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There are a lot of reasons for thinking that higher education has been on a wrong track for the last fifty years or so. I have mentioned some of them here and here for example. As I discuss in my book, current thinking about how to manage a university (particularly a large one) is driven by an industrial model. It’s not an idea that I invented. Fifty years ago, Frederick Rudolph, the great historian of universities, talked in pretty explicit terms about the “assembly line”:
On one assembly line the academicians, the scholars were at work; from time to time they left their assembly line long enough to oil and grease the student assembly line. . . . Above them . . . were the managers—the white- collared chief executive offi cers and their assistants. . . . The absentee stockholders sometimes called alumni, the board of directors . . . the untapped capital resources known as benefactors . . . the regulatory agencies and commissions in charge of standards.
You can understand how all of this got started at the turn of the last century. The great benefactors of higher education were industrial leaders like Andrew Carnegie and John D. Rockefeller. They wanted the fairly chaotic system of schools, colleges and universities to establish ground rules. What constituted credit? How were students defined? Where was their money going to go? The only real models they had to rely on were the brand-new manufacturing models that valued high quality at low cost. In these models, variance is the enemy. These were the models that were imposed on American higher education. We can still see their echoes in testing and accreditation bureaucracies.
But Carnegie-era industrial policy had no way of foreseeing the explosive growth that the last half of the twentieth century brought to American institutions. I am not alone in thinking that 19th century industrial policies are at a dead end in higher education.
The Prezi presentation at the start of this post, is an overview of how badly the factory model has led us astray over the last generation. Maria Andersen — a community college professor — has been cannily accurate in her portrait of modern higher education practices, and I have become a fan of her analysis of the state of our systems.
There is no sound for this video clip unfortunately. The clip below has sound but the video is pretty bad. I don’t know what to tell you about how to watch these presentations. If you have two computers you might consider using one for audio and the other for video.
Yesterday’s post prompted questions about what exactly a MOOC is. It even prompted a note or two about why anyone would choose a stupid name like MOOC. I can help with the first question. Here is a video explaining the concept. I can’t help with the second question, but if you have a better term please let me know.
SmartMoney’s “payback” survey of 50 top-priced schools shows which alumni are reaping rewards in the job mark… (cont) http://deck.ly/~U7fPG
Crazy claims about faculty productivity are bouncing around like ping pong balls. Public research universities in Texas are getting more than their fair share of attention from agenda-driven politicians because their professors are not spending enough time in class. They’ve even invented a classification system based on this one-dimensional view of academic life:
I don’t think I’d want to be a coaster, but to be honest, I wouldn’t want to be a Sherpa, either.
CCAP’s Richard Vedder has looked at the same data through a conservative economic lens and concluded that significant costs savings can be found by adjusting teaching loads — upwards, of course. Like CCAP I think there needs to be more emphasis on undergraduates, but just lopping off a part of an institutional mission is not the way to do it. Unless, of course, you are of the opinion that everything outside the classroom is overrated in American universities.
Maybe I travel in different circles, but the faculty workday appears to me to be an already overstuffed suitcase. Anyone who wants to cram in another sock needs to take a look at what’s already there. Mission creep, bureaucratic bloat, crushing compliance requirements, and the willful bliss with which research universities give away research time have filled every nook and cranny.
I talked a few weeks ago about how research is given away, and it’s a topic that always draws phone calls and email. But let’s take a look at the same data that CCAP uses. The John William Pope Center recently published a national analysis of teaching loads. It should come as no surprise that they have gone down over the last twenty years, but more interesting is the trend.
The decreases virtually track the increased workload by program officers at Federal funding agencies. But since staff spending at agencies like NSF has been stagnant for twenty years, program officer workloads really just measure proposal submissions.
Why the decrease at Carnegie Research and Doctoral institutions? According to an NSF study the tendency in most NSF program offices is to deliberately underfund project proposals. Over half of the researchers surveyed reported that their budgets had been cut by 5% or more and that their grant duration had been slashed by 10% or more. There is little room for padding an NSF budget, so these are real cuts in funds that are needed to successfully complete a research plan. One more sock stuffed into the productivity suitcase.
What does a winning proposal cost? The same study reported:
…PIs’ estimate of the time it took for them and other people—for example,
graduate assistants, budget administrators, and secretaries (not including time spent by
institutional personnel)—to prepare their FY 2001 NSF grant submission was, on average, 157
hours, or about 19.5 days. It should be noted this is the time for just one proposal that was
Since the NSF success rate is currently around 25%, that’s about 80 days just to prepare a winning proposal. Add to that the time needed to conduct the research that goes into every proposal submission, and you get a rough idea of what needs to be funded just to make research pay for itself. This is lost productivity, and it shows up in reduced faculty teaching loads.
The trends at Comprehensive, Liberal Arts, and Community Colleges measure something slightly different: each of these institutions sees climbing the Carnegie hierarchy as important to their missions. For example, NSF awarded $350M to community colleges last year. The lions’ share of these funds went to worthy projects to train technicians, broaden participation in the sciences and support research experiences for returning veterans. Individual awards for some of these programs start at $200,000 and solicitations for larger, center-scale proposals are encouraged. Like their research cousins, Community Colleges reduce classroom productivity to compete for federal research awards. An institution with an undergraduate research mission can easily get drawn into a system they cannot afford. And the data supports the claim. For the period covered by the Pope Center report, proposal submissions from these institutions have increased almost in lockstep with lost classroom productivity.
Measuring technical productivity is not a job for the faint of heart. You have to take into account all uses of time, and outcomes that are often unpredictable events influenced by factors beyond an organization’s control. Modeling productivity is complex and frequently contentious, but I have yet to find anyone who seriously proposes measuring engineering productivity by the amount of time spent at a single activity. Outside higher ed.
There is an easier explanation for the disturbing downward trend in teaching loads. It is mission creep. There is really only one way out, and it has nothing to do with cramming more into a Texas-sized suitcase. How about if everything from sponsored research to intercollegiate athletics had to pay its own way? The academic suitcase is full of stuff already. Let’s figure out where to put everything else one sock at a time.
NEWMAN: Wait a minute. You mean you get five cents here, and ten cents there. You could round up bottles here and run ’em out to Michigan for the difference.
KRAMER: No, it doesn’t work.
NEWMAN: What d’you mean it doesn’t work? You get enough bottles together…
KRAMER: Yeah, you overload your inventory and you blow your margins on gasoline. Trust me, it doesn’t work.
JERRY: (re-entering) Hey, you’re not talking that Michigan deposit bottle scam again, are you?
KRAMER: No, no, I’m off that.
NEWMAN: You tried it?
KRAMER: Oh yeah. Every which way. Couldn’t crunch the numbers. It drove me crazy.
Even Kramer got it. Fundamentals matter, but there is a persistent legend in many engineering organizations that culture trumps the bottom line. It’s a legend that propagates because, as change management consultant Curt Coffman has provocatively noted, “culture eats strategy for lunch” when it comes to execution. What Coffman and others who talk about “soft stuff” don’t tell you is that in the end culture doesn’t matter.
The reality is is this: culture only trumps the bottom line in organizations that are heading in the wrong direction. It’s easy to see why: bad execution can be excused when it is in the service of a higher calling. Sometimes — the legend goes — cultural purity even demands failure. Briefings that begin with a retrospective tour of a company’s glory days or the exploits of its leaders are not going to end well. It’s a malady that afflicts start-ups, Fortune 100 companies, universities, and political office holders.
It was a rare meeting at Bellcore or Bell Labs that did not begin with a bow to a century of innovation and accolades. Theirs was a tradition so rich that it was bound to color all projects in perpetuity. I knew a business development managers who intoned “WE ARE BELLCORE!” at the start of engagements. It always sounded to me like a high school football chant designed to cow the opposition.
The remnants of the Army Signal Corp research lab at Fort Monmouth New Jersey had long dispersed by the time I interned there in the early 1970’s, but stories of the famous scientists who once stalked the cavernous halls of the enormous hexagonal building near Tinton Falls were retold to each new class of PhDs as if the great men would be dropping in any moment to don lab coats and resume their experiments.
Start-ups are not immune, either. A few weeks ago, I was nearly ejected from a meeting with a CEO who was raising early stage money for suggesting that the distinguished professors who had founded the company might have had less than complete insight into market realities.
The “We are great because…” meme is propagated by leadership at all levels. Even in this age of the decline of the celebrity CEO, countless university and corporate websites are travelogues for executive jaunts to far-flung campuses. Supporters of one prominent Silicon Valley CEO would muse to anyone who cared to listen: “I wonder what it feels like to always be the smartest person in the room?” The phrase found its way into an industry analysts’ briefing at the very moment that the company’s stock was falling off the edge of a cliff. I watched the faces of the analysts, and it was clear that they were pondering entirely different questions.
I’ve had my share of run-ins with employees who were not at all shy about using vaguely remembered words of long-departed leaders to pit culture against execution. In one instance, a series of patents led to an ingeniously conceived system for streaming audio and video from conference rooms and lecture halls. Unfortunately every cost projection showed that the effort required to install and maintain the equipment swamped any conceivable revenue stream. When I confronted the inventors with the inevitable conclusion, I was excoriated in the most graphic possible terms because I had not taken sufficient account of the intellectual beauty of the system. The crowning blow: “Dr. [insert the name of any of my predecessors] would have understood my work!”
On another occasion, I was called upon to invest heavily in a newly conceived and revolutionary mathematical method that would transform not only our business but scores of related industries. The inventors’ local managers had been completely sold on the idea and were willing to put a substantial portion of their margins at risk to develop it.
Key to the idea was the notion that every textbook in the field had been written by authors who willfully ignored the power of the new theories. The invention involved an area in which I had done research in the past, but I couldn’t make much sense of the claims. I dutifully sent drafts of patent disclosures to experts, but the feedback was discouraging. The claims in the patent disclosures were either false or so muddled that further analysis was useless.
I pulled the plug. Reaction was swift and heated. Here’s what it boiled down to: the founders would have had faith in the employees, and I did not. They were right about me, but not about the founders.
It is in the nature of engineering organizations to reconstruct the past to suit the present. Hewlett-Packard was famous for such rose-colored glasses. When then-CEO Carly Fiorina combined ninety or so business units — each of them concentrating on a slice of a business that overlapped with a half-dozen others, driving down operating efficiencies and, with them, margins — into a total of six, howls could be hear from every HP lab on the planet. “Bill and Dave would not have done that to us.” A casualty of Mark Hurd’s rapid moves to salvage the strategic advantages of the two year old Compaq merger by slicing investments that did not have a clear path to revenue was the revered software laboratory at HP Labs. “Destroying the culture!” cried the masses.
Now I happen to think that both moves were unwise, but not because of any cultural imperative that had been handed down from Bill and Dave. The numbers were seldom that hard to “crunch”. It always boiled down to fundamentals. Risks were taken, but only when the fundamentals made sense.
It is a unique fiction in Silicon Valley that Bil Hewlett and Dave Packard were friendly to anything but an engineering culture that demanded results and held managers personally accountable for their decisions. I once got in trouble with the company’s director of marketing and communications for suggesting otherwise in a public forum.
“Culture” often reared its head during my tenure at HP — usually as an excuse for ignoring business fundamentals. It was a problem that plagued Joel Birnbaum, my precedessor, Dick Lampman, head of HP labs and others over the years. On those occasions, I was happy to have the words of Bill Hewlett and Dave Packard to fall back on.
I’ll talk about that in my next post.
Normally collegial discussions took a nasty turn after I suggested that most universities lose money on sponsored research.
Incredulous: “I don’t believe it. My department tacks a 50% surcharge to all my contracts; how can they lose money?”
Defensive: “Here are all the reasons that doing research is a good thing, so what’s your point?“
Defensive with an edge: “Why are you attacking research?“
Let’s be be clear about it: if it’s your institution’s mission to conduct research, then spending money on research makes perfect sense. In fact, it would be irresponsible to deliberately starve a critical institutional objective like research.
On the other hand, there are not all that many universities with an explicit research mission. But there is an accelerating trend among primarily bachelor’s and master’s universities to become — as I recently saw proclaimed in a paid ad — the next great research university. The university that paid for the ad has absolutely no chance to become the next great research university. Taxpayers are not asking for it. Faculty are not interested. Students and parents don’t get it either.
The administration and trustees think it’s a great idea. Research universities are wealthy. Scientific research requires new facilities and more faculty members. Research attracts better students. Best of all, federal dollars are used to underwrite new and ambitious goals. Goals that would be out of reach as state funding shrinks. As often as not, the desire to mount a major research program is driven by a mistaken belief that sponsored research income can make up for shrinking budgets. It’s a deliberate and unfair confounding of scholarship and sponsored research
If your university is pushing you to write grant proposals to generate operating funds, then alarm bells should be going off. Scholarship does not require sponsored research. Chasing research grants is a money-losing proposition that can rob funds from academic programs. It’s an important part of the mission of a research university, but for almost everyone else, it’s a bad idea. It’s a little like shopping on Rodeo Drive: there’s nothing there that you need, and if you have to ask how much it costs, you can’t afford it.
How is it possible to lose money on sponsored research? After all, professor salaries are already paid for. The university recovers indirect costs. Graduate and undergraduate students work cheap.
A better question is how can anyone at all can possibly make money on sponsored research. Many companies try, but few succeed. A company that makes its living chasing government contracts might charge its sponsors at a rate that is 2-3 times actual salaries. Even at those rates, it is a rare contractor that manages to make any money at all.
On the other hand, a typical university strains to charge twice direct labor costs. Many fail at that, but the underlying cost structure — the real costs — of commercial and academic research organizations are basically identical. There is a widespread but absolutely false assumption that underlying academic research costs are lower because universities have all those smart professors just waiting to charge their time to government contracts. The gap between what universities charge and what sponsors are willing to pay commercial outfits is the difference between making a profit and losing a lot of money. Just like intercollegiate athletics, sponsored research programs tend to lose money by the fistful.
Let me say up front that the data to support this conclusion are not easy to come by. Accounting is opaque. Sponsors know a lot about what they spend, but relatively little about what their contractors spend. It is in nobody’s interest to make the whole system transparent. But my conversations with senior research officers at well-respected research universities, paint a remarkably consistent picture. With very few exceptions, it takes $2.50 to bring in every dollar of research funding.
Fortunately, the arithmetic is easy to do. If you know the right questions to ask, you can find out how much sponsored research is costing your institution. Here are ten sure-fire ways to lose money on sponsored research. You do not need all of them to get to a negative 2.5:1 margin. If you are clever just a couple will get you there.
- Reduce senior personnel productivity by 50%: university budgets are by and large determined by teaching loads, a measure of productivity. It is common to adjust the teaching loads of research-active faculty. Sometimes normal teaching loads are reduced by 50% or more. It is, some argue, table stakes, but a reduced teaching load is time donated to sponsored research because funding agencies rarely compensate universities for academic year support.
- Hire extra help to make up for lost productivity: Courses still have to be offered, so departments hire adjuncts and part-time faculty.
- Do not build Cost of Sales into the contract price: The sales cycle for even routine proposals can be months or years. Time spent in proposal development converts to revenue at an extraordinarily small rate. In nontechnical fields and the humanities where research support is rare, the likelihood of a winning proposal is essentially zero.
- Engage in profligate spending to hire promising stars: Hiring packages for highly sought-after faculty members can easily reach many millions of dollars. A sort of hiring bonus, there is little evidence that this kind of up-front investment is ever justified on financial grounds.
- Make unsolicited offers to share costs: Explicit cost-sharing requirements were eliminated years ago at most federal agencies. Nevertheless, grant and contract proposals still offer to pay part of the cost of carrying out a project.
- Allow sponsors to opt-out of paying the indirect cost of research: An increasingly common practice is to sponsor a research project with a “gift” to the university. Gifts are not generally subject to overhead cost recovery, so a university that agrees to such an arrangement has implicitly decided to subsidize legal, management, utility, communication, and other expenses, and
- Accept the argument that indirect costs are too high: The meme among federal and industrial sponsors is that indirect costs are gold-plating that must be limited. Rather than believe their own accounting of actual costs of conducting research, they argue that universities, should limit how much they charge back to the sponsor.
- Build a new laboratory to house a future project: Sponsors argue that it is the university’s responsibility to have competitive facilities. But that new building is paid for with endowment funds or scarce state building allocations that might have gone toward new classrooms or upgraded teaching labs.
- Offer to charge what you think the sponsor will pay, not what the research will cost: Money is so tight at some funding agencies that program managers are told to set a (small) limit on the size of grants and proposals independent of the work that will be actually be required.
- Defray some of the management costs of the sponsoring agency: It has become so common that it is hardly noticed. University researchers troop into badly-lit conference rooms to help program officers “make the case” to their management.
- It is motivated by a gauzy notion that all colleges and universities are entitled to federal research funds..
- It is fed in the early stages by accounting practices that make it easy to subsidize large expenditures.
- It has the cooperation of funding agencies who know that the rate of growth is not sustainable.
Virtually everyone involved in university research knows that the bubble will burst. A colleague just showed me an email from his program director at a large federal research agency. It said that — regardless of what he proposed — the agency was going to impose a fixed dollar amount limit on the size of its grants. But in order to win a grant, he had to promise to do more. His solution: promise to do the impossible in two years instead of three. Just like the famous Sydney Harris cartoon, a miracle is required after two years. At least there would be enough money to pay the bills while a new grant proposal was being written.
Disruptive Tech Congrats to Ashwin RT @ashwinram: RT @openstudy Honored to get funded by @NextGenLC challeng… (cont) http://deck.ly/~TezsI
I know a young woman who attends a very pricey public university that has plans to raise her tuition by another 25% next year. It’s in one of those western states where the number of applicants far exceeds the number of available freshman openings. You have to wonder what was going on in the alumni office when they were putting their quarterly newsletter together. It proudly announced the latest institutional initiative, a million dollar branding campaign.
It would be one thing if it were a campaign to spread awareness of the university’s many great programs among prospective students. It would even be all right to mount a a campaign to position the university as a driver of economic growth and social well-being for a balky state legislature. But no, this was a branding campaign along the lines of management book/landfill fodder classics like Why Johnny can’t Brand. “It’s even worse,” said the father of the soon-to-be gold-plated sophomore. His face was red and his hands were shaking as he shoved the alumni newsletter under my nose.
“They are going to spend a million dollars — my dollars — on standard logos and common fonts.” No more nightmarish inconsistencies between physics and modern languages when it comes to business cards and PowerPoint presentations. And those press releases from the Athletic Director will now just have to rise or fall on their own merits. They won’t have serifs to hang onto. Prospective employers will heave a sigh of relief knowing there has been no graphical hanky-panky in the registrar’s office when it comes to the forms on which student transcripts are printed. Teams of litigators will have new weapons at their disposal as they fan out across the world to chase down the diploma mills that churn out thousands of knock-off degrees. As they cross the commencement stage, new graduates and their parents will be greatly comforted to know that every time their daughter is introduced from that day forward, the university’s branded, descriptive tag line will have to be tacked onto the end, as in, “Meet Sally Smith who recently graduated from Western State University, the Mighty Blue Raiders, leading the force of change and innovation for the Rocky Mountains and beyond.”
OK, sorry. I got caught up in the moment, but it struck me that a million dollar project to apply consumer product marketing tools to a university that is raising tuition by 25%, closing academic departments, shutting down programs, and firing scores of staff was probably going to have some unintended repercussions. Marketing professionals would say it was not the best choice optics-wise. I remember thinking to myself: “This is maybe the dumbest use of university funds that I have ever seen.”
If you’ve seen my other posts (here and here for example) about college costs, you know that, optics-wise, I am suspicious of any expenditure that does not add value to students. So I started to wonder about other really dumb ways that universities spend money. I have a top five list.
- An expensive “branding” campaign to standardize logos is at the top of the list.
- Letting service units do research: Dormitories, IT facilities, bookstores, technology licensing, and public relations offices, are all service units. The problem is that mission creep results in an ever-expanding number of ever-expanding service units. No doubt inspired by institutional aspirations, they try to hire the best people. Some of them have PhDs and academic career goals of their own, so they push very hard for a piece of the campus research pie. But, as we all know, university research seldom pays for itself. It is mission creep upon mission creep as service units with no academic mission whatsoever funnel resources into research programs.
- Overhead forgiveness: Faculty members and research sponsors are equally suspicious of indirect costs on research contracts. Professors see it as an unnecessary tax on their salaries, and sponsors confuse it with profit. Both sides push to have it reduced or eliminated. There are even federal agencies that make it a point to try to have it forgiven as they strong arm investigators into promising more and more for less and less. Even full cost recovery does not pay the actual cost of research. Reducing or eliminating research overhead is an expense that robs the rest of the university, and is not a smart way to spend money.
- Centralization: I once had a colleague — a fellow general manager — who effectively blocked any attempt to increase the size of his staff with “Where the f— do you think we are, General Motors?” It translated better back when General Motors was ranked number one in the Fortune 500, but it is nevertheless a good message today that administrative bloat is a dumb way to spend money. The Spring 2008 issue of the UCLA faculty newsletter shows how bad it has become:
Over the past decade, the numbers of Administrators in the UC almost doubled, while the number of faculty increased by 25%. The sharpest growth took place among Executives and Senior Managers: 114%. Because Administrators command high salaries and benefits, any increase in their number higher than the expected growth rate for the University results in high costs: rough estimates of the costs of carrying extra administrators at UC range around $800M.
- Entertain yourselves: We call it many things. Networking. Teas. Receptions. Faculty meetings. For most of the world, lunch means a five dollar sandwich from the cafeteria. At too many university gatherings, a catered buffet is the lure that induces professors to attend. Whatever we call it, the world sees it as a free lunch, and professors spend university funds to feed themselves at the drop of a hat. Long-time viewers of the NBC comedy series The Office know the drill. If there’s a reason to entertain ourselves let’s do it:
Jan: You already had a party on May 5th for no reason.
Michael: No reason?! It was the 05 05 05 party…
Jan: And you had a luau….
Michael: …it happens once every billion years.
Jan: And a tsunami relief fundraiser which somehow lost a lot of money.
Michael: Okay, no, that was a FUN raiser. I think I made that very clear in the fliers, fun, F-U-N.
Jan: Okay, well, I don’t understand why anyone would have a tsunami FUN raiser, Michael. I mean, that doesn’t even make sense.
Paring the list down to five was not easy, and I am sure many of you have lists of your own. What was number six? Well, Rutgers’ decision to pay Nicole “Snooki” Polizzi (star of MTV reality show Jersey Shore), $10,000 more than the annual cost of attending the university was a real contender. It was $2,000 more than Nobel Prizewinning author Terri Morrison received. It was a problem. Optics-wise.