Business Models for Global Higher Education: Five 'Avoidable' Assumptions

Global Higher Education is good business. Over the last five years or so, billions of dollars worth of investment has gone into it, and it has become, if not the next thing, at least one of the next big 'things'. This euphoria may be a fall-out of the bust in For-Profit Education in the United States; or, it may have arisen out of the unique demographic opportunity in Asia, and with a generation-lag, in Africa. However, it is still a relatively new business, stumbling through its way - figuring out its business model as it goes along.

So, here is the question we should start with: Is Global Higher Education business a solution in search of a problem?

One must start with Education as a business and the debate surrounding that. However, Public Higher Education in the form that we know is a relatively recent thing, and education businesses stretch back in time much longer than we think. Education businesses often took the lead in the time of great social and technological change, and made money out of the emerging vocational opportunities in book-keeping, business training and even medical school. Once these became professions which people train for, Public and Philanthropic institutions caught up with it, pouring long term investments into building great institutions, and legislating to limit the For-Profit play in the field.

For-Profit play survived, and even thrived in the recent years, primarily on the back of de-regulation that came since the Thatcher-Reagan years. However, for this very reason, Higher Education businesses developed a national character. As businesses, they were deeply connected with government policy, building business models to take advantage of every new dollar that came along. Therefore, the localism that confront the idea of Global Higher Education is not just a leftist reaction to global business, but rather a business philosophy deeply ingrained in the Investors', and Entrepreurs', mindset.

However, such locally focused businesses are now coming up against a barrier that is afflicting many consumer-focused industries in the developed world: Lack of demand. In case of Higher Ed businesses, it is the demographic shift - ageing population - coupled with transformation of work challenging the business models. Countries in Asia and Africa, which is experiencing a population boom, expanding private business activity but an education sector crippled by the lack of public investment, therefore, presents a never-before opportunity. This is the gold rush of our time.

But, Global Higher Education businesses are often underwhelming (as some of Gold Rush would have been), failing to deliver the promised millions all too often. Such under-performance is becoming critical as the bubble in private valuations seem poised to bust, and the investors start losing heart that global Higher Education would ever deliver. It is the time, as they say, to start thinking.

Such reflection must start, I argue, with the examination of five key assumptions that underpin most Global Higher Education businesses. These are unstated, unexamined beliefs, with historical roots, but, with the experience of half-decade as guide, apparently misconceived.
First, there is an 'Asymmetry of Knowledge' assumption, that global education business models exist because of an asymmetry of knowledge, abundance of 'know-how' and 'know-why' in metropolitan centres of global education - US and UK primarily - and scarcity in other countries. Whether or not this is factually correct is not the point. Instead, the modern global education business models exist because, as one of the commentators put it, the talent is everywhere but opportunities are limited in some places (or, as Richard Florida says, the world is not flat but spiky). Therefore, it is not the magic of the degrees from US (or UK), but the doors they open, that makes learners to come to it.

Second, there is the assumption that a global qualification creates a 'Professional Advantage', even in the local job market. But this is not borne out by evidence. When Parthenon, a consultancy which is now part of EY, went around asking employers if global education credentials matter, they came back with a surprising answer. In summary, a candidate with global degrees may be preferred over a candidate with only equivalent local degrees, but they do not necessarily get a premium (except in some areas like Multimedia Production and Hospitality) for this. Such preference, though, arise from the students' life experience - we all know and accept that working and living abroad transforms a person - rather than her degree. This counts against the holders of Distance Learning qualifications or Online Degrees, as they may not have had this exposure. Besides, the 'equivalent local degree' is a nuanced term: In this scale, a local state university would count higher than a For-Profit abroad. And, finally, absence of a premium makes the pursuit of overseas qualification, at an extra cost, not a particular rewarding enterprise.

Third, and this is a common one cutting across industries, that there is a 'Globalization Apocalypse' and markets are all converging. This holds that even if the employers may not put a significant premium on global qualifications today, the learners are still better off acquiring a global credential, simply to be ahead in the game as business practises evolve. But, most current economic growth in the world is not driven by global demand, but rather demand arising out of inside markets, from the multitude of Asians and Africans moving from $1 a day to $1.20 a day, for example. The thriving industries in the emerging markets are not IT Services or Export Manufacturing as was the case only a decade ago, but Banking, Insurance, Retail, Telecom and Education, servicing the local consumers. In that respect, business practises are diverging, and global credentials, which operate with a chip-on-the-shoulder worldview and create a chip-on-the-shoulder mindset, create handicaps rather than advantages.

Fourth, as there always is, a 'Technological Assumption'. The excitement about Global Higher Education opportunity is rested on the spread of the Internet, mobile revolution and falling costs of data communication. This is the supply side of the business model, the way to service the unquenchable thirst for better knowledge and professional advantage of an increasingly globalised labour force. The problem is technology is not value neutral, and the Internet in a remote village in India is not the same as the Internet as we know it in San Fransisco or London. And, this is not just about download speed: It is also about all other things including where it is accessed. The dingy, crowded, sweaty 'Cybercafe' indeed looks very different from the suburban Starbucks. 'Where' is a more important question than we would ever imagine, as it is hard to visualise the lives of the students who do not have a quiet, personal room of their own - never had and never will - purely through the technological standpoint.

Fifth, and here is another supply side assumption linked with all the above, is an assumption about 'Language'. That everyone speaks English is not true - we know that! Yet, most business models of Global Higher Education is language-blind, standing on a simplistic assumption that everyone would understand English, and the same way (which is an even bigger leap). English is indeed a language of privilege in most parts of the world, and the privileged either have easy access to local jobs and opportunities, or they did not wait for the global Higher Education to reach them.

With all these, am I belabouring the point that there is no opportunity in Global Higher Education? Not at all - I am just arguing that we need to look beyond the simplistic view of selling British or American degrees through some sort of Online mechanism, just as the funding environment becomes more demanding. More specifically, I am suggesting that we need to explore three key ideas in building the business models for Global Higher Education.

One, Global Higher Education does not create a 'Professional Advantage' in all jobs and professions, but in some specific jobs and professions. Industries that are externally facing, IT Services, Hospitality etc, are good examples, as they serve clients globally. But a bigger and emergent opportunity is in the areas of Global Workflow, industries and professions where global collaboration is absolutely crucial. These are new opportunities without clear solutions, befitting disruptive innovation and global business opportunity.

Two, the 'Closed Business Models' of Global Higher Education is out of sync with the reality of disruptive globalisation. Indeed, it is oxymoron to think that the opportunity of global business arises because of massive shifts in technology and social practise, and yet it only requires doing what has always been done, just over the Internet! Indeed, there is some talk about 'unbundling' of Education, but not so much of 'Open Business Models' which allow global and local to 'Re-bundle' together as the need arises. Closed Business Models are ineffective in dealing with the diversity of labour markets, reward structures and cultural preferences that global engagements invariably bring, and open business models that mix local and global to an appropriate degree to reflect the Global Workflows it intends to serve stand uniquely able to take advantage of the opportunity.

Finally, as we progress from a top-down to collaborative paradigm in Global Higher Education, one needs to explore new possibilities in educational pathways. We should be searching for a 'Common Global Core' offering diverse pathways to multiple qualifications, outside the disciplinary and national boundaries. This key supply-side assumption - to do away with artificial boundaries of disciplines and national education systems - should create scale that allows one to move away from enforcing technological and linguistic uniformity that excludes a lot of people.


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