The Growth Paradox: Why Your Institution May Need to Get Smaller to Get Stronger

#HigherEducation #UniversityGovernance #StrategicLeadership #InstitutionalEffectiveness #HigherEdStrategy

In boardrooms across higher education, growth metrics dominate strategic discussions. Enrollment targets, new programs, campus expansion – the implicit assumption is that bigger equals better. But what if this growth-centric mindset is actually undermining your institution's long-term sustainability? What if the path to institutional strength requires the courage to become smaller?

The "growth trap" in higher education follows a familiar pattern. An institution builds its reputation through quality education and strong outcomes. Success drives growth, which requires expansion of facilities, programs, and staff. To support this expanded infrastructure, the institution needs ever-increasing enrollment. Eventually, maintaining growth requires compromising the very qualities that drove initial success – selectivity declines, class sizes expand, student support services strain, and quality metrics begin to slip.

This vicious cycle opens institutions to disruption from competitors who focus not on growth, but on "profitable stability" – maintaining selective admissions, investing in teaching excellence, and preserving high academic standards. These institutions recognize that their value proposition stems not from scale, but from their ability to deliver consistently superior outcomes.

For governing boards, recognizing when to shift from growth to right-sizing requires careful attention to key indicators. When net revenue per student declines despite enrollment growth, when discount rates climb to maintain enrollment targets, when student satisfaction metrics trend downward, and when mission drift becomes evident in the pursuit of numbers – these are warning signs that growth may be undermining rather than strengthening the institution.

The challenge for boards is that right-sizing often requires difficult short-term decisions in service of long-term sustainability. It means having the courage to:

• Maintain admission standards even when enrollment targets are at risk
• Invest in quality even when growth seems to offer an easier path
• Focus resources on areas of genuine strength rather than trying to be everything to everyone
• Build financial models based on sustainable excellence rather than continuous expansion

The fundamental question boards must ask is: "Are we growing stronger or just bigger?" Growth that undermines academic quality, stretches support services thin, and erodes institutional distinctiveness is ultimately self-defeating. True institutional strength comes not from size, but from the ability to consistently deliver on your promise to students.

The path forward requires boards to reframe their definition of success. Instead of measuring progress primarily through growth metrics, focus on indicators of institutional health:

• Student outcomes and career success
• Graduate school placement rates
• Employer satisfaction with graduates
• Alumni engagement and giving
• Faculty recruitment and retention
• Financial sustainability metrics
• Market differentiation and brand strength

Boards must also recognize that right-sizing isn't just about getting smaller – it's about finding the optimal scale at which your institution can deliver excellence sustainably. This may mean becoming more selective, focusing on core programs where you truly excel, or restructuring operations to match sustainable enrollment levels.

The imperative for boards is clear: don't let the pursuit of growth trap your institution in a cycle of declining quality and increasing vulnerability. Have the courage to pursue profitable stability, even if it means becoming smaller in the short term. Your institution's long-term strength and sustainability may depend on it.

Additional Readings

• "How the Mighty Fall" by Jim Collins
• "The Innovative University" by Clayton Christensen and Henry Eyring
• "Demographics and the Demand for Higher Education" by Nathan Grawe
• "The College Stress Test" by Robert Zemsky, Susan Shaman, and Susan Campbell Baldridge
• "The Great Upheaval: Higher Education's Past, Present, and Uncertain Future" by Arthur Levine and Scott Van Pelt

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About the Author: Robert (Skip) Myers, Ph.D., advises and counsels college and university governing boards and their presidents seeking to optimize and align their joint leadership performance.

Follow him at Robert (Skip) Myers, Ph.D.