Opinion: Reform is optional, disruption is certain

Debate is good for the higher-ed sector but missing the bigger picture is dangerous; institutions must prepare to adapt to inevitable change. By Daniel Musson In 1996, I decided to do my MBA. I was working in a senior role in a financial institution in Brisbane at the time. Four years after commencing a five-year, part-time MBA at the University of Queensland, I transferred to Sydney for another role. But I was unable to transfer what I had completed in my MBA to a business school in Sydney. Nor could I study my MBA by distance. So, over years, I commuted back and forth regularly to attend classes, staying with my parents. I don’t regret my MBA but, as far as customer experiences go, it was plainly unsatisfactory. Until that time, I had worked as a manager in retail and banking and for a long time both these industries were challenged by the need to place the customer at the centre of what they do. More recently they have made significant progress. And where traditional banking and retail operators failed to innovate, others stepped in. The banks got the message and are striving to be leaders in technology. Shops have also innovated, or withered. The world has changed quickly. Many can’t recall the last time they visited a bank branch. Mobile phones have become digital wallets. Postal services have created new revenue sources. Apps have removed the previously great costs of international calling. Taxis are fiercely battling innovations such as UberX. Hotels are up in arms about Airbnb. These are not trends introduced by government or driven by ideology. The world is being transformed by businesses and institutions wanting to meet demand for better products and services. Education is next. On that front, there is a lot of debate about the government’s proposed education reforms – but what are we debating towards? No matter what policies are in place, change to the higher education sector will come. If we are struggling with the reforms of the current government, we are in for a shock from the key trends that will drive change in our sector in the coming years. A recent Ernst & Young report on the future of universities found that in all but a few cases, the business model universities now use will fail within 15 years. This is due to five key global trends: democratisation of knowledge and access the rise and rise of digital contestability of markets and funding global mobility integration with industry. Higher education leaders, and in particular Australia’s vice-chancellors, are well aware of these trends. They know their organisations will be swept away if they do not change. Just like our big brand department stores, our sector can no longer rely on location. Also just like our department stores, the solution is not just to increase the price. If the government’s proposed reforms are brought in, we can expect students to take a much closer look at the return on investment of any courses they undertake. Deregulation will sharpen the need for all higher education providers to adapt our mindset to put students at the centre of our view, rather than expect students to accommodate the preferences of the institution. Many in higher education are taking early action. There is already great progress under way but it will become more and more difficult for those who delay. Like healthcare, higher education needs the right support from government. Also like healthcare, many organisations in our sector are there for a clear public good. But that doesn’t mean they are immune from market forces. They still need to be run in a commercial way. Yes, any proposed changes from government should be scrutinised and debated. But we should be mindful of opposing the symptoms of change without reference to the much bigger, and more powerful, forces at play. Daniel Musson is chief executive of the Australian Institute of Management which launches its new Online MBA today