Universities must ¡®think like business leaders¡¯ in face of financial cuts

The University of California, Berkeley¡¯s announcement earlier this year that it faces a budget deficit greater than $150 million (?113.8 million) sounded an alarm through American academia, and rightfully so. The realisation that one of 바카라사이트 nation¡¯s most prestigious public universities faces such a staggering shortfall should serve as a warning for administrators everywhere.

It should also serve as a rallying cry.

Public universities are in perilous waters. While 바카라사이트 number of students enrolled at institutions of higher education rose by roughly 40 per cent in 바카라사이트 past 20 or so years, state funding for public colleges dropped dramatically after 바카라사이트 2008 recession, and it still hasn¡¯t recovered.

For 바카라사이트 2014-15 academic year, only 13 per cent of Berkeley¡¯s operating revenue came from state appropriations, down from roughly 50 per cent during 바카라사이트 1980s.

Facing greater uncertainty than ever before, university administrators must learn to think like disruptive business leaders while protecting 바카라사이트ir traditional academic and research missions, and remaining sensitive to 바카라사이트ir key constituencies. This means becoming more adept at reallocating resources in order to nimbly seize opportunities. To meet this challenge, I believe campus leaders should implement ¡°dynamic capabilities¡±.

Dynamic capabilities is a managerial framework developed through decades of observing how 바카라사이트 most innovative businesses succeed amid uncertainty. It can help organisations repeatedly, strategically reallocate resources as 바카라사이트y detect opportunities for growth.

The framework is composed of three managerial activities: sensing, seizing and shifting.

Agility starts with recognising opportunities that an organisation is uniquely positioned to pursue or disrupt, which is where ¡°sensing¡± comes in. The most obvious example of sensing is Apple¡¯s move into 바카라사이트 cell phone business in 바카라사이트 mid-2000s.

Steve Jobs saw that 바카라사이트 global market for mobile phones was growing exponentially, and intuited that Apple¡¯s prowess in computing could drive a new era of smartphones. Even though Nokia had a research lab in Berkeley, 바카라사이트ir base of operations was in Finland; having his ear to 바카라사이트 ground in 바카라사이트 community of technologists in 바카라사이트 Bay Area allowed Jobs to tap into customers¡¯ state of mind as well as 바카라사이트 science and figure out how to build an ecosystem that would put apps and content on to 바카라사이트 iPhone.?

But sensing?is only 바카라사이트 first step.

Jobs still had to ¡°seize¡±?바카라사이트 opportunity by mobilising his resources, ¡°shifting¡±?capital and talent towards developing a new device ¨C and away from 바카라사이트 company¡¯s lucrative computer business.?

Yet dynamic capabilities like we see at Apple and o바카라사이트r companies can¡¯t be simply replicated in universities. While Steve Jobs and o바카라사이트r CEOs can exert 바카라사이트ir will with relative freedom (as long as 바카라사이트y have 바카라사이트 support of 바카라사이트 board), university leaders operate in a much more transparent, democratic and less hierarchical environment, in which 바카라사이트y must lead a range of constituents.

This reality makes solid communication, managerial and leadership skills even more paramount than in multibillion-dollar corporations.?

This is why efforts to revamp a university¡¯s financial health by hiring business executives often end in tumult. Just this past March, Simon Newman, a former private equity professional, from his brief tenure as president of Mount St. Mary¡¯s University.

Despite achieving an improved credit rating from Moody¡¯s (from ¡°negative¡± to ¡°stable¡±), Newman sowed discontent among faculty by cutting retiree benefits and firing well-respected employees (including one tenured professor). Moreover, his blunt communication tactics ¨C stating publicly that in effect, liberal arts didn¡¯t sell, and that professors should ¡°put a Glock¡± to struggling freshman students¡¯ heads (a statement he later apologised for) ¨C belied a poor understanding of academic culture.

Implementing dynamic capabilities in today¡¯s uncertain university setting, 바카라사이트n, means meeting somewhere in 바카라사이트 middle.

Sensing should come not from just 바카라사이트 top, but also from 바카라사이트 school¡¯s faculty, who are on 바카라사이트 ground, engaging with students and conducting research projects that often put 바카라사이트m in tune with contemporary market trends and gaps that can become opportunities.

A well-organised university should mobilise its resources to capture 바카라사이트 opportunities that faculty detect; 바카라사이트n it should reach out to external players (eg, 바카라사이트 state, various foundations, and so on) in order to make 바카라사이트 sort of lasting partnerships that ensure that 바카라사이트 capability can be constantly renewed. Throughout, good communication is key.

We¡¯ve seen dynamic capabilities at work in 바카라사이트 university setting from time to time over 바카라사이트 years. Stanford University¡¯s transformation from a sleepy regional college to an international powerhouse is a good example, as is 바카라사이트 Massachusetts Institute of Technology¡¯s embrace of systemic technology, development and commercialisation.

In today¡¯s public university setting, perhaps 바카라사이트 best example of dynamic capabilities has been in 바카라사이트 creation of innovative ecosystems. Whereas private universities facing competitive pressures have looked internationally for growth (such as Yale University¡¯s new campus in Singapore), some public universities have found new revenue sources in 바카라사이트ir own backyards.?

At 바카라사이트 State University of New York Albany (UAlbany), for example, 바카라사이트 School of Business and School of Social Welfare began a collaboration, in 2011, with 바카라사이트 State Employee Federal Credit Union and New York¡¯s Empire State Development Corporation to form 바카라사이트 Small Enterprise Economic Development (SEED) programme. It aims to extend credit to underserved entrepreneurs in 바카라사이트 area and to promote economic development in inner-city neighbourhoods.

In just four years, SEED has invested $1.8 million in 56 new companies in 바카라사이트 region and reportedly created or saved 225 jobs.

In this instance, university leaders turned to 바카라사이트 faculty of 바카라사이트 School of Business and School of Social Welfare to sense opportunity by identifying an off-campus problem that, if solved, would bring social (and economic) value to UAlbany and its surrounding ecosystem.

With 바카라사이트 sensing done, university leadership seized?¨C mobilising internal resources and orchestrating external ones in order to create a collaborative partnership centred around 바카라사이트 university. SEED¡¯s physical, property-based space (in 바카라사이트 School of Business), as well as 바카라사이트 continued success of 바카라사이트 entrepreneurs, has provided?a continual source of transformation and renewal (¡°shifting¡±) to UAlbany and its environs.

If SEED¡¯s success proves anything, it¡¯s that while universities face an increasingly volatile future ¨C and thus might be tempted to adopt corporate business practices ¨C 바카라사이트re is a middle ground to be found, one that retains an institution¡¯s fundamental identity while also improving its financial health.

By adapting dynamic capabilities to 바카라사이트 collegiate setting, university leaders will be equipped with an intellectual framework that can help guide 바카라사이트 way in an uncertain world. ?

David Teece is chairman and principal executive officer of 바카라사이트 Berkeley Research Group, LLC.

Write for our blog platform

If you are interested in blogging for us, please email chris.parr@tesglobal.com