Why the Private Higher Education Sector Will Innovate and Grow

As the third Chancellor of the Colorado State University System (CSU System), I envisioned an opportunity that few traditional, public universities had tackled.  That opportunity was the creation and launch of an online university that was fully capable of delivering its own online degree programs to non-traditional working adults in cooperation with the State’s largest community college system.

The outgrowth of that vision was, first, a plan for CSU Global, followed by an initial visit by a team from the Higher Learning Commission, followed then by the delivery of its first courses for enrolled students.  Now CSU Global has graduated its first students, a proud day for public universities that have exhibited sadly few fundamentally innovative programs in the educational market.  Besides CSU Global and a few others like the University of Maryland, the innovativeness of the proprietary sector of higher education is striking when compared with the traditional not-for-profit sector of higher education.  Why?

There are many reasons besides the capital that the private sector possesses to support its creativity and growth and the market orientation that drives the private sector to respond to customers’ needs.  Among them is the willingness of proprietary higher education to embrace the Forces for Change in Education that I have previously identified in this blog.  Among them are institutional unbundling, individualized learning, the teacher as coach, and the social communication phenomenon, including collaborative learning communities.

But why have so few traditional universities done exactly what private sector universities have been able to do with the rapid development of new educational programs, the deployment of fast growing programs for non-traditional students?  After all, we have certainly seen increases in the revenue of traditional universities, albeit not from robust increases in funding from state budgets.  And there has been no shortage of calls for change from the public via state governors, federal education leaders and local boards.  Why, then?

The answer is complex on the one hand and straight forward on the other.  The complex answer emanates in part from the historic shared governance between faculty and administrators, shared governance that slows decision-making and tempers risk-taking.  But it goes beyond mere shared governance.  Faculty members quite honorably believe that they have a responsibility to uphold the traditional patterns of learning that have served learners well for two millennia and have made U. S. higher education the envy of the world.  Moreover, our traditional universities have a very significant responsibility for innovation in the form of research that has the potential to drive technological improvement.  That research, as valuable as it is to society, inhibits a focus on teaching by faculty members whose evaluation depends for no more than a weighted third on teaching and student learning and whose prestige and market value depend on the millions of dollars in research support on which many universities depend.

The straight forward answer to why we have seen so little innovation from traditional universities is the same answer one finds in any industry that is stumbling. Its administrators have demonstrated too little real leadership.  Its structure, like all managerial structures, seeks marginal improvements on an existing technology (see Clayton Christensen’s work on innovation) rather than embracing a disruptive one, and it is not organized around its customers.

If you have read this far, you may ask yourself why, when I was leading the Colorado State University System, we were so successful?  The fundamental answer lay in our willingness to embrace change and take a risk along with an understanding that CSU Global’s survival depended upon its being structured outside of the normal reach of faculty governance via an independent organization, located at some distance from either of the other two traditional campuses.  It also depended upon some faculty members’ recognizing that their livelihoods and the quality of CSU education were not at stake with the creation of CSU Global for an alternative educational market.

But, as I said earlier, too few traditional university systems have embraced the willingness to create fully distinctive educational institutions.  Thus, private sector education has filled the void, and it is likely to do so as long as society does not restrict its potential to innovate – and grow – as it meets the needs of more and more students.

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