Michael Davis is chief executive of the UK Commission for Employment and Skills (UKCES)

One very exciting part of the work we’re doing at the UK Commission for Employment and Skills is exploring, with the 157 Group and Gazelle Group, how we can best strengthen strategic relationships between businesses and colleges. As a former chair of a manufacturing business and an FE college, the three points below represent what I see as key areas to have come out of this conversation so far.

Accountability

Accountability in business is normally straightforward: a business is accountable to its customers and to its shareholders. In our world, however, those putting up the capital are not the end users, making for a much more complex model. For colleges, working out lines of accountability relative to business and public service can be a real challenge, and yet fundamentally important.

College leadership teams and governing bodies need to recognise the risk of missing accountabilities and look at how they design that in. One great example is Leicester College (declaration: I used to chair the governing body), where there is a student liaison committee populated through course representatives. This hard-wires the student voice into college governance, building strategic accountability into leadership of the college.

Instead of customers and shareholders, colleges need to recognise accountability to students and businesses, the voices that determine the real value of the college’s offer.

Localism

Another aspect of accountability, localism demands direct relationships between businesses, employees and colleges. This direct relationship means that accountability to individual businesses is just about as local as you can get, and creates the conditions for businesses and colleges to build long term sustainable relationships.

In England, employers spend over three billion pounds per year of their cash on training. That’s a huge market and whilst some colleges are completely at home in that market, the data says that many are not. That’s why the UK Commission supports the proposals floated by Doug Richard in his recent review of apprenticeships, that the public contribution to apprenticeships should be routed directly to employers via PAYE offsets. This would align public and private investment and ensure that colleges work directly with businesses.

Critically reviewing where value is added and cost incurred

My favourite bike shop does very little trade in bicycles. It sells training classes, bike fittings, Pilates sessions, cakes, coffee – everything but the bike. This stems from the fact that unless you are buying really expensive bikes, the value-add is not in the bike itself, it’s in what you do with it.

That’s a fantastic example of realising where value is added and capitalising on it. The other side of the equation is seeing where a changing business climate shifts how costs are incurred. The company I chaired in the past relied upon a network of distributors across 50-plus countries. These distributors used a network of reps to visit camera shops to explain how the products worked.

Changing times meant that more consumer information was available online, as well as sales directly to the customer. Suddenly distributors became no more than stock holders – they incurred cost but added little value. The company changed strategy, to bypass the distributors and add value in other areas.  It finished up with its own on-line photography school - a radically different, more efficient business model.

What is so encouraging about the work of the Gazelle Colleges – and other forward thinking organisations -  is their perception of where value is added and cost incurred. This opens up a window to all sorts of different enterprise models, such as Learning Companies, co-location of learning facilities within business premises, and businesses sponsoring design of curricula. This model not only supports success and growth of colleges, but fruitful partnership with local business.

Let me finish by saying that I recently spoke to the CEO of a telecoms company who said that you had to be prepared to constantly challenged and disrupt your own business model, because if you didn’t, someone else would.

Business and college collaboration has potential to be a really positive disruptive innovation; it is best that colleges see this now, rather than have their business model pulled out from beneath them as times change.

Accepting accountability to students and employers, the need for localism, and a watertight understanding of value and costs will make for colleges that serve individuals and communities with very little waste. This is not only crucial for learners, but for the growth of the economy as well.

Michael Davis is chief executive of the UK Commission for Employment and Skills (UKCES)

About UKCES: A social partnership that aims to raise skill levels to help drive enterprise, create more and better jobs and economic growth. For more information about the publication UKCES, the 157 Group and the Gazelle group are developing, and to input into it, click here.

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