The business of higher education

Posted on June 28, 2009 by

Lots of institutes of higher learning have been attempting to emulate various corporate business models for the past several years. Having spent a large number of years in and around higher-education; but with adequate cross-polination in the ‘real world’, I find this fascinating, but likely somewhere between futile and fatal — and not just for any one institution, but potentially for the US higher-education system as a whole.

It sounds good on the surface, but the number of caveats are so vast that I’m sure many, many people will be able to base dissertations on the topic over the next couple of decades. But all the details are inconsequential since the fundamental principle is invalid.

HigherEd institutes are not businesses. They do not operate with the same parameters of a business. They do not have ‘customers’, in the traditional sense. They do not generate profits, nor losses. They do not have investors. They do not compete in an open market. They are not free or able to enter new markets. Now, certainly arguments could be made that students are customers, donors are investors, etc. etc. but in the end those are all just analogies, not realities. Likewise businesses do not have to operate with the same constraints that most (public) universities must.

Trying to wedge them into that model, and actually record profits/losses, take on investors, etc. would ultimately result in the demise of their basic function (That’s education and research, for those that have forgotten). Why? Because education (and research, I’ll get to that later) is not a commodity, and its value is intangible. Research can, of course, have tangible value, but research and invention do not occur in a predictable or measurable manner. That is, it one might spend 20 years and $100M developing a blue LED, only to have another institution develop a superior device in 6 months. Now, I know you can ‘measure anything’, but not all measurements have value, and if everyone isn’t using the same unit of measure, well, just ask the ESA Mars Probe team what happens.

That said, wholly commercial educational institutions already exist, e.g. university of phoenix, Sullivan, etc. And to a certain extent they have been around for decades. They haven’t caused the academic community to collapse by any means, though many would argue that they have cheapened the overall value a college degree. But if traditional institutions attempt to fully commercialize higher education, that will leave the door open to experienced aggressive corporations to step into the business. I can only imagine what the future graduates of the MicroSoft University system will have learned, but I don’t like it.

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