Campuses are coming back to life, but that doesn’t mean a return to business as usual. Virus containment remains critical, but so is the need to address the pandemic’s huge legacy of disruption. The financial health of many schools is severely challenged, and neither teaching and learning nor the character of student demand will ever be the same. Campus leaders feel an urgent need to close current budget gaps and develop strategies for the future.
Like so many of us in higher education, I’ve been searching for ways to tackle these problems. My long experience in colleges and universities suggests that most institutions will weather the immediate storms. They are decentralized and filled with smart, dedicated people, which makes them resilient even in bad situations. There will be mergers and closures, but most campuses will persist in recognizable form.
The real question is whether the sector will emerge with enough strength to provide badly-needed leadership for the post-pandemic world, or whether most schools will become less mission-centered and innovative: a result that could unseat them from the special place they occupied during the past century.
The challenge, then, is not simply to solve today’s immediate financial and operating problems, but to do so in ways that launch schools on paths toward future strength and relevance. In other words, out of crisis must come strategy—not just survival. This and my next three blogs will explore how this can be accomplished.
Gap-Closing and Strategy Development
One can hope the post-pandemic sense of urgency will accelerate strategic thinking, but I fear the opposite will happen. Having participated in efforts to eliminate large budget deficits and in multiple strategic planning exercises during my decades in higher education leadership and consulting, I can attest to the different and largely incompatible mindsets that institutions normally bring to gap-closing and strategy development. The Chinese character for “crisis” combines the characters for “problem” and “opportunity,” but the connection does not necessarily apply when there is both a short- and long-term problem.
Urgent needs for gap-closing usually arise when unexpected events produce large budget deficits that must be eliminated quickly—before the school dips too deeply into its reserves. Good strategy construction, on the other hand, requires expansive search and the thoughtful consideration of options by many participants. Pure forms of the two approaches are depicted below. The real world is seldom this tidy, but the diagrams put the contrast into sharp relief.
Quickly closing a budget gap requires campus administrations to identify cost-cutting and revenue-boosting actions that produce results in a year or two, hopefully without incurring intolerable levels of disruption. The box lists some familiar examples. Internal consultation is desirable, but the urgency means that many objections must be overridden. Hence the organization tends to exhibit what Harvard Business School professor John Kotter calls “survive” behavior. Among other things, this means people hunker down and have difficulty thinking strategically.
Constructing a new academic strategy involves searching widely and deeply for opportunities to grow or improve in ways that are sustainable and better align the institution’s programs and processes with its markets and mission. Good planning exercises are highly participative and, while deadlines are important, sufficient time is allowed for thoughtful consideration of alternatives. This triggers Kotter’s “thrive” behavior, as manifested by positive energy, can-do attitudes, and creativity that produce both more and better activity.
Data-Informed Conversations and What-If Testing
Institutional leaders are coming to realize they must move quickly on a budget deficit and, at the same time, significantly revise their academic strategy. There is no time for traditional planning processes, yet to embark on gap-closing by itself risks throwing the organization into survival mode—which may preclude the identification and acceptance of good strategic solutions. How can leaders stimulate “thrive” behavior and compress the planning process to get results in a timely way—all while closing a looming budget gap?
The answer, I believe, lies in an integrated process that combines data-informed conversations with a capacity to rapidly evaluate the ideas they generate (“what-if testing”). The process, shown in the flowchart, begins with a preliminary assessment. This may result in emergency actions to contain the deficit but, in any case, it is followed by a deeper evaluation of the situation in both the short and long term.
Participation should begin with the initial assessment, and the resulting conversations should produce focus, commitment, and an agenda for further analysis. Today’s data systems and models enable quick progress, which allows people to move promptly to conversations about what options may be available. These conversations are important because they can instill hope and enthusiasm as well as formulate specific options for consideration. This keeps the focus on strategic thinking rather than survival.
The ability to test options in a timely way is critical for maintaining enthusiasm and achieving rapid progress. This requires predictive models as opposed to the historical ones that support most data analysis. The process, called simulation, inputs data about the options to be tested and calculates outcomes for a variety of measures. The challenge, of course, is to have models that are sufficiently detailed and accurate to produce actionable results. I described the Gray predictive program economics model in my most recent blog.
Combining Short-term and Strategic Decision-Making
The what-if tests lead to further evaluative conversations, now informed by the analytical and simulation results. These may produce immediate decisions, but more likely they will point to further analysis, option formulation, and simulation. The cycle continues, probably with numerous false starts and recoveries, until the key decision makers feel that adequate levels of understanding and consensus are achieved. A well-run process will sustain hope and enthusiasm while using the post-pandemic sense of urgency to drive needed changes.
It may turn out that certain gap-closing decisions need to be made before finalizing the longer-term strategies. Even here, however, the integrated process pays off by reducing the possibility that important strategic options will be limited by ill-considered immediate actions.
My next three blogs will describe how these high-level concepts can be reduced to practice. October’s edition will consider the requirements for developing sustainable strategies, and in November I will delve further into how understanding the university as a system has enabled the development of serviceable predictive models. The December log will address issues of academic culture and how effective leadership can overcome the barriers it creates.