William Annandale February 9, 2017

Winners and Losers – Strategies in Higher Education

The last few years have seen major changes in higher education in the UK; a sector that was more used to quiet evolution previously. The changes can be traced back to the coalition government’s ‘Students at the heart of the system’ white paper in 2011, the enabling of a dramatic increase in undergraduate tuition fees for English universities, up to a maximum of £9,000, in 2012, and the removal of central control on recruitment numbers.

Since then, not the least of the shocks has been Brexit, which is predicted by many to have a major negative impact on universities’ recruitment of EU students, to add to uncertainty about international student recruitment, related to immigration policies.

The dynamics of the sector are now completely different. The outgoing chief executive of UCAS said in her ‘end of cycle’ report in December 2016 ‘When I took over at UCAS in 2010, students chased places – now the places chase them’. Marketisation is a jargon word used, often pejoratively, to describe what is happening in UK HE, and students as consumers. Whatever the terminology, there is no doubt that HE has changed forever.

There is also no doubt that financial pressure is building, on at least some universities. HEFCE’s most recent report, in November last year, on the financial health of the sector suggested ‘a widening gap between the lowest- and highest-performing institutions and increasing volatility of forecasts in the sector’, with forecast surpluses by institution ranging from ‘a deficit of 28.6 per cent to a surplus of 21.5 per cent in 2017-18’.

From a strategic and marketing perspective, what can and should universities be doing as a result of all the changes? Two broad courses of action are suggested.

1: Size and Shape

The removal of the cap on undergraduate UK and EU recruitment numbers has provided a big opportunity for universities but it will only be right for some to take advantage. Expansion clearly comes at a price, in terms of staff and facilities, and brings increased risk at a time of increased uncertainty.

If not already undertaken, universities need a major review of what they want their size and shape to be in the future. Size with regard to overall numbers but also undergraduate versus postgraduate, domestic versus international, directly delivered education versus partnerships etc. Shape includes issues such as breadth of faculties and courses offered, emphasis and investment in research versus teaching, the extent of face to face education as opposed to blended or remote learning, and facilities offered to students.

In the past, most universities have had stated intentions for growth, within the previous student recruitment limitations. Now, consolidation is absolutely a viable option and one that is likely to be more appropriate for some institutions (the UCAS ‘end of cycle’ report indicates that a number of universities are already taking that route).

A consolidation approach also needs to consider breadth. There has been a tendency for universities to try to be all things to all people; hard decisions now need to be made about less reputable faculties or departments and where the focus should be, so that the institution can concentrate on and promote a strong core. This includes a hard look at proposals for new programmes; a HEFCE report from 2012 concluded that only 10% of new undergraduate single subject programmes could be considered successful. With estimated programme development costs at £200m, this suggested that £180m of NPD costs did not achieve a return for institutions.

2: Distinctiveness

Alongside size and shape, distinctiveness is an increasingly important issue for universities to address. How can they genuinely stand out, to target audiences such research funding bodies and industry as well as prospective students, in an increasingly competitive and crowded marketplace?

The typical ‘inside > out’ approach of ‘broadcasting’ (shouting louder) what you think you’re good at will not work unless it’s based on real insights from ‘outside > in’. How is the institution really perceived by the outside world versus its peer group, who are this peer group in reality (not always those assumed), what is being said about it on social media forums for instance regarding student experience, and what is important to those having to make a choice? According to UCAS, almost two thirds of students with some A level grade profiles now get five out of five offers; that’s tough competition even after short listing, and (good) distinctiveness is imperative.

A distinctive position can and should evolve over time but it needs to be established in the first place, and established on the basis of depth of insight, and then communicated in a motivating and appealing way. Many universities are becoming increasingly innovative in their ‘campaigns’, particularly digital; not always, however, grounded in a relevant and appropriate proposition and positioning.

The HE sector has many opportunities and many challenges, and the gap between ‘winners’ and ‘losers’ will inevitably widen, even in the near future. As well as being reactive to changes, universities should be proactive to take charge of their own destinies, and make sure they have the fundamental strategies in place to ensure they end up in the winning camp.

William Annandale March 9, 2016

Quangos – 7 steps to stay off the bonfire

Quangos are a hot topic of discussion in the UK; the acronym being quasi-autonomous non-governmental organisation and typically meaning an organisation to which the government has devolved power. They cover different ‘arm’s-length’ government bodies, including non-departmental public bodies, non-ministerial departments, and executive agencies.

Around five years ago, the UK coalition government announced that hundreds of publicly funded government agencies would disappear with the aim of improving accountability and costs, the famous ‘bonfire of the quangos’. In fact, according to a National Audit Office report from March 2014, 285 public bodies had been abolished, apparently saving over £2.6bn, but 184 new organisations were created at the same time. Interestingly, of the 184 groups set up between 2010 and 2014, 66 of them are companies in which the government owns some or all of the shares.

This suggests that quangos are not the epitome of bureaucratic waste and excess, as some have suggested. In our experience, these types of organisations often have good people, brand goodwill and engaged customers. At a time when their government funding is either being reduced significantly or withdrawn completely, what they don’t typically have is a commercial approach or culture.

What therefore to do with an organisation that has a future, but not enough funds?

Identify what market you are serving; as a quango or similar, you will have had a captive or guaranteed market for your services. Using a combination of market research and consultation with your existing contacts, the market in the commercial world can be identified and quantified, enough to help strategic direction and help raise funds.
Develop a customer proposition; transform your existing offerings into a customer (value) proposition, to answer the question – ‘what can you do for me (target market)?’ and test with a few prospective customers
Create a distinctive positioning; there will undoubtedly be competitors already providing similar services, so evaluate what you have to offer and determine what is distinctive (unlikely to be unique) versus others
Initiate product development; identify how the current services could be developed and improved, for example by talking to existing customers, and start a programme of new product development; initially building on your in-house capabilities
Produce (or update) a business case and plan; an important discipline to help establish whether there really is a commercial opportunity but also for approaching potential funders with a well thought through rationale
Consider future status and structure; there are many options for the future status of the organisation, including whether the team want to continue to be part of a not for profit enterprise. There are also key questions about governance and structure; who has the expertise for different roles, where are the gaps and how are they going to be addressed, how is remuneration and ‘equity’ to be decided etc?
Develop a communications plan and ‘launch’; the new enterprise cannot be the best kept secret, it needs to communicate and promote your services. Quite likely a ‘soft launch’ initially, contracting with some warm contacts before committing to more ambitious plans

7 steps; quite straightforward in principle, not so easy to achieve but a robust way of transforming from quango to a flourishing enterprise.

How many will then find themselves on fire as opposed to being on the bonfire?

William Annandale November 11, 2015

Teaching Excellence Framework in UK Universities

Will UK universities need a new approach to strategic planning?

It is just as well that UK universities are filled with, and run by, bright people. Just when they might have thought they had worked out how to improve their reputation – many made significant gains in the 2015 THE and QS rankings – the UK government decides to change the rules, or at least issue a Green Paper with a view to changing the rules. It is about consultation at this stage but the Green Paper does signal a fundamental change which will impact on the strategy and planning of many HEIs.

A bit of scene setting first. Many UK universities, outside of the research powerhouses like Oxbridge and Imperial, derive a majority of their income from teaching. However, their reputation – particularly international reputation, which is becoming increasingly important – is based far more on their research. For many institutions, research – and the promotion of it – has become a clear priority and, as a consequence, for many academics, building a research profile is more important for career and personal interest than teaching students – even if this is what pays the wages. As the Green Paper itself says, ‘teaching has been regarded as a poor cousin to academic research’.

Belatedly – and, in our view, positively – the proposed new Teaching Excellence Framework (TEF) is intended, amongst other things, to start redressing the balance. Over time, according to the principles behind TEF, universities will be categorised in one of several levels for ‘teaching quality’.

If a university finds itself in the bottom rung, that is likely to have a major impact. Not only will it be unable to raise tuition fees (and may have to reduce them), its teaching quality designation will deter large numbers of high-quality students from applying. The institution will run a real risk of a downward spiral, where lesser quality students, a low ranking for teaching quality, and constrained finances could create real problems. The Green Paper is quite open about this possibility – ‘Eventually, we anticipate some lower quality providers withdrawing from the sector, leaving space for new entrants, and raising quality overall’. It’s worth questioning whether students should be paying ‘extra’ for the quality of teaching that they might expect as a matter of course, but that’s a different topic and a different blog.

Consider also the situation at the other end of the spectrum. Those universities with the highest ranking could well be overwhelmed with applications. This would put a huge strain on admissions systems and staff, trying to cope with large increases in the volume of applications, and potentially risking more disputed decisions on who to offer places to.

Now the good news; there is time (some) to prepare. The government is proposing that the first version of TEF is piloted in 2016 and has a more limited scope in its first two years. Planning and Strategy teams, however, should start evaluating its potential impact now, and developing alternative scenarios for their operating models. In turn, Marketing teams can start to consider how their institutional propositions might need to be adjusted.

And a good start point; the robustness of existing data about teaching quality for each institution. The National Students Survey (NSS) records scores for ‘assessment and feedback’ and these have traditionally been the area of the student experience with the lowest satisfaction levels. Now is certainly the time to ensure that any shortcomings are identified and addressed.