Thought Leadership Series: Budgeting For Innovation (Part 5)

Series Overview

Setting budgets is one of the most important responsibilities university leaders must shoulder. Budgets serve as the practical manifestation of a university’s mission and goals, so pursuing the process thoughtfully is critical to driving innovation the right way at any institution. There is a lot more to budgeting than the numbers on the page. Successful senior leaders recognize it is one of the primary instruments they can use to shape  change, both now and in the long-term across campus and beyond.

Recently, Vinay Ganti, Senior Vice President, Strategy at Noodle, sat down with Richard (Rick) Matasar. Rick’s career spans four decades, where he served in senior positions both in central administration (10 years) and as a law school dean (20 years).  Most recently he was the Senior Vice President of Strategic Initiatives and Institutional Effectiveness at Tulane University, and before that as the Vice President for University Enterprise Initiatives at New York University. His time as a law school Dean included stints at the Chicago-Kent College of Law (Illinois Institute of Technology), the University of Florida Fredric Levin College of Law, and New York Law School.

He brings to the table considerable experience developing revenue-generating programs, discovering new ways to do traditional programming, and leveraging existing assets.  Vinay and Rick discussed the state of universities and the need to evolve given our rapidly changing society. 

Today is the fifth in a five-part series that will provide a comprehensive approach to how to do budgeting in a way that promotes innovation and growth in higher education. In today’s article, we will focus on the role of leadership in driving an institutions financial future. The full series is as follows:

• Mindset: Chart a Vision and Plan for Budgets that Drive Innovation and Growth‍
• Culture: Understand an Institution’s Culture and its Impact on Budgeting ‍
• Revenue and Investment Capital: Fund Your Institution’s Mission
• Expenses and Priorities: Spend Strategically for the Long Term
• Leadership: Align Stakeholders to the Budget’s Vision and Establish Protections for the Vision (Today)

Part V: Leadership -Align Stakeholders to the Budget’s Vision and Establish Protections for the Vision

‍This is the final part in a five-part series of discussions with Richard Matasar, who understands the administration of universities and the steps that need to be taken for them to flourish. If you are new to this series, you may want to start with Part I, Part II, Part III, and Part IV.

Given what you have seen in the private sector as opposed to higher ed, what are the peculiarities or nuances of leadership that are not obvious? Should people think differently about leadership?

‍Navigating leadership in the academic sphere requires a deft balance between numerous stakeholders. Unlike the corporate world, academia lacks operational boards and shareholders, leaving the focus on key constituents: internal teams, deans, administrative personnel, alumni leaders, and students. Academic leaders must tread the waters of consensus-building, controversy, and politics, always striving to answer pivotal questions such as: 

• What initiatives will find universal acceptance? 
• Which ones are likely to stir up storms? 
• Which will require the implementation of a political tug-of-war? 

The power at the disposal of academic leaders may appear subtle, yet they wield a potent tool: enhancing esteem, whether through boosting reputation or supporting research. Yet there are certain landmines that these leaders must avoid. First in line is ensuring student satisfaction—controversial decisions that disregard their beliefs are a recipe for chaos. Secondly, faculty morale cannot be compromised. Instituting policies that degrade job satisfaction, increase burdens, or diminish services are pitfalls that must be sidestepped

University leadership demands a higher degree of personal ethics due to increased scrutiny. The politically-charged environment and the permanence of tenured faculty can challenge administrative leadership. However, it’s essential for leaders to foster confidence and enthusiasm within the community, emphasizing the collective benefits of their vision. As the embodiment of this vision, the president and their cabinet play a vital role in driving the university towards its long-term objectives.

How do we develop long-term innovation rooted in the student experience if the students are temporary stakeholders?

‍That is THE QUESTION. In industry, the gold standard is to acquire a customer, keep a customer, and acquire new customers. 

There is no such thing as a strategic accounts model in higher ed.

‍Why not? We should be thinking long term about the life experience of education for every student. We should begin building recruitment of students long before their senior year of high school. A well-run university does camps, alumni events where children are honored, a series of things that makes their brand part of the life or thinking of a student, such as USC, Georgia, or Alabama, where young people identify with the institution nearly from birth. Rather than just making it an emotional grip, it should be an intellectual grip. These programs are just taking hold. A university leadership team should be thinking about early acquisition. When we recruit a student as an undergraduate, we also have to make it easy for them to do their graduate education at the same university, whether that is onsite or online. It should be frictionless. We have then gone from four years to six, seven, or eight years. That is a very different value proposition and a loyalty change on the part of the student so that the university is their intellectual home, not just an undergraduate experience. We may be physically located in one place but reach everywhere, such as for personal and professional development. We should become the institution of choice for upskilling for every graduate. That should be the mindset of the leadership of tomorrow. We have to be the go-to lifetime provider of educational services for the people who have an attachment to us. That is powerful. Even if you are marginally successful, that changes the game. 

‍It’s not a phony association. What we want to do is build a substantively real connection that gives people that lifelong commitment to be our customer, community member, team member, or student. Ultimately, our students can be teachers. There is a virtuous circle that we have not taken advantage of. Online education has become one of the great ways we can encourage former students to be the educators of the next generation. Online education is the way to reach out to our graduates. 

‍The long term in the leadership ranks is to think about students differently, honoring them not as temporary residents, but thinking of them on a way station to a life-long commitment to being a member of our team. 

None of that seems to be in conflict with what faculty want. Agreed?

‍Faculty could support this, but many have an internal conflict. For example, a faculty member educated at a top-tier university—who is teaching at a mid-tier, low-tier, lesser-tier university—will likely counsel an outstanding student to seek entrance to a top-tier university. So there is a conflict, given that we also want that student at our mid-tier university. It’s true and unfortunate. How do we mitigate that, where that conflict is real for us as a faculty member, but ait would be in our best interests to retain that student? Part of it is transparency in presenting options to the student. The value proposition for change management for your students and faculty is about sweetening the deal for them in ways that have not presently been considered. Long term, our brand equity will be built through our graduates, research of our faculty, programming, and associated perks and benefits. The best thing the Ivy League universities have is their extensive networks. Mid-tier institutions each have a network, but have not exploited it as well. To adopt this mindset to bring faculty and students along, we have to offer a perk, a benefit, a distinctiveness we have to create rather than having a generic path to create a “student for life”. That is hard. 

Mid-tier educational institutions possess strong community ties and hold substantial potential for shaping students’’ futures within their geographic vicinity. However, a shift in faculty mindset toward practical readiness over traditional academic rigor is crucial for these institutions to deliver tangible value and foster long-term student loyalty. So how to craft a compelling narrative for these mid-tier institutions? One that promotes engagement and provides an enriching academic experience for the students?

I wish I could say it’s just faculty, but it often filters up to the top. It circles back by saying, “are student outcomes important?”.  By “outcomes”, do we mean more than grades? What are the outcomes that matter for our students when they go out into the world? We already measure research outcomes clearly: How much federal funding has been secured; how much other sponsored research funding has been achieved; where are papers being published; how many are citations? That’s easy. It is a little bit harder when we consider “student outcomes”. Developing an objective set of metrics for student outcomes to which we are willing to pay attention to will be one of the most important parts of the future. Some will be imposed on universities from on high, such as national governments, Boards of Regents, or state governments. There are going to be some attempts at accountability being put in place over the next decade. If we want to get ahead of those, we need a clear understanding of what we think a successful graduate of our university will look like. That will be one of the great leadership challenges: How the university’s president, provost, and deans are going to lead rather than resist this change, upon proving the value proposition of their particular institution. 

Now, we have shifted our discussion, from the alignment of interests, connecting the long-term mission for the school with short-term stakeholder mapping, to accountability. Accountability carries a lot of baggage. Higher ed as a community will be facing a level of accountability it has not, to date, been accustomed to or comfortable with. But, that discomfort offers an opportunity for leaders to emerge.

‍In the category of what makes a place distinctive, there are only a handful of things we can identify. There is a distinctiveness tied to “we are old, venerable, traditional and have networks”. But, this is only the case with a few universities. In contrast, there are institutions who can say they are inexpensive and will be low-cost providers. Everyone else needs to work hard to be distinctive in a crowded space. There is the “University of Prestige” which will continue to maintain its distinctiveness if it does not “go backwards”. The “University of Cheap” is the other side of the equation. Its advantage comes from the fact that it is providing a generic product. One knows exactly what one is getting: a degree of higher education. In between, there are two categories left: “Zombie Universities,” which are already dead and don’t know it, and “Value Universities,” which are the aspiration for most institutions. 

There is a whole new vocabulary with which university leaders will need to become comfortable. There is a “University of Value” in addition to a “University of Prestige”.  From the consumer standpoint, there is more clarity on market segmentation, but universities have not necessarily reflected on their brand position, owned that, and differentiated themselves. 

‍There are hundreds of “Top 50” universities. Everyone will place themselves in some upper category. We know that this is not the reality. We take advantage of the fact that everyone believes they are doing something above average. But there is a point where someone’s grading scale is going to reveal that this is not the case. We need to be prepared. Value in the university context is price and outcome (and return on investment as an individual student). Outcomes are not all monetary. They can involve feeling good about yourself, becoming healthier, developing good habits of the mind, etc. We should be able to prove them a little better than we have done. 

And use them to justify pricing or allow people to choose their experience a la carte. Also, to be more disciplined about what you are selling. We need to be a bit more honest about what we are selling and, indeed, to admit we are truly selling. We are selling an experience. 

‍We don’t like to think of it as a sale, but there are two things going on at a university. 

We are selling an educational experience, which combines social, emotional, cultural, and educational aspects. It’s a valuable, independent market where all schools play. They all know who their competition is, where they stand, who they can win against, etc. The other market is building products. A university will be judged by what every graduate in the world does. If they add value, it’s a credit to the university. If they don’t, it’s a demerit. We have not owned this in a serious way yet.