Surviving an avalanche: universities need to move in the right direction
March saw the publication of Michael Barber's Avalanche report on the future of UK universities. Unusually for a sector where levels of public interest in thought pieces on its future are marginal at best, the Metro covered the story, claiming that even "red brick institutions" were under threat if they failed to find a niche in the new world order. The Telegraph's headline was even more direct: adapt or die.
Whether or not these proclamations come to pass, I do foresee an avalanche of consultants crashing towards the sector concerned to lend a generous hand with pro bono advice. Without the pro bono bit.
If the bog standard public UK university has a staple product, it is surely the residential three-year degree. I agree that in future, sole reliance on this dish, served up as it has been for decades with a garnish of research on the side, is not the imaginative offer asked for by Barber. Nor for that matter one that students are likely to consume as enthusiastically as they have done.
However, while there is no room for complacency, universities in the UK have to date shown remarkable degrees of resilience and adaptability. Compared with other industries, universities collectively, and individually as brands, have endured in ways that leading companies in the commercial sector have not. Despite the turbulence, there is a sense that we have, in part, been here before.
The cliche of the ivory tower suddenly laid bare to the ruthless forces of commercialisation, hopelessly equipped to cope, is not one those working in the sector recognise. But make no mistake, the benign years are well and truly over.Looking at UK university foundation rates since 1167 (Oxford's founding year), the average yearly growth rate is about 0.6%. But this growth accelerates in the post-war years where the number of institutions has risen at around 2.9% a year since 1960. The long term rate predicts 10 new universities by 2018 in addition to those that gained the title in 2012.
Even if Privy Council were to see fit to approve in bricks and mortar a statistical prediction, this would seem neither sustainable nor desirable set against a static demographic of school leavers, declining mature and part time enrolments, and a funding policy at present reducing, not stimulating, demand.
What this means for potential new entrants including those from the for-profit sector remains to be seen. But the opposite of growth is contraction. And perhaps this is where the sector is now heading?
To see how this might unfold from a perspective with its hat tipped towards Barber, consider the FT30, the UK's first companies index. Set up in 1935, only four constituents from the original FT30 are listed in the equivalent FTSE 100 today, a survival rate of just 13%. If universities had been culled from inception at an equivalent rate through commercial pressure, as of 2013 fewer than 20 would exist today.
The commercial picture is complicated further by mergers and acquisitions in ways not yet seen in higher education. In 1935, for example, ICI (Imperial Chemical Industries) was a proud British company that half a century later became the first in the UK to report pre-tax profits of £1bn. In 2008, it was taken over by Dutch rival Akzo Nobel. Other brand casualties over the past 50 years that are now owned by foreign investors include British Airways, British Steel and British Home Stores.
Knowing this, and accepting the accelerated commercialisation ushered in on the back of higher education reforms, here is a more bleak prediction for the next decade. Mergers and acquisitions on a scale not seen before seem inevitable as the sector slides towards a major shakeout. The 'avalanche' will comprise debris from a partially collapsing sector unable to reconcile internal risk adverse cultures with externally imposed market constraints and globalisation.
The cumulative growth curve for publicly funded universities will plateau – we may already be at peak HEI. Might it be instructive to look at this from a US perspective, if not done already, to see if lessons can be drawn from organisational life cycles and their individual and cumulative wavelengths? For most of the UK's higher education history, those life cycles can be measured in centuries, not the decades characteristic of publicly-listed companies. But for how much longer?
As market failure and competitive rivalry loom ever larger, the forces referred to by Barber will include one or all of the following: insolvency, break up and liquidation. You can survive an avalanche if you move quickly enough in the right direction, or failing that give yourself some breathing room before you're buried in the hope someone digs you out. I'd prefer to take my chances with the former. Incidentally, the best performer from the original list of 1935 FT constituents is Imperial (Tobacco not College).
Professor Nick Petford is vice-chancellor of the University of Northampton – follow him on Twitter @nick_petford
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