Changing Higher Ed Podcast 125 with Host Dr. Drumm McNaughton and Guest Phil Hill – Higher Ed OPM Marketplace Transformation
In this episode of Changing Higher Ed podcast, Dr. Drumm McNaughton, a leading expert on change management in higher education, and Phil Hill, one of the top experts on educational technology and online project management, discuss the current—disrupted—state of the industry and the answers college and university presidents must come up with to survive the existential questions facing institutions today.
For years, Phil Hill performed small company market analyses, then developed expertise in online and digital education from their very beginnings. When leaders at colleges and universities suggested that he specialize in the unique and complex needs of academia, he jumped at the opportunity.
Here, with high-level understanding and penetrating insight, he distills his expertise and opinions into a few specific strategies that leaders can implement to navigate the marketplace and the role of online project management (OPM), which he argues is more politicized and difficult—and more important—than ever.
From MOOCs to Higher Ed OPM
Massive open, online courses—MOOCs—introduced in 2008 and widely adopted beginning in 2012, promised to revolutionize how we learn. By offering traditional course materials, as well as videos, class lectures, and practice quizzes, MOOCs brought the universe of education to anyone with access to the internet. And it was all free.
MOOCs let people from all walks of life jump into just about any topic from day one. Behind them were the names of some of the most prestigious and important higher ed institutions in the country, including MIT, Stanford, and Harvard. MOOCs were exciting and the hype surrounding them was persuasive, but almost as quickly as they burst onto the scene, they fizzled out.
Unlike MOOCs, OPMs are poised to live up to expectations, according to Hill. That’s because they are more complex and changing more slowly than MOOCs, so they are turning out to be more important.
“Now, with OPMs, it seems that disruption is the main byword.”
For one thing, the OPM market is more mature. It began more than twenty years ago and initially focused on infrastructure hosting for online platforms, then moved to programs in very specific disciplines for numerous less-prestigious regional universities across the country. Hill says the general higher ed system responded with an attitude of, “Okay, we get you’re doing online and that’s not really education, so go play in the corner by yourselves.”
The OPM market was seen as a sideline for its first ten to fifteen years—an alternative to for-profit sector organizations such as the University of Phoenix that also helped traditional colleges and universities operate in the online space. Growth was slow until about 2010 when having an online presence became something hundreds, if not thousands, of institutions decided to pursue.
This newly competitive arena is how the OPM market has been disrupted. Regardless of how institutions get into the market—by doing it themselves, by using a fee for service, or by partnering with OPMs—the result is no longer a mere sideline to the education mission; it has become mainstream.
The Bellwether: 2U
On the other hand, knowledge of the disruption found in the OPM market itself can help guide leaders, as well. Hill says that ten years ago, when online education started hitting, the center of the market part was 2U, which focused on developing an elite customer base by going after big-name schools like USC, UNC, and Syracuse—“poster children” for tuition revenue sharing models.
2U has faced major changes recently. First, it realized that the competition between institutions was changing the enrollment dynamics, as online offerings meant students could attend virtually from anywhere in the world. In addition, 2U last year acquired edX, one of the two major MOOC forums and one of the three major MOOC providers. Now, 2U is essentially seeking to become an online platform company and create the generation of OPMs.
This entails going beyond (mostly graduate) degree programs and into offerings such as free courses, bootcamps, short certificate programs, and more. edX brings tens of millions of registered students to the table, and now 2U can market to students at a much lower cost while saving money on sales and marketing efforts.
Another big change other is the current uncertainty in financial markets, which has caused the stock prices of these companies to fall significantly. As a result, these companies can no longer afford to focus on growth; they must also focus on profitability in order to stay in business. 2U has laid off 20 percent of its workers across the country in order to achieve profitability, for example.
The whole OPM market is either dealing with these issues today or will have to deal with them soon, according to Hill.
The Demise of Zovio
Disruptive market forces also have led to the demise of online education provider Zovio, Hill says, and it’s an excellent case study that leaders should study and learn from.
“Magical thinking doesn’t work. Creating an online program will not solve your long-term issues.”
Zovio was the parent company of the for-profit Ashford University, which was sold to the University of Arizona as a nonprofit conversion. However, as part of the deal, Zovio remained the OPM with the long-term contract to do the majority of the same work it provided before. Zovio’s ill-fated perspective was thinking that the very fact of becoming nonprofit would reverse its long-term enrollment declines and shore up its finances—but the university also believed the agreement would do the same.
While an online presence can benefit an institution if there is a significant investment and sound strategy, the result, in this case, is that Zovio is about to be sold for parts and go out of business entirely.
Issues to Watch
Accreditation and Regulation.
Hill doesn’t expect 2U and others to try to get accreditation in order to offer their own programs. The model of doing their business through college and university partners, with the institutions doing the teaching and holding the accreditation, will likely continue.
One exception, however, is 2U’s purchase of Trilogy, a provider of online bootcamps. While this means 2U will provide the teaching, bootcamp programs do not lead to an academic degree and thus do not require accreditation. If this accreditation requirement changes, then 2U will be forced into making a choice regarding continuing on that route.
While many similar changes are being discussed that could impact OPMs, Hill says the main general area for leaders to watch is oversight. Accrediting agencies, the U.S. Department of Education (financial aid), and universities themselves have not done a good job of evaluating the quality of online course programs and determining the future direction of OPM-based programs.
Hill expects this to emerge as a topic of public concern. For one thing, the Biden administration will continue another two or six years and tends to be more regulatory than Republican administrations. This administration has a strong consumer protection mindset and thus is looking at any and all ways to influence the market.
Institutional Governance and Marketing.
Gone are what one of Hill’s vendors termed the “deans gone wild years,” when individual colleges made decisions regarding tens of millions—if not hundreds of millions—of dollars without review and approval by the central administration. The result is hundreds of programs, such as online MBAs, that compete against each other.
“Five or ten years ago, the mentality was to get in-game with online programs so the money and enrollments would start flowing, and you can figure it all out later. The time to figure it out is now.”
In addition, knowing and promoting their specific core competencies help institutions recruit students—even more important with the years-long enrollment decline nationwide and the so-called demographic cliff awaiting higher ed in another two or three years. Adopting a business mindset of thinking about strategy, positioning, and core competencies (including what parts of what OPMs provide should be a core competency of the institution) helps institutions be more competitive in a crowded market.
Risk Management.
While the online education market is growing and is crucial to the future of higher education, that does not mean that online education providers are profitable. In fact, most are not. They were built on a financial platform based on growth: take on debt, invest now, and have losses today so the company can grow and turn a profit over time. This is no longer sustainable, and several companies have begun employee layoffs.
On the university side, it means that leaders must carefully consider risk management – entering a long-term contract with a company that may not last the duration of the contract. And risk management and oversight are the responsibility of the administration and board, respectively.
Even if an institution is happy with its OPM, Hill advises a regular strategic review. This ensures that what is in motion still aligns with the school’s mission and its path forward. Leaders should make sure that the agreements in place are still what is needed. Defining your needs and strategies along the way will prevent a crisis in the event an exit strategy is needed.
Resources
About the Host
Dr. Drumm McNaughton is a Higher Education Consultant, CEO of The Change Leader Consulting Firm, and an international leader in transformational change for Higher Education.
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