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Extreme Leadership

October 2014


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Toward Equal Opportunity

Bill Gates

Bill Gates, co-chair of the Bill & Melinda Gates Foundation, addressed a packed general session on July 21 at the NACUBO 2014 Annual Meeting in Seattle. Following is an edited version of Gates’s opening message.

Our motivation at the Bill & Melinda Gates Foundation for all our work—to eradicate disease, to alleviate poverty, to ensure the health of education here in our country—stems from a single core principle: that all lives have equal value. The United States really stands for the proposition of equal opportunity, where access to great education is the key element. 

On the individual level, do people have equal opportunity? The data shows that, unless you’re given the preparation and access to higher education, and unless you successfully complete that higher education, your economic opportunity is greatly reduced. Recent data shows the premium in salaries for people with four-year college degrees; today, it’s almost double that for those who do not have college degrees. With changes coming in the economy—more automation, more globalization—that divide will become even more stark in the years ahead.

So, if we’re really serious about all lives having equal value, we need to make sure that the higher education system and its access, completion, and excellence are getting the attention they need.

Unfortunately, although the U.S. does quite well in the percentage of kids going into higher education, we’ve actually dropped quite dramatically in the percentage who complete higher education. Among developed countries, we have the highest dropout rate. Understanding why that happens is very, very important.

We have to deliver value, and we must measure that value. Adjusting the resources so that we’re doing it well is a mission for you, the business officers of the colleges and universities, because you’re the ones charged with fiscal management. The quality of instruction, the viability of financial aid, the physical plant, the support systems—all are trade-offs that the financial model drives, and that have huge impact on every aspect of the student’s experience.

Measuring Value, Determining Strategy

My key message today is that that model will be under challenge. Instead of tuning it to find 3 percent savings here or 4 percent there, as in the past, there will be dramatic changes, in terms of deciding on what scale you can operate, what kinds of students you’re going to go after, and whether you change your cost structure. The role of the business officer won’t be just finding that last little tuning or getting the reports done, it will be to get in the center of the strategy.

Everything that counts requires resources: scholarships for low-income students, student support, libraries, labs, elements that attract good professors. Balancing those things to deliver value, and measuring that value, will be more daunting.

When we think about revenue sources for higher education we can see that a number of them are challenged. At the state level, a higher portion of budgets is going to health- and retiree-related areas. The second biggest pot of money—the education pot—is raided. On a per-student basis, that money has gone down, and there’s no likely prospect it will go back up.

Federal funding, the Pell Grant program, and other federal loan programs have expanded dramatically over the last decade; now, there’s not enough funding for those to increase. Tiering of students, where you make sure that the ones who can afford high tuition are paying it, has been pushed. But, that is now probably reaching a limit, where even middle-class and upper-middle-class students have a hard time with that top tuition rate. 

So, revenues are going to be problematic and sources of that revenue are going to be more demanding with talk about measuring outcomes. Although in a certain sense measurements can be a very good thing, this is a challenge to get out in front of, because inappropriate measures can be worse than no measures at all.

Harnessing Technology

In this fiscal environment, we also have innovation. For course delivery, we talk about massive open online courses [MOOCs] and how we can take the lecture component and deliver that in a more flexible, higher-quality form, over the Internet. 

The work on MOOCs is really just at the beginning, and the competition for excellence among them is heating up dramatically. You will see emerge, over the next five years, some fantastic courses for remedial math, remedial writing, statistics, and all the entry-level courses. All the elements—the lecture, the quizzes, the online collaboration—will improve very substantially. The net result of that will be that the lecture piece will no longer be competitive; it will be about how you take the online content piece and combine it with study groups, labs, and discussion sessions.

Many institutions will use this capacity to increase theirscale, so at the same time you have constrained revenues, you will have institutions offering to enroll a larger number of students—more competition. Instead of supply and demand being in balance, there will be an imbalance. Some institutions will make progress into this new world and some will not.

Another piece that gets less attention is student advising. It’s possible to create a digital system that knows everything about students, including all their discussions about scheduling, financing, and goals; the challenges they face; when they have been online; and when they have been attending courses. Such a system can analyze when a student might need some support intervention and identify what kind of intervention is best. 

Whether what’s needed is help with their financial package, or with their motivation or scheduling, the institution’s support resources can go to that student’s digital record and have the entire context, so staff can help them in the most efficient, least costly way. Those support systems will have to be very connected to administrative systems; that will require investments, considerations about privacy, and defined job categories for support staff.

Ironically, as we raise completion rates and we have more students in their third and fourth years, the cost structure of delivering upper-level courses is much higher. It’s very important that you understand your costs by year as well as your cost by student type. 

Metrics to Shape Policy

It’s easy to take a simplistic view of the for-profit sector, that maybe they’ve overmarketed or over-promised in some cases. There are some bad practices in that sector, but there are also a lot of best practices—the support systems they’ve had, the student tracking, the way they use capital assets, and the way they take a much tougher cohort of students, on average, than most institutions. Seeing the challenges they face and the things they have done well, and incorporating those into all of higher education, will be important. 

It’s time for the higher education community to develop and adhere to reporting standards that you’ve shaped, that really get at cost and performance issues. The sooner you drive this, the better, lest standards are brought down from on high in a way that’s really not appropriate. I see no world in which these metrics are not going to be more significant in shaping policies.

We need to make sure that we’re really talking about educational goals and the outcomes. Yes, it’s oversimplistic to say it’s just about a graduate getting a job with a certain salary; we should also have in mind such things as citizenship, broad knowledge, and deep understanding of the world, although those are very difficult to measure. And what about satisfaction? What were students’ expectations coming in, and what happened to them, and did they think they fell short or the institution fell short? That should be well understood.

Strategic Discussion

There’s a certain irony that academic institutions are good at studying other aspects of society—the health-care system, or for-profit business. Can you turn that lens on yourself and ask, is it appropriate that certain degree programs are subsidizing others? Are there degree areas that some universities should get out of, and instead, specialize in areas that they’re particularly strong in? Those questions simply haven’t been asked, and this new environment will force it to happen. 

We can identify the best ways to deliver a postsecondary education, and we can learn from thousands of best practices. There will be a digital infrastructure, not just for the courses, but for the analytics. 

University presidents and academic deans have often been reluctant to bring CFOs and business officers into the strategic discussion. But, the number of moving pieces, the number of things that had to be reconsidered in the past, were very different from what they face now, in an environment where there will no longer be a perception of unlimited resources. Your advice to presidents and deans will be critical. 

I think this is very exciting. The role of education to lead the way—for equality, for our country, to create the jobs of the future, to make the best use of technology—is more critical than ever. It will be a period of turmoil and challenge, and I think you will rise to the occasion. We certainly need you to do so. 


Lessons From the Edge

Alison Levine

Opening general session keynote speaker Alison Levine knows firsthand what it takes to scale new heights. As someone who has climbed the highest peak on each continent (the Seven Summits), Levine’s reflections on how to lead amid challenging—and downright dangerous—environments resonated with attendees. Among Levine’s counterintuitive lessons gleaned from her extreme mountain climbing: