Hospitality & Design Summit 2009 - 150

- Speaker Perspectives Apollo Group and the Rise of For-Profit Adult Education: A Case Study on the Art of the Advantage, continued Fire/ breakoUt The trigger: a flood of working adult students Between 1976 and 1991, enrollment in the University of Phoenix and its sister entities grew by about 1,000 new students per year on average. Over the next five years, average enrollment growth quadrupled. Unleashing unorthodox tactics The University of Phoenix unleashed numerous tactics that would keep traditional universities hesitating off-balance as they considered their responses. • It opened campuses where no one expected them, in office buildings near freeways. • It used instructors others spurned (95 percent of the university’s instructors were part-time teachers, most of them with full-time day jobs). • It adopted course-design practices—writing courses centrally at headquarters—that fundamentally challenged those of traditional academic institutions. Traditional universities are rooted in giving faculty members freedom to design and teach courses. • It exclusively targeted working adult students, ignoring the population of high school graduates for whom traditional universities clamor. • It fully embraced web-based learning programs while traditional universities assessed the value and risks of using the technology. By wrapping its grand strategy—delivering college education to working adults—in a maze of interlocking, unorthodox strategies, the University of Phoenix achieved what Sun Tzu would call “taking whole,” John Boyce would call “paralyzing the enemy,” or more modern strategists today call “disruption.” The University of Phoenix became so unusual that no traditional university would want to attack it directly. Mental and moral games The University of Phoenix also played the moral and mental games of conflict to keep traditional universities at bay. It aligned itself fully to its core purpose of serving working adult students. The implications of this dedication freed it to choose a path others would not want to follow. It spurned many of the core activities traditional universities hold dear. It invested little in building the grass lawns of picturesque campuses. Its purpose required little advancement of intellectual knowledge so it need not fund faculty research. In sum, it adopted a low-end positioning that no traditional university would embrace. The most traditional colleges could muster only scorn for the University of Phoenix. As they watched the University of Phoenix centers open near freeway exits, they dismissed this discount offering in the same way Coca-Cola dismissed cheap no-brand sodas. But just as Coca-Cola was stirred from its slumber by eroding market shares in developing countries and began taking its low-end competitors seriously, traditional universities would slowly realize they had been taken by surprise. The University of Phoenix was a for-profit entity but one with a legitimate social mission (to educate working adults). It was built around a customer segment no one had taken seriously, but this segment was one that would come to define the student body of the future. Twenty years ago college campuses were dominated by youth. Today, over 80 percent of college students work full-time. As a result, traditional universities began giving way to for-profit ones. 1991 was the inflection point at which Sperling’s innovation reached the Fire phase. What did Sperling have in place that pushed his idea to the tipping point? Since radical innovations involve a significant mental shift, rapid adoption occurs when a critical number of the right people have adopted the new perspective and begin convincing the masses to change their views. The shift Sperling was driving was to stop viewing education as a purely academic activity but instead as a more practical endeavor. Education was to become a business. This view has several critical implications. If college education can be a business, for example, then it is acceptable for a college to make a profit, to seek innovative distribution channels (such as on-line learning), and to focus on educational programs with market need. It becomes acceptable for a college to forgo teaching the foundational classics of arts and science and to instead focus only on practical studies of business and technology. If this new perspective were accepted, then the people who graduated from such college-as business institutions would also become more accepted. Their employers would be comfortable giving them jobs and raises even though they earned their degrees later in life and from a for-profit education provider. The critical number for the University of Phoenix appears to have been 25. In 1991, the company established its 25th campus, or center. Through these 25 centers it served about 17,000 students. With this scale, the company had elbowed its way into the realm of established universities and was beginning to pierce the national consciousness. Students began enrolling in larger numbers. Traditional universities began citing the University of Phoenix in internal strategy reviews as a cause for their slowing enrollment growth. As Sperling’s company attracted attention from students and competitors alike, it shifted smoothly into the fast-paced, creative mode demanded by the Fire phase. hospi tal i ty des i g n su m m i t 2009

Hospitality & Design Summit 2009

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