Value added: a new framework for university leadership and management.

THERE IS A GOOD DEAL OF TALK ABOUT THE NEED FOR ACCOUNTABILITY today defining learning outcomes, for example, or asking that faculty be accountable for the effectiveness of their teaching. In short, there is a shift from offering programs and degrees to creating value.

Like it or not this rowing orientation is shifting the definition of the "business" institutions of higher education are in, from inputs to outcomes and value creation. Yet the processes, culture, governance, and structure of the university are not set up to deliver value. This means a different management framework has to be in place to focus the entire institution on value. The implications of a focus on value, therefore, go to the core of leadership and management.

We propose value as the cornerstone of a new framework for regenerating higher education, and will concentrate here on the leadership and management challenges involved in implementation.

What's in It for the Leadership?

A focus on value will give institutional leaders:

* A handle for getting unstuck* Extraordinary times need extraordinary solutions, and the times aren't just tough they are changing. Institutions face resource shortfalls and changes in public expectations that will not disappear when economic conditions improve Foucsing on value can provide just the catalyst needed for rethinking and reconfiguring the core elements of the educational model.

* Sustainability. The conventional academic strategy of increasing inputs in order to increase rankings may not be sustainable for the long term. The New York Law School's dean, Richard Matasar, calls the current model of legal education "unsustainable." The quest for higher rankings drives up costs without, in most cases, increasing the value of the degree in the marketplace. Graduates are faced with a combination of large debts and a declining job market. Small and middle-tier law schools, consequently, may put themselves out of business if they continue to increase inputs. This hypothesis is applicable to higher education in general.

* A sound basis for differentiation and competitive advantage. Consider the University of Phoenix. By traditional measures of reputational quality, its offerings are undistinguished. But its leaders have understood the critical needs and expectations of working adult learners that determine value to them. In response, it has created world-class, convenient support services and accelerated adult-learning offerings in both classroom and online settings. The university's distinctive value proposition is in its ability to provide consistent and superior value, keep costs low, and develop a learner-centric approach to curriculum and services.

How to Lead for Value: Turning Ideas into Action

There is certainly no dearth of ideas about change in higher education. The challenge lies in execution. Institutional leaders must be able to first recognize the management and leadership challenges, implicit in conceptual models of change, before they can identify solutions.

Value has limitless potential. Yet value maximization requires imagination and innovation to identify, leverage, repurpose, reuse, and create new value combinations. A key challenge for leaders is to hire, reward, develop, and motivate staff along criteria consistent with their vision and strategy. Providing all stakeholders with the environment, roles, and responsibilities that allow them to succeed is a related challenge. Strategic reorientation, consequently, is not simply a question of establishing new processes or programs, but one of leading and motivating people toward a new vision and objectives.

Pioneering for-profit providers, for example, used the concept of a value web to deconstruct sequential processes and enhance value at all stages of relationships and services. They were thus able to help stakeholders re-conceptualize the higher education model around a focus on meeting the needs for accelerated adult learning in key professional areas. Further, they developed organizational systems and culture to support strategy. The value proposition they constructed is based on superior accelerated learning experiences, not traditional program quality or lower price, alone. The overall experience also features efficient and customer-friendly support services. Together, all the elements that go into that experience comprise a value web, whose ability to create and constantly increase value depends not only on the component parts but the dynamic interrelationships among them.

Our research and experience indicate that to implement a new vision and leadership framework, leaders must begin changing the way "business" is understood and conducted iii two core areas, particularly in measures of success and rewards and in core processes, especially strategic planning.

Measures of Success: Outputs vs. Inputs

Over the past several years, IHE leaders have been searching for a different set of measures and metaphors, more suitable to the challenges. Gartner analysts introduced the notion of "value on investment," which was initially employed to describe how to leverage investments in information technology to create innovation and strategic differentiation. This concept was expanded in The Business Value Web (National Association of College and University Business Officers, 2003) to suggest that maximizing value could be an effective unifying principle for leveraging all of the resources available to colleges and universities.

Yet for too many institutions, success is measured in traditional ways: 1) benchmarking against a group of peer institutions, 2) copying successful programs and practices, and 3) targeting comparative levels of resources, faculty salaries, and other traditional measures of quality and success. In this framework, the driving force is "quality." Quality here is equated with the prestige achieved by securing high placement within the U.S. News & World Report ranking system.

Value is different. A focus on quality typically seeks more and more resources for enhancing reputation based on traditional measures. 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. 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.

A focus on value, meanwhile, can be seen metaphorically as shifting the frame of reference from provider to "customer," and the mode of communication from monologue to dialogue. A focus on quality can be likened to a monologue spoken by the institution or external assessors of reputation. A focus on value is a dialogue between each stakeholder and the institution.

Value balances three factors:

1. The nature and quality of outcomes

2. The essence of the experiences through which the outcomes are achieved

3. The 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. How these resources are combined and engaged determines the value experienced by individual stakeholders.

Emerging Vectors of Value

Traditional measures of quality will not cease to be important. But an additional set of elements will be increasingly seen as the essential differentiators between individual colleges and universities. These vectors of value revolve around the capacity of institutions to develop a culture, capacities, and initiatives that support and leverage innovation and create distinctive, personalized value propositions for learners and other stakeholders.

The simple truth is that input-based measures of quality, alone, are likely to be unsatisfactory as guides to the realignments facing American colleges and universities in the coming years.

To meet the criteria of such external evaluating bodies as the U.S. News rankings, institutions must focus on improving quality inputs such as the caliber of students, scholarly reputation of faculty, and amount of research expenditures.

Consequently, in spite of sporadic efforts at considering their impact on the learner and improving the value of the education they provide, most IHEs use quality measures where it really counts: selecting priorities, hiring and promoting faculty, allocating resources. A driving focus on prestige conferred by rankings propels the institution on a path of increased expenditures and prestige-accruing initiatives rather than the outcomes of its education. Unless measures are aligned with vision and strategy, an institutional focus on value is not possible.

Core Processes: Forget About the Same Old Models

Too many IHEs squander golden opportunities to use planning as a tool for true discovery and organizational development. Their so-called "strategic" plans are uninspired exercises and represent little more than mere extrapolations of existing practices into the future, five years at a time. By their very nature, these traditional approaches to planning do not allow for fundamental rethinking, outside existing strategies, and business models and, therefore, discourage fundamental innovation.

The new concept of planning is linked to experimental implementation. It is an integrated process of continuous reflection, learning, experimentation and refinement of vision and initiatives--rather than a once-a-year event. Three key characteristics stand out from our consulting practices:

* Leveraging resources, relationships, and innovation outside established silos. Most institutions compartmentalize planning into familiar functional and departmental categories, failing to leverage the resources and relationship across these boundaries. It is a simple matter to reorient planning and problem solving to take a holistic view and look for these leverage points. We used our business value web model, in a recent assignment for The New York Law School, to examine the interconnectivity between its leadership, faculty competencies, courses, students, relationships, publications, initiatives, development, and student services. The school has crafted new activities and relationships to capitalize on the value embedded in these elements of the value web. We applied a similar approach to help The George Washington University Research and Technology Campus in northern Virginia to ratchet up its value proposition for key stakeholders--students, researchers, faculty, donors, and local enterprises.

* Engaging stakeholders in co-development. Staff, faculty, learners, partners, and other stakeholders should be engaged at the very start of the process and throughout. Depending on individual talents and interests, they should serve as thought and implementation partners rather than simply as participants in meetings.

In a project with GWU, for example, we engaged Faculty, administrators, and prospective corporate partners in three market development teams. The teams brainstormed about new initiatives for serving the intellectual capital needs of the information communications sector in northern Virginia. They produced two new models for two new learning enterprises and fashioned 12 joint benchmark projects to test and refine the concepts. Traditional planning would have sought to "communicate" the new strategic direction to various constituencies. Planning for the entrepreneurial and innovative organization becomes an opportunity for participants to learn and "do" together, refining strategies/initiatives and discovering how to spread successful innovation across the institution, sector, or profession. Planning, in other words, becomes a developmental and transformative process.

* Deploying expeditionary initiatives, practicing radical incrementalism. One of the assumptions that doom many strategic plans to serve as shelf ornaments rather than mechanisms of change is this: Once the right ideas and solutions are discovered and committed to paper, one's work is done. Thus planning often becomes a wish list or detailed schedule of events and actions rather than an engine for unleashing creativity and motivation, developing capacity, and testing new strategies.

In many of our projects, we have guided clients to jump-start ambitious change strategies through smaller-scale expeditionary initiatives, rather than depend on bureaucratic processes of consensus and formal approvals. In this way, new concepts can be launched and rapidly prototyped, serving as probes into the future and hubs for innovation. A new customized MBA for a client company--a defense contractor--was jump-started that way by GWU's business school in partnership with the client, ending years of bureaucratic limbo.

Developing an organization through learning expeditions allows for constant joint learning and adaptation. Expeditionary initiatives often lead to strategies and solutions that could never have been forecast at the beginning of the expeditionary process. We call this process of small-scale action along a well-coordinated trajectory that leads to large-scale transformation "radical incrementalism."

Getting to Value

Gaps in the capacity to innovate and deliver new value propositions, enterprise-wide, doom many academic institutions to sporadic, fragmented changes. These gaps are caused by four factors:

1. Misalignment between institutional purposes and the purposes of individual stakeholders and the public

2. Difficulties in mobilizing, leveraging, and repurposing the value that resides in the resources of colleges and universities

3. Institutional offering reductions in the face of financial hardship

4. Increasing costs and escalating debt for graduating students

Recent dramatic rises in tuition cost and cutbacks in colleges and university offerings create the potential for an even greater perceived gap in the future, which IHEs must act to avoid. Closing the perception of a value gap requires a new kind of leadership and continuous efforts to align with stakeholder needs, improve outcomes and experiences, and control/reduce costs, The tension/balance between outcomes, experiences, and costs must be a continuing issue for IHEs hoping to enjoy the confidence of students, parents, and the public. Focusing on value will enable institutional leadership to assure they deliver on that promise.

There's a new emphasis on value to learners and accountability for outcomes in many IHEs' strategic plans and marketing materials. But to benefit from this new focus, institutions must translate strategy into practice. It's critical that change not be relegated to pilots and spin-off initiatives. A value-based strategy must be supported by leadership philosophy and management practices; measures and rewards; and the processes of planning, prioritizing, and developing the organization.

STRATEGY AND PLANNING: Traditional vs. New

TRADITIONAL

1. Think you can know the answers

2. Plans

3. Planning, then implementation, repeated over and over

4. Planners and consultants as experts

5. Extrapolative

6. Focus on quality

7. Primarily tactical and operational

8. Shoehorn strategic elements into organizational planning

NEW

1. Expeditionary

2. Strategies, prototypes, and stories

3. Continuous process, simultaneously blending strategy, solutions, and development

4. Co-creation involving many stakeholders

5. Jump shifts in vision, then radical imcrementalism

6. Focus on value

7. Strategic

8. Establish different rhythms for strategic, expeditionary thinking, which shapes and drives organizational planning

VALUE: Yesterday, Today, and Tomorrow

IHEs can meet stakeholder value needs by using the emerging vectors of value. These can be turned into strategies by institutions intent on focusing on value.

TRADITIONAL QUALITY MEASURES

Faculty salaries and compensation ($ per rank)

Program/curriculum quality--peer review

Program quality--reputational

Level of research funding 

Peer evaluations and reputations

Standing in U.S. News & World Report rankings

Quality of campus facilities and amenities

Selectivity of student body (% applications accepted)

Quality of students (average SAT, GRE, LSAT)

Student success (graduation rates)

Student developmental experiences (measured by reputation, survey of student engagement)

Productivity enhancement measures through process improvements, generating return on investment (ROI)

EMERGING VECTORS OF VALUE

Create a campus culture that supports collaboration and innovation, at all levels.

Develop leadership's capacity to innovate, from trustees to president to grassroots.

Comprehensively and aggressively develop human resources through applied professional development.

Leverage innovation, relationships, and academic and administrative resources. Focus on value propositions.

Create stretch goals for using technology to generate greater value for stakeholders.

Capitalize on newly relevant programs, experiences, and applications.

Deconstruct and reinvent academic and administrative processes and business models, penetrating functional and departmental silos.

Create new experiences for learners, using technology to extend the campus in time and space and make new experiences.

Control costs and prices aggressively.

Create "knowledge exchanges" and "electricity grids" for sharing courses and meeting demand with surplus capacity.

Focus on achieving several public performance goals--such as reducing the "total cost of completion" for higher education and/or improving K-12 education and teacher development--in exchange for greater flexibility.

Anna Caraveli, a higher education strategy consultant, has helped universities increase their customer base, identify new niches for leadership, and strengthen their value to their constituencies. She can be reached at [e-mail]. Donald M. Norris, who is president and founder of Strategic Initiatives (www.strategic initiatives.com), works with IHEs on strategic planning and marketing as well as organizational transformation.