strategy – View From A Bridge – management, education and personal thoughts

Making Music or Chasing Placing

When Simon Rattle was interviewed about his move from the Berlin Philharmonic to the London Symphony Orchestra he made the point, “There are a few great orchestras in the world, thank goodness. Although some people do put them in ranking order, it’s not like a snooker match. Each orchestra has different things to offer. In some ways these two orchestras are as different as you can imagine.” He went on to comment that, “So many of the things I believe deeply in, including this idea of access for everybody, that education and growth should be at the centre of an orchestra, are exactly what the LSO have been doing.” Universities share some characteristics with orchestras and access, education and growth should always come before rankings.

Regrettably, the University of Southampton’s recently published strategic plan is a reminder that some universities are willing to consider the empty credibility of league tables as equal to the needs of students, communities and society. However, my review of 50 UK university strategic plans suggests that most are avoiding the temptation of putting rankings as a measure of performance, with the Principal and President of King’s College London even writing in a preamble to their plan, “This is not about league tables but about the real contributions we make to the world around us.” Some who have built their measurement around league table rankings are finding that their statements are not ageing terribly well.

University of Southampton

The University of Southampton has been good enough to leave the September 2021 Consultation Draft Strategy on its website so it is possible to see how it developed a more bombastic tone that leaned towards rankings as a sign of success. For example, the draft Purpose and Vision’s rather modest “we aspire to achieve the remarkable” becomes the heroic “we inspire excellence to achieve the remarkable”. Even this is slightly less overstated than Queen Mary University’s, “the unthinkable, achieved”.

A triple helix of Education, Enterprise, Research becomes more convoluted with the insertion of Knowledge Exchange (KE) in front of Enterprise to make it, more logically, a quadruple helix. The Research England’s Knowledge Exchange Framework confirms KE as reflecting “..engagement through research, enterprise and public engagement.” so it could stand alone. One suspects that some enterprising (sic) apparatchik suggested that you can’t have a PVC Research and Enterprise without using the word (perhaps PVC Research and Knowledge Exchange would be a better option).

The draft suggests that the “suite of KPIs, should position us to achieve a stretching ambition of being a top 10 UK and pushing towards a top 50 internationally recognized university..”. There is much less room for doubt in the final version where “..success will be Southampton positioned as a top 10 UK and towards a top 50 internationally recognised university..”. One oddity in all this posturing is that the University’s website home page carries a statement about being a Top 15 UK University; Top 100 in the World but takes you to a page of rankings where they are shown as a Top 16 UK University. This is presumably because they think the Sunday Times is more credible than the Complete University Guide (where they are 15^th).

Not In a League of their Own

The University of Southampton is not on its own in having league table aspirations and the table below shows others in the sample of 50 who are explicit about ranking being a strategic plan objective. The point here is that if something is in the strategic plan you would expect a university to devote time, money and effort specifically towards achieving it. It is quite different to prioritising what is best for the student, the community or the great global challenges.

Many universities focus on self-improvement through enhancing their performance in, for example, the National Student Survey or Research Excellence Framework or through measures such as financial stability, attrition rates and graduate outcomes. This seems more reflective and service oriented than deciding to compete in myriad and meaningless ‘best of’ tables that have little direct relevance to students or staff. It is noticeable that universities in the Russell Group are more likely to cite rankings as a performance criteria which suggests they may be a little insecure about their credentials to be in a Group that claims members as “world-class, research-intensive universities.”

Several of those reviewed have, somewhat sneakily but probably wisely, left the provenance of their measurement to be chosen at the discretion of a future Vice Chancellor. It is also relatively easy to sign off on an heroic objective if you know you will not have accountability for delivering it. Others have nailed their colours firmly to a specific mast and may regret it.

University	Statement in Strategic Plan
Lancaster	“We will measure this goal by making further progress towards a top 100 position in key global rankings of universities.“
Manchester	“We will be recognised as among the best universities in the world, in the top 25 in leading international rankings“
Birmingham	“Our aspiration to establish Birmingham in the top 50 of the world’s leading universities“
Cardiff	“We aim to remain in the world top 200 as measured by QS World University Rankings, the Times Higher Education World University Rankings, the Academic Ranking of World Universities and the Best Global Universities Ranking, and in the top 100 of at least one of these. We aim to enter the UK top 20 in The Times and Sunday Times Good University Guide.“
Durham	“The Times/Sunday Times League Tables Top 5“
Bristol	“By 2030, we will: be firmly established among the world’s top-50 universities (draft)”
Liverpool	“…will be among the top 20 UK universities in the world rankings.“
QUB	“Be ranked in the top 175 in global league tables. Be a top 50 university for our global impact.“
Surrey	“Reach a top 15 position in appropriate national league tables; be in the top 100 position in global league“
Essex	“In 2025 we will be recognised nationally (top 25 Times Good University Guide) and globally (top 200 Times Higher Education World Rankings)“
East Anglia	“will focus on consolidating our position as a top 20 university in all of the main UK university league tables“

Cardiff’s approach may have looked reasonable in 2018 when the strategy was launched and they were in the 101-150 grouping for the AWRU (they are now in the 151-200 group). However, the most recent tables show they have failed to achieve one top 100 international ranking and their current Times/Sunday Times rank is 35. The strategy runs until 2023 so there may still be time and it’s always possible to blame the pandemic but the next iteration of their strategy may be slightly less prescriptive.

The University of East Anglia says, “We also recognise the importance of league tables and will focus on consolidating our position as a top 20 university in all of the main UK university league tables.” Regrettably, the most recent round of league tables finds them at 22 in the Complete University Guide, 41 in The Guardian, 26^th in the UK in the THE World Rankings and the THE Table of Tables, and, 27 in The Times/Sunday Times. Not one top 20 place to consolidate as yet but the strategy allows until 2030 to put things right.

One observation is that the University of Warwick, which seems obsessed with league table measurements on the front page of its website, does not explicitly suggest that success will be measured by them – its main claim seem to be that it will be ‘larger than now’. Another would be that UCL is currently in a consultation about its 2022-2027 strategy as a contribution to “maintain the trajectory established by UCL 2034” and uses league tables to highlight issues as part its discussion papers. UCL’s approach is rich in content and may be worth a review by anybody looking to write their own strategy or simply to understand this end of the higher education landscape.

The Things They Say

No review of Strategic Plans would be complete without reflecting briefly on the tendency to reach for the most hyperbolic forms of expression to convey even the simplest of ideas. It is as if the universities are writing the higher education version of the September Dossier rather than setting out a sober-minded and responsible plan. For some there is a reflex to state the blindingly obvious as if it were the musings of a Zen master:

University of Exeter – Together we create the possible

University of Warwick – Excellence with purpose

University of Strathclyde – The place of useful learning

While, occasionally, there are some phrases which just feel, um, worth recording:

University of York – collaborating unconventionally

Leicester University – we don’t want to make a negative impact

Summary

There is increasing evidence that students consider other factors more important than league tables, so for universities to place them as a key measure seems more about internal vanity than external need. INTO University Partnerships claimed recently that research shows “Gen Z students have adjusted their focus from rankings to outcomes amid COVID-19” and even Universities UK has got round to suggesting eight “core metrics” which could easily form the basis for both degree and institutional measurement . Regrettably, this has not stopped some relative newcomers to the rankings party presenting machine learning and AI as the answer to achieving transparency, objectivity and non-gameability so the merry go round continues.

Making league table positions a measure of university strategy puts marketing before meaning or Style Over Substance (a new SOS for the sector). I have discussed views on the most obvious failings in “Keep Your Virtue…Ignore the Reputation Rankings” and “Rank Hypocrisy” and it is good to see that most of those reviewed seem to recognize the vacuousness of this form of measurement. To place ranking as a strategic ambition diverts time, energy and money away from delivering results for students, partners and the great global challenges.

NOTES

* The review of 50 University strategic plans considered documents publicly available on their websites. A combination of search mechanisms and text review was used to determine if league table rankings were specifically and meaningfully mentioned as an objective of the plan. A number of strategic plans reviewed mention current league tables in their text but do not elevate them as a specific strategic objective. The author is pleased to consider any authoritative challenges to the material identified and will post updates/corrections if they prove to be valid.

**The review was based on the documents identified as the main strategic plan of the university in question. It is recognized that operational plans at theme e.g. research, or school of study e.g. biological sciences, may suggest objectives related to league table rankings.

***The review focused on references to league table rankings identified as THE World University Rankings, AWUR, QS University Rankings, the main UK newspaper rankings e.g. Times/Sunday Times, Guardian etc or more broadly as, for example, “key global rankings”.

More Pathway Jeopardy

INTO’s joint venture with the University of Gloucestershire is under ‘strategic review’ with the possibility of closure. INTO is no longer accepting applications to start at the on-campus centre in 2019, which is understandable given the uncertainty but seems unlikely to improve future prospects. It is anticipated that the review will be complete in early July.

A number of ‘third party’ pathway centres in the UK and US have closed in recent years, including Navitas at Edinburgh Napier and Oxford International at the universities of Canterbury Christ Church and Bedfordshire. In the US four CEG OnCampus pathways are closing, and EC’s higher education business has shut down with partners moving to Study Group. INTO Gloucestershire offers some insights into the dynamics at play in the joint-venture model.

The centre opened in 2013 but has struggled to build enrolments or achieve operating profitability. The most recent published figures show average enrolments falling for two years and lower in 2017/18 than 2014/15. The University’s Financial Statements for 2017/18 noted ‘the highly challenging market’ and it seems unlikely that 2018/19 enrolments were much, if any, better.

Table 1 – INTO Gloucestershire Average Enrolments

Source: INTO Gloucestershire LLP Annual Reports

The University’s most recent Financial Statement concluded that the ‘financial performance of the JV entity combined with the net revenues from progressing students, continues to deliver a worthwhile partnership arrangement for the university which enhances the internationalisation agenda.’ With the UK likely to be heading for a good enrolment year this might seem to be a good moment to double down on the investment after weathering some difficult years. There’s also the possibility of even better times ahead if proposed changes to post-study work opportunities become reality.

But as the joint venture enrolments have slipped first year, full-time international enrolments have also stalled for the University. Published data doesn’t provide insights into progression from the joint venture but as UK universities have become more competitive for international students it’s possible that more are leaking away to better ranked or more favourably located institutions.

Table 2 – University of Gloucestershire Non-UK Enrolments with JV Enrolment Overlay

Source: HESA Data and INTO Gloucestershire LLP Annual Reports

A closer look at the financial story also suggests some reasons for caution on all sides. Recent Financial Statements show the University has written off £2.8m of debt from the joint venture over two years with INTO University Partnerships (IUP) writing off £3.8m of debt in the same period. Current financial year data is not available but the debtor balance owed by the joint venture to IUP at the end of 2017/18 was £1.77m.

Table 3 – INTO Gloucestershire LLP Debtor Balance to IUP and Written Off Amount

Source: INTO University Partnerships Annual Reports

The joint venture has been unable to operate profitably in its first five years of operation despite measures to make ‘changes to the model of paying for services supplied by the two respective parent organisations’. One ratio for pathway watchers to consider is that the joint venture’s cost of sales rose from 73% in the peak enrolment year of 2015/16 to 87% by 2017/18. Significant reductions in operating expenses have been unable to make up for the resulting decline in gross profit, but are likely to have reduced revenue to the partners for services they provide to the joint venture.

Table 4 – INTO Gloucestershire Turnover, Cost of Sales, Operating Expenses and Operating Profit

Note: Operating loss shown excludes exceptional items and interest Source: INTO Gloucestershire LLP Annual Reports

A university statement indicates that the strategic view was initiated jointly. Increasing levels of indebtedness, less revenue from the centre paying for services and little prospect of a significant shift in the ability to recruit students would certainly concentrate the mind. As the joint venture’s Annual Report notes – ‘the principal risk facing the LLP is the continued under-recruitment of students to its programmes.’.

The university have confirmed that ‘no decisions have been made’ and that ‘no compulsory redundancy notices have been issued to staff either employed by the JV, or employed by the University outside of the JV, as part of this process’ and it is to be hoped that INTO and the University of Gloucestershire can find a sustainable way forward . But if not, it would follow INTO University of East Anglia London and INTO St George’s University as the third of the company’s joint ventures to close. That would leave eight joint ventures and two wholly owned operations remaining in the UK.

Most pathway portfolios have partnerships that struggle to recruit and are likely to come under the microscope when times get tougher or business models are disrupted. That’s why there is likely to be more realignment, restructuring and portfolio shuffling as the sector matures. I once heard an industry leader comment that the trough between launch and profitability is becoming deeper and longer – the question is whether some vessels are too leaky to make it to the other side.

Image by Arek Socha from Pixabay

SHOPPING FOR IDEAS: HIGH STREET TO HIGHER EDUCATION

Higher education should look to the disruption in retailing and other sectors to develop a roadmap to the future. While no two sectors are the same, the notion that novel and implementable ideas can come from other alternative disciplines has a good history¹. The parallels between retailing and higher education offer particularly fertile territory for consideration.

There are, arguably, particular similarities between department stores and universities. Both offer wide ranges of largely similar products and make claims about their quality, customer experience and real estate to justify premium prices. Moreover, in recent years both have been driven to special offers, discounting and increased marketing costs in an attempt to secure the volume of customers they need to survive.

Breaking Bad As Demographics, Technology and Globalisation Bite

The heyday of high street and the shopping mall, from the mid to late 20th century, coincided with the ‘massification’ of higher education². The demands of the baby boomer generation coupled with consistent c5% annual real GDP growth in developed market economies from 1950 to the early 1970s³underpinned both. Changing demographics and the relative decline in government investment has made higher education as vulnerable as retailing to changing market forces.

In that context, headlines reported a record number of over 7,000 store closures in 2017⁴. While doomsday predictions that “50% of the 4,000 colleges and universities in the U.S. will be bankrupt in 10 to 15 years”⁵may be wide of the mark, closures are accelerating. For universities it may be ominous that the major losers in retailing were department stores which “have been suffering a death by a thousand cuts for years due to poor merchandising and outdated business models”.⁶

Further broad comparisons between the sectors can be drawn. Technology is often cited as a key factor in the disruption of retail and higher education, and education is rapidly moving to a point where attendance at a bricks and mortar institution is optional. But even if technology had not created generations of digital natives who learn in new ways it has placed the power of search and comparison is in their hands.

Globalisation has also had a marked and growing impact in both sectors with a shift in favour of Asia Pacific over the past ten years⁷. China’s improving performance in global university rankings and its plans to be the dominant global centre for international students by 2049⁸ suggest the direction of travel. The traditional distribution of international students from east to west appears to be shifting rapidly and institutions need to develop effective responses.

Finding The Path From Apocalypse To Renaissance

Against these headwinds there are a small number of universities in the world who may have the financial and brand strength to resist these global tides. Short of a catastrophic scandal, financial mismanagement or a government bent on vandalising its international credibility it is probably safe to assume that the likes of Harvard, Cambridge, and other national or private treasures are secure.

For the rest there is an urgent need to refine, realign and reinforce what they offer to students. A germane lesson for them from retailing is that, despite the headlines, overall in 2017 more stores opened than closed and retail sales grew by 4.5% (over $232bn)⁹. While the media were coining the phrase ‘retail apocalypse’, smart investors and business operators were moulding their offer to meet the needs of a changing world.

Retailers have invested significant brain power and cash in trying to find a way through the storm. Their focus on their value proposition – how they solve customers’ problems at the right price – is a useful tool for focusing on what is important. And there are a number of themes which universities might consider.

1. Provide unique and compelling products and experiences

Dreary, derivative and duplicated product lines are not enough in an era where a world of choice is accessible at the touch of a button. Universities must examine their own “product lines” (degrees and other courses) and determine how much they can be streamlined into areas that are both market sensitive and differentiable from the competition. While the campus experience is not dead it cannot be taken for granted, and the marketing lessons of experience-driven destinations such as national parks and vacation resorts might provide inspiration.

2. Online delivery must be world-class

Costco, Walmart, Nordstrom and others have invested heavily in ensuring that their online involvement is well resourced and competitive with the best that Amazon can offer (their success is one reason that Amazon has begun advertising itself in traditional media¹⁰). For most universities the reach and scalability of online is attractive but they will be competing against the rest of the world. Only the very best quality delivery of market relevant courses with full academic commitment and outstanding user experiences will stand the test of time.

3. Pace, performance and personalisation

Retailers have optimized supply chains and utilized technology to ensure that product is always available, personalisation is possible, delivery never disappoints, and repeat business is maximised. For universities excellence must extend from the first point of contact to the building of alumni networks and lifelong learning. If a programme of study or administrative process is not competitive, a disciplined university will recognise the problem quickly and adjust it or eliminate it.

4. One size does not fit all

Sears declined from being the largest retailer in the US in 1989 to near bankruptcy in 2018, but Dollar General, 7-11, Aldi and O’Reilly Auto are among those opening stores. Value, convenience and specialisation have given them growth opportunities in the market. It’s a reasonable reminder that there are millions of students around the world with differing needs and resources. Universities should actively focus on understanding the market, seek differentiation and develop their niche.

Perhaps the best rallying call from retailing is what Deloitte has termed ‘the great retail bifurcation’¹¹with growth for ‘price’ and ‘premium’ performers contrasting with ‘balanced’ retailers, who have broadly similar offerings, lagging behind; they suggest that the moment is ripe for a modern renaissance which uproots traditions, institutions and thoughts. More starkly they comment on the need for ‘new and unique capabilities’ and reflect the degree to which the ‘new requirements differ from the old operating model’.

All told, however, the most significant and radical change needed may be an unravelling of the emotional commitment to delivery and outcomes which remain organised around a model first established in the 11^th century. The large fixed-cost base of buildings and grounds have also come to be seen as more central to the identity of most universities than meeting the needs of their students. There is a pressing need to focus hard on the needs and expectations of the customer and consider new models and concepts. Looking outside the sector for inspiration may help.

References

Sometimes the Best Ideas Come from Outside Your Industry, Poetz, Franke and Schreier, Harvard Business Review, November 21, 2014
‘The United States Country Report: Trends in Higher Education from Massification to Post- Massification’, Gompert, Iannozzi, Shaman and Zemsky, National Center for Postsecondary Improvement, Stanford, 1997)
Multinationals and Global Capitalism: From the Nineteenth to the Twenty-first Century, Geoffrey G. Jones, Oxford University Press, 2005).
2017 just set the all-time record for store closings, CNN Business, October 25, 2017
Quote by Clayton Christensen, from Inside Higher Education, November 21, 2017
Debunking the Retail Apocalypse, Holman and Buzek, IHL Group, August, 2017
Global Powers of Retailing 2015 Embracing Innovation, Deloitte Touche Tohmatsu Limited, 2015
Carma Elliot OBE, Director China British Council, quoted in The Pie, December 19, 2018
Retail’s Radical Transformation/Real Opportunities Beyond the “Retail Apocalypse” to a Bright Future, Holman and Buzek, IHL Group, August, 2018
Jeff Bezos used to hate spending money on ads, Eugene Kim, CNBC, February 1, 2019
The Great Retail Bifurcation, Why the retail ‘apocalypse’ is really a renaissance, Deloitte Insights, Deloitte Development LLC, 2018