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Two Ships, The Perfect Storm

Two Ships, The Perfect Storm. Roy A. Herberger, Jr. UNICON 3/26/02. What’s the Point?. Our industry is being “re-invented” and we didn’t even know it! Evidence and Analogues Suggestions for coping.

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Two Ships, The Perfect Storm

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  1. Two Ships, The Perfect Storm Roy A. Herberger, Jr. UNICON 3/26/02

  2. What’s the Point? • Our industry is being “re-invented” and we didn’t even know it! • Evidence and Analogues • Suggestions for coping

  3. The definition of Future Shock: “The dizzying disorientation brought on by the premature arrival of the future” Alvin Toffler

  4. Data Points from the New Economy • 51% of US adult population now have some college education, up from 40% in 1991 • Students over 40 are the fastest growing age-group and now account for over 15% in postsecondary education • Since 1950 Service employment has grown from less than 14% to over 35% today

  5. New Economy Data Points • Labor Costs now account for 87% of the non-financial corporate output • Higher education has been in decline as a priority since 1991 when 30 states appropriated less for education than they did in the previous year

  6. Conditions for the Perfect Storm • Killer applications: e-learning efficiency • Inflection points: U of Phoenix hits $100 million in net earnings • Labor Limits: Tenured workforce • “Over supply” of high end education seats • Loss of the Social contract: Buy low, train high, pay low • Brand Paradox: Cenquest vs. LBS

  7. Perfect Storm • Information Age Leapfrog: • The global economy forces “knowledge bases” such as the software industry to develop outside of the academy • Little time for incubation on academic timetables • Emerging work typologies demand a level of continuous learning that does not fit the college delivery system • More than $1.6 Billion was raised in the capital markets for new “for-profit” education

  8. Principles at Work • The academy used to get by on reputation and a few stars since we owned the product space • Univ. of Phoenix claims to have 4,000 content providers • Managers who know how to cut costs and build on established brands survive • Fragmented industries caught in middle supply positions die the death of a 1000 cuts

  9. Principles at Work • Pan Am affect: Globalization and trade flows cause every nation to create their own airline…and education networks • First mover advantage in education today works when you are well capitalized • Bandwidth drives product and opportunity on a global scale • There is a correlation between the research university and the knowledge economy

  10. Principles at Work • Courses are gradually being evolved toward learning objects • Not-for-profit means rare access to capital markets

  11. Price/ Quality Education Demand Curves Top Tier Schools U of Phoenix Enrollment

  12. What does the market expect from us? • Quality, measured outcomes at a shrinking price • Flexibility of product design and just in time local delivery • Loyalty and continuity • Speed to market/ Speed to ROI • Reputation

  13. Questions to ask of your organization • Are you training your production system? • How much of your retained earnings went into research, into product development, product acquisition? • Do you have a network that supplements your products? • Are you in charge of acquiring new production capability? • How much of your income is spent on building brand awareness? • Do your workers fly Business Class?

  14. How do we measure shareholder value? • Market used to be fragmented and information was limited • Today brand means everything as a substitute for limited information • Are media rankings our stock market indexes? • Tomorrow, retained earnings will be the estimate of returns to shareholder value

  15. Coping Mechanisms • Look for the “Killer Idea,” but try not to invent it • Alliances that simulate oligopolies • Blended learning that has the for-profit attitude and structure • Measurement systems that work • Is it possible that we can move to an “ESOP” model with our faculty?

  16. Org Chart

  17. Funded by Sevin Rosen Learning objects by NETg Distributed by Sylvan Remarketed by Fathom Facilitated in India Licensed by Viviance in Germany Content target: AARP Faculty on loan from Michael Porter Servers by Acer Tax location in Belize The Next Generation Ex-Ed Org

  18. Thanks for Coming to T-Bird Questions?

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