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He found that colleges and universities were simply not designed to serve working adults. They were organized for young people—recent high school graduates who had not yet entered the workforce. In most colleges, working adults were treated as second-class citizens. Though many universities offered night classes, none of their offices or bookstores stayed open in the evenings. Working students had to take time off work to enroll because registrars’ offices were only open during the day. The same was true whenever adults had to buy books, meet faculty, or consult advisors. Working students had to commute to class but could not find convenient parking. As a result few working students were able to finish a two-year program in less than four years or a four-year program in less than eight years.3 ”I’ve never been interested in making widgets or anything like that, I want to improve the quality of life for my fellow men. I am, by nature, an improver--and a meddler.”4 - John Sperling, Founder and Chairman of the Apollo Group Rigidity: recognizing the university system was stuck As Sperling’s conviction that the demands of university students would experience a dramatic shift grew, so did his determination to change the university system. He compiled his findings and proposed to his employer, San Jose State University, that it support the creation of degree programs designed for working adults. Sperling already had a sense that universities were stuck. They had so far refused, almost across the board, to respond to the needs of working adults. When San Jose State turned down Sperling’s proposal, he had the evidence he needed. The system was stuck. It would resist responding to the weak but uncontestable signals Sperling had uncovered. So Sperling resigned from his tenured position and committed himself to meet the needs of working adult students on his own. water/ imagination A new metaphor: the university as a business From the very beginning (which we might argue was Plato’s Academy, founded in 385 B.C.), universities served a social mission. Whether supported by the state or by the Church, as most were during the Middle Ages, the university played a noble purpose. It was the preserver of knowledge, the educator of leaders. This history constrains our view of what a university should be–a nonprofit institution with a social purpose–and the language we use to talk about universities reinforces that conception. But Sperling held a different view of the university, perhaps out of necessity. Like many innovators, he saw beyond the current players (colleges, universities, professors, etc.) because he conceived of the university using a different metaphor. He was willing to see the university as a business. So Sperling chose a radical path. He founded a for-profit company that would operate degree programs that served working adults. Initially he planned to offer his programs to existing universities. At first, he met disbelief—like all radical innovators do. The idea of a for-profit educational company seemed odd to educators who had grown up in publicly funded and nonprofit domains. But in 1973 Sperling won over the University of San Francisco, which contracted him to run an adult-education program for them. Sperling enrolled 500 students during his first year of operation. wood/ Formation Sperling’s Wood phase lasted for just under two decades. He grew from 500 students in 1973 to 17,500 in 1991.5 Though impressive, this growth pales to the rate his companies, eventually combined as the Apollo Group, would obtain in following years. During these two decades he would work through the “fuzzy” phase of strategy as he helped partners and students shift their views on college education, and as he put in place the key elements he needed to reach take-off. Partners: seeking university support then going it alone Sperling met early success. After the first program for the University of San Francisco, he signed contracts over the next two years with two more universities, for a total enrollment of 2,000 students. By his third year in operation he generated $2 million in revenue and $200,000 in profit. But the following year he hit a roadblock. The Western Association of Schools and Colleges disliked a for-profit company entering the education business. They threatened to pull accreditation from Sperling’s university partners if they continued to work with Sperling’s company. Sperling’s clients immediately cancelled their contracts. Sperling went from 2,000 students to none, from $2 million in revenue to zero. Effective innovators seem to share an uncommon reaction to what most would call failure. Just as Taoists see right and wrong, good and bad as purely subjective, unrelated to fact or truth, innovators view success and failure as subjective. Failure is not determined by external circumstances but by an internal decision to stop. When Sperling’s company evaporated before his eyes, he chose not to call this failure but rather to see it as a bend in the road for which he simply needed to adjust his steering wheel. He realized his original model of working through universities would face too much resistance, so he founded his own university, the University of Phoenix (based in Phoenix, Arizona), to teach students directly. He made his former partners irrelevant. In 1976, the University of Phoenix welcomed its first class of eight students. Though less spectacular than his 500-student start three years prior, his new direct model addressed his only real challenge. Until that date he had proven he could recruit students (users). The demand of working adults was strong and would continue to grow. He had also shown he could recruit faculty and administrators. His only barrier had been partners. With his new model he no longer needed the support of existing universities. Though national accreditation agencies would not welcome his company, he was able to secure less prestigious, but equally satisfactory, regional accreditation. h o s p i t a l i t y d es ign s ummit 2 0 0 9

Hospitality & Design Summit 2009

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