15 years to live for old school universities

Digital media have a thoroughly democratizing effect: thanks to the huge availability of high level education online, universities lose their role as ‘keepers of knowledge’. “It’s going to be a tough decade”, said one vice-rectors whom Ernst & Young interviewed for the report said.
The primary hypothesis is that the dominant university model in Australia — a broad-based teaching and research institution, supported by a large asset base and a large, predominantly in-house back office — will prove unviable in all but a few cases over the next 10-15 years.
Worst case scenario
At a minimum, incumbent universities will need to significantly streamline their operations and asset base, at the same time as incorporating new teaching and learning delivery mechanisms, a diffusion of channels to market, and stakeholder expectations for increased impact.
At its extreme, private universities and possibly some incumbent public universities will create new products and markets that merge parts of the education sector with other sectors, such as media, technology, innovation, and venture capital. Exciting times are ahead — and challenges too.
The researchers have summarised the drivers of change of this brave new world into five key trends:
1.Democratisation of knowledge and access
The massive increase in the availability of ‘knowledge’ online and the mass expansion of access to university education in developed and developing markets means a fundamental change in the role of universities as originators and keepers of knowledge.
2.Contestability of markets and funding
Competition for students, in Australia and abroad, is reaching new levels of intensity, at the same time as governments globally face tight budgetary environments. Universities will need to compete for students and government funds as never before.
3.Digital technologies
Digital technologies have transformed media, retail, entertainment and many other industries — higher education is next. Campuses will remain, but digital technologies will transform the way education is delivered and accessed, and the way ‘value’ is created by higher education providers, public and private alike.
4.Global mobility
Global mobility will grow for students, academics, and university brands. This will not only intensify competition, but also create opportunities for much deeper global partnerships and broader access to student and academic talent.
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5.Integration with industry
Universities will need to build significantly deeper relationships with industry in the decade ahead — to differentiate teaching and learning programs, support the funding and application of research, and reinforce the role of universities as drivers of innovation and growth.
The university sector is critical. Universities educate the leaders and entrepreneurs of the future, create new ideas and knowledge, and earn much needed export income. Universities provide opportunities for students of all backgrounds to increase standards of living for themselves and future generations. But, to succeed, universities will need to forge new business models that are dynamic, modern and fit for the decades ahead, so the report says.
The researchers see following ‘escape routes’:
1.‘Streamlined Status Quo’
Some established universities will continue to operate as broad-based teaching and research institutions, but will progressively transform the way they deliver their services and administer their organisations — with major implications for the way they engage with students, government, industry stakeholders, TAFEs, secondary schools, and the community.
2.‘Niche Dominators’
Some established universities and new entrants will fundamentally reshape and refine the range of services and markets they operate in, targeting particular ‘customer’ segments with tailored education, research and related services — with a concurrent shift in the business model, organisation and operations.
3.‘Transformers’
Private providers and new entrants will carve out new positions in the ‘traditional’ sector and also create new market spaces that merge parts of the higher education sector with other sectors, such as media, technology, innovation, venture capital and the like. This will create new markets, new segments and new sources of economic value. Incumbent universities that partner with the right new entrants will create new lines of business that deliver much needed incremental revenue to invest in the core business — internationally competitive teaching and research.
The report concludes: “Faced with this dynamic industry landscape, Australian universities should critically assess the viability of their institution’s current business model, develop a vision of what a future model might look like, and develop a broad transition plan. Deliberations on future models need to include which customer segments to focus on, what ‘products’ or services they need, optimal channels to market, and the ideal role of the university within the education and research value chains. Support functions will need to be streamlined and in some cases fundamentally reconfigured. Regardless of the path chosen, universities will need to align new directions to their institution’s core purpose and values.”
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