What this may look like
A Case Study for Higher Education
This is not a prediction, what follows is a thread of thinking which is intended to prompt more questions than it answers. It is speculative and intended to be challenging. If Covid does have a radical impact, what might that look like and what does it call out for by way of strategies for recovery? Crucially, what does a “better than before” outcome entail?
Getting the Balance Right
Like Millennials before them, Generation Z cohorts are digital natives and have highly developed expectations about on-line experiences; but is the University experience for them about the learning, the life-style or both? For the vast majority the balance between the experience and the course is significant – apart from its intrinsic and applied value, a degree offers the prospect of leaving home at a relatively small fraction of the cost of moving out and renting or buying property. There may not be a credible alternative experience for many prospective students. Moreover, these cohorts are also facing the most bleak economic outlook of any generation since the War. Even before Covid, these are the generations who will in their futures face the most challenging burdens of climate change and social care; they could easily be the first generations for decades that do not have the prospect of being better off than the generation before. It is immensely difficult to judge but this could impact their underlying motivation and outlook; and, equally, their willingness to take on substantial debts for a potentially very different experience from anything they had planned/anticipated.
Conversely, demographics are broadly heading in the right direction for a resurgence in demand (or at least expectations of a resurgence). However, belief in a “more of the same” marketing model for Universities could be myopic. The “tyranny of the three-year degree” and a focus on a campus-based/residential experience may tend to blind some institutions to much wider opportunities. Widening access and participation now come front and centre in what will have to become a much more personalised learning model. Covid is forcing an issue which has been bubbling away from some time – value for money.
For the first time, the model of higher education based on living away from home while studying at the expense of building up significant debts may be fundamentally challenged by a model that is more localised and blended.
There is clearly much more to the student experience than the digitally mediated and private study element but what happens when campuses cannot be leveraged?
How many institutions are able to replicate even a fraction of their experience on-line?
What of the needs of first generation HE students and others for whom a digitally mediated experience will be far more challenging to access than a campus-based model?
What about the life-style decisions that influence student decisions as much as their choice of course?
What of the revenues that evaporate when footfall on to campus is diminished?
With a precarious ceiling on fees, institutions cannot allow their costs to spiral to address these challenges. Significant numbers of students may view the prospects of not receiving the expected experience as a reason to defer and pursue other opportunities. If even a small percentage do, institutions with already slim margins may be seriously challenged.
To avoid the stereotypes and the myopia, we need to begin to think in potentially very granular segments.
Students interested in the application of their degree for future careers – these are the lawyers etc., those who take an instrumental view and seek the best place to enhance their future prospects in their chosen professions.
Students interested in the continuation of their studies “out of pure interest” but with less or even no sense of career direction. As above, these folks are primarily interested in the degree or the learning experience.
Student interested in the student lifestyle in the round – work-hard/play-hard (possibly keen or gifted in sports but certainly attracted by independence of lifestyle and by extra-curricular experiences) – probably the majority of students.
Students interested in the lifestyle above the studying.
Students interested in the lifestyle to the exclusion of studying.
If the vast majority of students are interested in the on-campus experience then the on-line experience is largely only geared towards the first two group; the probability of deferrals may be gauged by how far the portfolio of courses offered maps on to specific segments and what those segments will expect as a minimally viable student experience.
It is worth reflecting that a University is not a monolith that has one model of delivery; different faculties and schools address different parts of a complex market in different ways. Any macro change such as Covid is not only a challenge but an opportunity to look at the areas that are threatened and those that can thrive. Given the intrinsic value of higher education, its transformational effects on the life-chances, health and well-being of students (to say nothing of its considerable direct and indirect economic impact), it is relatively easy to see that HE takes on even greater relevance during a crisis than in “normal” times. At this point, it is important to look at the wider market and to identify other market segments that may also have little or no interest in the on-campus life-style but would still benefit from, and perceive the value of, a higher education experience e.g.:
Career changers – those economically displaced by Covid who may have lost livelihoods and need to rethink their entire careers – these folks would fall within Group 1 or 2 above; they may not follow the professions but may seek a degree to improve their future employability.
The 'no-longer so gainfully employed' – these are folks whose firms have had an economic shock and who embrace a new strategy – they may have a strong desire to retain current capabilities and build on them (possibly as a commercial imperative but also as a moral imperative post-Covid); they will have used the job retention schemes to assess and evaluate their future strategy and have a new plan – these people will be sponsored or supported by their firms provided that the experience offers good returns on investment. It is not difficult to see opportunities here in a range of disciplines with creative and innovative dimensions – this is the grouping where major seismic shifts may be closer at hand because of Covid e.g. creating green infrastructure and de-carbonising the economy.
The ‘Retiring’ – those who take Covid as an opportunity to step back from full-time work but are seeking a new challenge – perhaps studying for the degree they previously never had time for?
The ‘Interested’ – those folks who have always wanted to pursue a degree but have not found appropriate opportunities – this group is difficult to reach but may become more obvious if provision is diversified for the “Retiring” and “Career Changers” – pursuing one opportunity may proliferate into others.
The 'entirely overlooked' – there are always some groups who for one reason or another do not participate in HE. These folks may not even realise there are opportunities for them and they are by definition difficult to reach. Again, these groups may become more obvious and accessible if provision is diversified to attract other groups.
All are likely to have a different view of student debt and VFM than ‘traditional markets’ but all could benefit to a tremendous extent from a suitably designed higher education experience.
The key issue is that if the current market takes a significant shock for one academic year because the typical student cohort takes a year out (or even two years if no vaccine is found and social distancing is maintained for longer than 2020/21), that will impact income levels for three years (but possibly longer if Covid rumbles on indefinitely). Capacity on campus will be of limited value and the dip will take a minimum of three years to correct. Some of the most motivated students may even find alternative routes in their careers and professions within existing provision at other more competitive/innovative institutions which may denude previously safe courses of high tariff applicants. Moreover, the sector cannot simply over-recruit thereafter to recover the position in 2021/22 (capacity on campus will allow some increase in intakes (if demand is there) but it will not be possible to make up a whole year of lost intake).
In international markets, it seems that national capabilities have been the default setting for every country when tackling the virus and, with little or no serious cross-border cooperation, this does have huge implications for each nation’s brand (UK PLC). The US and UK have been particularly badly hit in this respect; South Korea and Germany conversely emerge strongly. It is difficult to avoid the conclusion that, in international markets, the performance of UK PLC will have some adverse effects on University recruitment; especially if every nation experiences a second peak, if vaccines are long in development (or fail) and personal bio-security becomes a significant factor in the decision-making of even a sizeable minority if not the majority.
It is not difficult to see a series of significant threats to operating models and revenues for a much more sustained period of time and this becomes a critical factor in new normal scenario planning. The student experience is much more challenging to manage in any coherent way with any kind of social distancing in place and a fixation on how to make that work could mean missing opportunities. It may not only be timely but possible and desirable for institutions to change direction and re-orientate themselves towards new markets and opportunities; it may even be essential for some institutions.
At this stage, it is worth acknowledging that “the super tanker is difficult to manoeuvre”. If we wish to avoid the permanent damage which could ensue, perhaps the best strategy for some institutions at the moment is to consider the scenario that one whole cohort has a largely virtual (non-campus) experience for the three years of their degree i.e. if a student does not enrol in September 2020, they will not over-turn a lifestyle pattern which works in 2020/21 to move city for 2021/22 or 2022/23 either. With, a net on-campus loss of 33% of students approximately, capacity will exist for much more radical remodelling of the on-campus experience and development of the virtual experience to make it more competitive.
From 2021/22, the on-campus volumes may begin to build back up but the scale and scope of the virtual experience could be expanded in parallel such that by 2023/24 the on-campus volumes are restored but the off-campus capability is well-established. A huge prize given how hard the virus will hit in the short-term. Could it be better than before?