By Heather O’Leary, Principal Analyst
The call for greater innovation in higher education has reached a fever pitch – with numerous commentators, researchers and government officials – including President Obama – contributing to the conversation. With few exceptions, traditional colleges and universities in the United States are viewed as resistant to change and ineffective. Additionally, schools are criticized for reducing the rate of tuition increases and for not doing more to rein in costs. Rightly, or wrongly, much of higher education is not viewed as proving the value or outcomes expected by an increasingly savvy student population and their families who help contribute to their education. Rather than innovating across the value chain, colleges tend to respond to this demand for innovation by increasing their discount rates and moving into new markets all while continuing to primarily do business as usual.
The Good News
With all of this criticism, and the admittedly slow pace of innovation in higher education, it would be easy to throw up our hands and feel hopeless. Yet, I would argue, there is cause for optimism. If there is one thing I firmly believe in is our power to innovate and change. True innovation happens when we take the best ideas from other industries and apply them in new ways to our own challenges. One of my b-school professors loved to tell the story of Henry Ford – considered one of the greatest innovators of his time and credited with revolutionizing the automobile industry. Funny thing is, Ford didn’t invest the assembly line – he sent engineers to the slaughter houses and had them mimic the methods used to process meat and applied it to building cars. The rest was history and the story of Ford the great innovator was born.
So how can we mimic Ford and his engineers? By taking a look at another well-established industry – wine – and applying lessons they learned to higher education.
The Wine Industry
Wine making has been around for millennia with the traditional “Old World” wine producers from countries such as France, Italy and Spain, dominating the market. That dominance however did not make them immune to external pressures and changes in consumer preferences. In fact, the very structure that originally made these wine producers dominant in the world – embedded wine making traditions, restrictive industry regulations and complex European legislation – eventually became their greatest weakness.
In the 1970s, when New World winemakers from California, Australia and South America, began to innovate around marketing, business practices and operations, as well as grape growing and wine-making, they began to cut into Old World profits and market share. Wine from these New World producers, once considered inferior, began to dominate the global wine market, not only in market share but also in quality and reputation.
Applying this Lesson to Higher Education
There are many parallels we see between the evolution of the wine industry over the last 30 years and higher education today. One key to the success of the New World wine makers involves their innovation around marketing practices, packaging & pricing. This resulted in impressive expansion to new audiences that weren’t typically interested in wine, increasing global wine consumption. We see a similar trend with the advent on online education, including for-profit programs and MOOCS. These online providers took a different approach to recruiting students and developed different delivery and pricing models. One can argue that this expansion brought higher education to a non-traditional audience, benefiting those students and even society as a whole. Yet like the New World producers of wine, the general sense is that this new model of higher education must be of lesser quality.
Yet online education, like it’s New World wine counterpart, offers greater quality than it is generally given credit for. It took the now famous blind taste tests of wines in the mid-1970’s for New World wine producers to be recognized for their quality and not just for their marketing abilities. Arguably, online education also has the potential to surprise its critics and offers a roadmap that traditional institutions would be wise to pay-attention to.
The bottom line is that all schools – traditional and online – need to evaluate how and where they add value. It is no longer enough to assume that the methods of delivery and the support services around them are meeting students’ needs. As with wine consumers, students and their families are seeking out educational experiences that provide higher value at lower cost. There certainly continues to be a market for traditional education, and I am not arguing that will radically change in the near future. However colleges that only focus on freezing tuition or fundraising for additional scholarship dollars without looking more broadly at how to innovate across the value chain will find themselves in an even more unsustainable position. For example:
- Different audiences – underrepresented minorities, high-skill students, remedial students international students – need to be treated differently beyond just differentiated marketing messages.
- Aligning services and the educational experience with not only what is valued by students, but what will benefit students and graduates – and fixing or eliminating those things that don’t.
- Understanding and embracing the different learning styles and approaches so that students who have accessed higher education have a greater chance of completing their degree with the greatest return on their investment possible.
What other lessons could you take away from this example and apply to higher education? Add your ideas to the comment section.