More than papering over cracks: futureproofing the university

It is easy to reel off the list of threats facing the higher education sector. While there is obviously concern in the short term about changes to government funding and student support, the longer-term disruptive effects of technology, environment and the place of universities in society are all on the long list of challenges.

A trite response would be to pitch for finding opportunities among the challenges. How do we break through the unhelpfully superficial, or the distracting hand-wringing about the future?

At KPMG, we’ve been working on a framework which bridges the larger themes that are disrupting the higher education sector with the smaller concerns, offering practical steps that universities can take to help shape their future.

It’s not prescriptive, and we don’t think there’s a single framework or model that all institutions should follow. The location, heritage and particular strengths of each university can – and must – shape how they will operate in the coming years and decades. Our report, Future-proofing the University, offers some ideas for a structured way of thinking about how to position for the future and can be used as a resource for opening up strategic conversations between senior leadership teams, governing bodies and other key stakeholders.

Let’s talk about the weather

In the context of significant disruptions, many universities have sought ways of becoming more resilient to weather the storms coming. There have been major transformation programmes to improve the student experience and reduce cost, particularly in professional services. Investment in new systems and interventions to support students have in some cases needed to be funded by savings from within the university. Rounds of cuts and redundancy programmes are common features in higher education and are in many cases necessary responses to challenging conditions.

We are also starting to see more vertical integration, with academies and further education colleges within university group structures. There has been continued investment in business partnerships and in overseas developments as ways of diversifying income, and many universities have embraced the apprenticeship agenda as a way of branching out.

But what is the best structure to make the most of these conditions? What scale do universities need to achieve to be resilient for the long term? Have universities really explored the role of partnership; collaboration or indeed outsource across their strategic aims?

Have they asked the searching questions about what the options can be?

Why now?

While collaboration is built into the sector’s DNA to some extent, it is rarely considered in a strategic context up front. This can lead to unstructured activity, with resulting challenges in effective oversight and governance; poor monitoring and a subsequent lack of visibility around the delivery of intended aims and, in the worst cases, financial and reputational issues.

Given the uncertainties ahead, strategic thinking needs structure; it needs tools and ideas to shape the discussions. Our report provides one such framework. Inevitably, there are more questions than answers, but the process of asking the questions it poses should lead to better debate, and ultimately, outcomes.

Here at KPMG, we have a wealth of experience in education, across other sectors and the world. Through our work, we’ve supported major organisational changes through collaborations, mergers and acquisitions in many contexts. We’ve seen those that work well, and those that don’t. We know that there are essential features of collaborative activity, and no quick fixes.

From our experience, we’ve learned that successful collaboration means getting some fundamentals right:

• Create and communicate a strong, clear, vision and engage staff in the process.
• Win over key stakeholders: for universities, that means academic and professional staff, students, alumni and the local community. Consistently across all organisations involved.
• There are no quick fixes: emphasise planning with a long-term future integration plan.
• Do the due diligence to interrogate the short-term and long-term benefits and spot issues which can be incorporated into planning.
• Focus on the structure and the people. If you can identify the future leadership team, let them lead.
• Have the patience to achieve long-term objectives and check back to see if the goals are being delivered; and
• Once started down a particular path, don’t let personal agendas or entrenched cultures derail well thought-through strategic intent.

We appreciate that adapting universities to be fit for the future can be difficult. But as our report shows there is an increasingly pressing need for universities to think creatively – and, crucially with a strategic vision – about their futures. Our report aims to support universities to consider each strategic aim and objective through a broader lens of the best way to deliver your desired outcomes: alone or in collaboration with others.

Fixing the roof while the sun is shining

The barriers for universities thinking about collaborative activities usually come down to personalities. One vice chancellor calls this the “fetishization of independence”: the belief of university leaders and governors that the separate existence of their institution is an unchangeable good. That sort of thinking doesn’t leave enough room for exploring whether there could be better outcomes for students, better business engagement, and better research in a different corporate form. To move anywhere with this agenda, we have to leave personalities at the door and shift the focus to benefits, not egos.

As well as sharpening the internal conversation for a university, a detailed consideration of the collaboration agenda should also raise questions about the regulatory environment. While in other sectors such as further education and healthcare the regulators and funders have often been the originators of merger activity – as has also been true in Welsh higher education in recent years – the conditions for a guiding hand from above aren’t present in English higher education as currently configured.

There are regulatory and organisational barriers to, or drags on, successful collaboration, but these can all be overcome. Some of that may mean changing the rules. If the funding or reporting requirements are barriers to working across sectors, say between further and higher education (which has prevented some mergers in the past), then one response must be to make a case for change. Just as few universities have given the time to consider collaborations in detail, fewer have thought carefully about how they could – or should – influence the conditions presented to them by the architecture of the sector.

Futureproofing for what? For whom?

There is no point in thinking about new operating models, new structures, or mergers and acquisitions, for their own sake. The heart of the question must be who benefits? Our report takes apart the operating context of a university and asks a few important questions:

• Doing what you do more effectively: are there more effective commercial models to drive efficient delivery? Are you operating at the scale to invest sufficiently in new technologies and can more effective commercial models drive delivery?
• Downstream value chain: are there different ways of reaching your customers?
• Upstream value chain: how are you set up to maximise research impact; employability and interaction with business?
• Collaboration with other HEIs: are you stronger alone or combined with someone else?
• Threat of substitutes: are you agile enough to counter the threat of new entrants and models?

Thinking about collaboration – in one or more of its many forms – is a valuable and important step to consider in reaching broader outcomes too.  It can be a tool for pushing strategic thinking in universities: challenging questions on size and shape, geographic reach, the teaching and research portfolio are essential to good strategy formation.

From the experience of collaboration, alliances, federations, mergers and acquisitions in UK higher education, across other sectors and in other geographies, there are some clear conclusions and recommendations:

• Universities should think about what collaboration could mean for them: better to think through a range of options so that they can position to take advantage of circumstances.
• Outcomes should be at the forefront of thinking, not just a focus on cost savings: answering the strategic question “why?” is essential.
• The time taken, the energy required, and the opportunity costs need serious attention: collaboration is intensive and, to be done right, requires a huge amount of management time and attention.
• Integration and cultural change will take a long time, and can’t be rushed.
• High-quality project management, benefits recording and reporting are essential features, and shouldn’t be skimped on.

Exploring collaboration should be a tool for pushing strategic thinking in universities: pushing on questions like size and shape, geographic reach, the teaching and research portfolio, and the elusive search for differentiation.

It may be that the result of this thinking results in other outcomes that help futureproof individual institutions. But by thinking about radical collaboration, universities can start to unpick their structures more effectively.