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Jan5Written by:Nathan Greeno
1/5/2010 6:18 AM  Its a new year. And a new theme is already in the web atmosphere of discussions within higher education. How do you cope with more students and less money?
It comes down very simply to business modeling, or what we call business acumen. In the simplest terms, if you were producing widgets at a loss, gaining more sales would just put you deeper into the hole financially. It actually would become a disincentive to grow. The longer this situation persists without being addressed the greater the vulnerability to failure. Often instead of addressing this with rethinking the business model, higher education responds with across the board budget cuts leading to morale problems especially in your high performing work units.
In the business world, we call that closed systems thinking. A closed system is one where the mentality is that the "pot" is limited and finite. When that is the approach, cutting budgets is the rational response....but leads to no future.
Alternatively, open systems thinking leads to new opportunities and new growth that does not rely on the current modeling. The "pot" becomes bigger, however, one must understand the nature of the modeling before growth. As stated before in the widget example, a larger pot of the same can lead to disaster.
To begin this analysis, higher education needs to determine the actual cost per student. How much does it cost to produce the widget? This is comprehensive and includes marketing, recruiting, facilities, administrative overhead, faculty and services....for starters. Without loosing a sense of "mission," higher education must look at alternatives in the nature of the widget, not just cost cutting efficiencies within its current system.
Many of our partner institutions embrace a targeted enrollment perspective that begins as a test bed for a new breed of enrollments. The Adult student represents that new breed. Online education often represents part of that equation as well, but minimally speaking, evening classes in existing facilities can be a start.
The Adult student doesn't require the facilities and services overhead that are required by traditional students. Combine that fact with the soon to be reality of Adult students representing 51% of all higher education enrollments and you begin to have an open system style of thinking leading to a new business model where the cost per student per credit creates a profit margin within a non-profit institution.
Before I get accused of losing a sense of the mission driven purpose of higher education, let me close with this. Solid business acumen leads to profitability. This profitability affords the institution the opportunity to pursue mission and extend mission. The two go hand in hand.
In this new year of 2010, I encourage you to take a serious look at how you are approaching and investing in targeted enrollment growth. The right enrollment growth combined with the right business modeling leads to more students and more money. For most of us in higher education, that is a win/win approach.
Nathan
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