When Colleges Die: Leadership Sucks and Everyone Else Pays the Price

It’s not news that many of the thousands of American colleges and universities (practically the same thing) are failing. Indeed, a number of very well-known schools have already closed down. Even those who have managed to survive so far are not safe. I expect a great many of them will vanish over the next decade or so.

From an industry perspective, that’s probably unavoidable. There are simply too many institutions of higher education in the US. Too many seats chasing too few people. But it is hardly inevitable for each respective individual school to fail. They do so primarily because of poor leadership. They collapse mainly due to inept administrators. They die mostly from uninformed management at the top.

Failure at the Top

Face it, higher education, especially in the US, is a business. And you need someone with business sense to make it work when times are hard. Once upon a time, when expanding demographics provided an almost unlimited number of students, anyone with half a brain could run a college. But in a down market, when every school is fighting over a declining customer base, “business as usual” just ain’t gonna cut it.

“When the sea was calm all ships alike showed mastership in floating.” — The Tragedy of Coriolanus, Act 4, Scene 1.

The situation today is a classic example of a mature market. There is now a shake-out when poor performers will exit. So what does a lot of schools do? They look for gimmicks. Oh, let’s build a new gym. Let’s put up a new residence hall. Let’s have a new website. Cut staff. Hire more administrators. These so-called strategic initiatives are juvenile and simple-minded, yet college leaders eat them up! Why? Because most college executives cannot manage their way out of a paper bag. And I’m being kind.

It’s Problem Identification, Stupid!

Problem identification is a critical problem. Most college administrators eagerly point out that the problem is declining enrolment. Easy enough to then blame the environment, specifically the demographics. There’s just not as many college-age people as before. But declining enrolment is NOT the problem. It’s the symptom of a problem. The problem is that people find no reason to attend the school in question. They choose to go elsewhere. Failure to recognize this, and hence the inability to deal with it, is a management failure.

Idiotic Things Administrators Do

Students and their parents ain’t stupid. They have to dish out serious money to go to college. It’s only natural that they want to get the best their money can buy. The two common (and dumb) responses that colleges take look something like this. One, they cut prices. Especially among private colleges, they keep the list prices high but offer considerable “scholarships” even to people who are not academically prepared at all. Everyone is a presidential scholar. The idea here is that people will come because the price is now lower.

So far so good. Only a low-price strategy can only succeed if the college also has low costs. Considering that most colleges are so bloated with debt and administrators, and they also lack any kind of economies of scale due to their small size, their costs cannot keep pace with the lower price tags. Result? Revenues can’t cover expenses. Pursuing a low-price strategy when one has high costs can only lead to one thing: abject disaster. And we have seen a great many examples of that. Not only in higher education but in business as well.

Another moronic response is to come up with all kinds of gimmicks. Borrow to build a new gym. Create a new website. Host a pizza party for move-in day. And so on and so forth. Even if these are meaningful to students (I’d say if I’m asked to hand over the price of a nice family sedan each year for four years, it’d take much more than that to convince me) and their parents, other schools can easily do the same. Result? We’re back where we began. Nothing changed except we have just incurred millions more in expenses. We’re in deeper shit than before.

Leadership Sucks, and the College Dies

What the schools need is to find a reason to exist. Why should students attend this school over another? Considering how expensive higher education is in the US, it’s a question many students and their parents wonder about. Why should I go to school A and not school B? There are, after all, thousands to choose from. What’s so special about this particular school?

In business parlance, what is the school’s competitive advantage? To be a suitable competitive advantage, a key consideration is that it must not be easily copied. Imperfectly imitable is the classic expression for that. In other words, copycat initiatives need not apply. Unfortunately, copycat crap is what most college leaders ever think about. Richard III decried, “My Kingdom for a horse!” For most colleges, intelligent leadership is the deficit.

Conclusion

Can every college find this raison d’etre? Probably not. The industry is simply too over-supplied. Many schools will fail. But is every school doomed? Of course not. It takes intelligent management with a clear vision and common sense. It takes leadership who understands that one must have a competitive advantage to survive and prosper. It takes courage to steer towards a new world. It takes humility to overcome personal and institutional hubris. It takes integrity to do what’s best for the college and its students first and foremost, and forego personal aggrandization and self-interest in the process. Unfortunately, you won’t find these attributes among the majority of college administrators.

“But there ain’t no Coup de Ville Hiding at the bottom of a Cracker Jack box.” — Two Out of Three Ain’t Bad, Meat Loaf