In this episode of Changing Higher Ed Podcast, Dr. Drumm McNaughton shares a conversation with Dr. Stephen Standifird, the President of Bradley University, where they discuss successful turnaround strategies and innovative changes that have created a path for longevity, success, and sustainability for Bradley.
Over the years, constant growth in the demand for higher education created a rapid expansion of institutions. The number of colleges and universities currently is around 4,600. In comparison, there are roughly 4,600 Dairy Queens in the United States. That means that one is as likely to run into a college or university as a Dairy Queen when traveling the country.
By any measure, higher education is a saturated market with declining demand.
Until about 2010, the higher education environment saw a consistent growth of enrollment; as a result, the industry has adopted the mentality of “If we build it, they will come.” This resulted in higher education losing its ability to become market-centric, and its leaders do not understand what today’s students are really looking for.
The CARES Act, although well-intended, hasn’t helped institutions recreate themselves or adapt to the changing environment. Instead, many higher education institutions are using these funds to delay the inevitable by returning to “normal.”
It is naïve to think that everything will get “back to normal.” Instead, this is an opportunity for higher education to think differently.
Bradley University’s current transformation, which is grounded in the organization’s founding in 1897 by a successful and cutting-edge businesswoman, involves thinking differently through adopting a mentality for turnaround strategies and long-term success. This involves considering how the institution can function differently and become more aggressive in some areas. They realize that these changes in the higher ed environment create an opportunity to think differently by truly understanding and designing programs focused on the needs of today’s students.
A Successful Turnaround Means Becoming Customer-Centric
The key part of Bradley’s turnaround strategies is becoming customer-centric. If institutions don’t understand what the market is looking for, they won’t survive short-term or long-term in today’s uncertain and ever-changing environment.
Bradley sees its customer as the students, who fundamentally make the decision to join or not join a college or university to pursue an education. The opportunities that they have after graduation are a pull-through, which influences student decisions, so higher education institutions need to pay attention. However, by following the money and determining who the institution serves, the answer ultimately is the students.
Bradley doesn’t use the term “student” because it comes with baggage. Many think of a student as a typical 17- or 18-year-old entering college. However, Bradley’s students come in all shapes and sizes–including online students, graduate students, continuing education students, and students involved in lifelong learning – so the institution opts to use the term “learner” instead.
This effort to think differently was incorporated into Bradley’s strategic planning process, which differs in approach from similar efforts often seen at other colleges and universities. The process started with talking to 1,600 prospective students to identify what they were looking for in higher education. This approach helped Bradley’s leaders see how they needed to think differently in designing programs to prepare today’s students for success.
One of the takeaways of this survey (which polled online, graduate, and undergraduate students) is that they are looking for a life of meaning and purpose. This has transformed Bradley’s thinking so that everyone realizes that while careers and majors matter, it’s only part of the pie. Instead, the university focuses on helping students achieve the life that they want.
That requires breaking down disciplinary boundaries. Bradley’s leaders believe that their job is to invite students to identify many potential doors that are possible in life and then give them the skills to be successful. This requires exposing students to the opportunity for diverse ideas, both in the curriculum as well as in intense experiential opportunities.
Successful Turnaround Strategies Include a Different Approach to Finance
Higher education tends to focus on costs. However, experts in turnaround strategies believe that cash is king and that the way to increase financial well-being is through investment. Prior to Dr. Standifird’s joining Bradley, the institution did not measure cash flow. Now the institution measures that weekly, so the institution knows where it can make investments. Therefore, it’s important to know the amount of cash available, instead of only focusing on deficits.
Unlike many colleges and universities, Bradley is doing well financially, thanks to their new CFO who came from the private equity world and has no previous higher education experience. Her background is an asset – she isn’t constrained by traditional higher education thinking. Additionally, she has built a great partnership with the provost and is able to question why the institution does certain things. This relationship has caused the provost to be more reflective and to consider if there are other alternatives to the way it “always has been done.”
Innovations in Governance Produce Higher ROI
There’s a big difference between input and decision-making in higher education shared governance. While faculty input is important in creating a new program, other decisions – such as debt restructuring – do not need faculty input. It’s important to understand where the boundaries exist between decision-making, accountability, and being informed.
A well-designed higher ed governance process needs to be flexible and move fast. For example, Bradley’s strategic planning process takes months, not years. Ultimately, the board approved the strategy. While there was controversy around that initially, this approach helped the institution move quickly. Additionally, everyone realized that the institution was moving in the right direction and the rapid rate of speed allowed Bradley to do things that it otherwise wouldn’t have been able to do.
Bradley’s efforts also involve improving instead of destroying processes. For example, Bradley introduced a new program approval process that flipped the traditional approach of engaging a curriculum review process before sending proposed programs to the administration. Now to get a new program approved, the president, provost, and CFO must first approve the proposal. It also must have a profit/loss statement and show a return on investment in three years. If it doesn’t have an ROI during that timeline, the proposal has a natural sunset clause built into it – the program is put to bed.
This gives faculty the opportunity to be creative to try things when developing profitable programs. The administration can then review and determine if they support a program before it goes through the academic curriculum review process. This helps ensure that faculty don’t waste their time on programs that won’t be launched.
This new process has worked very well, resulting in the approval of three new programs in three months. More importantly, the new process showed faculty that once administration had approved a proposal, they were serious about supporting it. This process also helps the institution become more dynamic to meet the demands of today’s students.
Bradley’s governing board also has been supportive of these efforts. Board members come with a variety of skillsets, including marketing, finance, and other unique perspectives, which allows them to offer more meaningful input on key decisions. Additionally, the board agreed that it needed to own the strategic planning process. There was no faculty vote on the strategy; instead, only the board voted. This gave them accountability and made them partners.
Deans Embracing Innovation and Responsibility Shifts
Higher education’s fear of failure often gets in the way of innovation, and one way to get over that fear is to reframe failure as a learning opportunity. It’s also important to align incentives to encourage people to be aggressive and take risks. For example, Bradley will introduce an incentive-based budget process in 2022. Each college dean will be responsible for their own P&L, which gives them permission to experiment by providing them the resources to do that. This approach also creates accountability.
During the past year, the changes in the institution’s financial reporting processes have encouraged college deans to adopt a new way of thinking.
For example, Bradley will continue to have a music program, even though it is expensive to run. However, the college that houses the music program also houses communications majors, and the dean who runs that college knows that if there are more communications majors, it’s easier to financially support music. Now because the decision-making process will be at the college level, the dean and their leadership team can make that type of decision. When this decision-making process incorporates accountability and authority, the university can be creative in how it tackles these issues. Additionally, this approach turns everyone across the university into partners in thinking through this process.
The deans also will be involved in the enrollment process and their P&L will drive their interest in being engaged. They will realize that if they don’t offer the proper programs, they won’t get the enrollments they need. This is how deans become advocates in the enrollment process and create a sense of shared purpose across the institution.
Three Recommendations for Higher Education Leaders and Boards
- Change in higher education is happening and things are not going back to normal. Recognize that the shift is here to stay.
- Humans tend to put more emphasis on loss instead of gains. Higher education leaders should not see this shift in higher education as a loss but as an opportunity to shape colleges and universities in a way that has never existed in over 100 years.
- To do that, higher education needs to become more market-centric and realize that the industry is not about us; it’s about the people that higher education serves. By deeply understanding and serving the needs of students, the future of higher education is very bright.
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Dr. Drumm McNaughton is a higher education turnaround expert helping colleges and universities create sustainable success.