Monday, August 3, 2009

Focusing on Value, Not Just Quality (1)

Analytics helps stakeholders to focus attention on the things that matter to them, and compare results across institutions/enterprises. When dealing with learning and workforce development, the key issue today is value.

Several years ago, Mark Olson (currently with IBM) and I wrote a book called The Business Value Web for the National Association of Business Officers (NACUBO). It suggested that maximizing value could be an effective unifying principle for leveraging all of the resources available to colleges and universities.

Value Is Different from Quality. A focus on quality typically seeks more and more resources for enhancing reputation based on traditional measures. In such a setting, greater expenditure of resources is often seen as a surrogate for quality in itself. Insufficient energy is placed on the creative reduction of costs while maintaining levels of performance. Quality measures often emphasize inputs, rather than outcomes (i.e., taking standardization of inputs as a proxy measure for standardization of outcomes). They focus on what can be measured and compared easily and aggregated to an institutional total, rather than being guided by what is important to stakeholders. Such measures of quality are typically seen through the eyes of the providers or external assessors of reputation and distinction.

Value Is Seen Through the Eyes of Stakeholders. Value is a dialogue between each stakeholder and the institution/enterprise. Quality is a monologue spoken by the institution or assessors of reputation. Value balances three factors:

• Nature of outcomes and their congruence with learner needs and the providers promise,

• Essence of the experiences through which the outcomes are achieved, and

• Cost/price.

Like the potential energy in the coils of a spring, latent value resides in the knowledge resources, programs, processes, relationships, infrastructure, and competencies of faculty, staff, students, and other stakeholders. The manner in which these resources are combined and engaged determines the value experienced by each individual stakeholder.

Value Distinguishes Institutions from Each Other – in the Eyes of Partticular Stakeholders. Delivering greater value for learners and other stakeholders can create strategic differentiation for individual colleges and universities and/or other providers of education, training, and workforce development. This is complicated by the fact that some institutions – like R1 research universities – serve many stakeholders at many different levels and in many different ways, while other educational enterprises – like for-profit learning enterprises or a graduate school of business – serve a more targeted stakeholder group.

Two institutions with similar “quality” of programs can have substantially different value propositions for particular learners and other stakeholders. Enhancing the value proposition for particular stakeholders often requires greater levels of collaboration, innovation and creativity, at all levels – individual, departmental, institutional, and inter-institutional.

Given resource scarcity, discerning and piecing together distinctive clusters of hidden value is emerging as a newly appreciated form of innovation. Innovation and creativity can release and enhance the latent value residing in institutional assets and resources of all kinds, creating new experiences for learners and other stakeholders.

Superior Value Propositions Based on Excellent Outcomes, Convenience, and Good Experiences. Consider the example of the University of Phoenix, Walden University, Capella University, and the growing cluster of for-profit learning providers. By 20th century measures of reputational quality, the research offerings of these institutions are undistinguished. But these institutions have fully grasped the value proposition required today by their key audiences. They have created world-class, convenient support services; treatment geared to adults, not adolescents; and accelerated, job-relevant learning offerings in both classroom and online settings. Typically these offerings are 6-8 weeks in length rather than following the traditional semester and are taught by seasoned practitioners rather than content experts. These offerings provide consistent, outcomes that are learner-centric and are tailored to workforce needs.

In consequence, adult learners have found the outcomes and experiences of the for-profit to be very appealing, generating tremendous growth for these enterprises. Moreover, adult learners have been willing to pay a premium price for these offerings, compared to public and even private universities. Since the for-profits have also figured out how to reduce the cost of faculty, on-line learning resources, and support services (in comparison with public and private institutions) they have generated substantial net margins that have been deployed in new product development, marketing (substantially more than not-for-profit education), and profit.

Coming Next, Aggressive Price Competition from For-Profit Providers and New Competitors. We’ve already commented on the price competition from providers such as Lamar University, partnering with a for-profit provider to provide on-line learning at a market-busting price. As the financial affordability crisis worsens, we will see more of this behavior.

Tomorrow’s blog will explore more about focusing on quality – how to leverage elements of the value web.

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