Why I ...believe universities should be more like businesses

November 28, 2003

Universities are in trouble - financially, organisationally and strategically - with enormous growth in scale, big uncertainties about future revenues, too many claims on limited resources, organisational sclerosis, low morale and uncertainty about their mission. Most are pursuing too many goals.

What the UK needs is a greater variety of institution, with differentiated strategies, and more models drawn from business. The first step towards a coherent business strategy is to determine who one's customers are. For universities, by far the largest market is learners of different kinds. In a democratic society, the most important function of universities is education. Universities must pursue scholarship and research, but education is the reason society invests so much in them.

The merit of a business model is that it rewards satisfying customer need and focus. Yet few British universities are organised primarily to serve students' needs, and teaching is rarely a core competence. Academics'

priority is publishing; for universities, it is meeting the targets set by the government, their paying customer.

Yet two of the greatest success stories, the University of Phoenix and the UK's Open University, focus rigorously on learners and their needs.

Phoenix's explicit mission is to treat students as customers; the OU's priority has from the outset been supporting adult learners. These principles may sound commonplace but regrettably are not. The single-mindedness with which these institutions have applied them accounts for much of the amazing growth in student numbers - now 200,000 at the OU and 120,000 at Phoenix.

The OU is arguably the outstanding British organisation of the past 30 years. Its innovative business model, multidisciplinary course development and tutor network have been imitated widely overseas. But its core value has been that simple but elusive one of helping learners to learn.

Phoenix is culturally different - avowedly profit-seeking, it does no research and invests less in course development. But it treats pedagogy seriously, which is why it is now a company with revenues of $1.4 billion.

It saw that adults needed something state universities were failing to offer - not just classes at convenient times, but quality-controlled teaching in vocational subjects from practitioners.

Both organisations are lessons in how to execute effective strategies and build powerful brands. They understand clearly what they are good at, market needs and how to meet these. They develop products and services valuable to their customers, focusing nearly all their efforts on delivering these.

Yet both are regularly patronised as not quite being proper universities by institutions that pay scant attention to teaching, so intent are they on producing mountains of research papers. It is surely they who have lost sight of their core mission.

Phoenix's business model is not applicable in western Europe, but there is a strong case for most universities becoming more business-like. Instead of trying to ape what Oxford does and overstretching themselves, they should focus on what they do well, on market need rather than government targets, and on reaching new learner-customers.

As the idealistic OU has shown, universities need not be ruthless capitalists to execute outstanding marketing strategies. The UK needs more pluralism - differentiated institutions meeting different market needs, in distinctive ways. The largest market is surely for organisations focused on the needs of different learners.

The government might welcome that outcome, but its bureaucratic regime of targets discourages it. It should set universities free.

Kieran Levis
Principal, Cortona Consulting

Kieran Levis is a main speaker at the THES -sponsored conference 'Universities Challenged: New Strategies and Business Models' on December 4 in London.

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