Innovating the Higher Ed Business Model:

with host Dr. Drumm McNaughton and guest Melik Khoury | Changing Higher Ed Podcast 094

Table of Contents

Innovating the Higher Ed Business Model

Traditionally, higher education has relied on the model, which was based on elite institutions that were fully funded by religions, endowments, or government. The entire governance structure and approach were designed as if institutions of higher learning were the only keepers of knowledge. When higher education expanded to serve more students, the traditional model was mass-produced with few changes. However, this model could not be funded appropriately by the nation or states, resulting in many institutions being in financial turmoil.

Unity College is innovating the higher education business model and breaking this mold. The institution has adopted a new eight-term educational model that decentralizes operations and gives deans and departments the freedom to design specific programs to meet student and client needs. This approach has in the institution’s enrollment jumping from 800 FTEs to 1800 FTEs in a year.

Dr. Melik Khoury, president of Unity College, has used his own experience to help set the vision and guide this transition. He was a non-traditional student who had the opportunity to get higher learning, but since he went through his undergraduate program, there have been few changes in higher education, especially in terms of graduation rates, affordability, and flexibility. Additionally, with the advent of technology and increasing environmental issues, too many students still are not successful and have real access.

Khoury used reverse engineering by looking at his own experiences and education and then talking to others. He had worked in almost every department in higher education and wanted to put the problem ahead of the tradition. To do this, he spoke with others and was able to gain feedback from a variety of people to identify the core issues with the traditional models that he believed were limiting success. One of his big discoveries was that while colleges differ, they attempt to run on the same business model, and the model does not like to change.

Transforming the higher education business model to support students in a very fast-paced and adaptive world is critical. However, higher education has not been trained to change; instead, it has been designed to maintain the status quo and trained to protect this way of operating. It’s easy to blame faculty, staff, and administrators; however, the higher education system wasn’t designed for the current environment. In a recent post, we looked at a new higher ed business model that targeted the value proposition; this podcast takes a different approach to innovating the business model.

Expanding Educational Equity

Many institutions view equity as being the few lucky students who get full scholarships. Instead, there needs to be a scalable higher education enterprise model to help any student who wants and deserves an education achieve one.

The concept of equity transcends affordability as well as culture. Higher education needs to change so that students are no longer required to leave their families and spend four years in isolation with some internships before returning to the real world. To remain viable in this current age, higher education needs to shorten the time requirements between attending school and earning a living.

Society has created a false dichotomy that individuals are either learned or career-ready. Instead, higher education innovation should combine both theory and application. This makes an employee, citizen, and constituent ready to face current and future issues such as technology, global unrest, climate change, and the pandemic. To accomplish this, students need to be able to choose their path instead of being prescriptive of using one approach that is valued over the other.

Higher Ed Business Model Restructuring Efforts

To make its shift, Unity College went through a multi-year process to understand its mission and curriculum. Discussions helped the college community realize that its mission as America’s environmental college was very relevant, but that access to the curriculum was restricted to traditional students who were looking for a residential model. This approach wouldn’t allow the college to serve different audiences, such as adults. Additionally, telling faculty experts that they were going to need to change their pedagogy and technology wasn’t fair.

To create a culture of innovation, the college created an enterprise model that is comprised of four sustainable education business units (SEBUs), each contributing to the value of the college as a whole. This structure encourages departments to really focus on building programs that appeal to a specific kind of student. The four SEBUs are Distance Education, Hybrid Learning, Technical Institute for Environmental Professions, and Sustainable Ventures.

The strategic plan called for identifying a specific audience, determining the program that they need, identifying the modality that will be used, and then building the program for that audience. This created a customized approach where services are tailored to meet the needs of the department’s students; additionally, the department doesn’t have to compromise what it wants to fit into the college structure.

  • Distance education is 100% online; its audience is the adult learner looking for a career change. Students can earn Bachelor’s and Master’s degrees, plus non-degree credit courses and micro-courses.
  • Hybrid learning is a blend of online and face-to-face; its audience is the traditional student who is coming from around the country for experiential learning. Students can earn Bachelor’s degrees.
  • Technical Institution for Environmental Professions is a mix of in-person and online learning; its audience is students looking for a career-ready education. Students can earn associate degrees, certificates, and continuing professional education.
  • Sustainable Ventures is a mix of in-person and online learning; its audience is students looking for education in sustainable businesses. Students can earn Bachelor’s and Master’s degrees, plus non-degree credit courses and micro-courses.


Each of these initiatives has its own faculty and staff, tuition, and calendars. This approach allows the college to easily pivot because it gives the department the flexibility to meet the needs of a specific group of students while the enterprise ensures brand equity, support services, and accreditation. 

This approach has allowed the college to move business model innovation faster while still having institutional guardrails that ensure that efficiencies and effectiveness remain in place. To be successful, the college realized it did not need to add more majors. Instead, it could change its schedule, pedagogy, tuition model, level of support, and kind of experiences for each student population—while understanding that some populations won’t care to have those same experiences.

Additionally, the college serves clients. The SEBU Sustainable ventures have several large areas that can be used for an eco-friendly event space.

Building a Sustainable Business Model

Pilot programs are problematic. Once they are successful, colleges often push it back into the traditional higher education business model where the new innovation cannot thrive. By using Unity’s model, the new programs never have to be integrated; they stand on their own. The college gives these new efforts three years to break even unless it’s supported by a major grant or donor. The employees can also shift to other efforts if the new program doesn’t work.

This approach has changed the mindset of the SEBUs and created a deeper understanding of the value of investment. Sometimes in higher education, tuition-driven institutions despise revenue generators, but by allowing each group to measure its own financial independence, Unity College can identify loss leaders. This has changed the culture from one of diplomacy to one of meritocracy.

This approach also has caused the college to move away from committees and instead embrace task forces. Instead of the right of veto, work is done through engagement and executive decision-making at all levels. Deans engage faculty and staff on projects, solicit feedback and then make decisions. This new approach required the college to make an investment in training and support of management because most in higher education don’t have this type of training.

Unity College leaders expect that new models will be created because each group has experience with different pedagogies. Additionally, the college has appointed a president of the enterprise model, who oversees the centralized functions. As a private affiliation, Unity’s future lies in not only building these efforts, but outsourcing its expertise to colleges and businesses that do not have the infrastructure, bandwidth, technology, or time to build it for themselves.

This approach mirrors what happens in corporations that have different divisions. Higher education institutions are no different, in that they have limited liability, are governed by a board, and have an enterprise that serves individuals.

Accreditation and Governance Support

The New England Commission of Higher Education (NECHE), the institution’s accrediting body, has been very supportive but also wants to make sure that the right controls are in place. Unity’s model means that everyone at the college serves as auditors for the effort. Additionally, Unity could potentially take one of their divisions and open it up in a different location as an accredited institution.

Governance has sped up significantly through using task forces. This approach removes the political nature of the work as well as the use of social capital as the currency. This also gives specific individuals responsibility for making decisions as well as accountability for the decision. Unity has identified the role, scope, and authority for each project.  

Benefits of Innovating the Higher Ed Business Model

Unity is positioned to have 2500 students by next June, up from 800 two years ago, if nothing changes. This is partially because students are interested in environmental science careers, but also because more prospective students are finding Unity College to be both affordable without large student loans and doable without putting their lives on hold. For example,

  • The student’s average age has moved from 19 to 30 over an 18-month period.
  • Diversity has gone from 8-10% to 20%–and it’s still growing.
  • The college used to enroll a small percentage of military veterans, but that group’s enrollment has grown to around 10% and growing.


Many juniors and seniors are being able to be employed full-time but still able to attend school. This is made possible through Unity’s calendar and flexible options that include remote learning.

Three Recommendations for Higher Education Leaders and Boards

  • Decide whether the institution is driven by philanthropy, tuition, or supplements. Once you have decided which is the primary lens, assess the documentation and bylaws to see if some of the processes work in opposition to the goals.
  • Be brave and create a system that is not based on fear. Leaders need to stop thinking of themselves as political figures and instead as a steward of students and their families.
  • Never put the tradition ahead of innovation. Trying new things is critical, and failure will happen. Nevertheless, invest in innovation.


Dr. Drumm McNaughton provides governance consulting, strategic planning, implementation, change management consulting, and accreditation consulting for higher ed institutions. 

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