Challenger Universities pt. 2c: The case for innovation

This Emerge article series, researched in collaboration with our extensive network of education leaders, offers insights and practical advice for founders and university leaders bold enough to create new universities.

This is part 2c of our challenger university series. Part 1 outlined our questions and hypotheses around the opportunities for challenger universities to arise (here).

Part 2 has focused on explaining the rise and resilience of challenger universities (2a - here), the challenges they face and the space for innovation (2b - here). This last piece in part 2, presents the case for innovation across 4 dimensions.

There is room for new entrants who can seize opportunities to improve the student experience, outcomes, offer a more tailored experience and do it at scale.

Improving experience

“The vast majority of what has happened in the online space has been videoing courses and bringing them online — occasionally there are some chat or Zoom-based learning communities; what disappoints me is that there is a giant amount learned about how we learn that we are not applying — many third parties don’t eat their own dog food.”

Stephen Kosslyn, president and CEO of Foundry College and former founding dean of Minerva Schools at KGI

Given how much potential there has been to improve the student experience, the pace of change in HE has been behind many other industries. While the gaming industry has created addictive online communities and worlds, the average university online experience is for example in many cases still headlined by Learning Management Software (LMS) created 10–15 years ago. Many universities still struggle with technology transformations and, while some are offering excellent online interactive experiences, there are still case studies of online learning consisting of filmed lectures with limited engagement opportunities for students.

Student satisfaction is generally fine in the US (source) and the UK (source). However, aggregated data fails to capture satisfaction across the full student experience and full potential universities can offer. In the US the six-year graduation rate is at only 57% (source) and in the UK the first-year drop-out rate has been increasing and sits at 7.6% (source).

In the UK more than a quarter of students still don’t find criteria for marking clear, assessment fair and feedback timely. Almost 40% don’t think their feedback is acted on and 30% don’t feel part of a community (source). Around 40% of first-year students want more help with independent learning and 75% want to try new digital tools to support learning (source). In Australia the majority of students would like to have their student experience more digitised and blended and 10% state that their course technology is either non-existent, outdated or ineffective (source). Whole books have been written on how little is learned by large numbers of students on campus (Academically Adrift).

There is huge potential to apply developments in pedagogy and learning in the classroom, including peer to peer reviews and feedback, mentoring and coaching, spaced repetition and active recall, personalisation of learning, deep learning and flipped learning, many of which could be better facilitated by technology (source).

Improving outcomes

“The existing sector defies logic: the fact that most faculty teach without ever having worked in industry. Unless it is pure philosophy, I can’t see how you can be an effective professor.”

Fadl Al Tarzi, founder and CEO of Nexford University

“Universities are totally disconnected from employers — 96% of hiring managers don’t think students are prepared. We are seeing this really interesting dynamic where we have universities as extremely valuable assets that now undervalued by employers.”

Daniel Pianko, managing director of University Ventures

Attending university is one of life’s biggest decisions. While university used to be a guarantee of a good job and future, it is today less and less so, with millions living in crippling debt (US at $1.6tn, with UK catching up fast with ￡121bn and now the most expensive educational system on average in the world) and working in jobs for which they are overqualified. Around 44% of US college undergraduates work in jobs that do not require a college degree (source) while half of all graduating students in the UK, where students specialise in fields of study, get jobs in fields that are not related to their degrees (source). Ironically, at the same time, industry is struggling to hire talent in high-growth areas, including tech, sales, health and management, with reports suggesting a $8.5tn talent shortage by 2030 (source).

While getting students into jobs is in no way the sole purpose of university, it has become increasingly important for students, especially when they bear the majority of HE costs. The importance of career readiness is particularly pronounced with findings that highlight the criticality of the student’s first job in predicting the quality of subsequent jobs. Research from the Strada institute shows that if you are underemployed for your first job, you are five times more likely to remain underemployed after five years compared to those who were not underemployed in their first job (source). The value of getting a first job with Google could today exceed the brand effect of having gone to Harvard — in a recent US survey individuals ranked an internship at Google higher than a degree from Harvard (source).

There are significant opportunities for universities and employers to collaborate, and there are also exceptional programmes to be created from the ground up in close collaboration with employers and students, while maintaining the holistic learning principles of HE.

Tailoring towards changing demands

“Prior to transferring to Minerva, I didn’t feel like the incentives and structures at my previous university allowed for enough flexibility on the curriculum and student experience: I was frustrated by this model that was sustained by textbooks and tests, and which didn’t factor in the experiences and activities that I participated in on outside of the classroom. At Minerva, I was able to focus on the interdisciplinary tools and skills that allowed me to connect my academic and extracurricular interests. “

Alberto Arenaza, co-founder at Transcend Network and former inaugural class member of Minerva Schools

There are opportunities for new players to emerge that attract students and excel by focusing on doing a few things exceptionally well. Many universities know little about their target audience and why they attend university. ‘Do Colleges Truly Understand What Students Want From Them’ highlights various student motivations and the need for universities to understand this and move away from one-size-fits-all models. Simplistic ranking / geography and online / offline / distance learning-based offers are less and less of a distinguishing trait. One example of a high level student segmentation is PwC’s report on the ‘differentiated university’ which talks about six different student personas covering: aspiring academics, coming of age, career starters, career accelerators, industry switchers and academic wanderers (source).

We see ‘non-traditional’ students becoming the ‘new traditional’ with a huge enrolment growth driven by students in developing countries, first generation students, adult learners and in the US, in particular, those ‘with some college’ who are reconsidering studies but who for whatever reason had to previously drop out. Tailoring towards these groups will be essential as they will represent a large majority of the additional 150m students over the next decade

In capturing the attention of the generation of upcoming students, it is also key to understanding the personas and expectations of Gen Z. In the same way that company marketing departments understand their users so well and tailor their offerings accordingly, universities that operate at this level will have an advantage. They need to understand why the current generation is different and unique, including descriptors like empowered, realistic, ambitious, ethical, impatient, unique, inclusive, entrepreneurial, online identity, indecisive and authentic (source). They need to use and include mobile-first experiences, partner with Gen Z brands, leverage social media and provide social proof (source).

Kaplans’ recent report based on 2,000 surveyed parents shows that parents’ perceptions and expectations from university are also changing. Two thirds of parents find college admissions extremely stressful, a 57% feel that college costs don’t justify the value of college education in light of dissatisfaction with poor employability outcomes. 79% were excited about alternative concepts of education, in this case a concept around a job with a college degree embedded (source).

Solving for scale

“I believe none of the legacy brand institutions will become distance learning institutions. They are just not good at it and can’t compete. 2U provided them with an ability to scale and create video professor systems, but video professors are too boring and ineffective. If you look at price points it makes zero sense to anchor the online model to the campus model and trying to price the same cost for something that is online.”

Tom Adams, president at Quantic School of Business and Technology, co-founder and CEO of Pedago and former CEO of Rosetta Stone

Students worldwide are more and more hungry for higher education and at lower costs — we cannot build enough universities to fuel this demand nor can we expect to feed everyone globally the same education.

While the student numbers in leading economies have shown stagnation in HE domestic enrolments, the global demand for HE is expected to continue to skyrocket, driven by developing nations, in particular East, South and SE Asia. This means adding roughly 150m new students to the global base of around 250m existing students over the next 10 years (source).

At the current growth rates we cannot build enough physical universities to sustain demand. Attracting more international students to physically travel to the west is also far from sustainable — for context, today there are only 5m international students globally (source), 1m of whom are in the US (source) and 1.7m in the EU (source), with high costs (often double for international students in the EU) of education and politics acting as key bottlenecks. Prices of online programmes have in many cases remained close to campus prices as institutions fear brand dilution, which has as a result done little to attract larger pools of international students.

To date surprisingly little has been done by western universities to capitalise on this large growth trend through online educational offers and the strong brand appeal of western HE. The growth of online education in places like the US has primarily been local — more than 65% of online students live within 50 miles of their university HQ. The key explanations are that the jobs these online students are looking for are still local, where their universities have a brand appeal and employer relationships. However, with the rise of outsourced and remote work increasing numbers of employers are happy to prioritise candidate quality over location (eg studies like Andela).

Trends like these could provide opportunities for strong brands to be built that connect western economies with developing nation talent, but also for new mega universities to arise in places like China and India.

Stay tuned for a new article in the series every week. Next week we move into part 3 of the series. Having discussed the existing landscape, challenges and opportunities, we move our focus towards the challenger universities that are making waves and carving out specialised, quality brands. We will share our university market segmentation and a few examples of challenger universities.

This article was originally posted on Medium here.

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