Most for-profit solutions do not threaten the core missions of universities


In a recent article, Edward Maloney and Joshua Kim lament the “big money rush in higher education,” which portends the “outsourcing” of “core capabilities” to for-profit companies. The article, while convincing, relies on a few tired assumptions about partnerships between for-profit companies and universities.

First, a definitional bickering: establishing clear moral issues between “non-profit” and “for-profit” outfits is a relic of a bygone era. Today, Team Nonprofit presents many leviathans with endowments greater than the GDP of medium-sized countries. And Team For-Profit represents dozens of DIY enthusiasts scrambling to meet next month’s payroll for half a dozen workers.

Yes, publicly traded online program managers occupy much of the oxygen in the “for-profit” space. But that’s just a small slice of the pie that includes a slew of innovators who are more alike, to deploy another weighted term, small mom-and-pop businesses.

In short: I do not see a rush of big pennies threatening to subvert the fundamental missions of universities. The most successful for-profit partnerships do not force universities to outsource their responsibilities. And these collaborations rarely undermine the ability of universities to retain control over core capacities.

The ‘rush for the jackpot’ is smaller than you might think

In my role at WGU Labs, I work with courageous edtech startups, most of which are built on lines of code designed to solve a particular problem. These lines of codes are written by ambitious dreamers, thinkers and educators, most of whom could make more money elsewhere.

In 2020, US edtech companies raised a total of $ 2.2 billion. This represents 1% of the $ 156 billion invested in American startups last year. And at the heart of the highest edtech valuations is the investor assumption that the company will attract clients outside of higher education. (Funny, this is seen as the failure of the field to generate ‘hypergrowth’.)

The open secret in the investment world is that selling things to universities is a bad way to get rich. The total addressable market is simply too thin. “Big money” may be a threat to universities for other reasons – imagine Microsoft University – but it won’t come into the hands of greedy edtech investors.

“Outsourcing” is a bug, not a feature, successful partnerships

There are, of course, many examples of universities outsourcing basic capabilities to third-party companies. Private dorms, for example, often exaggerate the inequalities on campus and can sometimes be scams.

But the term “outsourcing” does not distinguish between clumsy transfers to third-party vendors and thoughtful collaborations between edtech companies and universities seeking to foster student success.

When a CTO partners with a company to integrate automated nudges into their learning management system, or a continuing education director partners with a provider of digital skills micro-credentials, students earn more than universities lose. And schools retain full control of the learning experience.

“Basic capabilities” are difficult to define

In their article, Maloney and Kim cite both “university departments” and “football teams” as examples of “essential capabilities”. I have seen little evidence of waves of universities rushing to outsource entire undergraduate departments. (To be fair, graduate programs are a different story.)

And football teams are just not at the heart of the learning experience. They will soon be outsourced anyway, and rightly so. The brutal exodus from Texas and Oklahoma to the Southeastern Conference portends a departure of many programs from the NCAA itself.

I doubt this will have any negative consequences for the median student. On the contrary, letting wealthy entities fund football will free up funds for campus activities that don’t involve helmets. Major college football, in short, should be outsourced.

The future of for-profit and non-profit partnerships

I am a teacher who works for a non-profit organization that partners with for-profit businesses. I often joke, with some sincerity, that students and businesses see me as some kind of “hack”.

But my frank opinion is this: (1) Edtech companies are not going to dominate universities anytime soon; and (2) when not-for-profit organizations keep a grip on the wheel, collaborations with for-profit companies can yield excellent results.

If I sound a little defensive, it’s because I struggle with this problem every day. As a teacher, I often hate the intrusion of the next big edtech bell and whistle. Sometimes I just want to teach.

As an edtech business partner, I often cringe at the default layoffs of for-profit solutions due to a misconception that the creators of these tools are swimming in vaults. They usually are not.

Maloney and Kim are correct in recommending approaching electronics technology companies with “deliberation, caution, and caution.” But the approach must also appeal to curiosity, openness and humility. Students, not institutions, are the main stakeholders. And they have a lot to gain.

John Clark is a senior consultant at WGU Labs and an assistant instructor at the Dominican University of River Forest, IL.

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