Wednesday, February 17, 2016

Internationalisation of Higher Education and Open Business Models

I have been working on Internationalisation of Higher and Professional Education for over a decade now, mostly at the business ends of things and exploring strategic opportunities. Therefore, I find myself often in conversations about how to internationalise educational offerings, often involving developed country institutions trying to tap into demographic booms in emerging markets, and sometimes, emerging market institutions reaching out the other way. 

Most of this conversation, as I see it, is opportunistic. The list of failed attempts is long, which, not incidentally, include my own two years of developing a business to deliver British qualifications online in partnership with colleges in India and China. So, my current wisdom is not just theoretical - it has all the practicalities of someone who burnt himself in the process! 

This makes me reluctant, often to the surprise of willing collaborators or investors who would see me try again, to engage again in cross-border education ventures. The reason for this is not any lack of entrepreneurial appetite - I did not suddenly change as a person in the summer of 2014 - but the lack of interesting ideas in the field. Most of the conversations in Cross-Border Education, in my mind, tend to make one of the two mistakes: Either its purpose is wrong or its business model is impractical. And, indeed, more often than not, it is both.

The first problem, of Purpose, is easy to spot. Most institutions (and companies) want to go cross-border in search of scale. It is about more students, often fuelled by the myth of the New Middle Class. The problem is that the New Middle Class is inadequately defined, both in terms of numbers as well as in terms of other qualitative factors. While globally, no one would be called Middle Class without making at least $20 a day, it is common to count in households with only $6 - $10 a day income in the ranks of new middle classes in India (and similar countries). Besides, while they seek to educate themselves, their quest for education is driven by traditional reasons, and aim for traditional outcomes - a Government job in India, for example! This hardly creates a disruptive possibility or a market for cross-border education. And, besides getting the maths wrong, the expansionary missions hardly sit well with education, which is often about enabling a person than providing idea-drills. The quest for scale, more, often undermine the commitment to care, and sensibilities that must accompany cross-border forays.

This brings up the Second Problem, of Business Models. With diverse markets, divergent motivations, and imperfect information availability, the Closed Business Models of Education is primed to fail more often than not. No regulator in the world create models flexible enough, and even the private companies make assumptions about cultures, processes and people that remain unexamined and invariable when going cross-border. Worse, culture is treated as separate from strategy, often as a soft aspect of business, a distraction rather than a core activity, though cross-border forays necessarily define culture as strategy. 

Indeed, the way Cross-Border Education could work better if Open Business Models were possible. There are people talking about unbundling of education - and the days of Closed Education Business Models, where an institution does everything from admission to certification (and even placement), seem numbered. However, such thinking has not yet reached the realm of Cross-Border Education. The field remains dominated by the old world assumption that emerging market students are fascinated by first-world institutions and degrees, which is validated by increasing student mobility, but inherently false when extended to project demand for in-country delivery and other non-traditional models.

So, here is my point: When planning for International Education, it is best to open the business model of education. Such thinking would allow one to focus on the value proposition and ask the question - what can an international education proposition do better for a student that can not be done locally (to justify the higher costs that are invariably involved). Such thinking also helps to solve other issues that affect such cross-border offerings, like the insurmountable challenge of pricing for the local markets. The European and North-American institutions, entrepreneurs and investors can not often escape 'Margin-based Thinking', which is a key aspect of any management thinking (in education circles, this is expressed using the ever-ephemeral term, Quality), and yet, most emerging markets do not offer margins at all, given the per capita income and relative cost structures of the market. Opening the business model and focusing on one or two key things where an International Proposition really adds value - and working with reliable local partners to do everything else - can create a model aligned with local prices and costs.

But, all said, the conversation about International Education is not strategic. Interestingly, for most institutions, it is a nice-to-have thing, kept at arms length, often as a department whose job is to make some money by selling programmes designed for the local market, and definitely not to generate ideas of their own. Watching the international engagements in education, therefore, is a torturous spectacle of engagement between narcissistic and self-obsessed developed country institution and pragmatic and narrowly focused emerging market students, each speaking a different language, with different sets of priorities and eventually leading to a failed connection.

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