The End of Cartels

Generally, systems of higher education have tended to be protectionist. While their constituent institutions have grumbled about the restraints the system imposes, they have had guaranteed markets and have seen this as an acceptable trade-off. The systems have been, essentially, cartels. Thus, the basic way of organizing a system of colleges and universities used to be to divide a state into regions and assign each member institution an equitable piece of the action (student enrollment, industry contacts, and so on). Some systems of higher education have attempted to encourage cooperation between the state-supported and independent sectors. Virginia is one of these. But whether for publics only, or for publics and privates, systems have divided the business among their constituent members.

All of this changes with the entry into the market of large-scale, national providers of educational courses and programs. The technology they will use respects none of the protective devices that have characterized higher education systems in this nation or, indeed, in any nation in the world. In the opinion of some, for instance, the universities of the Netherlands do not offer an adequate array of graduate programs for a population in which almost one-fourth of adults hold baccalaureate degrees. But this does not stop graduate study; many Dutch students now get their degrees electronically from British universities. It has become very easy to break the backs of cartels.

The systems that will adapt best to the new landscape are those whose boundaries are reasonably permeable and whose conception of a mission is to perform certain kinds of work rather than to preserve certain kinds of institutions. They will be systems that build alliances rather than defenses. A "Maginot response" will be foreign to them. Their member institutions will be responsible for their own well-being in the marketplace, and they will have enough autonomy to assume that responsibility. They will not be bound by procedures and regulations that force them to do things in slow and ponderous ways. But they also will not be protected by the system. The new landscape will belong to the agile. The future identities of most colleges and universities are not going to be expressed in brick and concrete, and success will not be signaled by increasing the numbers of physical sites they own or control. They will need sites they occupy for a while before moving on, without permanence. To behave otherwise is to be like the Pony Express, seeking faster horses and better riders even as the telegraph wires are being strung overhead.

It is not surprising that the introduction of electronic delivery has motivated almost every college and university to think of itself as an originator of instruction and few to think of themselves as receivers. But the market will not support this understanding of what is going to happen. This technology has the potential to improve learning and, within a generation, almost every course in every college or university will include resources that are accessed electronically. Every institution will be a "receive site," and within the faculties of numerous institutions there will be teachers whose knowledge and skill offer them opportunities to originate courses and programs.

Can systems of higher education be managed in this new world? Now that turf-allocation and protectionism are obsolete, is there any role for a State Council of Higher Education? Yes, if new management techniques are developed. The Council of Higher Education and Virginia's colleges and universities are well positioned to redefine the work of state higher education systems over the next several years. Indeed, we began this work almost ten years ago and it continues today in the initiatives called "restructuring" and "decentralization."

All institutions, especially successful ones, are apt to become complacent over time. The new coordinating body is in the business of disturbing complacency effectively, and of engendering a sense of restlessness and healthy dissatisfaction within the system of higher education and among those responsible for it.

At the end of every higher education success story, the Council's voice should be heard murmuring, "Yes, but. . . ." At the end of every project, it should wonder aloud, "What would happen if. . . ?" or "Wouldn't it be interesting to. . . ?"

I do not think any central administration will be able to develop strategies that are responsive to the changes that occur in the complex environments that now exist. We have to learn management techniques that do not attempt to force-feed all information through a central mechanism, because such mechanisms can't react quickly or creatively. Authority and responsibility need to be dispersed throughout the system.

The Council's new management techniques rely upon decentralization and institutional autonomy; insistence upon results; high tolerance for competition, confusion, and failure; and strategic investment. The new higher education coordinating body is a gadfly rather than a planner, an investor rather than an allocator, a mediator and referee rather than a regulator.

These techniques are grounded in informal authority, as opposed to the formal authority of statute and regulation. The Council's formal authority is neither extensive nor very interesting, and does not distinguish it from other coordinating bodies in American higher education. What does distinguish it are its management techniques, which depend entirely upon the tacit support of both the colleges and universities and state government.

I venture that this is a management model with which most of us are not familiar. It may be taught in management theory courses but most organizations -- and higher education systems -- still are based more on statutory and regulatory authority than on the kind of informal authority that characterizes Virginia's system. It is extremely important to Virginia higher education that creation of this new model be allowed to continue.

It is no accident that Virginia's system of higher education is generally regarded as one of the best in the nation despite modest (and, many would agree, insufficient) state support. We have a better system than its state funding should yield, in part because we charge higher tuition and fees than in other states. But also, perhaps, it is because we have figured out a productive method of governance.

Some states may have to adapt significantly to cope with the new climate. Virginia higher education can flourish by building upon the characteristics I have identified.

We need to decentralize the greatest possible operational responsibility to the colleges and universities themselves. They have to be lean and efficient, and able to move quickly. Following the example of the autonomy given to the teaching hospitals of Virginia Commonwealth University and the University of Virginia during the 1996 Session of the General Assembly, we should give colleges and universities complete responsibility for their personnel and their operating and capital expenditures. Those that are too small to assume all of these responsibilities themselves either should form cooperatives or purchase the administrative services from larger universities.

Accountability for results should be expected, and achievement should be rewarded by budget action.

The state has taken the first steps toward developing "performance benchmarks and standards" for all activities of government. But the benchmarks that have been developed for higher education need major refinement. They measure what is easy to measure: room use, graduation rates, expenditure patterns, and so on. They avoid measuring what is difficult: whether learning occurs and, if so, how much.

We have talked long enough about ways to assess what students learn as opposed to simply how many credit hours they earn. ""Learning productivity" is a measure of how much learning is occurring at what cost. We have begun to make these measurements through the Council of Higher Education's "Indicators Project," but we still have a long way to go. We need to develop performance standards that accurately and comprehensively reflect the kind of work colleges and universities actually do.

The Importance of Strategic Investment

Twenty Years of Higher Eduction in Virginia