Learning at any cost

Ralph Fernando Agile Strategy, Education, Opinion

Whilst it is true that no person, or sector, is immune from the impact of the Covid-19 pandemic, some are at greater risk than others. Higher education is near the top of the list.

It is estimated that the loss of income to British institutions from accommodation, catering and conferences in the final term and Easter and summer vacations will amount to c.£790 million (see the full report here) . But this pales in comparison to the potential impact on the next academic year. A new report commissioned by the University and College Union (UCU) forecasts a deficit in tuition fee and teaching grant income of £2.47bn for the forthcoming academic year (a quarter attributed to UK-domiciled students). This does not, of course, reflect further losses associated with other major income sources such as student accommodation and conferences. All this is taking place against a backdrop of institutional debt that has more than trebled over the past decade as campuses have been upgraded and international reach extended. Many were struggling to service the debt even before the far-reaching consequences of Covid-19 became clear.

Furthermore, the impact is not just financial and extends beyond the institutions themselves. The current situation creates broader existential risks relating to national and regional skill gaps, rising socio-economic disparities and the UK’s position as a global research leader drawing international investment.

Grant me the serenity…

Faced by systemic challenges of this scale, higher education providers have sought government intervention, both financial and political. The Treasury has been reluctant to single out the sector for special treatment, initially directing higher education leaders to support packages available to the wider business community. On Monday, its view softened slightly, introducing some additional funding to offset projected tuition fee losses. A ministerial task force review is currently underway to determine what further aide may be provided. The sector knows governmental handouts are not inevitable. In the wake of a swathe of potential mergers and insolvencies, some see a potential catalyst for the fundamental restructuring of tertiary education to meet the skill gaps exposed by the pandemic and a future outside the EU.

Universities and higher education institutions must be on the front foot. Like an agile re-imagining of the serenity prayer, they must adapt to the things they cannot change, anticipate the things they can, and possess the data and political savvy to manage both. What should education leaders prioritise?

Survival: Assure short- and mid-term liquidity

It starts, of course, with ongoing financial viability. From financial and organisational restructuring (e.g. debt restructuring; institutional mergers) through to short-term cost cutting (e.g. furloughing) and rapidly introduced revenue-generative services (e.g. online programs), higher education must be broad and bold in its actions in order to ensure survival. Cashflow is the primary lens here; whilst higher education has naturally focused on the immediate cost-cutting opportunities, much less has been made of new potential income sources, in part due to systems constraints. There are, however, a range of options available to launch value-added services and propositions rapidly to market, many of which remain untapped. Furthermore, all these decisions must be made within the context of the broader, and potentially revised, purpose of the organisation, and the defensive and offensive choices it has available to it.

Stabilisation: Mitigate risk through increased “optionality”

There are many fundamental questions driving uncertainty in the sector (e.g. When will students return to campus? How significant will international and domestic deferrals be?). In order to achieve stability in such an environment, an organisation must identify where across its value chain and operating model the volatility and uncertainty will have greatest impact (e.g. rental yields), and then design and put in place “real options” it can trigger at a determined later date if required (e.g. short-term rents to key workers in the local area). A systematic and practical approach to “designing in” this optionality is challenging (e.g. negotiating with suppliers; engaging with out-of-sector partners and customers) but will enable the organisation to capture opportunities and address issues once they become clear.

Strategic Shift: Reimagine yourselves for future growth

Across the many potential future options for higher education in the UK, few do not involve some fundamental reshaping of provision, at least in the mid-term, and in the worst cases over the next few months. Maintaining a richness of perspective will be key to finding innovative solutions and pathways to growth. This can include looking to other sectors for learning, as well as looking outside the UK: other market-oriented education systems such as those found in the US, Canada and Australia face similar threats.

Institutions should not shy away from rethinking their purpose and role in the world, and from being purposeful in gathering the right type of data now to inform future pivots in positioning and proposition. The fact Covid-19 has forced students and institutions to interact entirely online provides plenty of opportunities to do this in ways which strengthen existing and former student relationships and which open up opportunities unique to the organisation.

My book Agile Strategy: How to create a strategy ready for anything, published by the Financial Times, outlines a new approach to managing an organisation through these uncertain times. It is available now on amazon.