Rethinking Universities’ Business Model

“Higher education is the strongest, sturdiest ladder to increased socio-economic mobility.” – Drew Faust, President – Harvard University

Education is an enabler and an equalizer. It’s believed that through education, we are all granted an equal opportunity to contribute to and compete in the global economy. This is the basic principle upon which globally, there is a commitment to ensure every child has access to quality education. In the recent past with reforms in the Kenyan education system and fiscal policies, education to some extent is being left a preserve for the rich. This is made even more pronounced following recent revelations by the Vice Chancellor of the biggest university in Kenya, University of Nairobi (UoN) that included an increase in school fees and tripling of accommodation charges. As the university institutes these measures, other universities including Kenyatta University and Moi University have decried tough financial times. For a university that has been in existence since 1960, we would expect UoN to have achieved sustainability if it were run with a focus on sustaining it’s operations beyond government financing. It may not be the easiest approach but in my opinion I believe our universities can do better without putting the extra burden on students and their families.

The standard operational model of universities in Kenya has been to raise their revenues from student fees including accommodation charges, receipt of government financing and partnerships/sponsorships for specific university programs & projects. These are key but when some of these revenue streams dry, they are put at a fix and this necessitates strategic planning on how to redesign the financial models of these universities. In my perspective I believe universities have the potential to be sustainable financially without putting the extra burden on students. In order for universities to do this they have to leverage their muscle in terms of intellectual powerhouses, strategic partners and investment acumen. Some of the approaches through which this can be done include:

  • Operationalization of research offices & grant making departments to support in mobilization of resources through funded projects, initiatives and research calls. Currently, most of this is at the mercy of lecturers and administrative staff who may have interest in these areas and at the same time most of these are done at a personal level rather than institutional. Institutionalization of such a domain has the potential to offer universities an additional revenue stream as they stand a better chance in securing projects considering the academic qualifications of their staff and access to human resource pool using students.
  • Establishment of innovation incubators and labs in the respective universities has potential in reshaping industries, positioning universities as strategic partners to corporate entities while attracting financial investment for the institution. This is based on the fact that university students’ have a curiosity muscle and adventurous nature that’s key in idea generation, testing, prototyping and follow through if provided with an enabling ecosystem. As part of a greater society these ideas have the potential to revolutionize industries as they are based on the prevailing market context. This has been a lifeline for universities like Stanford which has an enabling entrepreneurial & innovative ecosystem as I earlier wrote about.
  • Universities are the powerhouses for industries in terms of labor supply as well as market for strategic product launches. The ability of universities to establish strategic partnerships with corporate partners to host sponsored programs, conduct launches and exhibitions to an audience that’s curious to try new things is a key ingredient not only in helping generate income but also exposing students to the corporate market. It’s being done by other universities through townhalls among other such programs with corporate guest speakers.
  • Universities through their alumni networks, well-wishers and donors have over time been able to organize fundraisers with an aim of supporting needy students. While these have been critical, thinking beyond the donation is important. I recently watched an interview by David Rubenstein of Columbia University, Endowment fund manager Kim Lew where he explains their working model to ensure raised funds are invested to ensure they can continuously guarantee support for needy students beyond the fundraisers. These are some initiatives which can be adopted and considering universities are not investment organizations, this is an avenue for a strategic partnership with a financial institution thus opening up mechanisms for additional funding.

I believe that before going back to parents and guardians to ask for more pay in fees, university managements need to think for and with the society. Denying the youth a chance through education is a disservice to the community. By exploring alternative financing solutions we can nurture a generation through quality, market-driven impact-based education. Let universities exercise their intellectual muscles as they are supposed to.

“Education is simply the soul of the society as it passes from one generation to another.” – G.K Chesterton

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