Developing, Managing, and Measuring a Fluid Strategic Action Model for Higher Education
Introduction
Today’s rapidly changing social, economic, and market forces present unprecedented challenges for higher education. In addition, there is a heightened demand for accountability and responsiveness coming from our state and national governments. These demands are real, frequent, and being linked to resources (Ward, 2013). At the same time, higher education is feeling increasing pressure from a discriminating public that has come to realize college and university options are considerable. In business terms, higher education is a buyers-market (Perez-Pena, 2014).
Today’s reality is that colleges and universities must and will change the ways in which they operate to survive the day and better position themselves for long-term viability. Every president of a college or university, public or independent, is aware of the forces of change.
The alarm has been sounded over the past 30 years in a number of publications examining change in higher education (Bonvillian & Murphy, 1996; Boyer, 1987; Breneman, 1994; Clark, 1992; Keller, 1983). Some respond more effectively than others. Historians are likely to point back to this time period in the evolution of higher education in the United States and reflect on just how much these forces of change have influenced the core societal role of colleges and universities and how they function (Thelin, 2011).
In spite of the pressures, there is a case to be made that some colleges and universities have not only met the challenges well but also capitalized on them. These institutions have survived, and even thrived, in spite of what appears to be at times, insurmountable odds. This is particularly true in the small independent, not-for-profit, sector of higher education and even more so within those institutions that have never relied on public funds or endowments to fall back on during difficult times. In fact, a close examination of these institutions would reveal that the notion of responding to profound forces of change is not a new idea at all. These institutions have not only understood the challenge of change, they have embraced it for much of their existence. They have evolved as the forces have compelled them to do so. Had they not, the landscape of higher education would look quite different today.
Forty years ago, there were predictions that most small independent, not-for-profit schools would be closed or absorbed by now for lack of a critical mass of students (Astin & Lee, 1974). It did not happen and, in fact, there are hundreds of such colleges and universities in the United States today that make up this sector. Some have succumbed to the pressure and closed or merged, but the numbers that carry on are still great. The Council of Independent Colleges (2014) (CIC), a champion of independent colleges and universities since 1956, boasts a membership of nearly 750 schools, and this does not even include all the possible institutions in this sector.
Although higher education is steeped in traditions, astute leaders today have come to accept the fact that in order for their college or university to respond to the forces of change, they must employ many of the same principles of modern strategy and operations that might be found in virtually any business, industry, or even civic organization. At the center of successful organizational strategies today is the ability to structure operational goals and objectives that support the overarching longer term vision and mission, yet fluid enough to redirect resources if warranted. This is in contrast to the once held belief that organizations could establish long-term strategic planning models that did not account for the short-term impact of the forces of change and perhaps even missed opportunities presented as a result of those changes. The idea of rigid 5-year strategic plans has largely disappeared (Dooris, 2004). Who can predict the market 5 years out? We have difficulty predicting it 1 year out (Morrill, 2013).
There is certainly merit in embracing our past in higher education as that has played a large part in our growing role of importance in society. However, to most colleges and universities today it is responsiveness to the market, timely decision-making, efficient utilization of resources, and a continuous measuring of outcomes that lead to success.
This chapter describes a model for strategic action that is in use in one school with considerable success. Between 2006 and 2014, Thomas University (TU) grew from a mere 685 student headcount to over 1,100 in domestic programs and over 1,200 in the People’s Republic of China (PRC); doubled its assets without expanding debt; nearly tripled its athletic program; more than doubled its programmable land holdings; and gained advances on its endowment.
The strategic model at TU incorporates an adaptation of Hoshin Strategic Management practices popularized in business and industry during the early years of our understanding of total quality principles.
This chapter describes the following:
• A description of the principles of this approach
• A leadership mandate at all levels of the organization
• A keen awareness of market demands
• An equal awareness of the college or university’s capacity to act on threats and opportunities and ability to redirect resources
• A process for monitoring and measuring performance
• An example of the model in practice
Since the fall of 2006, TU has engaged in a dynamic action-oriented strategic initiative using a process that continuously looks to the future, yet is sensitive to the current core programs and processes essential to sustain the organization. A key element of this strategy approach is to understand and protect the core—those initiatives that have a proven performance record and perhaps have long carried the greatest load for assuring viability of the institution.
Adaptation of Hoshin Principles
Hoshin Strategic Management is a method of establishing, monitoring, and executing strategic priorities in a manner that allows for current operations to progress without disruption, while also engaging in continuous improvement and pursuing new breakthrough opportunities that show promise in supporting the overarching goals of the organization (Waldo, 2014).
This method for strategic action was originally employed at TU, in 2006, because of a compelling need to maintain successful on-going initiatives while also producing new and immediate (breakthrough) performance results directed toward enrollment growth and operational and financial stability. The current president has utilized this model in several schools as it is easily adapted to differing organizations. The following represents key guiding principles of TU’s adaptation of the Hoshin principles into its own Plan for Strategic Action:
• Maintaining existing and successful initiatives that continue to carry or add value to the organization—TU understands what constitutes its core programs and primary revenue generating areas and does not allow them to be compromised as new opportunities are pursued
• Identifying breakthrough opportunities that can advance the organization to new levels of performance and incorporating them into the core—expanding the portfolio
• Continuous improvement of operating processes that assure strategic initiatives become operational reality—an uncompromising commitment to empower those in the best position to actually carry out the vision and the mission
• Continuous review of progress, with accountabilities for key leaders—a collaborative and routine exercise to hold each other accountable for results
• Remaining flexible enough to adjust priorities, if warranted—not being trapped by ill-considered plans and initiatives that fail to produce
The absence of wealth sharpens decision-making at colleges and universities such as TU as all resources are considered precious.
Although it is widely accepted that successful strategic processes require engagement of all constituencies, ultimate responsibility for assuring progress of the school falls to the president. The president is the chief strategist. In the same respect, heads of major divisions must not only be involved in the formulation of that strategy but also are charged with actually carrying it out. At TU, the Administrative Team (A Team) is this body. The A Team’s work is also reviewed and sanctioned by the Board of Trustees, who, according to by-laws, are the ultimate authority on strategy direction and are engaged at critical junctures in the process. Their role is not only to accept and approve the strategy but also to monitor progress.
The President is charged to present the Board of Trustees with a viable strategic model that assures the health of the university. He does this through a collaborative and collegial process of engagement with key constituents. This is not an unusual model for overseeing major institutional strategy and is considered essential by all regional accrediting bodies as well as scholars of higher education management (Beard, 2009; Morrill, 2013).
The total quality management lessons of the 1980s helped organizations discover that apparent sound strategy falls flat without an organization’s ability to operationally carry it out. At TU that occurs in the divisions and departments. Visions and missions are merely words on paper and posters until they become reality through the working elements of the organization (Roberts, 1995; Seymour, 1992; Sims & Sims, 1995). At TU, the A Team, to include the President and key cabinet members, drives the strategy model. However, the handoff is swift to the operating units, which have considerable latitude in their execution to carry out the work that is directly linked back to the overarching strategic goals.
Market Demands
The notion of market pressures is hardly a new subject in higher education. Since the early 1980s, when the dynamic of markets changed for many colleges and universities, astute leaders became cognizant of the fact that higher education is a highly competitive enterprise. This gave rise to a new level of discussion of managing in higher education, to include emphasis on marketing (Keller, 1983). Although the demographics favored us, the competition was heating up. This competition was coming not only from within the public and independent sectors but also from the rapidly emerging proprietary colleges and universities. This latter element has grown to at least 3,000 institutions over the past 30 years (Association of Private Sector Colleges and Universities, 2015).
As a private university TU’s tuition is high compared with the public colleges and universities in the region. It is worth noting, however, that TU’s tuition is actually low given the average rates of private colleges and universities in Georgia and around the nation. This is by design as price leadership, at least within the independent sector, has long been a strategic priority. TU is also quick to point out the value-added elements of its educational offerings as a way to counter the public school sector’s low tuition.
Being small is a strategic advantage and presents many opportunities for TU to shine where the public and larger institution counterparts cannot. TU, like so many other small independents, capitalizes on the strategic advantage of being small…and nimble. Few would argue, including the proponents of public higher education, that small independents are not advantaged by their ability to secure and act upon new market opportunities expediently. Those who do not embrace this opportunity typically suffer as we have recently witnessed at Sweetbriar College (Carlson, 2015; Kolowich, 2015). As many as 250 other schools could experience the same fate as Sweetbriar, according to one recent estimate (June, 2015).
Organizational Capacity
Many small, independent, colleges and universities are not well endowed. In the independent sector, presidents learn quickly that to be considered well endowed, or capable of weathering sustained periods of financial stress, requires a much more significant bank account than most realize. One might be tempted to think that $20 million is a great deal of funds to support an institution. It is not when your annual draw on endowments is probably averaging 4%.
TU is tuition-driven, which translates into enrollment periods three times per academic year with the revenue stream for each being essential to fund the operating budget.
Perhaps more importantly, the absence of a large endowment has served to sharpen the skills of presidents of small independents to generate the level of revenue to not only sustain the school but also grow it. TU’s story is certainly a case in point. The question of managing capacity with such tight operating margins goes without saying. Keeping in mind that all credible small, independent, schools such as TU have to meet the same quality standards as their competition who are regionally accredited, it is carried out with extraordinary efficiencies. In fact, thriving small colleges and universities are often models for operational efficiency.
Monitoring and Measuring Progress
In order to assure that the school is moving in the right direction, at all of the operating levels of TU, a unique document labeled the Strategic Operational Priorities report was created, which illustrates the specific operational goal to be carried out within a 12- to 18-month period, within the divisions and departments; the individual most responsible for seeing completion of that priority; additional personnel involved in the effort; timeline for completion; and current status. This document is aligned to the overarching institutional goals reported in the Plan for Strategic Action, which is in its third iteration since 2006. That document is further aligned back to the stated goals that are shared with major constituencies, including TU accreditors. This alignment is also central to TU’s success as the overarching institutional goals feed the strategic operational priorities, and action taken at the division and department levels (see Figure 4.1).
For all strategic operational priorities, a single member of the Administrative Team is always identified as the key owner of individual items, to include the President and all Vice Presidents. This ownership is designed to assure that all purported priorities are monitored and carried out with the highest level of attention. This also assures that accountability for carrying out these priorities is transparent. At least once per month over the 12- to 18-month period of time, each member of the Administrative Team, including the President, is required to report to the entire group on his or her progress staying the course to meet the priority deadline.
Figure 4.1 Thomas University Strategic Process
Redirecting Priorities
One of the most appealing attributes of this strategic model is the ability to redirect priorities rather than continue to expend resources on initiatives that no longer serve to support those overarching institutional goals. This is not to suggest that the overall strategy should be subject to risky and too frequent redirection. In fact, at TU the overarching strategic direction has changed little since 2006. What has changed is the addition of promising initiatives as opportunities presented themselves and a vastly improved operational enterprise that carries it all out.
When redirecting priorities has occurred, it was typically due to a newly discovered awareness that the yield expected from a particular initiative was not really materializing, or a more rewarding direction was discovered. When this occurs, the principal A Team member most responsible for that particular initiative brings their view back to the entire leadership group. It is their responsibility to show others on the team why an effort must be redirected. This level of ownership is critical to the successful application of TU’s strategy model.
The Model in Practice
Embracing a more fluid approach to long- and short-term strategy formulation has guided major decisions and actions at TU. Specific work in the PRC is an example of how the approach has been instrumental in achieving a breakthrough strategy.
As of this writing TU has over 1,200 students enrolled in a specially designed, in-country, delivery of 1 year of academic study in the fields of business and nursing. It is expected to grow much larger. Few schools in the world can claim this level of activity in the PRC and none can within the educational field of nursing. TU’s current President had a similar successful PRC-based program at his last small, independent, college where he held the position of Provost.
Many educational institutions and even more businesses have tried and failed in the PRC. Those failures can typically be attributed to several overarching missteps in analyzing the opportunities in the PRC and structuring operations to act on them. The missteps include:
• Underestimating the degree to which cultural differences would influence outcomes
• Taking on more risk than the organization can withstand
• Not accepting the fact that most successful ventures require a considerable amount of time to come to fruition…patience is an absolute
• Perhaps most damaging to a college or university…not engaging key constituencies in the formulation of an international strategy and execution of programs
TU’s approach to this breakthrough opportunity called for and was undertaken with the following:
• Entering into exploratory engagement with PRC partners with a healthy dose of caution yet recognizing that even the smallest piece of such a huge market could yield great returns for the institution; this met the initial test of a breakthrough opportunity
• Initially treating the development of this program area as an auxiliary enterprise and not becoming operationally dependent upon it until everything was running and producing at the level of expectation to make it a mainstream initiative; it is now part of the core
• Incrementally building the operational support system (to include people and processes) to manage this initiative and not overinvesting in the costs to do so
• Continuous assessment of the return on investment, particularly as the initiative grew and increasing demands were placed on the institution
• Perhaps most important and certainly a central element of this strategy approach, making timely decisions, to include commitments on behalf of the institution during critical negotiations at the onset of partnerships
In Summary
In spite of the significant challenges that higher education has had to face over the past decade, Thomas University stands as an example of a small, independent university that has managed not only to survive but also to thrive. In looking back over this time period, it is apparent that not much was left to chance. Decision making, resource allocation, structuring of people, and processes have all been carried out with overarching strategic goals identified, shared, and converted into real operational actions. The Plan for Strategic Action at TU has been employed to keep all major constituencies, and particularly those with influence on the outcomes, focused.
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