As College mergers plateau following the Area Review process and Universities begin a review of tuition fees, horizontal to vertical integration in post-compulsory education could make a lot of strategic sense. For some, it may be a necessity.
As every leader in further education will know, the purpose of the Area Reviews according to the original documentation was to “ensure that we have the right capacity to meet the needs of students and employers in each area, provided by institutions which are financially stable and able to deliver high quality provision”.
In short this was code for less and in theory more financially stable Colleges enabled by a series of mergers.
Similar objectives can be seen in the language launching the review of post-18 education, launched by the Prime Minister on the 19th February with reference to increasing choice, value for money and high quality.
The terms of reference for the review state that the outcome ‘must be consistent with the Government’s fiscal policies to reduce the deficit and have debt falling as a percentage of GDP’.
The consequences of this approach may not be that different to the further education Area Review process but this time the opportunity is different.
As the composition of the skills landscape, and our economy, changes with the rising status and criticality of vocational and technical routes alongside academic degrees it makes strategic sense for University and College leaders to look afresh at the operating environment, and towards a different collaborative future.
The synergies in the skills ecosystem are there to connect and yet to date it rarely happens with College to College mergers the norm, and College to University less so.
The contention of this article is that it’s timely for this to change if we are to ensure that we have stable and financially secure further and higher education institutions for the future.
Education is evolving
We are the facilitators of our own creative evolution, so said American comedian and social satirist Bill Hicks. Whilst leaders in education operate within a highly regulated and complex policy environment the freedoms and flexibilities exist to create new structures, ways of working and thinking.
Taking the best characteristics of our Colleges and Universities and fusing them together, creating new business models aligned to national priorities whilst also optimising systems and processes is a prize worth striving for.
Back when Colleges were incorporated in 1993 there were broadly 450, today that figure stands at 273. Of the 52 mergers originally proposed by the further education Area Review process, fifteen collapsed or materially changed.
Whilst there are many variables behind why that happened it is my contention that any collaboration or partnership that isn’t built on a co-created shared vision and purpose will likely face difficulties, especially if the primary driver is a financial one.
Relationships built purely on money are often fraught with weaknesses not least because financial efficiency isn’t strategy.
Operational effectiveness should not be a reaction to austerity, but rather business as usual. In the investing world, billionaire Warren Buffett once remarked “only when the tide goes out do you discover who’s been swimming naked” meaning that many an organisation can stay afloat in opulent times, but when austerity hits organisations cannot sustain themselves if they don’t have a sustainable vision for growth and in the disruptive digital age that will mean radical change.
As the education sector has been dealing with austerity for years, consultants looking for efficiencies to justify a merger have often found that the sums don’t add up, whilst banks get nervous as the risk profile increases.
College and University alignment offers a different solution, and one where the required underlying factors necessary to support sustainable collaborations are more likely to be present with conditions that are more likely to be genuinely transformational.
Education is for life, not just for children
We all have a vested interest in the education and skills agenda because, like agriculture, we are all reliant on it.
The challenges for the UK have been widely recognised in a range of reports including the ‘Inadequate to Outstanding, making the UK’s skills system world class’ from the CIPD, published in 2017 and suggesting that the UK is sleepwalking into a low-skill economy.
This view is backed up by a wide range of additional research and the UK Government is well aware of the challenge and intends to address it.
Colleges and Universities are the key national assets to address this challenge, but rather than react to the outcomes of Government reviews independently they should be driving their vision forward collaboratively as part of the national response supporting Government in the process.
How to get into a relationship in five easy steps
If you ‘Google’ how to get into a relationship you will be presented with the following items to consider.
Despite all the research I have undertaken over the years, including my MBA, this rates highly amongst the best advice I have seen for leaders considering a merger or acquisition despite it being tailored towards personal relationships for the younger reader.
- Get involved for the right reasons.
- Focus on the long term future.
- Have a clear understanding of mutual expectations, ambitions and values.
- Be clear on the commitment and the resources involved.
- Be clear on what sacrifices and trade offs each party is willing to make.
As education leaders grapple with austerity and value for money drivers it makes sense to explore the opportunities for collaboration before financial pressures become the dominant force.
It is likely that the outcome of the review of post-18 education will result in new and disruptive funding models for different degree subjects based on national economic impact measures. In short this has the potential to have huge impact on University finances, but it doesn’t have to.
In times of increasing uncertainty and financial constraints College and University leaders are under increasing pressure to transform their organisations and whilst there are no shortage of opportunities to do so this will require new tools (such as emergent technology) and new growth mindsets open to new ways of thinking of working.
The underlying cost base of a College is less than a University. Staffing and operational costs are lower. However whilst University running costs are a lot higher they are also home to some highly specialist expertise, facilities and equipment where the subject area requires it.
In areas where the subject does not require such expensive resources it makes less sense for that provision to be based in a University and more sense for it to be delivered in a more cost effective part of the organisation which could be a College.
Put together, Colleges and Universities cover a broad and diverse range of the learning ecosystem. From diplomas to apprenticeships, degrees to bespoke in-company training it makes strategic sense to consider closer alignment.
There is a precedent. Currently there are three University and College mergers in the pipeline and they may well be the shape of things to come.
To date this has not been an easy transition which may explain the relative lack of further and higher education mergers and this needs unpicking to understand how to avoid the same mistakes of the past.
Competition, Collaboration and Coopertition
Collaboration has not traditionally been easy in the public sector because of a long established history of contradictory public policy that on the one hand often requires collaboration and on the other fierce competition, thus creating a bizarre landscape of ‘coopertition’.
If Colleges and Universities formally join together the tensions of competition with collaboration are removed, and each part of the entity can focus on what it distinctively does best. To achieve this requires shared vision, but fortune favours the bold, as the old Latin proverb goes.
The first University was formed in the UK before 1167 and the world has changed rather a lot since that time.
Partly as a consequence of technology, the pace of change we see now is greater than any point in our history but some things remain constant, the foundations for a sustainable collaboration being one of them and the inevitability of change being another.
In a report titled ‘Unlocking the Power of Partnership’ KPMG note the following. “True partnership is about identifying shared value and leveraging the combined strengths of each partner to achieve a level of impact that could not be accomplished independently”.
As we move through the opening days of the Fourth Industrial Revolution, collaboration and the ability to form new operating models that add value are not optional, but a necessity.
The values that underpin most Colleges and Universities are already largely aligned, and the combined resources of both can create impact not possible independently.
When it comes to the future of further and higher education, we’re better together.
Jamie Smith, Executive Director, South Staffordshire College, Co-Founder Statistics24.com