Order the Change, and Change the Order

• By William H. Graves
• 10/29/04

To become high-performance academic institutions, we must develop IT with our eyes on innovation and its measurable outcomes.

When British mathematician, logician, and philosopher Alfred North Whitehead quipped, “Progress requires order where there is change and change where there is order,” he couldn’t know how well his concept would apply to managing and using technology in higher education. Bringing order to rapidly changing technologies may be the CIO’s role, but applying technology to change the traditional academic order must be the shared role of faculty and executive leaders.

Yet the academic order should never be changed for the sake of change—or for the sake of technology. An institution’s academic priorities should drive its efforts to fund and manage IT in support of innovation. Help your colleagues to grasp this, and your institution will be well on its way to becoming a high-performance institution. It will succeed, however, only by monitoring and reporting its results against the expectations and metrics of the society and constituencies it serves. But first, you and your colleagues must commit to:

• moderating the randomness of grass-roots innovation with the determined discipline to fund innovative projects of verifiable institutional value
• funding those projects for their potential to advance stated strategic objectives
• monitoring those projects using quantitative institutional performance indicators
• making sure those indicators are embraced by external policy and oversight bodies

If you’re not certain which innovative projects to select and how to measure their progress, just look at the vise squeezing today’s leaders between opposing forces of a) pressure to improve accessibility and accountability, and b) pressure to manage unreliable revenue sources. The following accountability and accessibility pressures can help you identify and use performance issues and related metrics to screen projects for their potential to improve institutional performance:

• Accountability as an academic quality issue. Measure and report student learning as evidence for academic quality, i.e., benchmarks for grades, retention/ graduation rates, and so on.
• Accountability as an expense issue. Measure and report the unit expense of learning, such as the expense per credit, per FTE, and per graduate.
• Accountability as a responsiveness issue. Respond rapidly to economic development/workforce needs with academic programs designed to meet the needs of strategic groups of employers, professionals, and students.
• Accessibility as a flexibility issue. Deliver services and selected academic programs more flexibly and conveniently via a “flex” model emphasizing online self-service supported with individualized, as-needed expert help.
• Accessibility as a capacity issue. Accommodate the growing demand for higher education.
• Accessibility as an affordability issue. Hold the consumer price index line on the rate of tuition/fee hikes.

The Revenue Side of the Vise

Funding projects to improve institutional performance will not be easy when revenue pressure is building from:

• Shrinking percentage of revenues coming from state and federal subsidies and programs
• Increasing internal need to fund more and larger need-based grants
• Increased competitive tuition discounting
• Inelasticity of tuition, partly in competition with tuition at for-profit institutions

Indeed, many academic leaders are preoccupied with building endowments and generating more revenues from grants, contracts, and market-driven programs to offset the above downward revenue pressures. Meanwhile, they are also capping enrollments and raising tuition to manage revenue shortfalls, thereby increasing pressure on accessibility and accountability.

Walter Wriston, retired Chairman of Citibank, would cringe at the situation. He is credited with having said, “Leadership not only requires managing expenses, but also creating new wealth.” Applied to competitive success in higher ed today, no truer words were ever uttered.

Yes, managing expenses is necessary, but no longer sufficient. Wriston’s counterintuitive insight, in higher ed terms, is that by responding positively to pressures to improve accessibility and accountability (to create new academic wealth), an institution willing also to manage its expenses can improve its academic outcomes, cost structures, revenues in excess of expenses, and competitive position—in other words, its institutional performance.

Redesign Services to Create New Wealth

Wriston might ask, “How can a competitive level of IT expense be managed in sync with investments in service innovations, to yield improvements in accessibility and accountability, and reduce revenue pressures?” The solution to this challenge, as practiced elsewhere in the service economy, uses technology to redesign services to improve service quality and flexibility while reducing unit costs. The redesign strategy usually targets a flex service model emphasizing convenient online (asynchronous) self-service while also reducing unit costs and providing access to individualized, expert service interventions when needed or requested.

Wriston’s Citibank, for example, d'esn’t use the phrase “distance banking,” but instead uses “personal banking” to describe seamless, anytime online access to customer accounts, online management/automatic transfers of deposits and payments, online loan applications, automated teller machines, toll-free or online access to a customer-service rep (usually on a 24/7 basis), and convenient offices where business can be conducted in more traditional ways during regular business hours. Banks also achieve economies of scale by outsourcing functions such as IT, by business process outsourcing, and by merging with each other to drive down unit costs. They use technology-enabled service redesign and the leverage inherent in outsourcing and scale to earn a competitive edge.

In higher education, there are two primary, overlapping redesign strategies: the common course redesign strategy described below (to improve learning outcomes and simultaneously reduce direct instructional unit expenses simultaneously), and the flex program redesign strategy for meeting increasingly individualized expectations for instructional and administrative service flexibility among both flex students and traditional students seeking a residential experience.

Common course redesign. Ordering the courses with the largest enrollments (all sections counted as one) at any institution, and stopping when cumulative enrollments account for 40 to 50 percent of all enrollments, will result in 20 to 30 “common courses”—all taught at most other institutions around essentially the same content. Common courses are typically required or in demand as electives in general education programs, college prep (developmental) programs, or high-demand degree programs. Their share of total enrollments justifies using proven common-course redesign methods pioneered in a program conceived by the Center for Academic Transformation (www.center.rpi.edu) with funding from the Pew Charitable Trusts. Grants supported 30 institutions as each planned and implemented a course redesign for one general-education common course, with help from the Center. The results conclusively demonstrated that such courses can be redesigned to improve student learning while simultaneously reducing per-enrollment direct instructional expenses by an average of 40 percent.

Flex program redesign. Flex administrative services, including marketing and recruiting services, are a critical success factor for flex academic programs designed for students who cannot participate in (or prefer not to participate in) instruction requiring significant real-time interactions among students and instructors. Redesigning an academic program for flex delivery requires matching an academic strength with a well-researched niche market (for example, understanding the competition, the targeted student profile, and the delivery characteristics required to enroll targeted students). Although successful flex academic programs receive little press in contrast to their unsuccessful counterparts, they abound: Benedictine University’s (IL) Web Flex MBA, Tennessee Board of Regents Online Degree Programs, UBonline at the University of Baltimore, UMassOnline, and many others.

Changing Academic Order = New Academic Wealth

I’ll be discussing the common course and flex program redesign strategies mentioned above, in future columns. In the meantime, a simple calculation will illustrate how Wriston’s “new academic wealth” can be created by changing the academic order:
Assume, for example, that 1) direct instructional expenses are at least 50 percent of total instructional expenses, 2) at least 40 percent of total enrollments are in 20 to 30 common courses, and 3) redesigning those courses will save 40 percent of direct instructional expenses (the average savings demonstrated in the Pew-funded course redesigns). Then expense reductions could amount to at least 16 percent of an institution’s direct instructional costs (8 percent of total instructional costs), and instructional capacity could be increased (provided the redesigns increase the student/faculty ratio, as they typically do by realigning but not increasing instructors’ labor). By also redesigning academic programs, including the general education program, for flex delivery, capacity could be further increased, expenses further reduced, and revenues and responsiveness increased through new flex markets.

Voilà! New academic wealth (that high-performance academic institution we’ve been talking about), brought about by changing the order, and ordering the change. Even policy and governance oversight bodies might conclude that Wriston and Whitehead were onto something.