Franchising Complexity: how to profit from transcending the linear paradigm in education

Authors: Carmen Costea, Constantin Popescu, Alexandru Tasnadi Academy of Economic Studies Bucharest Romania Franchising Complexity: how to profit from transcending the linear paradigm in education Sponsors for this research:GIACS 12380/2005 and IDEA II 774/2007 Email of correspondence: cecostea@ase.ro

The world is changing. So changes our attitude and expectations requiring new approaches of life and profit. Profit seen in different challenging ways (money, experience, knowledge) Ancient Chinese Science – Feng-Shui - promoted the Profit of Life (as a space harmony with the environment) under the Law of Heaven and Earth knowledge. We easily identify there the feedback value of own thoughts. The goal of Feng-Shui, as practiced today, is to situate the human built environment on spots with good qi, while areas not suitable for human settlement should remain in their natural state. These unusual tools have reliable correspondents in the western management practices, life, finances and personal relationships. Every day life teaches us, a lesson that science has only recently acknowledged, that life is complex. From pseudo science to alternative approach, from placebo effect to self-motivation the oriental and western theories praise formally and eloquently the need of durable development asfulfilment and harmony, a better life inside a sounder society and environment (as a living entity) where people need to learn, think and consider, the role of the community and the value of being. People have reacted in very different ways towards the alleged benefits of these unusual tools that have reliable correspondents into the management practices, on one's life, finances or relationships. The Complexity of the Living Entitya national funded project through IDEA II 774/2005

As a teacher: what you get is what you teach2. As a business owner:what you get is what you finance

We are in the situation to rethink both Science and Development of Life under a new approach, of education: Uni-dimensional vs Multi-dimensional This is why we promote a new way of considering the real meaning of education and analyse it, under the label of “E” Theory (of sound education, effusiveness, socialemancipation, eleganceof thinking andeconomic emergence). We sustain a new philosophy of life and action within economies and societies. This does not exclude at all, the ancient knowledge and experience. People need to learn, think and consider, the role of the community and the value of being. This is the high time for universities to take the challenges from the dominant mindset, to the new ways of learning and understanding the complex approaches of education based on mutual obligation. Moreover, they have the obligation to share and disseminate this knowledge too. Franchising the knowledge (SHAPE THE CHANGE) This new perspective = Capitalizing the added value by PRO-ACTIVE auto-governance : agility, flexibility, versatility, adaptability Consequences of a long run of development

Opportunity/scoping Commitment to action Self motivation and assumed responsibility Constant innovation Flawless execution Trends: Status spheres: traditional, transient, online, eco, giving, participative Premiumization Snack culture Online Oxygen Eco-ionic Brand Butlers Make it yourself Crowd mining Good learning Good jobs Good quality of employers (Family) spousal coverage Look in: Enhance CI practices Look out: Learn about best of others Look ahead :Opportunity /Scoping Take action: Move execute, and raise the bar Characteristics of the new type of education

From the linear educational system to the non linear educational system Et Et+1 Linear Paradigm Non-linear Paradigm

Risks Oportunities Rules Multi-culturalism Labor migration Networks (transport, internet) New ASSETS helping to reconsider the value and economic approaches based on institutional and ideological needs for changements Sensors : Education, Society, Environment Standards:

Perform Distributed measurements - portable interrogators, using fiber optics applied to map temperature changes in classes (interferometry, difraction and spectrometry, photonic crystals or other optical switches Manipulate light makes sense in using new sensors to develop applied science at societal level Well versed in spotting advantages to be able to identify opportunities A solution could refer to several different types of the first short cycles. Use Technology to make educational inroads by Xcellence of Science Networking

More analyzes, New indicators The key.... capitalized returned added value Consumption - not only a concept or a culture a measurable integrated culture underlining the trends, the risk of authenticity, external assets integrated in the world economy. Efficiencyseems not be shared by all

A potential model ♦ Itmay permit to emphasise the relationships between quantities (Objectives), of different dimensions, in connection with other quantities (parameters), important in higher education according Bologna Convention. ♦Each quantity is defined such as to be easily understood its physics dimensions and easily quantified for the later development and the use of the physical model by sociologists and economists. ♦A temporary quasi stability is supposed (small relatives values of the derivatives) in the evolution: of population number, of its age and education distribution and of its academic behaviour, during education. ♦The model will only be exploited qualitatively. ♦Later on, this model may be developed as to include yearly and specific variations and fed with quantified values of the considered quantities, get upon field studies or literature research.

Potential Conclusions: right “E” approaches, strategies, behaviour Corporate Family State Data sources: National Office of Statistics National Commission of Economic Forecasting Ministry of Education and Research Institute of Academic Education Ministry of Finance Ministry of Labour Ministry of Home Affairs NGOs Report Governmental Agencies Model Iterative fluctuation, Trajectory Fixed points Attractors

A possible MODEL to be applied* ♦Let us consider the Environment we refer to (region, country, state, federation, union) as having a population of P members and a class population of PE , representing that part of population born along one year, at an age corresponding to the normal age of enrolment in Higher Education (HE). Let pe , equal to [1] pe = Pe / P be referred to as the proportion of population at the normal age of enrolment in HE. Let Sne be the number of newly enrolled students in the HE institutions of the considered Society, during one academic year. Sne , the number of newly enrolled students, may include initial students and adult students. The quantity a, equal to: [2] a = Sne / Pe , could be defined as the rate of access to enrolment in HE (shortly – academic access). *model presented by prof Radu Chisleag Politechnica University of Bucharest at ENEC Pitesti March 2008

♦Therefore, Sne, is equal to: [3] Sne = a * Pe = a * pe * N. Let d (0 < d < 1) be the dropout rate for one year of study. Let f (0< f < 1) be the failure rate during one year of study. Let Sbe be defined as the total number of students at the beginning of the first academic year. ♦ Because of the dropout, the total number of students remaining enrolled at the end of that academic year, Seed , is [4] Seed = (1 - d) * Sbe ♦ Because of a still present rate of failure at the beginning of the new year, the total number of students at the beginning of the first year becomes: [5] Sbe = [1 + f(1-d)] * Sne = [1 + f(1-d)] * a * Pe = [1 + f(1-d)] * a * pe * N.

♦Now, considering the effects of the dropout and failure, in the first approximation, the number of equivalent students at the end of one year of study, Seedf , isequal to: [6]Seedf = (1-d) * [1 + f(1-d)] * Sne = (1-d) * [1 + f(1-d)] * a * pe * N , smaller than the number of totally financed students in that year of study. ♦ The number of students graduating during one academic year, Sg , is smaller than Sne (at the beginning of the cycle),due to the dropout (here considered of constant rate, for each of the T years of study): [7 a]Sg = Sne * (1-d)T <Sne . ♦If the dropout rate, d, be small (like for prestige universities), we might approximate equation [7 a] with: [7 b]Sg = ~ Sne * (1-T d) . ♦Therate of access to graduation, ag , may bedefined as: [8]ag = Sg / Pe = Sg / peN = a * (1-d)T < a .

♦For a T years cycle, because of failures, the average actual duration of study of a graduate is not more T , but Ta , approximately equal to: [9 a ] Ta =T * (1+f)R > T, where R is the number of yearly failures permitted by the existing academic regulations. ♦For a small failure rate, f, we may write a linear relationship for [9 a]: [9 b] Ta = ~ T * (1 + R * f). ♦For a cycle of T years normal length, the number of financed years of study per graduate, Tfg , is no more T but, considering the both rates of failure f and of dropout d (that means the financing of students who are failing and/or not graduating) covered by the society (public funding), is: [10 a] Tfg = T * (1+f)R * (1-d)-L, where L is the length in years the dropouts be financed by the education system.

We have to accept that, in democratic societies, where there is required that all students have to comply with the same academic standards and the admission selection is based mainly upon merit (and even upon excellence for a few universities), an increase in the academic access rate, a, would probably mean an increase in both f, the rate of failure and d, the dropout rate. More, because the increase in the academic access a is meant to address not only initial but adult students, the new segment of the adult students are to probably do more non-academic work during studies, than the initial students, as to ensure the living expenses for them and sometimes for their dependants, and be academically less performant (due to lack of continuity, too) this, again, meaning an increase in both failure, f , and dropout d rates, when increasing a . Consequently, Tfg is rather strongly increasing with the increase of a and correspondingly, ag / a are, in turn, decreasing when a is increasing.

The total number of students enrolled and financed in a T-year cycle, Sc is : [12] Sc = Sg * Tf g > Sg * Ta > Sg * T  Thus, enlarging democratic access to higher education (essentially accompanied by the increasing in failure and dropout rates), means increasing of Sc and Tfg and consequently, a larger relative increase in the number of teachers than of the rate of access. Thus HE may be considered as a generator of demand of services (of education) and consequently a generator of jobs, not only a consumer of public resources. Therefore, the perception of the social effect of increasing the rate of access might, eventually, be positive. Let c be referred as the unit cost and defined as the average cost of one year of study for one student enrolled in that cycle. It has to be mentioned here that, this cost of educating one student during one academic year, c = c(a), is probably to increase itself with the increase of a, because of the new investments in equipment, buildings and human resources (educators) necessary to offer more students higher education than the actual academic infrastructure permits. But, in that Societies where the actual academic capacities are not entirely used, the fixed expenses might not increase and c(a) might slightly decrease with a, at least until the maximum existing capacities are reached.

The Society’s Budgetnecessary to run a cycle, B , is: [13]B = Sc * c = Sg * Tf g * c = Sg * c * T * (1+f) R * (1-d)-L = = ~ Sg * c * T * (1 + R * f) * [1 + L * d] = ~ ag * T *c * (1+ R * f) * [1 + L * d] * pe * N The cost per graduated student would be: [14]B / Sg = ~ c * T * (1+ R * f)*[1 + L * d] = c * Tfg , much larger than c * T andfast increasing with f, d, c (and with a and ag). Thus, the decision to increase access to a cycle of Higher Education, without other measures, will require an increase in the Budget for running a cycle, the relative increase of B being much important than the relative increase of the access to that cycle of HE, this correlation generating a large effort for the public budget. This conclusion is to be completely understood by the politicians deciding a larger democratic access to higher education and by the members of the Society who are paying taxes but benefiting, too, from such a decision, not to consider here the workers abroad, not contributing to the education budget at home. But, usually, Parliaments and/or Governments do not easily accept the increase of quota of higher education in the public budget, in spite of the possibility of so generating new jobs in education with a low specific investment (the investment for creating and maintaining a job in HE being much smaller than in the major part of new industries).

The deduced relationship [13] clearly explains one feature of the essence of Bologna Declaration: no increase in the academic access is possible in the actual budgetary frame, without a structural reform of Higher Education. To run all three cycles: I (B.Sc.); II (M: Sc.) and III (PhD.) (O = I , II, III), the necessary Budget for higher education, BHE , would be: [15]BHE = BI + BII + BIII = pe*N*[(Tfg*ag*c)I + (Tfg*ag*c)II + (Tfg*ag*c)III] = = pe * N* O[ T * (1+f)R * (1-d)T-1 *ag*c ]O ~ = pe * N* cO{ T * (1+ R * f) * [1 + (T-1) d] *ag*c }O The component parentheses differ significantly between them by: extensive parameters: • e1) rate of access to higher education, a; • e2) duration of study T ; • e3) eventually, by the number of cycles O, financed for one individualand by intensive parameters: • i1)failure rate, f , • i2) dropout rate, d , (f and d influencing the rate of access to graduation ag ); • i3) unit cost per year of study, c.

An increase in every one of these parameters results in an increase of the budget for Higher Education. jiLet F be the total yearly Funding of Higher Education, where FP , comes from Public sources; FC comes from private sources (Companies ); FU comes from the direct revenues of the universities due to services done by them (including taxes). Then: [16]F= FP + FC +FU, In the major part of EU members, F, the Funding of higher education is ensured mainly by public contribution, with the exception of a part of doctoral costs and a small part of master costs, which are covered by private companies. In all Central and East European (CEE) former communist countries, the Public Funding, only, practically, counts. A balanced budget of the HE means: [17]BHE = F

For the needs of this model, the academic excellence, E, might be defined as the quality and the quantity of the new personal knowledge and abilities acquired by a graduate of a cycle, by the new knowledge and new types of products generated by one student of a cycle during his or her graduation studies.  Sociological and psychological investigations have shown that E is very fast increasing (some would say quasi-exponentially) with the: • Quality and the volume of the basic knowledge K; • Intelligence and Emotional quotientQ • Creativity, G, • Motivation, M, • Desire to win, V • Habit to work, L;  Training for research age, A (for small A), A being the time span since starting academic education and being generated the first genuine results. •  Supplementary investment, I, for training for excellence (investment in equipment; supervising; organising competitions . . . )

When expressed as a function of the previous parameters, the Excellence becomes [18]E = Emref * exp (bKK + bQQ + bGG + bMM + bVV + bLL + bAA + b II), where Emref is a reference value of academic excellence, corresponding to some defined levels of values for the considered parameters (for example, to the minimum requirements for enrolment) and bj are system constants to be determined. This function E is a very sharply increasing one with the increase of each of the parameters determining the Excellence. It may be found in sociological and psychological reports that the intensity (value) of all parameters K, . . . , I, are Maximum decreasing when going further from the top values among the members of a society, that is with increasing the rate of access to higher education, a, especially in democracies, where the education is free and the selection is based upon merit. In a first approximation, that leads to a relationship of the form: [19]E = E MREF * exp (-a) where EMREF is a high reference value of academic excellence, to be found considering, for example, the top 10-4 * N segment of the population of the considered Society.

Because of the negative derivative of E with respect to a, the increasing of the democratic access, a, will induce the decreasing of the average individual academic excellence, in spite of the necessary increasing funding.  Nevertheless, the Society’s cumulated academic excellence, ET, thetotal quantity of new knowledge and new types of products generated by higher education will be slightly improved, but at a higher unit cost, the newly generated cumulated academic excellence obtained by enlarging academic access being more expensive, larger the increase in access be.

WHAT IT HAS TO BE DONE to increase the access a to Higher Education, subject to social restrictions (and referred based upon the mentioned relationships implied in the developed model) ? Relations [13] and [16] gives some hints how to increase a (an intensive parameter) without increasing the quota of the budget of HE in the Society’s budget: to reduce the values of the other extensive parameters and to reduce the values of the intensive parameters.  But, until very recently, the actual structural reform proposed by politicians has been a rather, extensive one. The major recommendations done and actions taken are mainly concerned with acting upon the extensive parameters, the intensive factors being applied to, rather partially and rarely, only as auxiliary ones when changing the extensive factors.

A new purpose - to study the dependence educational parameters on the macro-economic and social indicators of Romanian universities and the possibility of forecasting their values for the incoming years. An application of this work can be the identification of the best geographical regions for best education as a new idea of a revenue, since Romanian universities are still under-ranked, especially in the field of economic 1.Public education/Private education 2. Education/Research

Franchising Complexity: how to profit from transcending the linear paradigm in education