We’re closer to the next recession than we are the last, a higher ed official recently reminded me. Indeed, while colleges and universities continue to struggle financially, the dark days of 2008 seem like a distant memory for most of them.
But the prospects for 2018 are not looking so great. This month, the credit-rating agency Moody’s Investors Service changed its outlook for higher ed from “stable” to “negative.” In a report, the agency cited constrained revenue growth in tuition and uncertainty in federal policy. The tax bill that is making its way through Congress leaves higher ed “highly exposed,” Moody’s said.
If that dire outlook comes to pass it will likely lead to belt tightening at many universities, cuts at others, and perhaps even a few closures. But there’s something else colleges and universities can begin doing right now to better prepare themselves for 2018, whether there’s a downturn in the sector or not.
The time has come for colleges to form much deeper academic alliances with other institutions. Collaboration in higher education is nothing new. For much of the last century, campuses have joined together because they are located near each other or their missions are closely aligned (connected by shared identities such as private colleges, Catholic colleges, and the like). The most common of alliances, of course, are athletic conferences. But beyond a few cooperative agreements to purchase goods and services together or share study-abroad locations, these consortia have largely failed to produce much in terms of costs savings, and they certainly haven’t changed the underlying financial model of universities.
Now, a new type of alliance is emerging in higher education that is centered around the need to solve common problems rather than to simply bond around mission or geography. One early version of this new kind of partnership was used to build and deliver Massive Open Online Courses (MOOCs) through alliances like Coursera and edX. Now we’re seeing the development of similar alliances to rethink student success for low-income students (such as the University Innovation Alliance) or deliver technological improvements in teaching and learning (Unizen).
To survive and thrive in the changing environment for higher education, more institutions must move to form deep alliances and collaborative platforms around nearly every function on a campus—from academic affairs to career services. Imagine if a group of colleges cooperated more to provide their back-office functions of admissions (beyond just sharing a common application), so that they could focus more on recruiting students. Or what if they shared career services resources so that a group of small colleges could better compete against larger universities for the attention of companies looking to hire. On the academic side, institutions can more easily build programs in emerging disciplinary areas such as data analytics or artificial intelligence by doing it together rather than on their own.
In a paper I recently authored I called this new type of alliance the Networked University. To imagine how the Networked University might work in practice, it’s instructive to look to another industry that two decades ago faced similar challenges to those confronting higher education right now: airlines. Although some airlines had the capital to grow or merge, most were hampered in their ability to adopt an expansion strategy. Enter the idea of airline alliances. The so-called code-share agreements have created networks of airlines, with the three biggest being Star Alliance, SkyTeam, and OneWorld. Under the alliance agreements, the airlines cooperate on departure times and routes, share airport facilities, and have reciprocal frequent-flyer benefits.
Strategic alliances, of course, are not unique to the airline industry. Every year, there are about 2,000 new strategic alliances in the world, according to the Boston Consulting Group, and alliances have been growing at a rate of 15 percent annually.
“Alliances can be an extremely effective way to embrace new strategic opportunities, pursue new sources of growth, and contribute to the upside of the business,” according to the consulting firm. “They are particularly useful in situations of high uncertainty and in markets with growth opportunities that a company either cannot or does not want to pursue on its own.”
What is most needed for this new era is a change in mindset among higher education leaders: they need to stop thinking that the only path forward is one that they take alone. Collaboration in this new era involves colleges and universities coming together as seemingly one institution to change their future direction.
