A President’s Perspective on Scaling for Growth
Last year, RNL focused graduate and online thought leadership on “Owning and Transforming Your Online Success.” Over the course of the year we offered a series of webinars, workbooks, and guides seeking to provide institutions with the building blocks necessary take ownership of their online future.
In 2023 our theme is “Scaling for Growth.” Why? Every bit of data we can lay our hands on indicates that online education remains the part of the higher education market with the most untapped potential. So after helping institutions take ownership in 2022, we want to help them scale in 2023.
This becomes particularly important as we see the online education market becoming an increasingly local one. Over the last several years, researchers have been documenting the proportion of online students who select an institution within 100 miles of where they live or work. This is quickly shrinking to a 50 mile radius as online education takes the place of any number of past practices aimed at offering students flexibility and convenience. As I write, RNL has a survey in the field that will document just how local this market is becoming (look for that data in June.)
At our recent Graduate and Online Innovation Summit, I had the pleasure of having a conversation with Dr. Susan Aldridge, who led repeated successful scaling efforts over the course of her career. While president of University of Maryland Global Campus, she developed their first online master’s degree in cybersecurity (you can read her excellent white paper on how she did this). In only a few years, this program grew from zero to well over 1,000 graduates annually, and this is just one example of the many times that she was able to scale for growth throughout her career. Susan is a gifted communicator, unafraid to tell the true.
Here is a video highlight of our conversation, followed by a transcript of what we discussed:
Dawn: Before we get into details of scaling for growth, how do you view the higher education landscape of in 2023?
Susan Aldridge: In just the last two years there have been over 80 college or university closures, and in this post-pandemic environment, with the COVID funds that sustained a number of universities ending, we’re looking at the real fiscal challenges at some of our institutions. There are more than 500 institutions that fall into the “watch” category of financial distress. That isn’t a small number. University presidents and senior leaders are also looking at the fact that high school graduation rates are dropping off a cliff in many geographic areas over the next couple of years. Presidents are looking at the impact of the convergence of factors, and the strategic directions they should take to firm up their financial future.
I believe that every institution can be successful in diversifying their revenue streams. Each institution has an opportunity to grow, but it can’t be done by making decisions based on campus politics. Sustained growth and revenue can only occur in a data-driven, market-driven environment. This requires executive decision-making discipline. I don’t want people to be discouraged by all the headlines. Be realistic about the fact that critical decisions now are going to either positively or negatively impact the university in the future.
Dawn: What do you make of the recent analysis that indicates that the data we’ve all been working with to “size” the online market has been undercounting students who choose to enroll in online programs by as much as 6 million students?
Susan Aldridge: IPEDS’ most commonly used data (fall snapshot) only reports fall semester numbers. This has made it challenging for us to get a full picture of the total online market – since online students are less committed to starting in the fall than the traditional audience. These starts throughout the year are especially challenging for CFOs who have been used to revenue projections based on (relatively) steady enrollment numbers built off the fall term.
The most successful universities bring in new students at multiple intervals during the year – 3, 4, 5 times a year. So the later the terms start, or the more terms students have to select from, the more nervous CFO’s become because the question is whether the university is going to generate the revenue to support all those expenses that have already been incurred during the year.
At my institutions, we reported the numbers every single term (with 6 starts per year). Every term, we reported the revenue for that term, and benchmarked against the budget and against the previous term, and the previous year. This gave our CFO and the Board a comfort level about the projected revenue results.
Dawn: You mentioned revenue, so I’m going to ask you about that. Over the years you and your teams have generated revenue of over 3.5 billion dollars in the adult student and online market. What are the key factors that lead to scalable growth on a campus?
Susan Aldridge: Know your institution’s assets! That is the most important ingredient for success. Every institution is known for certain academic programs where you’re ranked fairly highly in the country. Most universities have key employers in their service area. Focus on those areas as you plan your growth strategy. I was just talking to an institution that wants to launch 100 programs online. I gasped and said, “60 percent of those programs are not going to generate sufficient revenue to cover your costs. So are you going to subsidize all those programs and disappoint the colleges, the faculty, and the university, or are you going to focus on the programs where there is market and the ability to cover your costs?”
To successfully scale, there are several things to keep in mind:
- Focus on two or three programs (not more than five) where you can build on your institution’s brand and reputation. Make significant investments in those programs to become the best, and then be prepared to scale them. And when I say, “Scale,” I don’t mean 25 students per term. I mean hundreds of students. Why? Because the initial costs/investment are going to be about the same, but in order to generate the net tuition revenue to keep your institution strong, you’re going to want to be able to keep that core curriculum for a few years and really scale that number of students. That is where the greatest revenue and the greatest return to the university occurs.
- To keep momentum going is to continuously innovate. If you’re not upgrading/updating your selected online growth academic programs every two years, you’re behind the market.
- Know your differentiators. Let’s take UMUC (UMGC now.) Cyber wasn’t something that naturally came to mind before we launched the first online master’s degree program in the country. But thinking about differentiators brought us to this subject. We had strong computer science programs. We had a close relationship with the US military and service members. We had faculty strength. We could recruit new faculty in that area, but cybersecurity wasn’t something that we were known for. So we went out to specialists in the field. I created a think tank with some of the smartest military, corporate and government cybersecurity experts in the country, and we built the programs based upon our close alignment with military, government and corporate demand.
- Work with companies in your region and make it attractive to them to work with you. Another part of the success of our cybersecurity programs was that we partnered with employers in our own backyard. If there are large companies in your service area that you can go and talk to about this, online is an asset for them. They don’t want their employees leaving billable hours. Their worst fear is you’re going to take them away from their day job, put them on a campus, and then productivity at the company is going to decline, or you’re going to have full semester programs, and the students aren’t going to be able to obtain the credentials for years. Building on online as an asset, as well as the ability to create some shorter terms to give them the skills that they need, is vital. Know the academic strength at an institution and build on the brand. It is a little controversial sometimes because institutions like to let everybody play ball in this space. There will only be a scalable market for a small number of programs.
Dawn: I’m a huge believer in using data to make decisions. It seems like many institutions could benefit from bringing more market data into their decision making processes. This is one way to take the politics out of decisions to say yes to some programs and no to others. What are your thoughts on using data as a component in scaling for growth?
Susan Aldridge: Market research is critical for success, but it must be conducted outside of the college proposing a program, and it must be conducted by market experts as an initial step in screening a program proposal, not as a later step to confirm a decision. Typically, institutions require that a program proposal should be submitted, and this often includes market research surfaced by the program directors They are not market researchers and as such this often amounts to little more than documentation of potential competitors. These proposals then go through academic committees and the faculty senate. The data included in the proposal is often insufficient to demonstrate real unmet market demand and is often used to confirm a decision made on other factors rather than to underpin a yes or no from the beginning. Every program launched will either become an asset or a liability to the university.
Faculty program directors and deans know their department costs but are not experts in SEO, market segmentation, organic search and digital advertising costs. They are not aware of how much advertising costs, and hundreds of thousands of dollars are wasted when they don’t use market data from the beginning of the concept. When programs are launched without solid market data and then do not perform adequately, program directors often assume that not enough money was spent to ensure success. After all the money invested to create the program, it is hard to say, “there isn’t a market for this program”. And it’s difficult to take programs offline once they’ve already launched, so it’s better to use the data upfront and suffer the pain and disappointment initially than waste hundreds of thousands of dollars that, quite frankly, universities don’t have to waste. These wasted dollars are preventing the university from making a real financial investment in the programs that are scalable.
Our conversation continues next month
I will post a second part of my conversation with Susan next month where she will answer the following questions:
- How do you bring people along to make change happen?
- How do you think the changes in the higher education market – declining enrollment in undergraduate and growing enrollment in graduate and online programs – going to be embraced by institutional stakeholders?
- What are the differences between institutions that want to change and move forward and those that do?
You can also reach out to RNL for a complimentary consultation. We can discuss your challenges, goals, and strategies that can work for you.