Friday, June 14, 2013

Creating Shared Value in For-Profit Higher Education

The for-profit sector of higher education is frequently criticized for a variety of reasons.  Some argue that it neglects the real needs of students and provides a subpar education, while saddling students with exorbitant debt.  Others (particularly educational traditionalists) point to its heavy emphasis on career and technical training as another apocalyptic sign of the demise of "pure" education, where students learn for the pure satisfaction of learning and receive a "well-rounded" (I've never really been sure what that means, but am guilty of using the term quite often in conversations with others where I'm defending the value of a liberal arts education) and "holistic" education.  

I'll admit that I'm still skeptical of the value that is provided by the for-profit sector to students.  However, I'm willing to admit that this value likely varies tremendously across various for-profit institutions.  Additionally, it isn't lost on me that those of us in the more traditional academy ought to be asking the same question of our work:  What value am I (or my institution) adding to the life of students?"

Notwithstanding my personal hesitancy and skepticism toward for-profit higher ed, I want to argue in this post for some ways that the University of Phoenix and Strayer's of the world could increase both profits and positive perception by reconceiving the intersection between their corporate goals and a broader set of societal needs.

In a January 2011 Harvard Business Review article, Michael Porter wrote about the need for corporations to consider the principle of shared value, by developing policies and practices that both add value to the company itself (in terms of profits), while simultaneously addressing broader societal concerns in the communities where they operate.  He asserts that profits do not have to come at the expense of adding value to society (as opposed to individual clients or customers) and that addressing societal needs should move from the periphery of an organizations mission to the core of a business model.  

Brick and mortar academic research institutions have, for some time, bought into this notion of shared value by attending to both the needs of individual students (by, for example, teaching courses and awarding degrees), as well as more general community issues (through conducting research that contributes understanding which can improve society).  Although the question of whether academia does this well, is open to debate, research institutions believe and attempt to create shared value.  For-profit institutions, however, have failed to consider how they might adopt a similar approach.   

The vast majority of for-profit higher educational institutions are stuck in an outdated model of value creation that narrowly views "value" as consisting of only two factors:  (1) profits for the company and shareholders and (2) value for students in terms of improved education, stronger job prospects, etc..  In essence, these organizations have fallen victim to the same mistake Porter points out in his article.  Like other corporations, they have not leveraged the opportunity to link their educational and economic missions with pressing issues or challenges in the broader community.  And, this is one of the potential explanations for why for-profit institutions are looked down upon by so many.  By focusing exclusively on profits and the needs of individual students, these institutions have developed a reputation of being selfish and concerned with the narrow interests of the "one."  Whether it is the corporation trying to get ahead or the working professional trying to advance her career by completing a degree, the ultimate focus is on advancing individual interests.  Although there is nothing wrong with a company wanting to turn a profit or an individual wanting to advance their education, these two images do little to engender support from the broader community.  

Clearly, a for-profit institution has no explicit obligation to add value to a community or address societal needs.  Unlike a public research institution, they do not receive state funding or other resources that come with an expectation to give back.  However, as Porter argues in his article, creating shared value isn't just about being charitable or sacrificing profits for the common good.  Rather, institutions that find ways to link their economic and educational missions with societal concerns, will be more innovative and productive and ultimately increase profits.

There are at least two reasons why this will be hard to do for the for-profit sector.  First, the lack of a research mission takes away what for most other institutions is a relatively easy and visible way to contribute.  Second, because for-profit institutions are often large and distributed across a variety of locales (both physical and electronic), they have no real sense of place and likely have a difficult time connecting their work to local needs and concerns.  

But, my hunch is that the for-profits that can identify broad societal issues that people care about, and then thoughtfully consider how their work of educating students can contribute, will be far more successful than those continue to cling to an outdated model focused only on providing convenient and accessible education for those who can't access it elsewhere, without adding value to society at large.  Finally, if any institutions take on the challenge of blurring the boundary between for and non-profit education by addressing social needs, it will be equally important for government to regulate the for-profit higher education industry in ways that don't obstruct their efforts to be both profitable and useful to society.  


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