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66 September/October 2014 BizEd your turn JOHN IS A typical recent graduate— articulate, well-groomed, and eager to work. After spending four years at a large public institution ranked within the top 200 by U.S. News & World Report, he has graduated with an enviable GPA. Yet, like many of his peers confronting the current chal- lenging economic environment, John is ill-equipped to translate the con- tent of his college classes into gainful employment. Therefore, four months removed from the euphoria of gradua- tion day, he remains unemployed. While John is not a real person, he unfortunately represents a very real problem: the crisis facing American higher education. Rising tuition costs have led to increased loads of stu- dent debt, which are exacerbated by underwhelming returns on investment. More and more skeptics are question- ing the actual utility of any degree— and that includes a degree from a business school. When experts debate how to "fix" traditional higher education, they often focus on how to revamp content delivery and how to stem the tide of increased costs. For instance, because MOOCs and other delivery methods promise to increase accessibility to course materials, many university administrators have diverted resources to pursue these strategies. However, we believe they should do exactly the opposite. Increasing access to inexpensive content simply increases the supply of students—like John— with undifferentiated skills. The university's advantage lies in increasing the value of the educational experi- ence. To prove our point, let's analyze the value chain in higher education. The Real Value of Education For decades, firms have used Michael Porter's value chain to understand the intrinsic value of the series of Disrupting the Value Chain activities they undertake to provide their services. They might consider inbound logistics, operations, out- bound logistics, marketing and sales, and service—as well as supporting activities such as technology and human resource management. An organization can use the value chain analysis to identify its unique source of competitive advantage and value proposition. For example, Nike's competitive advantage is in marketing and sales, not in operations. Arguably the most important strategic move Nike made in its history was to focus on its strengths in those two areas and to hire other organizations to take care of operations. In any industry, if powerful envi- ronmental pressures drive toward stan- dardization in a particular aspect of the value chain, commoditization is a common result. Recognizing this cycle, the best organizations don't follow the trap of investing more resources in the areas of their value chain that are becoming commoditized. Instead, they redirect their resources into important services that develop new, unique sources of value. These organizations emerge from commoditization cycles renewed and stronger than before, while those that misdiagnose disrup- tive pressures cease to exist altogether. Now let's look at higher education's value chain, which includes student recruitment, student support, student placement, content delivery, and knowledge creation. Many college and university leaders believe that the value proposition of higher education lies solely in content delivery—that is, giving students access to formal knowledge in the classroom or online. But we believe those academic leaders are mistaken. Content delivery is becoming rapidly commoditized due to uniform accreditation requirements and profes- sional standards dictating that fundamental course by Douglas E. Thomas and B. Tom Hunsaker Douglas E. Thomas B. Tom Hunsaker

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