B. Build or Buy???
Deciding whether to "build" components using faculty, staff, and other local resources or to "buy" them from outside sources pervades all aspects of these initiatives, e.g., training for faculty, course development, workstations, software licenses, enhancement of network infrastructure to support courses that are more Web-intensive, etc., etc., etc. Some useful insights are embodied in the following generic equation:
Costs * Time = Obscure-ConstantFor example, let's apply this equation to course development, e.g., faculty converting a group of courses to 100 percent online formats.
- Scenario #1A ... "Optimistic Baseline"
Suppose that 10 faculty in a small department taught 60 courses between them each year, i.e., 6 courses per instructor. Also suppose that in the last 3 years that these 10 instructors converted 30 of their courses to 100 percent online formats. In other words each instructor converted 3 courses in 3 years, or one course per year (on average).
These development activities probably imposed minimal additional costs on the Department -- other than some additional merit pay -- because the department's Chair might regard these creative activities as part of the instructors' expected "personal development" or "service to the community" ... But as noted in the heading for this paragraph, this is an optimistic baseline ... :-)
- Scenario #1B ... Expansion via Contractors
Now suppose that the Chair decides that she wants to convert the other 30 courses because she wants her department to offer online degrees. However she determines that she can't wait three more years; she wants to convert the remaining 30 courses in just one year. Perhaps she's an impatient administrator ... or perhaps she's read the handwriting that's looming ever larger on the walls. Waiting 3 more years might place her department in a precariously non-competitive position compared to similar departments in other colleges that are already offering online degrees.
Our generic equation reminds us that it will probably cost her department at least three times as much to convert the remaining 30 courses as the first 30.
(Costs * 3) * (Time * 1/3) = Obscure-Constant-Value
Why? Among other reasons, the Chair will be expecting each of her 10 instructors to flip the last 3 courses in one year which is one-third as much time it took them to convert their first 3 courses, i.e., each instructor will have to work 3 times as hard. Where will they find the time? Some might be willing to work extra evenings and weekends ... for substantial stipends in addition to their regular pay ...
... Beyond this, the Chair will have to hire outside subject matter experts, i.e., contractors, to make up the difference ... assuming that she is able to garner enough votes from her faculty to offer online degrees and enough support from her Dean, Provost, and President to authorize the substantial additional development costs.
- Scenario #2 ... Two MOOCs
As another example, let's suppose that this same fictitious department wanted to offer two MOOCs -- massive open online courses -- one in each semester. Once again, the Chair would like to launch these courses as soon as possible, but no later than next year. Students who successfully complete the courses will not earn course credits; they will receive certificates of completion from her department.
The Chair presses this initiative because she wants to provide her faculty with hands-on experience with an important cutting-edge development in online pedagogy, specifically, to enable them to gain access to the very large data sets that will be generated as the hundreds of students enrolled in her department's MOOCs interact with the online course materials. This "Big Data" may provide instructors with important new insights as to how students really learn, insights that could also be applied to improving the effectiveness of the online and blended courses that her department offers its on-campus students.
In this case she determines that the biggest challenge is not the costs of developing the two MOOCs, but the higher costs of offering them. Whereas her department's online courses for on-campus students rarely enroll more than 30 students, the Chair anticipates enrolling as many as 300 students in the MOOCs. Mindful of the low completion rates associated with MOOCS previously offered by many other institutions, the Chair is determined to garner greater success by providing the same level of support -- advising/coaching -- for off-campus students in the MOOCs as her department usually provides for on-campus students who take its regular online courses, i.e., one instructor per 30 students.
Rather than overload her own faculty with these additional advising/coaching responsibilities, she contacts the Chairs of four other HBCUs, proposing an alliance whereby each department would assign two instructors to participate in the MOOC. Happily all four Chairs accept her invitation.
A formal Memorandum of Understanding (MOU) is negotiated. Ten instructors will be assigned to the MOOCs, and no more than 300 students will be admitted to each course. All five HBCUs will co-sign the non-credit certificates that will be issued to students who successfully complete each course. All five HBCUs will secure equal shares of any tuition revenue generated by the MOOCS. And they will all have full access to all of the data that is generated by the interactions of all 300 students with the online course materials.
For the purposes of this discussion, "allies" are a group of HBCUs involved in partnerships to develop and/or offer blended and online courses and programs via the Internet. In other notes on this blog, I have called these alliances "Virtual HBCUs"
- Survival Strategies
It seems to me that alliances are not just useful possibilities; they must now become core components of the survival strategies of most HBCUs as all HBCUs become increasingly pressed to develop a substantially larger number of blended and online courses as quickly as possible in order to remain viable competitors in the rapidly evolving global academic marketplace. Few (if any) HBCUs have the resources to continue to go it alone.
- Promoting Alliances
Unfortunately, alliances do not bloom spontaneously like mushrooms in the backyard after a heavy rain. Opportunities for alliances must be identified; members must be recruited; the partnerships must be formalized by Memoranda of Understanding (MOUs); and the MOUs must be ratified by the faculty and administrators of the participating HBCUs. Each of these promotional activities requires substantial amounts of time, time that few Chairs at any HBCU can afford to invest.
HBCU organizations -- e.g., UNCF, TMCF, NAFEO, and HBCU-FDN -- have always encouraged HBCUs to collaborate with each other. Hopefully, these organizations will help HBCUs to identify potential alliances for developing online and blended courses and programs, and will task their legal staffs to develop templates for drafts of the MOUs that will provide the frameworks for successful alliances.
Two kinds of contractors are most relevant in the context of the present discussion -- course developers and adjunct instructors
- Course developers
As noted in the Scenario #1B (above), HBCUs may be pressed to engage outside subject matter experts to help them develop materials for blended and online courses. Care should be taken to ensure that their contracts have air-tight specifications that the materials produced by these outside experts become the intellectual property of the HBCU. Having been paid a fee for their services as developers, the contractors are not entitled to royalties from the tuition generated by these materials, nor can the contractors sell these materials to other institutions.
- Adjunct Instructors
Online courses offered to off-campus students must be more sensitive to fluctuations in market demand than courses offered to on-campus students because the demand off-campus courses is more volatile, especially if the off-campus courses are offered in sessions that are shorter than a semester. In some academic years, a course may be offered five, six, or seven times; whereas in other years, there may only be enough demand for two or three offerings. Contracts with off-campus adjuncts must reflect this greater volatility.
Strategic Partners for Launching Online Programs for Off-Campus Students
For the purposes of this discussion, "strategic partners" are online service providers that invest the substantial funds that are required to market and recruit off-campus students for online programs in exchange for a negotiated share of the tuition revenue from these programs.
These for-profit corporations may also provide other useful services, e.g., course development, coaching, and 7 by 24 help desk support for students; but their defining contribution to their partnerships with HBCUs is the money they invest up-front to cover the costs of expensive marketing and recruitment campaigns, costs that can range from hundreds of thousands to millions of dollars. (Note: Marketing and recruitment campaigns are usually staffed by the strategic partner and/or its subcontractors)
I have discussed strategic partnerships extensively in other notes on this blog and also provided a directory of some of the most prominent online service providers who offer strategic partnerships.
- Selecting a Strategic Partner ==> Investment Funds vs. Prior Experience with HBCUs
HBCUs have some unique requirements -- a consideration that should be kept in mind when selecting strategic partners. The reader is referred to the Directory of Potential Strategic Partners posted elsewhere on this blog. As per the directory, at this time only three service providers -- Colloquy/Kaplan, EOServ, and Pearson-Embanet -- have developed online degree programs with HBCUs. As the reader will also see, EOServ has the most experience producing HBCU degree programs; Pearson, a $9 billion per year global behemoth, has access to the most money for marketing and recruitment; and the other providers fall somewhere in between these two extremes.
-- This would suggest that HBCUs that only intend to launch one or two online degree programs in the next few years could succeed with smaller marketing and recruitment efforts. They could therefore give more weight to prior experience with other HBCUs when selecting their strategic partner.
-- On the other hand, HBCUs that intend to launch a much larger number of programs, e.g., 15 or more, would require more extensive and expensive marketing and recruitment efforts. They could therefore give more weight to investment capacity when selecting their strategic partner.
- Substantial HBCU Investments Still Required
Engaging a strategic partner will not enable HBCUs to launch online programs for free. As noted above, the partner typically pays the large up-front marketing and recruitment costs; but substantial costs to the HBCU will still remain, e.g., stipends for faculty to develop the online courses, stipends for faculty to serve as advisors for off-campus students, upgrades to the HBCU's student information system (Banner, Jenzabar, etc), upgrades to its network (if the courses are hosted on the HBCU's LMS), additional dedicated staff to provide the rapid responses to applications expected by students in the highly competitive global market for online programs, etc, etc, etc
- Academic Excellence vs. Profits
Whereas HBCUs measure their overall performance by retention rates, graduation rates, and other academic metrics, their corporate partners measure their overall performance in profits. While these metrics are not diametrically opposed, their substantial divergence will provide a continuous source of tension between the partners and a consequent need for continuous compromise, beginning with the specific terms of the contract that defines the partnership. Accordingly, during the contract negotiations, HBCUs should seek advice from legal counsel having considerable prior experience with these kinds of strategic partnerships.
- The Contract -- Revenue Shares From the corporate partner's perspective, when it invests the substantial funds up-front that are required to advertise the online programs and then to field the recruiting teams that provide intensive follow-up communications with prospective students, it is purchasing a share of the revenue stream from the tuition that will be paid by students who enroll in the programs. As with its other investments, the corporate partner will press for a larger return on its investments where the risks are higher and will accept a lower return where the risks are lower. Corporate shares vary from 20 percent up to 80 percent of the tuition revenue.
It's useful to distinguish between "expansion" and "start-up" operations. If an HBCU has a strong national brand and has already launched online programs that have enjoyed substantial enrollments for a few years, it is engaging the corporate partner to help it expand its operations. By contrast, if an HBCU's brand is relative weak outside of its immediate community and if it has not launched any online programs yet, then it will be engaging the corporate partner to invest in a start-up operation. Expansion programs will pay a lower share of the revenue to their corporate partners because they pose lower risks; programs that are closer to start-ups will pay a higher share of the revenue to the corporate partners because they entail higher risks. Unfortunately, the vast majority of HBCUs (and most other colleges and universities) are closer to start-ups than expansions.
HBCUs should therefore press for two kinds of exceptions to whatever initial revenue shares are negotiated:
-- First, if enrollments in the online programs increase substantially from one year to the next, the HBCU's share of the tuition revenue should also increase because the risks are decreasing
-- Second, if the HBCU negotiates contracts with government or corporate clients to provide online training/education services, these contracts will bypass the corporate partner's marketing/recruitment efforts and will involve lower-than-normal enrollment risks; so the HBCU's share of the tuition revenue should be higher.
- The Contract -- Intellectual Property
If the corporate partner's staff will have access to the HBCU's online course materials, the contract should affirm that the courses are the HBCU's intellectual property, that the corporate partner may not share these course materials with other the institutions.
And if the corporate partner also provides course development services, the contract should affirm that the course materials produced by the partner's staff become the intellectual property of the HBCU. The obvious exception involves the inclusion of materials previously copyrighted by the corporate partner, e.g., videos, charts, photos, quoted excerpts from previously published materials, etc.
- The Contract -- Operational Metrics and Target Levels
The contract should define operational metrics that will be used to measure the monthly/annual performance of each partner, e.g., number of qualified students recruited by the corporate partner, the percentage of qualified applicants admitted by the HBCU within a specified time frame. Each partner should be confident that the scheduled target levels for its metrics and the scheuled targets for the other partner are achievable.
- The Contract -- Programs and Launch Schedules
Deciding which online programs should be launched and when they should be launched may become particularly touchy sources of tension. For example, the corporate partner's quest for profits may impel it to prefer the most salable programs and to launch them on relatively aggressive schedules; whereas the HBCU may prefer to launch a mix of programs that are more similar to the mix of programs it currently offers to its on-campus students and to launch the off-campus programs on schedules that would enable its regular faculty to develop most, if not all of the online courses.
- The Contract -- Limited Liability
The corporate partner's staff and the staffs of its subcontractors will engage in marketing and recruitment activities on behalf of the HBCU partner. The contract must therefore limit the HBCU's liability in cases where the staffs of the corporate partner and/or its subcontractors misbehave, especially in cases wherein their actions are not in compliance with government regulations.
- The Contract -- Exit Clauses
Both parties should recognize that their partnership will be launching a new business venture, a start-up operation, and that most start-ups fail. In other words, no matter how well the programs are designed, launched, marketed, recruited, and managed, there is a significant chance that the partnership may fail. The HBCU's legal counsel should therefore ensure that the contract contains appropriate exit clauses that will enable the HBCU to terminate the contract in such a way as to minimize the negative impact on its students, its financial status, and its reputation.
Of course, the corporate partner's legal counsel will ensure that the contract includes appropriate exit options for the corporate partner ... :-)
Part 3 -- Challenges and Comments (continued)
C. Courses and Programs (forthcoming)
D. Faculty (forthcoming)
E. and Students (forthcoming)
- Strategic Partners for HBCU Online Programs ... Sept 2013
- Virtual HBCUs as Strategic Alliances ... Oct 2013
- Virtual HBCUs -- Three Potential Strategic Alliances ... Oct 2013
- Directory of Potential Strategic Partners for HBCUs and Virtual HBCUs ... Nov 2013
- Directory of Potential Strategic MOOC Partners for HBCUs and Virtual HBCUs ... Dec 2013
- 2014, a Good Year for HBCUs and Virtual HBCUs to (Quietly) Flip and MOOC ... Dec 2013