Take the case of Reed College. Colin Diver, Reed’s president, plaintively noted in the New York Times recently, “’The catering to consumer tastes — I keep trying to say, we are in the education business,’ … expressing a frustration rarely voiced publicly by college presidents.” (“College in need closes a door to needy students”, 10 June 2009).
Peter Drucker, the “father of modern management”, always enjoyed talking about business, even the education business. Drucker was a friend of mine when I directed his executive program at Claremont. He once asked me to sit in on a class where he promised to give an entire lecture advising me how I should run my program. I showed up.
He often posed three classic questions that we went so far as to print on coffee mugs. I present these questions for President Diver’s reflection.
“What is your business?” for the academic manager it is somewhat straightforward, and generally involves delivering learning in some way. (One could argue of course that it goes further than that, for example, equipping or preparing people to be world citizens who make a contribution where they are.) At Reed, as at most places, colleges and universities believe they are in the education business.
“Who is your customer?” gets stickier. The list can include faculty, students, parents, donors, community groups, trustees. legislators and alums, to name a few. It is a far cry from the relative simplicity of the private sector where the end user and probably the wholesaler/distributor may complete the list. Executives of the academy have to set some priorities or go crazy juggling demands. Because of Drucker’s third question, “what does the customer consider value?”, the fewer customers the better, since value perceptions need to be identified for each customer and resources assigned to deliver this value.
But how is the list shortened? And what is the financial/political cost for each shift in relative position for each “customer”? If trustees are the chief customer, how are students and faculty going to respond? I once considered alums the ultimate customer – I thought that unless the whole value chain is aimed at ultimately creating happy alums who are educated, personally market your college, and give money, you may not do well. As a dean, how would you create an educational experience as a value chain that ends up with smart, happy alums writing huge checks?
Legislators? Most public institutions receive less than they used to from state funds, but elected officials tend to ignore their diminished clout – attempts to control the state university have not slipped at the same rate that the funding has. What does the governor/legislator consider value? Control, face time at commencement, or responsive testimony appearances when summoned might be found on the list.
It goes without saying that faculty may balk at any ranking other than the number one slot on the customer list. With my faculty hat on, I cannot but agree. With my manager hat on I’m less sanguine. Talk about customers perplexes faculty because traditional thinking celebrates the reign and prerogatives of the professor holding forth in the classroom. President Diver continues, “The whole principle behind higher education is, we know something that you don’t. Therefore, we shouldn’t cater to them”; i.e., students don’t know enough to tell us what to teach. Of course, adult learners may challenge this paradigm when they learn as much from each other as they do from the teacher. I have definitely learned from my adult learners. And there are some pretty smart undergrads out there these days.
The key element in this discussion, whatever your faculty or president thinks about the student as customer in the classroom, is differentiating between teaching and marketing. The faculty must manage the learning expectations for their programs and courses. But if there are no students sitting in the classroom, there is a marketing problem.
Faculty primarily, but presidents as well, sniff condescendingly at the marketplace nuances of degree programs as products to be purchased. However, if your institution is heavily tuition dependent, it is hard to ignore students. They pay most of our salaries. To complicate the discussion further, if you are a small, private liberal arts college, then the parents probably foot the bill. So who is the customer? What a student “considers to be value” is significantly different than what a parent might identify. [Reed College keeps its integrity here – no climbing walls.] Scarce resources are needed to offer value propositions for programs – which value proposition will get those resources?
Let’s assume, for the sake of discussion, that in a marketing sense, the student might be the customer. Even if someone else is footing the bill, the prospective student could have much to say about the eventual choices made.
With a customer identified, Drucker’s three questions, for maximum effect, should be used iteratively. So if we have the customer and the customer’s value expectations figured out, we need to re-check whether we understand what business we’re in. Of course, it is straightforward to say “we are in the education business”, or we do teaching, research and service. Not good enough.
I work at a Caribbean medical school just starting an MBA in health management for an international, professional clientele. We have a long history of delivering medical education to young, aspiring MDs. So our business might be, more precisely, medical school teaching, research and service.
Who is our customer? This may be changing. In our early days, students who could not gain entrance to traditional medical schools came to our place, eventually became doctors, and did as well in their medical practices [primarily back in the United States or Canada] as their counterparts from other schools. We now have many more applicants than places, and are the school of first choice for scores more, drawing from a considerably more diverse international pool. So our customer is generally a younger person, not necessarily from the United States, who is pretty smart but probably still won’t go to Harvard.
What does this customer consider value? For some, above all else, a chance to be a doctor, whatever it takes, whatever it costs. Frankly, this customer may have few choices.
Our new MBA program is very different. We are online, unaccredited [for now], looking for English-speaking professionals with eight to ten years of work experience [adult learners] across health industry sectors, in any country with enough bandwidth to support our program delivery. With the proliferation of online MBA programs, potential applicants face a huge array of choices. What they value may be significantly different than what a potential medical student values. The other institutions that compete with us for the same pool of applicants are numerous and competent.
Two completely different sets of responses to Drucker’s questions emerge.
In working with business executives over the years, I have a few thoughts about recruiting adult learners. Our customers are the folks who hang out at the Admiral’s Club when they fly, have two cars in the garage [one is probably a beemer], and like their lattes fast, done right, and courteously served. They are more likely to buy something because of a relationship than obeying a Google banner ad marching across the bottom of their computer screen or even responding to an email blast. They want to hear a human voice fairly quickly after dialing a telephone number and selecting an option or two. They want a one-on-one chat with someone important at a wine and cheese info session, with follow-up phone calls, and maybe even a small promotional gift [a good book written by a faculty member – in my info sessions, Drucker books were hot commodities]. They want a customized product that is worth their time and money.
The bottom line is that we shouldn’t think all potential applicants are alike. Hard, discerning reflection about our core business, our “customers”, what they value, and most important, how that fits with what we’re offering, must inform the deliberations of top administrators. Centralized recruiting and admissions may no longer work well. Every value chain and value proposition is distinctive. Maybe smaller business units should run the whole decentralized affair – program management, marketing, recruiting, teaching and assessment, even alumni/ae relations? Being successful at bringing in young medical students is categorically different from work-hardened adult professionals.
Back to Reed College’s dilemma. The board priority in the budget process emphasized “protecting the character of the college”. President Diver was reluctant to tap the fund. The budget committee chair volleyed back that the endowment should not be off limits., “We should do it if it will protect the character of the college.”
I am familiar with Reed College, and I think they have a very good idea who their customer is. The trustees sound like a savvy bunch and their talk about “protecting the character of the college” is solid business talk. The character of the college is fundamental to the business of Reed College, and the “take rate” on the endowment might be key to Reed College’s dilemma.
President Diver, rejoice in your strong brand, listen to your board, and don’t fear the student as customer. Peter Drucker is smiling.