Risk and Reward: Seven Strategic

Risks Confronting Australian

Higher Education

Ian Marshman

Honorary Principal Fellow,

Melbourne Centre for Study of Higher

Education

1. That Australian universities fail fully to exploit

the current favourable environment

• Australian universities really in a superb space

– Funding and assets

– Minimal regulation

– Highly autonomous

1. That Australian universities fail fully to exploit

the current favourable environment

• Australian universities really in a superb space

– Funding and assets

– Minimal regulation

– Highly autonomous

• Strategic risk: adequacy of institutional leadership

and strategic capabilities

– Mixed capabilities

– Sector reputation: emulators rather than innovators?

– Governance role as well as executive accountability

– Capabilities required for what are large and highly

complex enterprises

2. That too much of a good thing really does

become ‘too much’

• Demand-driven system: a remarkable funding windfall

– Response been varied but overall 22% growth u/g load

– Some standout institutions

– Expansion predominantly in cost-effective courses

2. That too much of a good thing really does become

‘too much’

• Demand-driven system: a remarkable funding windfall

– Response been varied but overall 22% growth u/g load

– Some standout institutions

– Expansion predominantly in cost-effective courses

• Strategic risk: reputational, financial and strategic

– Declining admission standards/progression rates

– Increasing casualization of academic staff

– Mismatch between supply of & demand for graduates

– Student disenchantment with the ‘value proposition’

– Precipitate an interventionist regulatory response

– NB VET analogue

3.That the current Australian higher education

business model becomes unsustainable

• Core elements of the contemporary model:

– Research drives rankings and national standing

– Rankings and national standing drive student quality

and volumes (esp. international)

– Student enrolments (esp. international) drive operating

surpluses

– Operating surpluses cross-subsidise research output

3.That the current Australian higher education

business model becomes unsustainable

• Core elements of the contemporary model:

– Research drives rankings and national standing

– Rankings and national standing drive student quality

and volumes (esp. international)

– Student enrolments (esp. international) drive operating

surpluses

– Operating surpluses cross-subsidise research output

• Strategic risk: financial

– Loss of competitive rankings performance

– Limits to growth and excessive scale?

– Emergence of a credible global T&L ranking that drives

student choice

4.That the Australian university approach to

internationalisation becomes discredited

• Australian concept of internationalisation uniquely

‘mercantile’

• Currently enjoy huge advantages: proximity to

market, migration regime, relative pricing

• Supported by significant rankings achievements

4.That Australian universities’ approach to

internationalisation becomes undone

• Australian concept of ‘internationalisation’ uniquely

‘mercantile’

• Currently enjoy huge advantages: proximity to

market, migration regime, relative pricing

• Supported by significant rankings achievements

• Strategic risk: financial and institutional autonomy

– Consumer pushback regarding ROI

– Geo-political shifts

– Emerging competitors

– Decline in rankings performance

– Over-reliance on one source: China– NB Brexit and US Presidential outcomes relevant

5.That a ‘weak’ Australian government attempts

major reform of a ‘broken’ system

• Current higher education framework is fundamentally

flawed

– No clear national post-secondary education policy

– Significant cross-subsidisation from T&L to research

– Over-dependence on international students

– Funding of T&L does not reflect actual costs

– Attempts at reform been naïve or thwarted by Senate

5.That a ‘weak’ Australian government attempts

major reform of a ‘broken’ system

• Current higher education framework is fundamentally

flawed– No clear national post-secondary education policy

– Significant cross-subsidisation from T&L to research

– Over-dependence on international students

– Funding of T&L does not reflect actual costs

– Attempts at reform been naïve or thwarted by Senate

• Risk: strategic

– Any coherent proposals for reform will impact individual

entitlements/expectations

– Senate not conducive to rational reforms: piecemeal or

highly compromised outcomes inevitable

– Best leave strategic reform to a later time: we are

muddling through pretty well

6. That digital disruption really does eventuate

• Doom-sayers been predicting end of campus-based

model for 20 years

– Still to be proven right

– Despite new entrants, new T&L modes yet to discern

any major disruption

– Power of brand? Cost of entry? Lack of scalability?

Inability to monetise?

6. That digital disruption really does eventuate

• Doom-sayers been predicting end of campus-based

model for 20 years– Still to be proven right

– Despite new entrants, new T&L modes yet to discern any major

disruption

– Power of brand? Cost of entry? Lack of scalability? Inability to

monetise?

• Risk: strategic and financial

– At some stage, it really will occur. Impact may be

sudden and largely unexpected

– For most, real threat for future of campus-based model.

Are we really ready?

– Most immediate risk: ‘unbundling’ of the T&L package?

– Eventually will be driven by consumer, if not provider

7. That universities lose touch with their core

constituents

• Period of huge enrolment growth

– Pressure on student experience

– Mismatch between expectation and reality for graduates

• Failure to engage with industry/ demonstrate research

impact

• Perception of inadequate engagement with community

7. That universities lose support of their core

constituents

• Period of huge enrolment growth– Pressure on student experience

– Mismatch between expectation and reality for graduates

• Failure to engage with industry/ demonstrate ‘impact’

• Perception of inadequate engagement with community

• Risk: reputational and financial

– Students become disenchanted with ‘university

experience’ and the ROI

– Employers critical of graduate preparation for work

– Miss opportunity for research/industry collaboration hubs

– Public support for higher education dissipates

– Future government(s) able to extract major funding cuts

© Copyright The University of Melbourne 2011