Innovation in Higher

Education:
Can Colleges Really Change?

Dustin Swanger, Ed.D.

June, 2016
 Table of Contents

Table of Contents 2
Introduction 3
Changing Climate of Higher Education 4
The Business of Higher Education 13
Defining Innovation 17
Challenges to Innovation in Higher Education 24
Innovative Colleges and Universities 35
Innovating Existing Colleges: Recommendations 45
Conclusion 53
References 53

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 Introduction
Higher education faces many more challenges today than ever before in its history.
Colleges and universities are challenged to serve a variety of students, from those who
are academically gifted to those who are under-prepared for college-level work. They
are challenged by the shrinking pool of traditional college-aged students in the United
States. They are challenged by the political pressures regarding the cost of attending
college and the growing student debt upon leaving college. These challenges are hitting
higher education from many fronts.

While higher education is seen as a critical partner for the future of the United States, it
is also experiencing a tremendous amount of political pressure. Public and political
expectations, coupled with the soaring costs of a college education, have led to
pressure on colleges and universities to become more efficient, to innovate and to
perform.

What is performance? That is one of the key questions that higher education leaders
must answer. The performance expectations of those inside higher education does not
appear to align with the performance expectations of those outside of higher education.
This misalignment is leading to more regulations and more frustration. There is a belief
among some outside of higher education that if colleges were more innovative
outcomes would improve. Yet despite this desire for innovation, the vast majority of
funding formulas from state and federal governments remain very traditional. That said,
there is also a growing trend within state funding sources across the country to establish
performance funding formulas (pay for outcomes) which elected officials believe will
make higher education more efficient and produce more, and “better,” graduates.

This paper will explore the current state of higher education and the pressures facing
colleges. It will also explore innovation and some of the challenges to innovation in
higher education, as well as some of the successes. While this paper will, by no means,
provide a definitive direction for colleges and universities, it will recommend some
changes that can be implemented on any campus to improve outcomes and
efficiencies.

It is the hope of the author that this paper will inspire conversations on campuses
across the country regarding innovation in higher education. It is also the hope that it
may inspire more dialog regarding federal and state approaches to working with higher

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education leaders on improvements that will provide more students a better college
education.

Changing Climate of Higher Education

Higher education is under attack. What was once a climate of good will and respect for
institutions of higher education - founded in the belief that the administrators, faculty and
staff who worked within the hallowed halls of learning institutions were doing the greater
good of society - is now replaced with a general sense of skepticism. Most of these
feelings are borne from the increasing costs of operating colleges and universities, as
well as a general lack of understanding of the breadth of work conducted in higher
education today. This lack of understanding is often compounded by the fact that some
of that work is difficult to measure through traditional methods.

The federal government alone spends over $150 billion annually at colleges and
universities to educate students. This funding is then supplemented by billions of state
dollars nationally. Faced with graduation rates between 15% and 57% (depending on
the institution) public decision makers are asking if they are getting their money’s worth
for such a large investment. Similarly, the general pubic is expressing growing concerns
over the high cost of a college education, worrying about growing student debt and
wondering if a college education is worth the cost.

There is no doubt that today’s climate of higher education is placing more pressure on
leaders of colleges and universities to think differently about how they manage their
institutions. There is more accountability placed on institutions for performance. That is,
clearly defining the outcomes of an institution - especially related to student learning -
and how institutions then prove that they are meeting those outcomes and ultimately,
students’ needs. National accrediting bodies, long thought of as the “quality enforcers”
of higher education, are being directed by the federal government to be more
demanding of institutions. It appears that there is a growing climate of mistrust of the
accrediting bodies themselves, seeing them as “good-old-boy networks” rather than as
quality control organizations; and, the federal government wants it to change.

Student retention and completion is becoming the mantra of elected officials. The
legislation entitled No Child Left Behind advanced by then President George W. Bush,
was envisioned to assure that every student in primary and secondary education would
meet established standards. Those schools in which students failed these standards
would lose funding. While the success of No Child Left Behind can be (and is being)
debated in a variety of settings, the growing belief that student failure is the

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responsibility of the institution is popular in capitals all across the nation. Today, there is
increasing sentiment among policy makers to apply standards and policies similar to No
Child Left Behind to higher education. They expect colleges to address issues related to
student failure and to improve student retention and graduation rates across the board;
and, to do so quickly.

Education leaders all across higher education are discussing these challenges. John
Ebersole, in an op-ed piece for Forbes Magazine, identified the top issues facing higher
education today. He lists several issues beginning with the increasing cost of higher
education. He states that while “much of the cost increase over the past five years can
be attributed to reduced state tax support for public institutions which has forced an
offset through increases in tuition and fees”1 the public and elected officials do not
believe that such increases are justified. Dr. Ebersole also cites a) a trend toward
competency based education, b) tougher accreditation standards, c) an emphasis on
assessment, d) voids in leadership, and, e) the growing diversity of students as
challenges that will plague higher education in the coming years.2 These challenges
must be faced by college leaders. To respond to such concerns, leaders are exploring
numerous initiatives on their campuses and throughout higher education.

Student Expectations
In her article, Five Critical Issues Facing Higher Education Leaders in 2014, Karlyn
Borysenko cites that increased scrutiny toward colleges and universities is a major
challenge now and for the future. She highlights a survey finding that “…24% of alumni
say the cost of their college education exceeded its value.”3 That is, perhaps their
college degree is not providing them with the return on investment that they expected.
Borysenko also states that the public and elected officials are paying much more
attention to post-graduation success, as measured by employment rates and salary
levels upon entering the workforce, than in the past. Additionally, students and their
families expect an immediate financial return for their investment in a college degree.

In a recent Inside Higher Education survey of college Chief Financial Officers, the
authors found that with troubled budgets and fewer traditional college-aged students
available, retention of current students will be the highest priority of colleges for the next
several years. This focus will force colleges to think differently about students’ needs

1 Ebersole, John. “Top Issues Facing Higher Education in 2014.” Forbes. January 13, 2014.
2Ebersole, John. “Top Issues Facing Higher Education in 2014.” Forbes. January 13, 2014.
3 Borysenko, Karlyn. “Five Critical Issues Facing Higher Education Leaders in 2014.” Edventures. August 12, 2015.

"5
and expectations and will likely have particular impact on those students who attend
part-time, or even full-time, and have to work while attending college. Given these data
points, Borysenko concludes that students are looking for a different kind of educational
experience. These students want an experience that uses technology to enhance
teaching and learning while reducing the costs of higher education and the length of
time to earn a degree. They also want more distance learning opportunities to
accommodate students who cannot fit a traditional approach to education into their
schedule.4

Funding
The 2008 recession had a devastating impact on the US economy; and, higher
education was not insulated from that impact. In 2008 nearly every state in the nation
significantly reduced state support for higher education institutions. In 2015, the fiscal
support for higher education by state governments had not rebounded since the 2008
collapse. In their 2015 report, Michael Mitchell and Michael Leachman cite significant
fiscal realities faced by higher education. For example, “Forty-seven states - all except
Alaska, North Dakota and Wyoming - are spending less per student in 2014-15 school
year than they did at the start of the [2008] recession.” 5

So how bad is public funding for higher education? In 2015, the average state spending
per student was $1,805 which was 20% lower than the average state spending per
student in 2007-08. While most states had moved toward restoring funding for higher
education, almost none had reached pre-recession levels. In fact, 13 states had
reduced their funding per student in 2014-15 school year. These reductions in state
support forced colleges and universities, particularly those in the public sector, to
increase tuition at a greater rate than inflation. In fact, after adjusting for inflation, on
average, public universities have increased tuition by 29% since 2007-08 school year. In
some states tuition has risen as much as 60% over the same time period. 6

Elected officials and the public have reacted negatively to tuition increases; however,
little has been done to return state support to pre-recession levels in order to stabilize
tuition. It does not appear that such support will return in the near future. Donald Heller,
Dean at Michigan State University, suggests that public funding may never again be

4Borysenko, Karlyn. “Five Critical Issues Facing Higher Education Leaders in 2014.” Edventures. August 12, 2015.
5Mitchell, Michael & Leachman, Michael. ‘Years of Cuts Threaten to Put College Out of Reach for More
Students.” Center on Budget and Polity Priorities. May 13, 2015.
6Mitchell,Michael & Leachman, Michael. ‘Years of Cuts Threaten to Put College Out of Reach for More
Students.” Center on Budget and Polity Priorities. May 13, 2015.

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what it was in the beginning of the century. He writes, “It is quite possible that state
appropriations for higher education are not going to recover after this recession as they
have in the past. Publicly-funded colleges and universities will have to develop
innovative solutions to reduce costs, shift revenues and deliver effective programs using
new models and technologies.”7

Regulations
Higher education is experiencing a crushing growth in regulations. In 2014, the Task
Force on Federal Regulations of Higher Education issued its report regarding a growing
regulatory environment for colleges and universities. The report cites a tremendous
increase in regulations and their negative consequences on campuses. In the report’s
introduction the Task Force states, “Over time, oversight of higher education by the
Department of Education has expanded and evolved in ways that undermine the ability
of colleges and universities to serve students and accomplish their missions. The
compliance problem is exacerbated by the sheer volume of mandates.”8 Additionally it
states that “….official guidance to amend or clarify its rules [are issued] at a rate of more
than one document per work day.”9

No one would argue that higher education should be without regulations. Certainly with
the amount of federal and state funds allocated to support higher education, reasonable
regulation is expected. But too much regulation is counter productive, “…regulations
serve an important role in ensuring institutional accountability. But requirements that
have excessive reach, or that are unnecessarily costly and difficult to implement - or
worse still, that hinder student access to college and drive costs up - are counter
productive.”10

Colleges and universities have seen changes coming for some time. While change is
not new for Higher Education, the severity of change and the growing attacks on higher
education from so many fronts will take a toll on colleges and universities. In a 2011
article entitled The Changing Landscape of Higher Education its authors, David J.

7Heller, Donald. “Higher Education Under Attack, MSU Dean Argues.” Michigan State University - Campus Life.
April 20, 2012.
8Recalibrating Regulation of Colleges and Universities: A Report of the Task Force on Federal Regulations of
Higher Education. 2014. p.1.
9Recalibrating
Regulation of Colleges and Universities: A Report of the Task Force on Federal Regulations of
Higher Education. 2014. p.1.
10Recalibrating
Regulation of Colleges and Universities: A Report of the Task Force on Federal Regulations of
Higher Education. 2014. p.2.

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Staley and Dennis A. Trinkle discuss ten trends that will have a lasting impact on higher
education for decades to come. These trends are, perhaps, disruptive to the way that
higher education has conducted its business for hundreds of years. Each trend is
explored briefly below.11

1. Increasing Differentiation of Higher Education

Higher education has historically been dominated by private universities.
To some extent, there is still the general aura that an educational
experience offered by a private university is more prestigious than those
offered at public colleges and universities. However, that trend is
changing; and, students may consider a variety of options for their post-
secondary education.

Today there are private elite universities, small private liberal arts colleges,
public universities, community colleges, and for-profit colleges - which
have grown at a rapid pace. The point is that students have choices. While
a college education may have seemed out of reach for some in the past,
with so many choices, college is perceived to be much more attainable
regardless of one’s life circumstances.

Such an array of options for a college education, coupled with a shrinking

traditional college-age population, has served to make the higher
education marketplace much more competitive. To address this
competition, some universities are exploring diversifying themselves. That
is, creating separate “lines of business” - for example a research division
and an education division - in order to address the diverse missions of
large research universities. Southern New Hampshire University is a
tremendous example of an institution creating a new “line of business” to
address new student markets. (SNHU will be studied later in this paper.)

Additionally, in order to improve their own employees and to keep them

from leaving their employment, some large corporations are developing
training institutions and calling them “colleges”. Some are even offering
college credit. “Hamburger U,” a training division of McDonalds, has
recently offered college credit for its management courses.

11Staley, David J. & Trinkle, Dennis A. “The Changing Landscape of Higher Education.” Educause Review. Vol 46.
2011. pp. 15 - 31.

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 2. Transformation of the General Education Curriculum
Liberal Arts as a curriculum of study is under attack. While colleges are
not (and should not be) career schools, elected officials speak about a
college education as if it is a “training” program for technical employment.
While certainly, a college education should prepare students for a career,
college should also expand each student’s experience and broaden his/
her understanding of the arts, science, language, humanities, etc., while
they prepare for a career.

For those in higher education who speak with employers regularly, many
of the skills for which companies ask students to be prepared are
developed through liberal arts programs or general education courses.
Employers want to hire individuals who have well developed language
skills, can write well, have a global awareness, can reason, can perform
mathematical functions, can work in teams and demonstrate appropriate
interpersonal skills. These skills are often embedded in the liberal arts and
general education courses.

Some students may not perceive a value in liberal arts classes. They often
see general education as an unnecessary cluster of classes that they
must complete in order to earn a degree. Today’s students are very value
centric. That is, they only want to do something for which they believe they
will receive a direct and immediate benefit. Therefore, higher education
needs to position general education as a more valued component of
higher education than it is currently viewed by many of its students and
elected officials.

3. Changing Faces of Faculty

While higher education has long struggled to recruit more diverse faculty
members to its campuses, there is a change that is occurring in faculty all
across the country. That change is not necessarily one of diversity, rather
it is the increase in the use of adjunct faculty for instruction. When
examining the composition of higher education faculty, it is clear that the
majority of faculty across all sectors are adjuncts. That may not mean that
the majority of courses at institutions are taught by adjuncts. However, a
“headcount” of faculty who teach in higher education results in many more
adjuncts than full-time faculty on campus.

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While the faculty advocates that the quality of education is much higher
when courses are taught by full-time faculty; and, that full-time faculty
create a college culture that cannot be created by adjunct faculty (who
come to campus to teach their classes and leave), parents and students
may not value full-time faculty in the same way. Rightly or wrongly, some
parents believe that adjuncts bring a more “real world” experience to the
classroom, which is seen as more valuable for students; while full-time
faculty are sometimes considered shielded from the “real world.” Higher
education needs to define the role of adjuncts and to help prepare them
better for college teaching.

4. Surge in Global Faculty and Student Mobility

Competition in higher education is much more fierce than in the past.
There are fewer traditional college-age students (18 - 24) and these
students have more choices for their college education. With the
technology that is available today and the anticipated technology for the
future, faculty and students can select colleges and universities anywhere
in the world as their preferred institution without ever stepping foot on the
campus.

Such mobility has the potential to drastically change the college

marketplace. For example, colleges in Asia are extremely interested in
competing with universities in the United States for international students.
Changes in technology may allow more international students from more
countries to enroll at colleges and universities that never before
participated in the international student market. Such mobility also means
that students may choose to take classes from more than one institution
during their studies.

Just as students have mobility, faculty too have options to teach at several
institutions and may do so from their home. This trend will have a
significant impact on faculty recruiting and affect the collegial interactions
of faculty on campus for numerous committees, curriculum discussions,
research, etc. The market is truly changing.

5. The New “Invisible College”

Related to faculty mobility, higher education is seeing the emergence of
what the authors call the “invisible college.” Historically, colleges served as

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repositories for information. Different colleges had particular expertise in
specific academic areas based on the interest of the faculty. This expertise
attracted new faculty with similar interests all of which created
concentrated areas of excellence within individual universities.

Today, digital networks of information make access to data and areas of

specialty ubiquitous, particularly in the scientific fields. Therefore,
researchers no longer need to be in the same physical location to
collaborate. This change will reduce the attractiveness of many
universities for expert faculty. For example, a faculty member may choose
to teach at a small institution in a rural setting, yet collaborate on research
with faculty in a large urban environment.

6. The Changing “Traditional” Student

Four-year colleges and universities predominately catered to students who
graduated from high school and left home to attend college. This is
particularly true of private colleges and universities with traditional stone
and brick campuses replete with student dormitories. Public universities
too, captured this market. Those who attended college after the age of 25
were considered non-traditional students and often started their education
at local community colleges.

Today, all across the country students over 25 years old are becoming the
majority of the student population - 60% nationally. These students usually
work full-time and often have family obligations. While historically
community colleges served this population, other institutions are seeing
this market as a means to supplement their shrinking traditional-aged
student population. A fairly new sector to higher education, private for-
profit colleges, have pursued this new student market quite
enthusiastically.

7. The Mounting Pressure to Demonstrate Value

The rising cost of attending a college or university has caused the general
public to question the worth of a college education. There have been
several studies regarding this issue and the data conclude that those with
college educations will experience higher earnings throughout their lives,
will be less likely to experience lay-offs, will contribute more to their
communities, and are more likely to be physically healthy. Yet, the financial

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outlay for many students causes families with already strained resources
to question if it is worth it.

Added emphasis by the federal government on “gainful employment”

statistics and loan repayment rates immediately after graduation as a
measure of the quality of education from each institution can enhance this
rising skepticism about college education. Higher education institutions will
need to demonstrate value to the public and potential students if they are
to remain viable.

8. The Revolution of “Middle-Skill” Jobs

The U.S. economy is becoming more reliant on colleges and universities
to prepare students for “middle skill” jobs. These jobs often require post-
secondary education but, perhaps, not a bachelor’s degree. It is estimated
that nearly half of all job openings within the next five years will be “middle
skill” jobs. While this may be good news for community colleges, it may be
bad news for the rest of the higher education industry.

Focusing on developing students for work in “middle skill” jobs means

focusing on more practical skills and less on theoretical knowledge. Again,
this has been a large market for community colleges. However, over the
past decade, private for-profit colleges have pursued this market
vigorously and grown their enrollments at a much faster rate than
community colleges.

9. College as a Private vs. Public Good

Public support for higher education is waining. Some states have seen
fiscal support for public higher education institutions devolve from state-
supported, to state-assisted, to state-related as funding has experienced
significant reductions. There are some public institutions that are
considering abandoning public support altogether and becoming private
institutions. Such a change would free them of “strings” attached to public
funding and provide them with the flexibility they believe that they need to
serve today’s students and to become more entrepreneurial institutions.

Today’s climate of mistrust of higher education, lack of a sense of value for

college degrees, and what is sometimes viewed as excessive college
spending have shifted the sense of public support from an investment in

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 the future to an expense line in the budget. This shift will cause higher
education institutions to clearly define their value and reduce costs.

10. Lifelong Partnerships with Students

Many colleges and universities are beginning to explore a new approach
to their students after graduation. Rather than considering them only as
alumni, they are developing approaches to have former students return to
their campuses on a regular basis. This effort to connect with alumni, post-
graduation, is based on a desire to have graduates establish a continuous
affiliation with their alma mater and to increase alumni giving.

The Wharton School of Business at the University of Pennsylvania is

developing an initiative to have their graduates return every seven years
for a free weekend-long professional development session. Such a
weekend is marketed as a “brain exercise” and one that will keep
graduates sharp and growing for the business sector. While true, it will
also keep those students returning to campus as their earnings increase
throughout their careers.12

All of these factors have created a climate for higher education unlike any seen before.
It is an unusual climate where elected leaders are looking to higher education for
solutions to problems (particularly economic) while chastising institutions as inefficient,
costly and unwilling to change. It is a climate of intense pressure to perform and to
improve student retention and graduation rates, while holding the line on costs. It is a
climate of fostering continuous improvement and innovation, while imposing more
regulations. It is a climate of challenge and opportunity for those who can be creative
and have a vision for the future.

The Business of Higher Education

Many career educators in higher education do not like to think of colleges and
universities as a business. However, colleges are indeed businesses. Depending upon
the sector (private, public, community college or for-profit) the business model may vary
slightly but every institution has revenue, expenses, profit centers, loss-leaders and
other characteristics that are very similar to a basic business model.

12Staley,
David J. & Trinkle, Dennis A. “The Changing Landscape of Higher Education.” Educause Review. Vol 46.
2011. pp 15 - 31.

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In her article, A Race to the Bottom: MOOCs and Higher Education Business Models,
Yoram Kalman applies a simple business model to higher education. She states that
there are three components to a simple business model: customer value proposition;
infrastructure; and financial.

Customer value proposition is characterized by what an organization has

that those who will make purchases want. In order to assure that an
organization has what is wanted, those in the organization must
understand the characteristics of its customers and their needs. They must
understand how those needs can be met by the organization; and, they
have to create a value for the customer in order for them choose their
organization over a competitor.

Applied to colleges and universities, administrators and faculty should

understand the needs of students. Students are looking for a quality
education provided in a manner that meets their needs. If a student is a
full-time traditional student his/her needs are different from a part-time
student who is a single parent working to keep food on the table and raise
children while attempting to achieve an education that prepares him/her
for the future. Organizations may choose to meet the needs of traditional
students, non-traditional students, or both.

Infrastructure is comprised of resources and processes that are used to

serve the customer. Buildings, lecture halls, labs, classrooms, equipment,
faculty, technology and scholarships are some of the resources that
colleges and universities have to help meet the needs of students
(customers). Processes include how we interact with students and each
other to meet these needs. Thus, processes like registration, budget
controls, hiring of faculty, course approvals, application for financial aid all
are processes that are used to serve students. If these processes are
cumbersome or difficult, students (customers) may look elsewhere.
Additionally, depending upon the customer (student) served by the
college, those processes may need to be different from sector to sector or
market to market.

The financial component of the business model consists of a number of

factors including pricing, fixed and variable costs, ratios, margins, and
revenue sources. These factors will determine the resources that a college

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 or university has to apply to the other components. Therefore, all three of
the components are highly interdependent.13

There are those who believe that the traditional business model for colleges and
universities is in jeopardy. They pose that there are several factors causing a disruption
in the higher education business model that will likely force college leaders to rethink
their models in order to survive.

Mark Toner suggests in his article, The Highly Endangered Higher Education Business
Model, that “long-standing trends: declining state support for public institutions and
concerns about sustainability for private colleges”14 are causing a significant disruption
in the operations of many colleges and universities. In a poll conducted for the article,
only 13% of the Chief Financial Officers contacted were strongly confident in the
business model for their institutions over the next ten years. Citing factors like tuition
increases, growing tuition discounts, the shrinking pool of high school graduates,
growing student debt and lower family incomes, many CFOs believe that their
institutions must find new sources of revenue and cut costs in order to survive.

There are those who project that some colleges will not survive this disruptive change.
In a September 2015 article in Inside Higher Education, Kellie Woodhouse reports that
Moody’s Investor Sector released a recent report predicting that annual college closures
will triple by 2017 and mergers will double. The major cause will be lower enrollments
and significant tuition discounts. While this projection only represents less than 1% of
nonprofit colleges annually, it suggests a new environment for higher education.15
Looking beyond the studies, closings and consolidations are becoming real. For
example, Georgia is preparing to consolidate eight of its thirty-five public colleges. New
Jersey is considering an overhaul of its public university system including merging
Rutgers-Camden with Rowan University.16 The State University of New York is
attempting to save costs across the system through shared services, group purchasing
and shared business processes.

13Kalman, Yoram M. “A Race to the bottom: MOOCs and higher education business models.” Open Learning. Vol.
29 No 1. 2014
14 Toner, Mark. “The Highly Endangered Higher Education Business Model.” Presidency. Summer, 2015. pp.15-18.
15Woodhouse, Kellie. “Moody’s predicts college closures to triple by 2017.” Inside Higher Education. September 28,
2015.
16DiSalvio, Phillip. “Shifting Landscapes, Changing Assumptions Reshape Higher Education.” New England
Journal of Higher Education. June 11, 2012.

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In a document released by the American Council on Education (ACE) entitled Beyond
the Inflection Point: Reimagining Business Models of Higher Education, Cathy Sandeen
edited several white papers into a concise essay about the challenges facing the higher
education business model. In this document, Jane Wellman, a higher education
economist, states: “We’ve got real challenges to our value proposition. Consumers and
employers are questioning whether what they’re spending on us is worth it. We’ve got a
resource problem, particularly in revenues but also in how we use faculty. We have
processes that are probably not helping us make decisions. We have real problems in
balancing our internal costs and revenues. We have a historic pattern of complicated
cross-subsidies that require fairly substantial levels of institutional general fund
subsidies that no longer exist.”17

As stated above, ACE’s document cites many of the same challenges identified by other
authors including a lack of public fiscal support, rising tuition levels, eroding trust in
higher education, focus on quality and productivity, changing student demographics,
high operating expenses, and growing competition among the colleges and sectors of
higher education. However, this document also cites opportunities for higher education
leaders to explore.

As more colleges and universities migrate courses to partially or fully on-line, there is an
opportunity to rethink the physical space of a campus and how that space is designed.
Can campuses shrink and provide similar services? Or, can facilities be used in other
ways to generate income?

On-line learning itself is also causing challenges and opportunities. As more institutions,
public and private, enter the on-line market it will affect several aspects of higher
education. First, it will provide students with even more choices for their education.
Secondly, as Burke Smith points out “as more purveyors deliver online learning, there
will be a downward pressure on prices. Once the market reaches that tipping point, for
example, institutions that price on-line learning like they do traditional classroom
courses will find it increasingly difficult to maintain those margins.”18 College leaders will
need to explore different funding models for on-line learning and perhaps define it as its
own “line of business” and price it accordingly.

17
Sandeen, Cathy A. editor. “Beyond the Inflection Point: Reimagining Business Models for Higher Education.”
American Council on Education. Center for Education Attainment and Innovation.
18Sandeen,Cathy A. editor. “Beyond the Inflection Point: Reimagining Business Models for Higher Education.”
American Council on Education. Center for Education Attainment and Innovation.

"16
Even traditional pricing will be effected. In fact, some institutions are already examining
the opportunity to charge different prices for different programs on their campuses. For
example, those programs that are expensive to operate - healthcare, science,
engineering, etc. - may be priced significantly different than liberal arts programs that
require fewer resources to operate. To some extent, colleges have accomplished a
portion of this differentiation in price through lab or course fees. However, on nearly
every college campus there is a cross-degree subsidy that uses excess revenues from
low-cost programs to fund losses in other high-cost programs. Competition may force a
rethinking of this practice.

While changes in the higher education landscape will force significant changes in
operations of colleges, demand for higher education is at an all-time high. New student
markets are emerging that are looking for new methods of education. To meet this
demand, college leaders will need to focus on strategic priorities including academics
and improving learning on their campuses. They will need to leverage technology in
order to improve efficiencies. They will need to be creative in their processes,
infrastructure investments and clearly define their market if they are to maintain a
balance between revenues and expenses19 .

As these challenges continue to face higher education, leaders of colleges and

universities will need to be more innovative. They will need to examine their business
models, their consumer markets, their infrastructures and their processes in order to
create a value proposition that positions their institution for a sustainable financial
future. But true innovation in higher education is not easy.

Defining Innovation
The term “innovation” is used a great deal in advertising, in speeches and in describing
one’s company or organization. It certainly seems that the term “innovation” is used
much more than the actual innovation that takes place. Russell Raath states in his
article, When Innovation Fails, that “even when organizations are not necessarily doing
anything ground breaking, or new, they still call it ‘innovation.’ Just because it just
sounds grander.” He continues, “These are not innovations - rather they are simply
improvements.”20

19Toner, Mark. “The Highly Endangered Higher Education Business Model.” Presidency. Summer, 2015. pp.15-18.
20 Raath, Russell. “When Innovation Fails.” Forbes. June 28, 2012.

"17
So what is innovation? In order to have a discussion about innovation and innovative
organizations it is important to start with a clear understanding of what it means to
innovate. A recognized author on the subject of innovation is Clayton Christensen. He
has been cited by presidents of higher education institutions as an inspiration for
innovation on their campuses. In his book, The Innovative University: Changing the
DNA of Higher Education from Inside Out, Christensen (along with his co-authors)
defines different types of innovation.

Sustaining Innovation is a process, system or modification that improves

an existing product or system. It may make it better, bigger, more efficient
and/or more beneficial to the end user. An example of sustaining
innovation is a new, updated model of a car that gets better gas mileage.

Disruptive Innovation is innovation that creates significant change. This

represents an innovation that “brings to market a product or service that is
not as good as the best traditional offerings, but is more affordable and
easier to use (particularly in the beginning)”21 of the product life. Said
another way, “Disruptive innovation replaces the original complicated,
expensive product with so much more affordable and simple [product] that
a new population of customers….now has enough money and skills to buy
and readily use the product.”22

Two simple examples of disruptive innovation include the introduction of the home
computer and Apple’s development of iTunes. The home computer, while not as
powerful as mainframes, brought computing to an entirely new market and customer. It
put computing power onto the hands of millions, or even billions, of people who did not
have (nor need) a computer-related degree to operate the product.

iTunes completely changed the music industry and how consumers purchase music. It
took an industry that was struggling with sluggish sales, and rampant with illegal
copying of songs and albums, and made it easy for consumers to download albums or a
song conveniently and for very little cost. This innovation changed consumer behavior.
Like many others, these types of innovations disrupted the status quo of their industries,
changed consumer expectations and brought an entirely new market to the table.

21Christensen, Clayton M. & Eyring, Henry J. The Innovation University: Changing the DNA of Higher Education
From the Inside Out. Jossey-Bass 2011.
22Christensen, Clayton M., Horn, Michael B., Caldera, Louis, Soares, Louis. “Disrupting College: How Disruptive
Innovation Can Deliver Quality and Affordability to Post-secondary Education.” Center for American Progress. Feb.
2011.

"18
 Innovation by Design
For many, the thought of being truly innovative seems an unattainable goal. Most
people believe that innovation takes place in a laboratory, a research facility or in the
garage of a “really smart” person. That is all true; however, innovation is a skill that can
be taught and, if managed well, become the culture of an organization. Through a
process called Innovation by Design or Design Thinking (often used interchangeably)
any organization can develop break-through ideas and products that provide sustaining
or disruptive innovation in the market.

Design Thinking is “…a human-centered, prototype-driven process for innovation that

can be applied to a product, service, and business design.”23 Human-centered means
that from the very start, the innovation team needs to understand what the customer
wants at a very core level. The team may develop an understanding of the customers’
wants better than the customers, themselves, know them. This understanding doesn’t
come from surveys and interviews; rather, it comes from observations and research. It is
a very empathetic approach - and not very linear.

A prototype-driven approach can be uncomfortable. It means that the team will

brainstorm many ideas that could solve the “problem” (problem being the issue that
sparked a need for a new product or service). Brainstorming identifies numerous
approaches to potential solutions, no matter how far-fetched they may seem. Then, the
team develops inexpensive prototypes of the product, or service, to explore what works
and what doesn’t work. The motto for this process is “fail often, fail early, and learn from
failure.” If there are no failures in the process, the team is not truly innovating.

On the website www.innovation-by-design.org the authors state that “Design Thinking

creates a framework for thinking and problem-solving that can help people tackle any
issue.”24 The authors identify several steps in the process (detailed below). However,
the process is not linear and those who are using the process may move back and forth
among the steps as they work toward the end-goal. This process develops many skills
including “empathy, imagination, collaboration, communication and persistence.”25

23 Cohen, Reuven. “Design Thinking: A Unified Framework For Innovation.” Forbes. March 31, 2014.
24 Innovation By Design website www.innovation-by-design.org.
25 Ibid.

"19
The identified steps in Design Thinking are:
• EXPLORE - identifying and investigating an issue
• FOCUS - Narrowing the field and choosing the most effective site for intervention
• IMAGINE - Brainstorming possible solutions, no matter how far-fetched
• DISTILL - Analyzing ideas and choosing the most promising solutions to pursue
• EVOLVE - Prototyping solutions and refining them based on feedback
• SHARE - Reflecting on those experiments with experts and end-users
• BUILD - Implementing the final idea and making it real26

While the above list of steps suggest a neat and orderly process, Design Thinking does
not usually function in such a manner. It is dynamic and can seem chaotic. As Russell
Raath states, “Innovation does not come out of a controlled situation. If you want more
innovation, allow more chaos.”27 Managers and leaders must encourage risk-taking and
celebrate failures, as well as successes, along the way if innovation is to take place.

Examples of Innovative Organizations

While there are numerous innovative organizations, three are identified below that stand
out as organizations that embraced innovation from their very beginnings. Perhaps
because of the personality of the CEO or perhaps because of the work that they chose
to do, innovation became a culture that defined the organization and how they approach
development. The businesses identified will immediately invoke a recognition of
innovation in their industries.

IDEO
IDEO is a global design company. They are well known for their innovative approaches
to problems and have been recognized as leaders in innovation. Working with
companies and organizations to make significant improvements to products and
services, IDEO uses a team approach to every design. They have been highlighted on
CBS 60 Minutes and have been very willing to share their process with anyone
interested.

IDEO’s design teams are not a cadre of engineers. They include engineers, but also
sociologists, designers, business analysts, psychologists, etc. Teams start by “diving
deep” into an understanding of the end-user of a product or service before beginning to
design anything. Tim Brown, the president and CEO states that “Design Thinking is a

26 Innovation By Design website www.innovation-by-design.org.

27 Raath, Russell. “When Innovation Fails.” Forbes. June 28, 2012.

"20
human-centered approach to innovation that draws from the designer’s toolkit to
integrate the needs of people, the possibilities of technology and the requirements for
business success.”28 This approach brings together: what is desirable from a human
perspective; what is technologically feasible; and, what is economically viable in order to
craft an innovative yet practical solution.

IDEO summarizes these in a simple graph.

Desirability Viability

Feasibility Innovation

Further, IDEO states that for their company, Design Thinking is best thought of as
overlapping spaces rather than orderly steps. These spaces, as they call them, are
inspiration, ideation and implementation. Inspiration is the problem or opportunity that
brought out the need for a solution. It is what motivates the team to innovate. Ideation is
the process of creating potential solutions, developing and testing ideas and creating
prototypes to see how these ideas might work. Finally, implementation is bringing the
prototype from a project to a product in people’s lives. 29

Apple
Apple is known by computer users around the world as an innovative company that has
created products that bring computing into homes and lives. While not possessing the
largest market-share for personal computers, Apple is known for its designs, its user-

28 www.ideo.com
29 www.ideo.com

"21
friendly and intuitive interface, its creativity and for developing an almost emotional bond
between consumer and product that has inspired unprecedented brand loyalty. When
Apple launches a new product, consumers wait in lines or sit by their computer until the
second that that they can purchase the product.

For Apple, innovation means developing products that are simple to use and beautiful in
every detail. This dedication came from Apple’s former CEO Steve Jobs. Mr. Jobs
believed in the following six design principles and instilled them in this company:

1. Craft Above All - attention to details matter, even those details that many
may never notice;
2. Empathy - an intimate connection with the feelings of their customer and
understand them better than any other company can;
3. Focus - perform well on the things that you decide to do and eliminate all of
the unimportant opportunities that we didn’t decide to do;
4. Impute - people form an opinion about a company based on the signals it
provides - even the best products will look bad if not presented well - people
do judge a book by its cover;
5. Friendliness - high-tech products should look friendly, not off-putting;
6. Finding Simplicity for the Future in Metaphors from the Past - make
things intuitively obvious, the user interface should remind them of things they
already know (folders).30

By having this six pillar philosophy to design and innovation, Steve Jobs parleyed his
company into one of the most recognized brands in the world. More importantly, he
created a culture of innovation and passion that is dedicated to designing products and
services that impress customers and inspire consumer loyalty.

Disney
Another company that is a household brand and is well known for innovation in its
industry is Disney. In his blog, Brand Driven Digital, Nick Westergaard identifies eight
innovative lessons from Walt Disney that anyone could apply to his/her company. He
believes that Walt Disney was an innovator and design thinker long before others were
and was far ahead of his time. He identifies these lessons below:

30 Kuang, Cliff. “The 6 Pillars of Steve Jobs’s Design Philosophy.” Blog November 7, 2011.

"22
 1. Innovation Requires Action - “if you can dream it you can do it,” taking
action is key and working a good idea until you get it right is well worth the
time;
2. Turn Convention on Its Head - sometimes reversing the norm is what was
needed - the norm was putting animation into live action, Disney put live
action inside of animation;
3. Life’s Challenges Can Open Doors - Mickey Mouse was created at one of
the lowest points of the company’s history - “sometimes a kick in the teeth is
just what you needed”;
4. What’s Next’ Innovation - never settle - keep moving forward, be curious,
and explore new paths;
5. Diversify! - use your brand to explore new products that are related to your
core business;
6. Embracing New Media/Multichannel Marketing - With the expansion of
television Disney wanted to be in every home every new character hit multiple
media - movies, tv, and theme parks;
7. Connecting Online and Offline Engagement - again hit new markets
Disney used online (movies and tv) and extended into offline - toys, stuffed
animals, and theme parks;
8. Nothing Matters More Than the Community You Serve - never lose sight
of who you’re doing this for - “We’re not trying to entertain the critics…I’ll take
my chances with the public.”31

These CEO’s worked in different times and different types of companies - design
consultants, high-technology, entertainment - but each fostered a spirit of innovation.
That spirit included knowing your customer as intimately as you can; paying attention to
details; thinking about what is next; trying things that may fail; and, exploring new
opportunities. These companies did not always have it easy. Both Apple and Disney
went through dark periods when they nearly went bankrupt. However, dedication to
innovation brought them back stronger than before they were failing.

External factors caused these companies, and others, to be at their most innovative.
Higher education has never before faced so many external factors that will force college
leaders to think differently about their students (customers), stakeholders (elected
officials, government agencies, boards) and employees (faculty, staff, administration)
and embrace innovation for the future.

31 Westergaard, Nick. www.branddrivendigital.com/author/admin/ June 13, 2011.

"23
 Challenges to Innovation in Higher Education
Change is difficult in any organization; people are resistant to change. As Lloyd
Armstrong writes, “Individuals generally are wary of changes that challenge old
assumptions and require new skills to succeed. Organizations are collections of
individuals, and thus reflect individual concerns.”32

Higher education institutions are filled with highly educated people who hold advanced
degrees; many of whom are seen as national experts in their fields of study. Additionally,
through research at colleges and universities, many of the innovations that we see in
thousands of products that are used around the world, were made possible by creative
faculty in research labs. These individuals are innovative.

It would stand to reason that with so many creative and highly educated people,
colleges and universities would be institutions of innovation. They would have cultures
of creativity and disruptive innovation that would establish new standards for education
around the world. However, largely, institutions are not innovative.

While college and university presidents all across the country tout the advancements of
their institutions, give presentations at conferences, write papers, etc. it appears that
much of this innovation on campuses is sustaining innovation at best (small
improvements).

In her article, “Innovations in Higher Education? Hah!”, Ann Kirschner states that
“….when observed from the 20,000-foot level, the basic building blocks of higher
education - its priorities, governance, instructional design, and cost structure - have
hardly budged.”33 She suggests that this lack of innovation and change in higher
education is hurting the United States in its standing around the world as related to
educating its population. At one time in its history, the United States was number one in
college degrees held by 25 - 34 year olds. However, in 2010 the United States ranked
12th among 36 developed countries in degrees held by this same age group. While its
standing in the percentage of graduates has declined, U.S. college graduates and those
who attended college without completing a degree are carrying a whopping $1 trillion in
student debt.

32Armstrong, Lloyd. “Barriers to Innovation and Change in Higher Education.” TIAA-CREF Institute. www.tiaa-
crefinstitute.org.
33 Kirschner, Ann. “Innovations in Higher Education? Hah!”. The Chronicle of Higher Education. April 8, 2012

"24
To make matters worse, there are those who argue that attending college has no
appreciable benefit for students when related to their knowledge and skill levels. While
academics highly criticized the book, Academically Adrift (Aram & Roksa), it quickly
garnered the attention of many elected officials, corporate executives and parents all
across the country. In the book, the authors suggest that after four-years of college
education, one-third of the students did not improve their skill levels in writing, critical
thinking, or analytical thinking.34 This assertion, along with other data that has been
cited about student completion rates and skill levels, has led to stakeholders asking
many questions about the effectiveness of U.S. colleges and universities.

Such questioning of the current US system of higher education and its effectiveness has
resulted in additional regulations, more accountability, pressure on accrediting bodies
and a call for institutions to be more innovative in their approaches to education and
student completion. Yet on many campuses, as stated above, innovation - true
innovation - has been slow coming and difficult to encourage. Why? With so many
educated people on college campuses, why has innovating the operations of the
university lagged? There seem to be several factors.

Tradition
In order for innovation to take place, there must first be a perceived need for change. An
inspiration - that belief that there is a problem to solve - must be the first step in a
Design for Innovation process. A challenge for innovation in colleges and universities is
that for many in higher education, there is nothing wrong. That is, for decades, the
United States’ higher education system has been identified as the global model for
universities. Indeed, for many countries, attaining a degree from a U.S. college or
university is still held in higher regard than a degree from a university within their own
country.

Regardless of any external pressure for change, many within the academy of higher
education continue to rest on the reputation of their institutions. Ann Kirschner writes,
“Universities have been protected by the prestige of their brands and lack of any real
competition.”35 Such dedication to one’s own brand and reputation is not unique to U.S.
colleges. In the Turkish On-line Journal of Distance Education, Gail and Donald Caruth
write that “A historical strength of higher education has been its success in preserving
the traditions, culture, values and customs. This coupled with the character of

34 Kirschner, Ann. “Innovations in Higher Education? Hah!” The Chronicle of Higher Education. April 8, 2012.
35Kirschner, Ann. “Innovations in Higher Education? Hah!” The Chronicle of Higher Education. April 8, 2012

"25
conservatism, when it comes to management, resists change.”36 They continue by
suggesting that perhaps institutions suffer from change overload as well. “Universities
and colleges are asked to confront change on many fronts - technology, diverse
students, competition, financial burdens, globalization, etc. Traditional models of
management are too slow and too inefficient to keep up.”37

Structure
The very structure of colleges and universities may create a resistance to innovation on
campuses. Unlike most corporate models with a more singular management structure:
“College and universities tend to be loosely coupled systems. Minor changes may come
easily while major changes are much more of a challenge.”38 These loosely associated
systems may be as vast as separate “colleges” within a university or as small as
separate academic departments within a college that may or may not interact with other
departments in the institution. These separations create numerous pockets of autonomy
within the academy on campuses.

The structure of traditional college governance on campuses can also create resistance
to innovation. Unlike nearly any other organization, the concept of “shared governance”
is engrained in the culture of higher education. Shared governance is a system, or
culture, that “…attempts to balance maximum participation in decision making with clear
accountability.”39 While shared governance provides members of the academy an
opportunity for input into decisions made on the university campus, it can also cloud the
decision making process and slow down innovation.

Confusion about shared governance can lead to stagnation with regard to innovation.
Some faculty believe that shared governance means that “…faculty have the primary
role of governing the university and that administrators are appointed to spare them
from the more distasteful managerial labor”40 required to operate the organization. Not
managed well, poorly run shared governance models can establish an adversarial
relationship between faculty and administration which stagnates an institution.

36
Caruth, Gail. & Caruth, Donald. “Understanding Resistance to Change: A Challenge for Universities.” Turkish
Online Journal of Distance Education. April, 2013. Vol. 14, No. 2. pp.12 - 21.
37Caruth,Gail. & Caruth, Donald. “Understanding Resistance to Change: A Challenge for Universities.” Turkish
Online Journal of Distance Education. April, 2013. Vol. 14, No. 2. pp.12 - 21.
38Caruth,Gail. & Caruth, Donald. “Understanding Resistance to Change: A Challenge for Universities.” Turkish
Online Journal of Distance Education. April, 2013. Vol. 14, No. 2. pp.12 - 21.
39 Olson, Gary, A. “Exactly What is Shared Governance?” The Chronicle of Higher Education. July 23, 2009.
40 Ibid.

"26
John Tagg suggests that the functioning of shared governance within its own
organization (College Senate) may not lend itself to innovation either. Often when a
discussion of major change is broached, a task force or committee is formed to conduct
research, discuss it and bring back recommendations to the larger body. That
committee reads about the change, benchmarks institutions that may have made the
change and presents thoughtful recommendations to the body. Those who spent no
time on the matter vigorously object to the discussion, sometimes based on procedures
and sometimes based on substantive information. The committee members making the
recommendations are upset by the reaction of their colleagues. The objectors question
the motives of the committee and, perhaps, accuse them of being “puppets” of the
administration. Hard feelings are formed on both sides and those not involved find the
whole exchange disgraceful. Thus, few want to participate in discussions of change
anytime in the future.41 This exchange within the College Senate structure may,
intentionally or unintentionally, serve to maintain the status quo.

Additionally, the campus itself may hinder innovation. Colleges and universities have
made significant investments in the infrastructure needed for a traditional campus
setting. Such infrastructures include: buildings, dorms, classrooms, athletic facilities,
fields, technology, etc.; that create significant overhead in the business model. It has
become clear through various research projects that “…when an innovation in
resources or processes that could be used in making the product appears on the scene,
it is likely to be adopted only if doing so won’t change the business model; that is, it is
highly unlikely to be adopted if doing so would unbalance and thus force a significant
change in the business model”.42 So whatever changes or innovations are sought,
dealing with the costs of the current infrastructure remain a challenge.

Funding
Financial support for higher education is in its most conflicting position in recent history.
The federal government has increased its support through PELL grants, veterans’
benefits and student loans to an unprecedented $150-plus billion annually. However,
during the 2008 recession, state support for higher education, particularly public
colleges and universities, decreased at an alarming rate. Since that time, many states
have again increased their public support. However, for many states, it has not yet

41Tagg, John. “Why Does the Faculty Resist Change?” Change: The Magazine of Higher Learning. January -
February, 2012.
42Armstrong, Lloyd. “Barriers to Innovation and Change in Higher Education.” TIAA-CREF Institute. www.tiaa-
crefinstitute.org.

"27
reached pre-2008 levels and many believe that it is not likely to increase significantly in
the near future.43

While more funding is not always the answer to every question, innovation in higher
education cannot be meaningful without changes in the funding structure of higher
education. Federal funding for students, primarily in the form of PELL grants and
student loans, remains very traditional in its approach to higher education. Katrina
Reichert, in a 2012 Policy Bulletin on federal financial aid writes, “The evidence is clear
that the traditional approach taken by colleges - semester length courses, a focus on
seat time, and long, sequential coursework - does not produce the desired student
outcomes.” She continues, “However, federal financial aid rules and processes are built
on the old assumptions of traditional courses and semesters, so some of the structural
changes [that are needed] clash with those rules.”44 Colleges and universities cannot
risk funding in order to innovate, but must innovate if they are to thrive long-term. This is
truly a conundrum for the entire higher education industry.

Stated another way, the allegiance to the traditional way of funding students enrolled in
colleges and universities quells innovation. Those institutions that do attempt
innovations find themselves developing “work-arounds” to the rules in order to serve
students. These work-arounds can include developing “shell courses” that house short
instructional modules through which students can move at their own pace, creating
manual processes that are labor intensive for the administration, or customized reports
that are outside the normal tracking system for students. Such work-arounds can often
confuse students and place them in jeopardy when they do not fully understand the
choices that they are making in order to gain the aid they need for these unique
approaches to learning.45

Faculty
Like shared governance, faculty of any institution can propel the institution forward or
hold it back. As stated above, the overall process of higher education has not changed
in hundreds of years. It is well recognized that without the faculty of an institution firmly
committed to innovation at a college or university, any efforts to significantly change the
institution are likely to fail. Sometimes getting faculty buy-in to innovation can be

43Kirschner, Ann. “Innovations in Higher Education? Hah!”. The Chronicle of Higher Education. April 8, 2012.
44Reichert, Katrina. “Aid and Innovation: How Federal Financial Aid Policy Impacts Students and How State Can
Respond.” Policy Bulletin. June 2012.
45Reichert,
Katrina. “Aid and Innovation: How Federal Financial Aid Policy Impacts Students and How State Can
Respond.” Policy Bulletin. June 2012.

"28
difficult. John Tagg explores faculty resistance to change in his article “Why Does the
Faculty Resist Change?”.

Tagg is quick to point out that rather than attribute such resistance to change as a flaw
in the faculty members, it is important to explore the structure of faculty work and not
the personalities of faculty in order to gain a better understanding of the issues. The
structures of higher education, as it relates to faculty, may foster a sense of status quo
rather than innovation.

There is a dichotomy in many faculty positions in higher education and it reflects the
dual purpose of many institutions. That dichotomy is the balance (or imbalance)
between research and teaching. While much of the current criticism about higher
education would reflect the teaching role of faculty, most of the current reward systems
in higher education (particularly big name universities) are based in research. Tagg cites
a nationwide study of faculty salaries conducted by James Fairweather, of the
Pennsylvania State University, in which this is very clearly exemplified. He found that
those who spent more time on research and published the most, received higher
salaries than their colleagues who were focused on teaching - regardless of the
program area.46 It is no wonder then that faculty attitudes reflect the perception that
research is much more valued in higher education, even at institutions with strong
teaching histories.47

Faculty have and value their autonomy within the structure of the college and university
environment. The Fairweather study also found that faculty believe that they are “safer”
if they keep to themselves and maintain the status quo. He found that “…faculty believe
that assistant professors who devote time to teaching and curricular reform are at risk.
Department chairs consistently warned assistant professors to stay out of coalition
activities in spite of the commitment by deans”48 to improve curriculum and pedagogy.
This suggests that faculty have a stronger affiliation with their discipline and department
than with the college or university (a finding in numerous studies of faculty life) which
keeps them from participation in college-wide innovations.

46Tagg, John. “Why Does the Faculty Resist Change?” Change: The Magazine of Higher Learning. January -
February, 2012.
47 Ibid.
48Tagg, John. “Why Does the Faculty Resist Change?” Change: The Magazine of Higher Learning. January -
February, 2012. .

"29
Even in community colleges where there is little-to-no emphasis on research, there is a
tremendous value placed on autonomy by the faculty “….teaching at most community
colleges creates an environment in which autonomy itself becomes the reward, a form
of control, an endowment.”49 Teaching in higher education can become a highly
personalized and individual sense of self. The privacy of the classroom and the
interaction with students inside the classroom can become a means of control and
eventually a personal entitlement for a faculty member. Therefore, talk of innovation and
change in the very structure of how education is delivered can be perceived as an
attack on the quality of a faculty members personal work. They may fear a loss;
although they may not be able to articulate what that loss might be. 50

Accreditation
In the United States, institutions of higher education are accredited by regional (or
occasionally sector) accrediting agencies. The process of accreditation is essentially a
peer review process and accreditation is considered voluntary. However, without
accreditation, institutions are not eligible for federal financial aid for students which
places a great deal of pressure on colleges and universities to comply. Over the past
two decades or more the federal government has questioned the rigor of a “peer review”
process and thus, accreditation has been placed under tremendous pressure to
increase its regulatory responsibility and improve its monitoring of colleges and
universities.

Some even argue that the accreditation process is completely broken. Senator Macro
Rubio (R-FL) stated that “We have a broken accreditation system that favors
established institutions while blocking out new, innovative and more affordable
competitors.”51 (The competitors to which Senator Rubio refers are the for-profit
institutions that have entered the higher education market and have been strong
contributors to the Senator’s campaigns.) None-the-less, there is a sentiment that
accrediting bodies focus on processes and traditional structures, rather than outcomes
and impact. They suggest that this focus keeps institutions from being innovative in their
approaches to education and learning in order to remain in compliance with
accreditation standards.

49Tagg,John. “Why Does the Faculty Resist Change?”.Change: The Magazine of Higher Learning. January -
February, 2012.
50Tagg, John. “Why Does the Faculty Resist Change?” Change: The Magazine of Higher Learning. January -
February, 2012.
51Higher Education Accreditation Concepts and Proposals. Senate Committee on Health, Education and Labor &
Pensions. U.S. Senate. p. 5.

"30
There is also a concern with the existing structure of accrediting bodies themselves.
The specific accrediting organization that accredits institutions within a region is solely
based on geography. Such a geographic approach leads to tremendous diversity of
institutions under one organization. For example, the Higher Learning Commission of
the North Central Association is responsible for the accreditation of close to 1,000
institutions from 19 different states. These institutions range from large to small, from
community colleges to research institutions, and from public to private colleges.
Therefore, standards are broadly written to serve a diverse group of institutions. Some
argue that such an approach leads to diluted standards that focus on processes and not
outcomes which may deter innovation.52

Government
As with funding and accreditation, government, itself, may be an impediment to
innovation in higher education. Colleges and universities have many “masters.”
Institutions are responsible to their governing boards, to the state education department
in which they are located, to a system administration office (where applicable), to their
accrediting organizations and to the federal education department. Each of these
organizations, governments and authorities has expectations, regulations, reporting
requirements, directives, policies, laws and advisories regarding the operation of
colleges within their jurisdiction. As Lloyd Armstrong put it, “The first thing to remember
about government is that it is all about politics and power. These attributes tend not to
be favorable to innovation.”53

While accrediting organizations provide colleges and universities their accreditation and
therefore access to federal funds, states provide approvals to operate within their
borders, approval of curriculum, state funds and may set standards for faculty. Also,
state regulators often oversee issues of competition within their states. For example,
community colleges in New York State have service delivery areas in which they may
operate their programs. A desire to reach new student markets may have a community
college attempting to operate outside of its designated service delivery area. The
political climate will push them back into their home market rather quickly.

52Higher Education Accreditation Concepts and Proposals. Senate Committee on Health, Education and Labor &
Pensions. U.S. Senate. p. 7.
53Armstrong, Lloyd. “Barriers to Innovation and Change in Higher Education.” TIAA-CREF Institute. www.tiaa-
crefinstitute.org. p.9.

"31
There is also an influential role played through politics in higher education as it relates
to competition, funding, grants, sometimes student admission to certain programs, and
college personnel to be hired. Two recent examples of political influence relate to San
Francisco City College and Bristol University.

In 2014, the accrediting organization for the SFCC, Western Association of Schools and
Colleges Accrediting Commission of Community and Junior Colleges, voted to revoke
SFCC’s accreditation due to a number of concerns the agency had regarding its
operations. Such action would remove SFCC’s eligibility for federal financial aid and
leave close to 80,000 students without the ability to continue their studies. As one might
expect, calls were made to elected officials and there was significant political backlash.
Ultimately the California Supreme Court determined that it will not overturn the
Commission’s decision. However, it did determine that the Commission broke the law in
the composition of the visiting teams as they “had too few academics” on them; and,
that the 19 member Commission itself may be in question since it has members “who
should not have been on the Commission” because they were selected under an old
process.54

Similarly, in December, 2015 the Accrediting Council for Independent Colleges and
Schools (which primarily addresses the for-profit education market) attempted to impose
its most significant sanction, denying reaccreditation, to Bristol University - a small for-
profit institution in Anaheim, California - based on its finding of 24 deficiencies. Bristol
offers certificates, bachelor’s and master’s degrees. In May, 2016 a federal judge
blocked the ACICS’s attempted action based upon the institution’s enrollment of
“underserved, low-income and underperforming students who have been unable to
obtain admission to other institutions of higher learning.” 55 The court said such action
would cause “irreparable harm” to the institution.

While politics saved SFCC and Bristol University from closing, when political interests
are involved, innovation is difficult. Innovation requires the opportunity for failure. Failure
may reflect poorly on elected officials and cost votes; therefore, keeping with tradition is
a safer path for colleges and universities. Saving SFCC and Bristol may have helped
thousands of students have a place to go; but it may also have reinforced the belief that
the status quo is working and dampen any desire for innovation.

54Egelko, Bob. & Asimov, Nannette. “City College of S.F. accrediting commission broke the law, judge says.”
SFGATE. January 16, 2015.
55
Fain, Paul. “Controversial accreditor ACICA tries to shut down a for-profit but was blocked by judge.” Inside
Higher Education. May 4, 2016.

"32
 Regulations
As the federal government has increased student aid to its current levels - over $150
billion - so, too, has it increased regulations on higher education. A recent governmental
report states that, “Over time, oversight of higher education by the Department of
Education has expanded and evolved in ways that undermine the ability of colleges and
universities to serve students and accomplish their missions. The compliance problem is
exacerbated by the sheer volume of mandates.”56 The plethora of regulations and the
rate at which guidance memos are issued serve to force colleges and universities away
from a culture of innovation, toward a culture of compliance.

While government officials cry out for colleges and universities to be more innovative in
their approach to education, to be creative in addressing student completion and to
experiment with practices that improve student learning, regulations stifle much of that
innovation. Jonah Goldberg summarizes it as follows: “In Silicon Valley, where
government touch is light, we can see the rapidity of innovation at work. In healthcare,
education, and other areas where the government’s hand is heavy, we see stakeholders
holding on for dear life.”57

Moreover, complying with regulations is not only detrimental to innovation, it is

expensive. The time, staff hours, reporting costs, audits, and, in some cases,
consultants needed to comply with all of the regulations can cost institutions millions of
dollars. Jack Preston states that, “….compliance costs money. But then how can
positive change be driven forward when creative ideas are checked at every stage and
not given a fair chance to flourish?”58 While Mr. Preston is writing about the private
sector and the challenges facing innovation (Bitcoin vs Financial Regulations; Airbnb vs.
Hotel Taxes; Tesia vs. State of NJ; Uber vs Taxi Commission; 23andMe vs US
Government) the concept can be applied to higher education as well.

That is not to say that higher education should have no rules. The Task Force on
Federal Regulations of Higher Education noted that, “Regulations serve an important
role in ensuring institutional accountability. But requirements that have excessive reach,

56
“Recalibrating Regulation of College and Universities.” Report of the Task Force on Federal Regulations of
Higher Education. 2014. p. 1.
57Goldberg, Jonah. “Innovation vs. Regulation: When entrenched interests face competition, wealth and opportunity
can skyrocket.” National Review. February 26, 2014.
58 Preston, Jack. “Regulation vs. innovation: five key battlegrounds.” virgin.com. April 10, 2014.

"33
or that are unnecessarily costly and difficult to implement - or worse still, that hinder
student access to college and drive costs up - are counter productive.”59

Performance Funding
Interrelated to funding and regulations is the notion of performance funding. There is a
movement in the United States to link funding of higher education institutions,
particularly public sector, to performance measures. Because many of the outcomes of
higher education may be hard to measure in a meaningful way, the proposed (and in
many states implemented) measures tend to be traditional measurements of things like
graduation rates, retention rates, job placement rates, student loan default rates and
other factors that may, or may not, reflect the quality of education at any given college
or university. They are, however, measures that the general public can understand.
Thus, with little political downside, performance funding is growing in popularity among
elected officials.

A 2014 article in the Journal of Higher Education stated that, “While performance
funding is a popular policy instrument that has support from many high profile national
higher education advocacy groups and political entrepreneurs, there is little evidence
this is an effective strategy for improving college completion.”60 More states are
adopting these measures and allocating a portion of state appropriations to them.
Tennessee was the first to adopt performance funding in some manner in 1979; yet,
there is little evidence that the state has advanced in its higher education standing.

While some argue that only through these types of performance standards will higher
education graduation rates improve, research does not support this assertion. In a 2014
study of a performance-based funding model enacted in Pennsylvania the results again
indicated a weak correlation between funding and performance measures. “While state
officials expected the program to have a positive impact on completions, results from
this study indicated that these outcomes were not achieved.” 61

Performance funding, accreditation, government, regulations, funding, tradition and

structure - all combined - work against creating culture of innovation on college and

59“Recalibrating
Regulation of College and Universities.” Report of the Task Force on Federal Regulations of
Higher Education. 2014. p. 2.
60 Hillman, Nicholas W., Tandberg, David A., Gross, Jacob P.K. “Performance Funding in Higher Education: Do
Financial Incentives Impact College Completions?” Journal of Higher Education. Vol 85, No. 6. (Nov. - Dec. 2014).
p. 850.
61 Ibid.

"34
university campuses. While higher education touts its creativity, innovation and new
approaches to learning have not taken place in the current environment.

Innovative Colleges and Universities

Despite all of the influences working against real innovation in colleges and universities,
there are some institutions that have been recognized as innovative. However, it is
important to understand how the authors defined innovation when discussing the
institutions selected. Were the “innovations” truly disruptive or were they improvements
within the existing system that enhanced student learning? Did they have anything to do
with improving college operations? While improving student learning is always a good
thing, it may or may not be the type of innovation that transforms higher education
models in a disruptive manner. That is, it may not have provided a new product, process
or service that made higher education available to markets that were heretofore
unserved.

In its September 16, 2015 issue of U.S. News and World Report, Delece Smith-Barrow
cites the “Top 10 Most Innovative National Universities.” Each of these universities
demonstrated terrific achievements. However, none of these achievements were
related to student learning, effective operations or improvements in approaches to
higher education. These achievements were primarily research related. They are as
follows:

• Drexel University (PA) - created “LiveNote” and application that provides

concert goers with historical and musical data;
• Harvard (MA) - developed a new study on cell phone data that can use
information to track the transmission of infectious diseases;
• University of Ann Arbor (MI) - developing technology that allows cars to “talk”
to each other;
• Duke University (NC) - an algae study that will drive down the cost of
extracting oil from plants;
• Northeastern University (MA) - national security research;
• Georgia State University (GA) - developed a new survey to better follow the
prevalence of sexual assaults on campus;
• University of Maryland - Baltimore (MD) - developed a virtual reality system
for research in biology, math, engineering, visual arts, and digital humanities;

"35
 • Massachusetts Institute of Technology (MA) - developed a more user-friendly
3-D printer;
• Stanford University (CA) - creating objects for everyday use;
• Arizona State - Tempe (AZ) - a study on how refugee camps, military camps,
and neighborhoods form; a study of domestic violence, and research that
affects our daily lives.62

Again, the above listed innovations are very interesting. They advance technologies,
influence our lives, provide a better understanding of the human condition and perhaps
keep us safer. However, they do not transform higher education. Such a list illustrates
the point that components of institutions of higher education, and the people that work
within them, are innovative. However, that innovation tends to be externally focused.

That is not to say that colleges and universities never innovate for the betterment of
students. Matt Connolly highlights several innovations at institutions across the country
in an article entitled “America’s Ten Most Innovative College Presidents.” He states that
innovation can be difficult; “Unfortunately, most of them [college presidents] like most
humans, tend to accept whatever definition of success their tribe and surroundings tell
them.”63 However, some presidents resist accepting the current performance of their
institutions as the best that can be achieved. Connolly recognizes the importance of the
role of the president in leading such innovations. He states that, “…presidents are
hugely important actors because their visions - and ability to carry out their visions -
determine whose interests really get served.”64

Mr. Connolly cites the following presidents, and their institutions, as truly innovative:

• Mark Becker - Georgia State University - Used “big data” to greatly increase
the success of racial minorities, low-income, and first-generation college
students. He increased the six-year graduation rate from 32% to 53% while
eliminating the gap between students of different races through proactive
advisement;

62Smith-Barrow, Delece. “Top 10 Most Innovative National Universities.” U.S. News & World Report. September
16, 2015.
63 Connolly, Matt. “America’s Ten Most Innovative College Presidents.” Washington Monthly. Sept/Oct, 2015.
64Ibid.

"36
• Maria Klawe - Harvey Mudd College - Bridged the gender gap in technology
from 1 in 10 girls in computer science classes to 4 in 10. She encouraged
girls to take computer science as a major or minor and hired women faculty
so that 6 of the 15 computer science faculty are women;
• Diana Natalicio - University of Texas - El Paso - Grew research funding at the
institution from $6 million to $84 million. She improved student outcomes at
the institution while increasing the participation of Hispanic students from 55%
of the student population to 80%;
• Michael Crow - Arizona State University - Grew ASU to 80,000 students while
increasing the graduation rate. The institution also enrolled more students
below the poverty line than before his arrival;
• Catharine Bond Hall - Vassar College - Focused on providing access to an
elite college by shifting the student population from 40% financially aided
students to 60%. She also increased students of color from 20% to 40% of
the student population;
• Paul LeBlanc - Southern New Hampshire University - Grew the institution
tremendously while creating a non-traditional system of education that
provides a great deal of student support. Students may complete a bachelor’s
degree for around $10,000;
• Michael Sorrell - Paul Quinn College - Took this 150 year old, historically
black institution from the brink of closing to successful operations. He
disbanded the football team to focus on academics and student success. He
turned the football field into a farm where students work (for pay) and grow
produce that is sold to local grocery stores and restaurants. Students learn
farming and business skills while earning income for college. He lowered the
tuition from $23,800 per year to $14,275;
• John Hitt - University of Central Florida - Grew his institution to 60,000
students while increasing minority enrollments. He created a system called
“Direct Connect” that guarantees admission to those students who earned an
associates degree;
• Sandy Shugart - Valencia College (community college) - Eliminated late
enrollments in order to “recapture” the first two weeks of instruction. Students
are required to develop a graduation plan during their first semester of study;

"37
 • Cheryl Hyman - City College of Chicago - Focused the institution on career
programs and placing graduates in jobs and nearly doubled its graduation
rate which was 7%.65
The above serve as good examples of how presidents can improve the performance of
their institutions. These presidents examined the performance of their institutions and
implemented programs to address student learning, graduation rates, cost of education
and the improvement of minority and first-generation college students at their
institutions. These improvements have been successful and are impressive in their
impact on each institution. However, only a few of them were truly disruptive.

Four institutions of higher education rise to the top of innovative colleges and
universities. Their approaches to serving students, their educational models to improve
student success and their approach to access to higher education for students are, or
have the potential to be, disruptive innovation in the higher education industry.

An interesting point to make about these four institutions of higher education is that
each found its own path to innovation. Each used its own culture and strengths to
determine how it would shape its future and become a unique institution. There is not a
singular approach to innovation in higher education and learning.

University of California: Stanford

Stanford University has developed a reputation for excellence in innovation, liberal arts
and research. Looking more deeply, one can see that Stanford University has
developed a culture of innovation and entrepreneurship that is not likely to be matched
by any other university. Stanford’s ability to help graduates launch new businesses is
unparalleled. Beth McMurtrie writes that closely tied with Silicon Valley, it is estimated
that some 39,900 active companies have been started by graduates from Stanford.66

In a time when governments are looking to higher education to spark and advance the
economy, Stanford seems to be an institution that embodies that spirit of innovation.
Unlike institutions that conceal themselves from the “outside world” in order to protect
an academic environment, Stanford welcomes the interaction with the business world.
In fact, Stanford offers faculty members opportunities to take a two-year leave in order
to work in industry or start a venture company. The belief is that those faculty will bring

65Connolly, Matt. “America’s Ten Most Innovative College Presidents.” Washington Monthly. Sept/Oct, 2015.
66McMurtrie, Beth. “Inside StartupU: How Stanford Develops Entrepreneurial Students.” The Chronicle of Higher
Education. October 30, 2015. A30 - A34.

"38
back to the classroom these corporate experiences and be better equipped to help
students understand real-world applications to the lessons provided on campus.
However, when a faculty member returns to campus, he/she must relinquish all day-to-
day operations of any company that they may have started and focus their attention on
their responsibilities at the University.

Faculty are also allowed the equivalent of one day per week to participate in consulting
activities. This too, is designed to keep faculty with an anchor in the “real-world”. They
may not, however, split their time between Stanford and another employer. They must
be dedicated to the mission and operations of the University.

When asked the question of technical education or liberal arts, Stanford’s answer
seems to be both. The faculty at Stanford have developed a culture that brings technical
education and liberal arts together in such a way that students value both. Through a
deep-seeded dedication to teaching problem solving and critical thinking, every student
at Stanford is immersed in interdisciplinary studies that combines technical education
with liberal arts and humanities.

The University’s focus on entrepreneurship is not just technical in nature. Graduates of

Stanford have also started numerous not-for-profit organizations to help communities.
But overall, students state that “the most value they’ve gotten from their education at
Stanford has come from interdisciplinary work.”67

To strengthen its dedication to the teaching of innovation and entrepreneurship,

Stanford started the Hasso Plattner Institute of Design at Stanford. Focusing on
teaching Design Thinking, this Institute (also known as the d.school) is a center for
innovators and those who want to think like innovators. Students and faculty from
medicine, engineering, law, business, sciences, humanities and education come
together to learn innovative thinking and how to solve real-world problems through a
human-centered approach. The d.school is open to Stanford students and any others
who wish to learn innovation through a variety of continuing education courses. It also
offers a two-year master’s degree through the Department of Mechanical Engineering.68

67McMurtrie, Beth. “Inside StartupU: How Stanford Develops Entrepreneurial Students.” The Chronicle of Higher
Education. October 30, 2015. A30 - A34..
68 Website - dschool.stanford.edu

"39
 Southern New Hampshire University
Led by President Paul LeBlanc, Southern New Hampshire University went from a small
2,000 student private college with declining enrollments, poor name recognition and
struggling finances in 2007 to a 34,000 student institution with national name
recognition in 2014. All of this was accomplished by rethinking the design of higher
education. President LeBlanc has stated that, “…the business models implicit in higher
education are broken.”69

Recognizing that transforming the core of an institution is extremely difficult, President

LeBlanc found a new path. He created the College of Online and Continuing Education
at SNHU. This new College was designed to work within the University, but outside of
the traditional structure. While leaving the core of the small institution in tact, this new
College has a very different business-model approach to higher education.

Although all courses are approved by the University’s governing body, implementing
these courses, once approved, takes a very nontraditional path. All courses for the
College of Online and Continuing Education are designed by a production team. The
College holds a 2 - 3 day workshop with subject matter experts, academic stakeholders,
and team members to create the curriculum. Then, focusing on on-line courses, the
production team creates a “master course” which is then copied in order to offer the
number of sections required for any given semester. Faculty who will teach the course
sections are provided the materials three weeks before the classes start in order to
prepare their lessons and approaches with students.70

Staffing for the College of Online and Continuing Education is an innovative model as
well. Offering 180 programs to 34,000 students, the focus of the College is on customer
service. The College has 160 admissions counselors who staff the phones seven days
per week. They have designed a website that allows students to conduct their entire
interactions with the College on-line. Students who click on the website to request more
information receive a phone call, generally within 9 minutes. If the potential student has
attended a college before, SNHU will track down any transcripts from other institutions
and pay to have them sent to SNHU.71

69Kahn, Gabriel. “The Amazon of Higher Education: How tiny, struggling SNHU has become a behemoth.” The
Slate. January 2, 2014.
70Raths, David. “How Southern New Hampshire University Develops 650-Plus Online Courses Per Year.” Online
Learning. Campus Technology. December, 2014.
71Kahn, Gabriel. “The Amazon of Higher Education: How tiny, struggling SNHU has become a behemoth.” The
Slate. January 2, 2014.

"40
Courses are eight weeks, rather than the traditional fifteen in order to keep students
moving through their programs at a faster pace. Students who have not logged on in the
first week of class are flagged for the instructor to call and speak with them personally.
While almost all courses are taught by adjunct faculty members (2,700 of them), SNHU
is experimenting with creating new full-time positions starting in 2015.

SNHU’s approach to full-time faculty positions in the College of Online and Continuing
Education is also innovative. The College is experimenting with this new full-time model
in an effort to determine if student performance and retention improves. These new full-
time faculty will teach 20 courses per year; four at at time for five eight-week terms.
They will grade assignments and provide feedback to students for which they will be
paid $55,000. They will do all of their work from their home. There are no committee
assignments, no research requirements, no faculty meetings, and no tenure for these
new faculty positions.72

SNHU is also experimenting with competency based education; an approach it calls

“College for America.” This approach requires no courses and no faculty. Rather,
students must demonstrate competency in subject matters through a variety of
evaluations of each competency. Students must pass 120 competencies to earn an
Associates Degree.73 While competency based education has been around for
sometime, it has been extremely difficult to gain approval to offer such an approach.
Approval must be granted by the Secretary of Education and the institution’s accrediting
body. SNHU was endorsed by the U.S. Department of Education and seems to be
leading the development of this approach.74

The SNHU model demonstrates a disruptive innovation and is truly fast-paced. It has
changed the notoriety of SNHU across the country and brought to the institution a
market that it never before served. It could be a model for several small colleges to
explore.

72
Kolowich, Steve. “Southern New Hampshire University Designs a New Template for Online Faculty Jobs.”
Chronicle of Higher Education. Vol. 60, Issue 35. May 16, 2014.
73Kahn, Gabriel. “The Amazon of Higher Education: How tiny, struggling SNHU has become a behemoth.” The
Slate. January 2, 2014.
74Gomez, Cynthia. “Competency-based education gains momentum despite complex regulations.” Recruiting and
Retaining Adult Learners. Vol. 16, Issue 9. June, 2014.

"41
 University of Phoenix
The University of Phoenix is almost synonymous with “for-profit college” and was
started by a man who hated the traditional higher education system. Its presence has
been a disruptive innovation in higher education; and, to understand the University, it is
important to understand its founder. John Sperling had a difficult life as a child of a very
poor family. Despite that extremely rough start, Sperling was able to earn a bachelor’s
degree from Reed College and a PhD from Cambridge. After graduation he became a
faculty member at San Jose State in California. Sperling wrote about being a professor
as “all that education prepared him for was life as a professor.” 75 He hated it.

A socialist, Sperling was passionate about the faculty union at San Jose State and
became its president. In 1968, he organized a faculty strike that ultimately failed; very
few faculty were willing to participate in any strike. That experience codified his hatred
of the higher education establishment. He wrote that the experience served as “one of
the most liberating experiences of my life.”76 He decided he no longer cared what
anyone in higher education thought of him.

In 1970, he decided that adults, particularly working adults, needed a new way to gain a
college degree. Traditional colleges and universities were not interested in working
adults. He believed that adults lacked access to higher education because of the way
that courses were scheduled as well as the colleges’ approach to learning. Courses
were targeted to kids fresh out of high school delivered by faculty who wanted to lecture
in 1, 2 or 3 hour blocks. Because of the rigidity of this model it could take working adults
6 - 10 years (or longer) to complete a degree. He felt there was a better way.

He approached San Jose State administrators with a new model for college education.
He was dismissed. He then approached struggling colleges and universities who were
hungry for more students. This strategy was successful and he began The Institute for
Professional Development. The Institute was focused on real-world problems, using
students’ experiences and group work to learn. Everything was focused on what
working adults needed to succeed - scheduling, support, group work, etc. - all geared
toward a less rigid, more friendly approach to education. Eventually, the accrediting
body in California (Western Association of Schools and Colleges) opposed Sperling’s
methods and he was forced to quit.

75 Hanford, Emily. “The Story of the University of Phoenix.” americanredioworks.publicradio.org.

76 Ibid.

"42
However, Sperling moved to Arizona and began the University of Phoenix with eight
students in a rented union hall. Again, focused on working adults, using group work,
credit for experience, and schedules that fit busy professionals. In ten years, the
University of Phoenix would grow to have 6,000 students. In 1989, the University
entered the distance learning market, long before many other institutions, and within a
short time had 200,000 requests for information.

In 1994, the Apollo Group (the University’s parent company) went public. That public
offering provided the capital for the University to grow to over 100,000 students within
five years.77 Focusing on the working adult market nationwide, the University of Phoenix
grew to its peak enrollment in 2010 of 475,000 degree seeking students. 78

While the University of Phoenix has had some difficulties recently, this for-profit
university has demonstrated a new model of education for working adults. Despite
critics of for-profit higher education; despite accusations of enrollment over quality;
despite political attacks from Washington D.C.; Phoenix continues to enroll around
328,000 students who are looking to better their lives, improve their careers and earn a
college degree.

After a failed attempt to recruit and serve traditional-aged students, Phoenix has
returned to its roots in the last few years, abandoning the traditional college-aged
market and again focusing on working adults over the age of 24. This refocusing will
undoubtably make University of Phoenix a significant competitor as more traditional
institutions pursue the adult market due to a shrinking of the traditional college student
population.

This relatively new model of college (for-profit) was truly disruptive to the higher
education establishment and has gone from an unwanted entity to holding a place in the
higher education landscape where its toughest critic, Senator Tom Harkin (D- Iowa),
now states, “Their success is in the national interest.”79

Rio Salado Community College

Rio Salado Community College is a part of the Maricopa Community College District in
the Greater Phoenix Area. Over the past few years, Arizona has cut state support to

77Hanford, Emily. “The Story of the University of Phoenix.” americanredioworks.publicradio.org.

78 Fain, Paul. “University of Phoenix is down but not out.” Inside Higher Education. October 26, 2012.
79 Fain, Paul. “University of Phoenix is down but not out.” Inside Higher Education. October 26, 2012..

"43
higher education significantly - by 48% since 2008. While Maricopa is a public two-year
college district, the cuts on Maricopa’s District budget of $774 million, result in a
remaining state funding level of around 1%. Such state budget cuts have drastically
increased tuition and reliance on local property tax increases to support the community
college district.80

Led by President Chris Bustamante, Rio Salado Community College appears to operate
much more like a for-profit university than a not-for-profit public community college.
Serving approximately 56,000 students (not all in credit programs), with 30,000 of them
online, Rio Salado has only 23 full-time faculty members. These faculty, along with other
staff and administration of the college, are housed in an industrial park near the Phoenix
airport. The vast majority of courses are taught by adjuncts - nearly 1,500 of them for
Rio Salado.

There are 600 courses that start on just about any Monday of the year. Focused on
improving student retention and success, Rio Salado incorporates an automated
program in its distance learning curriculum that can predict student success by the
eighth day of class. The computer algorithm triggers a flag for students who it deems in
jeopardy in order to have advisors intervene and offer assistance to these students.
Faculty members may also flag a student for additional help.81

Rio Salado offers shortened semesters, a corporate college partnership program and
independent study; all of this to make higher education accessible to anyone who is
interested. The College has national appeal and enrolls students from 48 states through
distance learning and provides credit for work experience.

Each student is required to check-in with an advisor on a regular basis to help ensure
progress through the classes. Rio Salado also assigns each student a mentor who calls
them upon enrolling in a class, again at mid-term and finally at final exam time. This is
designed to proactively reach out to each student enrolled in a class and gauge how
they feel they are doing.

Rio Salado Community College is following a much more business-like model for higher
education than any other community college. However, President Bustamante believes

80Marcus, Jon. “Community college district tries full slate of innovations, all at once.” PBS Newshour. August 28,
2014.
81 Ibid.

"44
that this is the direction for the future. He states, “Colleges must be more nimble and
adaptable if they are going to serve their students.”82

Each of these institutions have developed truly innovative approaches to serving

students. They have, to some extent, abandoned the traditional model of college
education in order to create a new institution, new service or new approach for a new
market of students. Not every institution will be able to totally reinvent itself or create a
new division within the college to address the needs of a new market. However, there
are things that every college and university may do to adapt to a changing environment.

Innovating Existing Colleges: Recommendations

Below are recommendations that colleges may use to modify their operations and
approaches to students’ needs and to new student markets. While each institution must
find its own path, the author hopes that some of the recommendations will serve to start
discussions on campuses that bring about change in higher education.

Adapting a Business Model

Higher education is under more scrutiny than ever in its history. Pressure to keep costs
low, to minimize tuition increases, to demonstrate a positive value proposition and to
operate efficiently is mounting from elected officials and the general public. At the same
time, for public institutions, state financial support has withered and is not likely to return
in abundance in the predictable future. This will require colleges and universities to think
and act more like a business.

What does “acting” like a business mean? Colleges and universities will have to truly
understand their cost of operation. That is, what does it cost to operate each academic
area or service? What benefits does each area provide to students, the community or
the university? These are examples of questions that college and university leadership
must ask. The answers are then reduced to numbers, sometimes uncomfortable
numbers. Each department must demonstrate a value measured against its cost. This
is not the way that many faculty and staff in higher education like to approach their
institution. Those drawn to higher education are typically humanists who do not like
getting bogged down in cost structures; they like to help people better themselves.
Statements like, “If we save one person, it’s worth it,” are the common. However, given

82Marcus, Jon. “Community college district tries full slate of innovations, all at once.” PBS Newshour. August 28,
2014..

"45
the growing pressures placed on colleges, perhaps all that cost is not worth saving just
one person.

Once the numbers are determined, decisions must be made. That does not mean that a
department that costs more than the monetary value it generates must be eliminated. If
the value (or perceived value) of the service to the university or community is great, a
decision to maintain it - regardless of cost - might be the right decision for the institution.
For example, nursing education programs are more expensive than many other
programs due to the student-faculty ratios required in clinical sections. However, few, if
any, community colleges would decide to eliminate its nursing program. These
programs are too important in the community to eliminate them. The important factor is
to know the costs and make an informed decision.

In business, many products have a life-cycle. That is, products must be updated or
phased out because consumers are no longer interested. This is one area that has
plagued colleges and universities for decades. Colleges tend to hold onto programs
long after they should have been phased out. In spite of low enrollments, lack of
equipment, poor quality or whatever reason, colleges and universities seem to have
programs that live-on forever. When colleges do close programs there is often an uproar
from faculty, students, alumni and sometimes elected officials. If such decisions are
necessary, make sure the data are conclusive and that the administration has provided
the department ample time to assess its operations and explore alternatives before
closing it. There are times when adjustments in programs can improve efficiencies
which make them, if not profitable, at least sustainable. However, sometimes one must
prune a branch to assure the tree’s survival.

Create a New “Line of Business”

Like Southern New Hampshire University, some colleges and universities have used a
separate division or “line of business” to serve as an entrepreneurial branch of the
university. Often “Colleges of Continuing Education” or some similar nomenclature serve
such purpose. These areas are often fiscally independent - that is they generate enough
revenue to support themselves - or in some cases are profit centers. They perform
many functions including business training, community education, professional
development, consulting and other services that are sometimes minimized academically
and viewed as less important at the institution.

Creating such a line of business may benefit many colleges and universities as they
attempt to reach new student markets that are not well served by the traditional model.

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There is a great deal of work to creating such an operation and the first year(s) may not
be profitable; therefore, ample time should be provided to determine its true viability.

No matter how creative an institution may become with program delivery modalities,
every institution must balance academic integrity with creativity; weigh full-time faculty
interests with being more nimble and having lower instructional costs (part-time faculty);
and, comparing traditional cost structures with the perceived value of the educational
experience provided. Being entrepreneurial in an industry steeped in tradition is difficult,
but not impossible.

Key factors to consider when exploring such a model are maintaining faculty oversight
of curriculum as well as course and program outcomes. Never force a faculty member
who is not interested in this new venture to participate. Talk with faculty and staff about
the needs of the students in the market that you are attempting to pursue, not the need
for revenue for the institution. Never substitute quality for revenue. However, be mindful
that quality may have more than one definition, don’t get trapped into the argument of
“the only way we deliver quality is by doing what we’ve always done”.

Many of these new approaches to delivering education are likely to be very different
from the way an institution is used to conducting business. Remember the SNHU model
in which an inquiry by a student is responded to within 9 minutes any day of the week.
Such ways of operating are foreign to universities and are not likely to become the
norm. However, new expectations for staffing such a line of business will be necessary.
This approach will require truly innovative thinking and a dedication to sales; a concept
not well liked in traditional college offices.

Focus on Innovation
Colleges and universities are full of smart and creative people. The challenge is to
harness that intelligence and creative energy into developing a culture of innovation. It
is critical that leaders of colleges and universities foster such a culture of innovation on
their campuses if their institutions will thrive.

Creating a culture of innovation means that leaders encourage the following:

a) rewarding innovation, even if it fails; b) training faculty and staff in Design for
Innovation techniques; c) fostering cross-departmental teams to solve problems;
e) clearly defining problems that must be addressed; f) understanding your customers
(students); g) providing time for unstructured time; h) not imposing too many rules;
i) listening with an open mind; j) encouraging prototypes; and, k) using data and

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observation. These techniques are both simple and complex at the same time. For
some managers it means thinking differently and for others it means letting go, which
can be difficult.

Rewarding innovation; even failure. One significant cultural aspect that keeps
organizations from innovating is the fear of failure. If faculty and staff believe that failure
will be seen negatively by the administration, or count against them during a tenure or
promotion review, they will always take the cautious path. Faculty and staff tend to want
to be absolutely sure that something will work before they try it. Administration needs to
assure faculty and staff that innovation is valued. When it works - celebrate it. When it
doesn’t work - celebrate it. At least the organization tried something new.

Training faculty and staff in Design for Innovation techniques. Using a Design for
Innovation or Innovation by Design approach to problem solving is a learned skill and
for many, not a naturally comfortable skill. It is not a linear process and, without proper
facilitation, can have teams feeling like they are floundering. It will be important to train
faculty on the techniques of the process and prepare some to serve as facilitators in
order to work with innovation teams. Design for Innovation is a structured - chaotic
process that provides direction while maximizing the freedom of thought and exploration
of potential solutions. If done correctly it is highly energizing and rewarding. However, it
is a method of reaching solutions that are not easy ones but often much more effective.
Give yourself time to become comfortable with it.

Fostering cross-departmental teams to solve problems. One of the key factors in a

successful Design for Innovation process is to not have people on the team who all
have the same background. For example, IDEO (a design company discussed earlier in
this paper) develops product teams that include engineers, designers, behavioral
psychologists, business management majors, artists, and others that create a very
diverse perspective to any given design project. These folks bring their own
perspectives to the process and force team members to think outside of their personal
comfort zone. Colleges and universities do some of this already. However, emphasizing
the diversity of the team and bringing in members from areas untapped before will add a
new creative dynamic.

Clearly defining problems that must be addressed. One of the big challenges in solving
problems is defining the actual problem. When thinking about the debates that often
take place on college campuses over a single word in a mission statement, defining the
real problem may seem like an impossible task. However, problem definition is a critical

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step in Design for Innovation. The facilitator should be skilled in helping a team get to
the real problem that needs to be solved. It cannot be so broad that it is insurmountable
or so tightly defined that solving it really doesn’t matter. For example, a statement like,
“How might we get every student to graduate from our institution?” might be too broad.
“How might we teach students to register on time?” might be too narrow. We might want
to use a problem statement like, “How might we get students to develop their own
graduation plan in time to be effective?”.

Understanding your customers (students). This is probably the most important aspect of
Design for Innovation. As stated earlier, Design for Innovation is a human-centric
process. How will the end-user respond to the product or service? How will they really
use it? What is it that they want, even if they don’t know? This process does not use the
average behavior of consumers. Rather it attempts to look at the two extremes - those
that are early adopters and those who have no interest in the product. What are their
traits?

Observation is critical. Consumers will often tell you what they think you want to hear.
People will tell you they do one thing, but when you observe them you see that they
function very differently. The team must take into account how people actually respond
or use a product or service, not what they tell you. For example, instead of asking
students how they use the registration process, teams should observe the process and
how students interact with each other, with the advisor, and with the technology. What
works? When do they get frustrated? Who gets through it with no problems? Who
struggles?

Providing time for unstructured time. If everything at an organization is structured work,

then there is no time for reflection and creativity. Some of the most creative companies
have the most unstructured work environments. Google provides game rooms, flex
time, nap rooms, etc. This creates an environment that allows people to be creative.
There are clearly productivity requirements, but less structure than many other
organizations. How can colleges and universities provide time and a place for faculty
and staff to be in an unstructured environment in order to help reflect on the problem
being addressed? This doesn’t happen in a scheduled meeting once per week for an
hour. Providing space and time that is conducive to creativity is important.

Not imposing too many rules. Rules kill creativity. The more strict the rules the less
creative an organization becomes. Companies like Apple are very flexible with work
rules in order to get the most out of their employees. They hire people who want to be

"49
productive and creative and then create an environment that supports that behavior. A
focus on rules and structure will get the organization forms and processes, not
innovation.

Listening with an open mind. Sometimes the best ideas come from people you never
thought understood the problem. It has been said that young people are the most
creative - until we teach it out of them. For many young people, there are few rules of
physics or social interaction. Therefore, they are unfettered by convention when
discussing a problem. Having people on teams that are not engrained in how we do
things will have ideas that should be explored without bias. Sometimes those ideas lead
to real solutions that are innovative because they are unencumbered in what “is,” rather
they are thinking about what “could be.” Keeping an open mind can lead to real
breakthroughs.

Encouraging prototypes. Developing quick and easy prototypes can help a team
progress through solutions that won’t work and get them to ones that will work more
effectively. One motto of Design for Innovation is “fail often, fail early, and learn from
failure.” Prototyping can help you fail often and fail early. They can also help determine
what doesn’t work so you can learn. These prototypes can be cheap cardboard
mockups or story boards of how something might work. They don’t have to actually
function but they provide a visual of how a product or service might look.

Using data. Lastly, it is important to use data in innovation. This includes data about the
end-user as well as trends, costs, etc. Data is key to determining if a proposed solution
will work and is sustainable. Remember innovation happens when desirability, feasibility,
and viability intersect. Data helps determine if that intersection is possible.

Administrative and Student Services

Administrative and Student Services are good areas to start with innovation
opportunities. They are less likely to cause major push-back and are, perhaps, easier to
take an Innovation by Design approach of empathizing with the end-user (students).
These are areas in which teams can examine processes and observe how students use
them. They can talk to students about the services that they like and what they don’t.
Organizations can observe students interacting with the processes in these areas. They
can quickly move to examining how other industries approach services and adapt these
approaches to college campuses.

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The private, for-profit sector of higher education has done a very good job of examining
these services and creating student-friendly approaches that far exceed the customer
service on many college and university campuses. Students are contacted quickly when
inquiries are made and often a small team of employees interacts with each student in a
proactive manner that makes the students feel that their needs are being met.

Customer contact and attending to details can be very important in this process. Think
about Disney. Attending a Disney park is expensive, customers stand in long lines, the
food is average and the parks are extremely crowded. Yet nearly everyone leaves the
park thinking it was the best experience of their lives. Why? Because Disney focused on
the end-user experience and what customers want to feel. When customers are in line
for a ride, they are often told through visual markings how long it will take to get to the
ride - they don’t have to wonder. Additionally, there are pictures, models, exhibits, etc.
that keep customers entertained while waiting in line.

In higher education there are many access points for students: admissions, registration,
financial aid, advisement, etc. Innovation teams should observe these processes and
think about them from the students’ point of view. How could we make the process
easier, more pleasant, friendlier, faster, etc.? How do our processes feel to students
compared to what they expected? These are areas of “low-hanging fruit” that could
change the customer experience and generate an institutional loyalty that would be very
positive, particularly among returning adults.

Regulatory Reform
Leaders in higher education accept that with significant investment (over $150 billion
annually) from the federal government comes regulation and accountability. The
question becomes, “How much accountability is enough?” While federal and state
elected officials look to higher education to help solve the problems facing our nation
and to be innovative, particularly regarding an under-educated populous and the need
for economic development, the over-abundance of regulations founded in traditional
practices provides colleges with an incongruent message.

If higher education accepts that there must be regulation, yet wants to improve through
innovation - trying new things knowing that some may fail - how can we bring this
equation in balance? First, the federal government could create a commission of federal
policy leaders and leaders of higher education institutions from across the sectors to
review current regulations and recommend modifications, reductions, eliminations and

"51
potential new regulations that encourage innovation while assuring that public dollars
are spent responsibly. This is a huge task but one that must be addressed.

Second, federal and state governments should request proposals from institutions to
launch pilot programs in order to test new funding methods that support innovation and
experimentation with initiatives to improve retention and graduation rates, knowing that
some will fail. Such pilots would vary for different student markets: traditional students,
returning students, students at a distance, etc. These pilots would be particularly helpful
with regard to financial aid. Currently financial aid formulas are focused, almost entirely,
on traditional students, taking a traditional schedule, using traditional modalities. How
might we modify financial aid formulas to encourage older students to enroll in higher
education and learn new “middle skills” in order to work in a new technology economy?

Third, colleges and universities must demonstrate a willingness to change. That is not to
state that what higher education has been doing is bad, in fact, it has been successful
for many decades. However, the industry must recognize that the U.S. has lost its
standing around the world as a leader in educating its population. Higher education
must stop pointing fingers to secondary education stating that students are not ready for
college and therefore will not be successful. Longing for the students of yesteryear will
not bring them back. While there are many successful students who come to colleges
and universities, thousands are not ready and often do not really understand how to go
to college. Higher education must embrace these students and prepare strategies for
success.

Focus on Outcomes
For hundreds of years, higher education has focused much of its discussion and energy
on inputs and processes. Clearly that tide is turning with accrediting bodies pushing
outcomes in courses and programs. However, higher education leaders must change
their thinking to focus on outcomes at their institutions. Questions like: “How does this
process contribute to student success?”; “How are we measuring our mission
completion?”; “How can we improve the completion rates in pre-college level courses
which can lead to graduation?”; “How do we know that students who graduate have met
our learning expectations?”; and, “How are we impacting our community?” These are
the questions being asked of higher education; therefore, college and university leaders
must embrace them and respond.

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 Conclusion
It is true that higher education is facing, perhaps, its most tumultuous period in its
history in the United States. The challenges facing colleges and universities are not for
the faint-of-heart and will, no doubt, significantly impact how higher education conducts
its operations in the future.

But all is not lost for higher education. Some small colleges and universities will likely
close or merge with others. Some will struggle to maintain their operations. Most will
adapt to the new pressures and seek to thrive as they have for decades, or in some
cases hundreds of years. However, none of them will make it by ignoring the writing on
the wall. Colleges and universities must learn to innovate on their campuses. Leaders
within higher education must develop strategies to address today’s challenges and
champion change within their institutions. Leaders must also advocate for change within
government to truly make the United States a world leader in education again.

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