CBOs Consider the Academic Enterprise
New at this year's annual meeting was a package of sessions created specifically for chief business officers that reflect the strategic nature of their positions. In these sessions, CBOs found thought-provoking perspectives and voices on higher education as an industry.
Facing a New Reality
Because of the financial crisis of the past year, “the social contract is being renegotiated,” said Morgan Olsen, executive vice president, treasurer, and chief financial officer of Arizona State University, Tempe. “It's critical for us to aggressively restate the case for higher education to the public.”
Olsen joined with Yoke San Reynolds, vice president and chief financial officer of the University of Virginia, Charlottesville, in the first CBO-specific session. Moderated by Kai Ryssdal, host of Public Radio International's business program, “Marketplace,” the panel and audience engaged in a wide-ranging discussion that included the financial future of universities, new models for delivering higher education, and the accelerated pace of change.
“Is it time for the painful questions?” asked Ryssdal. “Do we need to revisit the image we've always had, that if you want to go to college, you can?”
One answer might be to “target the right kind of education for each individual student based on aptitude,” suggested Reynolds. Olsen noted a proposed new model in Arizona that would provide a lower-cost undergraduate education without “frills.” He also said the future for community colleges in this country is “probably brighter than it's ever been.”
Also examined was the role of the research university, whether it's a sustainable model, and what its relationship should be to undergraduate education.
“We're a fundamentally capital-intensive industry,” Olsen said. “We have federal stimulus money for the next year and a half, but what happens after that?”
Clarifying the Nature of the Academic Enterprise
“Misinformation about higher education can be costly for individual institutions and for the academic community as a whole,” said A. Lee Fritschler in his presentation “The Cost of Culture Wars in Higher Education.” Professor of public policy at George Mason University, Fairfax, Virginia, Fritschler has focused specifically on the accusation that higher education institutions “are closed to new ideas and are hotbeds of liberal thinking.” This widely reported perception was the impetus for Fritschler and coauthors Bruce L. R. Smith and Jeremy D. Mayer to research and write the book Closed Minds? Politics and Ideology in American Universities (Brookings Institution Press, 2008).
Research for the book showed that three main factors related to the politics and ideology of higher education: the fact that for decades higher education was considered too conservative; the overall increase in diversity and inclusion in American society; and growth in the participation rate in higher education (75 percent of high school graduates now go to college). The authors' conclusion: “Higher education has become a mirror of our diverse society.”
Responding to the Recession
In the final of three CBO-specific sessions, “Higher Education as an Industry: How Do Analysts See Us?,” Paul Jansen, a partner with McKinsey & Company's Nonprofit Practice, discussed the recession's impact on higher education. Specifically, an institution's near-term success through the downturn will be influenced by the strength of its funding sources and by demand for its programs, said Jansen.
He noted three primary strategies being taken by colleges and universities in response to the recession, dependent in part on a particular institution's financial health heading into the crisis.
- Bridging—Make only the necessary cuts to get over the hump.
- Don't waste a good crisis—Use the opportunity to take on sacred cows and lower costs. Be aggressive early since you don't know how long the crisis may last.
- Through cycle—Shift resources to strategic priorities. Look to exploit the weaknesses of competitors to acquire new talent and customers.
While we remain in a period of tremendous uncertainty regarding the national and global economies, the good news is that overall demand for higher education will not only remain strong but will grow, said Jansen. Also certain: The higher education institutions most likely to emerge strong on the other side are those that maintain flexibility, awareness, and resiliency through the recession.
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