Wednesday, August 5, 2009

Efficiency and Innovation in Preparing for the Recovery

In an Executive Briefing reported June 22 in the MIT Sloan Management Review, Dr.Vijay Govindarajan, an expert on innovation at the Amos Tuck School of Business at Dartmouth University, described a “three box” metaphor for the strategy needed during coping with recessionary times. This metaphor applies to enterprises in all industries – including higher education and health – but with obvious nuances.

Box 1: Improving the Efficiency of Today’s Businesses.
Becoming leaner, smarter, and more efficient is critical in a recession. Indeed, many innovations are directed at improving the efficiency and effectiveness of processes, yielding dividends in both existing lines of endeavor and new areas. Dr. Govindarajan points out that recessions are followed by periods of expansion and by changes in the competitive landscape. The benefits of these conditions are captured by nimbler, leaner competitors.

During normal times, Dr. Govindarajan recommends enterprises spend 50% of their energies on harvesting efficiencies and economies. During recession, he recommends increasing this percentage to 70% because resources are diminished and the penalty for mistakes is greater.

Box 2: Forgetting the Past, Selectively, Identifying the Concepts and Folk Wisdoms That Must be Abandoned in order to Achieve a Prosperous Future. William Faulkner once remarked, “The past isn’t dead. It isn’t even past.” What was true for fictional Yoknapatawpha County in Faulkner’s world is also true for colleges and universities. But to assure vibrant futures, colleges and universities need to revisit concepts carried forward from the past, embracing those that are timeless, reframing or abandoning others.

Needed change will be uncomfortable for those faculty who say: “Just give us the resources we need to do our jobs and get out of the way. We know quality and can do the job.” In public colleges and universities, the mantra takes a fresh twist, “Just give us the resources promised in the formula funding that always falls below the normative level and then gets cut during recessionary times.”

The harsh truth is that the halcyon days of unreflective autonomy and generous public funding will not return. They are past. Public funding will continue to be insufficient and institutions will need to aggressively reinvent, tweek, and reimagine and be more transparent and accountable about it.

This is a conversation that is occurring across American higher education. Sage leaders are reframing the saga of their institutions, post-recession and engaging faculty and staff in engaging fresh views of the future.

Box 3: Creating New Lines of Business that Are the Enterprise’s Future. Dr. Govindarajan proposes than enterprises spend 30% of their energy developing and migrating new lines of business, 25% into adjacent businesses close to current practice and 5% in genuine break thorough endeavors. These new endeavors require forgetting things about the past and spinning new sagas about the university of the future.

What are some examples of institutions that are reframing their future saga:

• Oregon State University (including its Extension Division) has partnered with several community colleges, local businesses, community governments and organizations, hospitals and other agencies to create Oregon Open Campus, a new model for creating community-based learning, embedded in community organizations

• Michigan State University is utilizing MSU Global to create new, online learning and development communities to discover what it means to be a “World Grant University”.

• Bard College is reaching out through Bard Early College High School to discover new partnerships to reinvent high school and change relationships between K-12 and and postsecondary education (more about this in tomorrow’s blog).

• In planning for new campuses in Loudoun county Virginia, George Mason University, Northern Virginia Community College, and Loudoun County Public Schools jointly planned for distributed operations and joint programming and for serving the students with half the square footage needed today.

Dr. Govindarajan believes in visioning a future strategy, not formulating a hard-and-fast plan. As he says, “You cannot plan for the year 2025, but you can prepare for it.” Expeditionary innovation can be used to discover the future, one successful experiment at a time.

John Seely Brown calls such an approach “radical incrementalism,” necessary in proceeding down the path to the “Big Shift” escribed in earlier blogs.

The Challenge for Institutional Leadership.
Over the past decades, effective institutional innovators like Dr. George Johnston, President of George Mason University, relied on “driving wedges” into the prevailing academic culture and using special institutes and programs as “skunk works” to create and test innovations. This is still an effective strategy for launching innovations, but the stakes for innovation are higher and the pace of experimentation must be greater. Institutions must find ways to rethink their value propositions and release the latent value imprisoned in current practices. We don't have time for a leisurely approach to innovation and transformation.

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