When the Government introduced changes to the Higher Education fee regime it also significantly altered the Higher Education market and created new demands on leadership in the sector.
In the past, when universities had a guaranteed income, the whole business of running a university was about management of the academic strategy, capital planning and expenditure. On the whole, financial management was largely restricted to knowing what you spent in the previous year and planning next year's budget in relation to that.
Now, however, the Government has made a number of dramatic changes to remove this guaranteed income and as a result the focus of university leadership has altered significantly. For one thing, the Government's estimate of how many universities would set their undergraduate fees below the maximum £9,000 per year was incorrect. The Government failed to appreciate that positioning yourself any lower than the top price conveys the message that you are not as good as your competitors. If you went into a clothes shop, for example, and saw three identical jumpers, one priced at £10, one at £20 and one at £30, you would naturally think that the jumper priced at £30 is of a superior quality to the other two. This may not be the case, but as any branding expert will tell you, price influences people's perceptions. How to price courses is a major marketing decision that universities now have to give full consideration.
With the changes in the landscape, university leaders need to look at their current strategies and the strategies they will need to succeed going forwards. Underlying this is the fact that the Higher Education market consists of different types of universities with fundamental differences between them.
One type of Higher Education institution consists of universities such as Oxford, Cambridge, University College London and Imperial College - our top institutions competing with the best universities globally. These universities have a lot of international focus in terms of both their students and their research money.
A second type consists of the rest of our research-intensives, such as Birmingham and Warwick, who also receive a large percentage of their income from research. These institutions certainly have an international reach in terms of their students and staff but are less internationally focused than the previous group.
A third type consists of universities with a much smaller proportion of their income coming from research, and a greater proportion of their students coming from the UK/EU.
Fourthly, there are universities who essentially don't do research, and specialise in teaching vocational courses. Many of these institutions have made the transition from Further Education colleges or teaching colleges.
Despite these significant differences in terms of their demographics and areas of focus, it seems to me that all four types of universities on the whole are adopting the same strategy. In brief, they are all planning to raise their fees to the top end of the government's fee range, aiming to recruit more international students and looking to raise more money through research. In my opinion, this doesn't seem quite right.
University leaders need to consider how many foreign students really want to study in the UK, how many foreign partnerships they can realistically manage, and how much research income they can realistically bring in. In other words, the real question that each university needs to be asking is where they sit and what their real options are. Going for the same strategy as all their rivals may not be the best move. Instead, they need to be more realistic and more innovative.
University of Northampton is a fantastic example of an institution that has been innovative and as a result has shined in the sector. By focusing on being expert in specific fields, and on developing partnerships around these areas of expertise (e.g. deep partnerships with the police and the NHS), Northampton have been able to significantly enhance their strategic position. By looking at what they are good at, and building upon the relationships they already have, Northampton have monopolised parts of the market and secured their future.
One important aspect of successful leadership is knowing how to win. In the past, with their guaranteed incomes, universities haven't had to think about how their organisation can win. Their competition has been internal, and leaders have focused upon how they can win in comparison to their fellow Deans and Department Heads. Now, however, it is essential that these Deans focus upon organisational success rather than individual success, and that means making strategic choices for the good of the organisation as a whole. For the first time, it is about working as a team and working together to ensure the right choices are made and followed through at an institutional level. This means that an institution may well be better off celebrating the fact that they have an outstanding Humanities department, for example, and favouring this over the Sciences. This trade off may mean the Dean of Sciences needs to adjust expectations within their own department, but ultimately, this will be beneficial for the institution and ensure a winning position during the tough times ahead.