Posted: July 18, 2013

Eight reasons why more than half of colleges are doomed

New models are on the horizon

Thomas Frey

(This is the second of two parts. Read Part One.)

So what happens when the legacy power of an institution meets a rapidly changing business environment driven by emerging technology? Some will survive -- but many will not.

Here are eight core issues for colleges that will drive a wedge between business-as-usual and the unstoppable forces of change:

  1. Overhead costs too high – Even if the buildings are paid for and all money-losing athletic programs are dropped, the costs associated with maintaining a college campus are very high. Everything from utilities, to insurance, to phone systems, to security, to maintenance and repair are all expenses that online courses do not have. Some of the less visible expenses involve the bonds and financing instruments used to cover new construction, campus projects, and revenue inconsistencies. The cost of money itself will be a huge factor.
  2. Substandard classes and teachers – Many of the exact same classes are taught in thousands of classroom simultaneously every semester. The law of averages tells us that 49.9 percent of these will be below average. Yet any college that is able to electronically pipe in a top 1 percent teacher will suddenly have a better class than 99 percent of all other colleges.
  3. Increasingly visible rating systems – Online rating systems will begin to torpedo tens of thousands of classes and teachers over the coming years. Bad ratings of one teacher and one class will directly affect the overall rating of the institution.
  4. Inconvenience of time and place – Yes, classrooms help focus our attention and the world runs on deadlines. But our willingness to flex schedules to meet someone else’s time and place requirements is shrinking. Especially when we have a more convenient option.
  5. Pricing competition – Students today have many options for taking free courses without credits vs. expensive classes with credits and very little in between. That, however, is about to change. Colleges focused primarily on course delivery will be facing an increasingly price sensitive consumer base.
  6. Credentialing system competition – Much like a doctor’s ability to write prescriptions, a college’s ability to grant credits has given them an unusual competitive advantage, something every startup entrepreneur is searching for. However, traditional systems for granting credits only work as long as people still have faith in the system. This “faith in the system” is about to be eroded with competing systems. Companies like Coursera, Udacity, and iTunesU are well positioned to start offering an entirely new credentialing system.
  7. Relationships formed in colleges will be replaced with other relationship-building systems – Social structures are changing and the value of relationships built in college, while often quite valuable, are equally often overrated. Just as a dating relationship today is far more likely to begin online, business and social relationships in the future will also happen in far different ways.
  8. Sudden realization that “the emperor has no clothes!” – Education, much like our money supply, is a system built on trust. We are trusting colleges to instill valuable knowledge in our students, and in doing so, create a more valuable workforce and society. But when those who find no tangible value begin to openly proclaim, “the emperor has no clothes!” colleges will find themselves in a hard-to-defend downward spiral.

Ironically, we are entering into a period where the demand for education will rise substantially. Yet traditional colleges are such a mismatch for what future consumers will want that dropping enrollments will cause many to fail. 

At the same, time many new opportunities will begin to surface, and future-learning centers will make use of former college facilities. Some may even resurrect the former institution under an entirely new business model.

Final Thoughts

Imagine coming across a job opening that requires a specific certification you currently don’t have. You match up well will all of the other job requirements but you’re only missing this one certification.

A few clicks later you find out the certification can happen online with 20 hours of training. So you spend your weekend getting certified.

Yes, there’s a big difference between having a cursory understanding of a topic and working level proficiency. But for many of us our future careers will hinge on situations like the scenario I just described.

As a society we’ve grown complacent, thinking smart people in colleges are doing a good job preparing our kids for the future. Yet higher ed has become a lumbering giant, slow to adapt and increasingly out of sync with the needs of business and society.

The same top-down institutional systems that have preserved colleges for centuries are now becoming their greatest enemy.

Much as failed golf courses, big box retailers, and shopping centers end up in the laps of local communities, failed colleges will also become local problems for city governments to deal with.

Pedestrian campuses that worked well during peak enrollment have a way of becoming white elephants for whatever comes next.

Thomas Frey is the executive director and senior futurist at the DaVinci Institute and currently Google’s top-rated futurist speaker.  At the Institute, he has developed original research studies, enabling him to speak on unusual topics, translating trends into unique opportunities. Tom continually pushes the envelope of understanding, creating fascinating images of the world to come.  His talks on futurist topics have captivated people ranging from high level of government officials to executives in Fortune 500 companies including NASA, IBM, AT&T, Hewlett-Packard, Unilever, GE, Blackmont Capital, Lucent Technologies, First Data, Boeing, Ford Motor Company, Qwest, Allied Signal, Hunter Douglas, Direct TV, Capital One, National Association of Federal Credit Unions, STAMATS, Bell Canada, American Chemical Society, Times of India, Leaders in Dubai, and many more. Before launching the DaVinci Institute, Tom spent 15 years at IBM as an engineer and designer where he received over 270 awards, more than any other IBM engineer.

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Readers Respond

Tom's comments support what I see in front of higher Ed after 30 years in higher Education. His observations are supported by many and cannot be overlooked. Risk adverse units continue to use chalk on a white board when it comes to delivering content. Figuring out the research/invention function is a more difficult matter and regrettably that role is not clearly understood by the public or legislators. By Rich Feller on 2013 07 18
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