership Will Be Needed to Guide
Institutions Through Times of Change

• These leaders will recognize that the question is
  not simply how the economy impacts higher
  education, but also how higher education impacts
  the economy.

• Revisit the mission and assess its alignment to
  the needs of your current and future student
  populations
  
• Collapse organizational silos that limit
  collaboration within management teams
  
• In economically challenging times, families need
  more than ever to understand why their money is
  best spent at one institution as opposed to
  another
• Avoid the higher education equivalent of that
  classic investment mistake selling low and
  buying high

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Discussion

• What questions would you like to pose to the
  panel? We also have some questions for you

• Where do you see the greatest risk of failure
  within our system of higher education?
  
• Whats the chief obstacle to effectively
  navigating through these troubled times as your
  institution?
  
• What important opportunities do these new
  environmental circumstances present for your
  institution?
  
• Whats your number one takeaway from todays
  conference?