Good Strategy/Bad Strategy and Higher Education
Strategic planning in higher education borders on the absurd. I???ve been witness to my share. More often than not, participants in the process ??? of which there are many because we wouldn???t want to leave anyone out of the experience ??? agree to do what they???ve always done, but more of it. It is not actually strategic planning at all. It???s goal setting.
???There???s a basic problem with trying to get universities to compete with one another: most of them are structurally incapable of following any coherent competitive strategy at all.
Michael Porter posited that there were basically three generic types of competitive strategies. Those competing on a broad scale could compete on cost (e.g., WalMart), or they could compete on product differentiation that allows them to charge a premium (e.g., Apple, Mercedes-Benz). A third option is to limit oneself to a particular niche and compete in a very small market (e.g., Porter Airlines, which only tries to serve a few destinations).
Universities have a hard time restricting themselves to niches, as breadth is one of the things that distinguishes universities as an institutional type. Competing on cost is also extremely difficult for them to do. That???s not just because of their well-known tendency to conflate quality and expenditures; it???s because low-cost (and hence low-margin) strategies tend to work through expanding production and becoming a high-volume producer. Needless to say, exorbitant physical infrastructure costs make this an unviable strategy for all physically-based universities (though distance and e-learning providers can obviously make it work).
That leaves only product differentiation as a viable strategy. But deep down, this idea scares everyone because higher education is an almost comically conservative and isomorphic industry; what Harvard and Stanford do, virtually everyone else wants to copy, to at least some degree. At the margins, there are some value-enhancing alternate delivery models, with Waterloo???s co-op model probably being the best (McMaster could have done it with problem-based learning, but was so conservative that it never fully capitalized on its medical school???s breakthrough). But even that???s too much for most; hence the rush to differentiate on meaningless points such as food quality.
So ??? no strategy, no differentiation, just individual universities all providing the same services with some different marketing attached and hoping people will think they???re a ???brand.??? This kind of thing leads governments to believe that institutions are really undifferentiated and should be treated like utilities; institutions, meanwhile, think their ???brand??? status entitles them to think of themselves as luxury goods.???
I???m slightly more optimistic than Alex. (Alex is the master of writing provocative statements in order to stir useful discussions.) I think universities can move in new directions; they can identify new opportunities and shift resources accordingly. But they don???t have much practice. Good strategy is about making choices: this direction, rather than that direction. For last several decades, universities have had the luxury of not needing to make especially tough decisions. Demand for university spaces has grown exponentially since the mid 20th century and barriers to entry have remained strong ??? keeping competition at bay. Today, budget realities, government pressure, and competitors (soon) are putting a slow and awkward end to this era. It???s time to learn how to do strategy.
No one clarifies the difference between good and bad strategy as well as Richard Rumelt (or as bluntly). In his book, Good Strategy/Bad Strategy: What???s the Difference and Why it Matters, Rumelt provides dozens of examples of strategies conjured by a wide of organizations that are not . . . well . . . strategic. Most strategies, he argues, are nothing more than vaguely defined goals. It???s rare that an organization actually combines these goals with tactics that will make achieving the goals likely.
Rumelt has little patience for bad strategy ??? particularly for the ???strategy template??? ??? the process of creating vision statements, missions, values and strategies (which, again, are often merely goals) which is common in higher education. Consider his interpretation of Cornell University???s mission statement:
Cornell???s mission statement: ???To be a learning community that seeks to serve society by educating the leaders of tomorrow and extending the frontiers of knowledge.???
???In other words, Cornell University is a university. This is hardly surprising and is certainly not informative. It provides absolutely no guidance to further planning or policy making. It is embarrassing for an intelligent adult to be associated with this sort of bloviating.???
(Any day someone uses ???bloviating??? in a sentence is a good day.)
Author: Keith Hampson
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