There May Be a Better Way
Kirchner Group
Our value proposition centers around a pragmatic approach to serving the needs of the private capital world.
In response to recent article on Inside Higher Ed - Slimming Down to Stay Afloat
The recent Inside Higher Education article, “Slimming Down to Stay Afloat” focuses on the efforts of West Virginia University (WVU) and other major universities to address the current economic firestorm engulfing higher education. The combination of declining student enrollments, high inflation rates, and stagnating, if not declining, research funding, endowment yields, and public funding has created major financial shortfalls which can no longer be ignored.
Like most institutions of higher education, that article notes that WVU is addressing its deficits by elimination of?those programs that appear to be the least desired by current and potential students, and that are, by extension, less profitable. One would hope that institutions would attempt to protect those institutional programs and assets that are most critical to mission and that have the most downstream societal impact, even if those programs are unprofitable. However, some would counter with the argument, ?“ No margin, no mission.” Unfortunately, if these “slimming down” efforts become insufficient to close current and future gaps, then institutions will ultimately face major downsizing decisions that may result eventually in mergers or campus closure. Numerous smaller schools and liberal arts institutions are already facing this dilemma.
While the approach of eliminating “underperforming assets” can have value, the real issue question is, “To what end.”?Are these cuts just focused on simply surviving the current economic crisis to continue doing business in the current way? Are these actions being done to simply fill a budget deficit; ?or are we considering deploying some of these ‘”freed” assets to create greater societal and financial value? Is it in the institution’s best long-term interest to rid itself of “underperforming assets,” both human and capital, or would it be better to leverage some, or most, of those assets for opportunities that allow the institution to simultaneously create greater societal value WHILE generating new revenue streams.
Any model that focuses on cutting solely for institutional survival is destined to fail the institution eventually.?Like pruning plants, the goal for any program of cuts should be to?produce MORE societal impact (fruit)?not less or even just the same. Institutions of higher education must be asking how they can do more with the assets they have. Sometimes, it means reallocating underperforming assets to support more “fruitful” efforts. In other cases, though, it may be that these underperforming assets are actual hidden assets that may be leveraged to create incredible new opportunities for both societal impact and revenue generation.
What is needed is a new approach, a new model, a new paradigm-----one that allows institutions to survive, sustain and grow their enterprise in a manner that is both sustainable AND scalable – one that allows them to generate greater social impact and value WHILE generating the new, sufficient resources needed to both survive and thrive. The key to this approach is a focus on asset management –knowing what your assets are, what their value in the marketplace is, what?opportunities are there for leveraging these assets through partnerships, and how these assets can be turned into opportunities that can support the institution’s vision, mission, and values.
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Unfortunately, most institutions do not have the internal capacities to evaluate their assets, the access to the markets needed to evaluate the potential value of those assets to others, the networks needed to seek potentially fruitful partnerships, and the operational expertise needed to build enterprise solutions and to do so in a timely fashion. Most institutions will need external assistance in identifying and discovering underperforming and hidden assets and then converting those assets into opportunities to simultaneously grow their overall societal impact and create revenue streams that provide sustainability to their efforts.
Moving forward, institutions of higher education can have a better way of responding to future financial challenges. Through the growth of an approach that optimizes the utilization of the human, financial and physical capital that they have, ?they can steadily grow their impact on sound footing that is less dependent on less controllable factors. Key to this is the institution’s commitment to identifying the external resources needed to not just help them identify areas to cut, but also to help them identify and optimize the potential societal and financial value of the incredible assets that they already manage.
These challenges are not unique to higher education institutions. Businesses and non-for-profits across almost all sectors have faced (and face) these types of challenges as well. For many of them,?drastic (non-strategic) cutbacks have proven to not be the solution. Over the past 40 years, we at Kirchner Group have developed unprecedented paradigms to help organizations in financial distress not only survive but thrive. This approach has also been implemented with many healthy organizations allowing them to grow their mission and make even greater contributions to the world around them. That success across numerous sectors makes us believe that education can reap the benefits of embracing this new-to-education approach. We believe that there is a better way.