Universities are at an inflection point; so too is private higher education.
The education entrepreneurs and private equity backing education ventures may present private higher education as the solution to higher education's current woes. In reality, however, most private higher education institutions are innovation-challenged and fail regularly. While some, like University of Phoenix or Hult Business Schools, have managed to be financially successful for short periods of time, such success is both rare and has been short-lived. Private higher ed model needs as much rethinking as that of the universities.
In most countries, private higher education plays a demand-absorption role. When demographic or economic changes result in significant expansion of student numbers and public education, because of their nature as bureaucratic institutions dependent on advance planning without unfettered access to risk capital, private higher ed steps in to absorb the excess demand. However, what works well when demand expands, works badly when markets mature or the demand contracts. However, such a role, while it may be profitable for the promoters of the higher ed ventures who can get out at the right time, represents poor value for the investors and indeed, for the students, who often lose money and time when a private higher ed institution craters.
The other role that the private higher ed can play well - at least in theory - is of bridging the gap between education and employment. Indeed, it is commonly assumed that the private higher ed is better placed to anticipate the changes in the demand for talent and respond to it appropriately. But this is seldom the case, primarily because private institutions are often as process-driven as the public universities. Besides, as most private institutions are peopled by staff whose formative experience has been in public universities, it imports the mindset and culture of public universities as far as change and innovation are concerned. Locked in its own processes, led by people who explicitly prefer predictability over adaptability, private higher education usually does not better than its public counterpart in moving with the market for talent.
One additional challenge for private higher education is that it takes a long time to build a brand in education and these timescales are often longer than its investors will permit. The rare and temporary successes of private higher education almost always relate to rapid expansion of the market, either domestic (as in India) or from outside the country (as in Canada, United Kingdom or Australia). But these expansionary cycles don't last too long - fizzling out with the moment of truth in 5 to 7 years time!
My evidence on private higher ed failure is somewhat anecdotal (not sure anyone researched this systematically yet but I would be grateful for any pointer) but I have a speculative theory. Private Higher Education institutions are often one-trick ponies which stick closely to their leaders' areas of expertise. This helps at the time of expansion but markets change: Public universities, with time, expand into areas serviced by private higher ed and opportunities in new areas arise. In theory, private higher ed, with its years close to the market, should be effective in finding new opportunities and launching new forays, but in practise, they are worse than public universities in this regard. Their command-and-control culture comes in the way and they find it difficult to do curriculum or pedagogic change.
As I get engaged in private higher education, I am trying to steer away from these pitfalls. My advocacy of a design thinking approach, instead of making it easy for me, has made things more difficult: I foresook the easy way of doing the same thing over and over again with the expectation of different results. This does not win me any brownie points with the investors, who usually want a tried-and-tested formula without involving the inconvenient details of curriculum and pedagogy. Over time, I have also realised that the key difference between private and public education is how they treat their communities. Private Higher Ed exists for their shareholders and everything else is an outsider, whereas good public institutions are driven by both faculty and student voice. The conclusion that I drew from looking at successes and failures of private higher ed is that this community needs to be reimagined and a new type of private higher ed - platform institutions - needs to be built.
For me, this is common sense: The most successful businesses around the world is using such a model. They are thriving by creating value creation platforms - think of Apple iTunes or Google Playstore - and building communities of people which create the value. This isn't very different from the good universities, which are really trusted brands and shared spaces for education entrepreneurs and aspiring students to meet. Usually, the processes at private higher ed entities are derived from the factory age and many institutions boast about their process effciencies over and above what public universities do. But this is precisely what prevents private higher ed to build brands and achieve success across contexts. A platform model, that privileges connections over content, adaptability over predictably and excellence over efficiency, is needed to create a fit-for-purpose private higher ed model.
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