1. Market Driven Strategic Planning by Michael K. Townsley, Ph.D. Higher Education Accounting Forum National Association of College & University Business Officials Chicago, IL April 26, 2004

2. Contact Information Stevens Strategy Ph. 603-863-4704 Email: Info@StevensStrategy.com

3. Basic Principles  Robert Lenington a strategic plan must be “... market-oriented and... contain alternatives to a market position that goes awry.”  George Dehne and The Noel Levitz Group a college must know itself and its competitors.  Colleges must understand the following legitimate demands: Potential students want quality education. Students depend on colleges to know the labor market and offer relevant training. Potential employers want skilled employees.  The college must remain attentive and flexible to student demands, and open to alternative market strategies.

4. Market Driven Strategy 101 Collect Internal Data on….  Financial trends cash, revenue, expenses, net assets, debt, auxiliary net income, and cost per student  Pricing tuition, fees, and discount rates  Marketing trends yield rates for admissions, matriculants, and enrollments  Student choice why students choose the college  Academic programs enrollments by program, graduation rates, and attrition rates

5. Market Driven Strategy 101 Collect Internal Data on…. (cont’d)  Fit of programs to the labor and graduate institution markets determine skills expected of graduates  Admission and student services practices, programs and students served  Student outcomes transfers, employment, persistence, and satisfaction  Personnel employees by category, cost per employee, and trends  Assets fixed assets, asset per student, and deferred maintenance

6. Market Driven Strategy 101 Collect Data on the Competition….  Identify colleges that directly compete for students;  Interview applicants who chose another college; and  Study the competition pricing and tuition discounting information marketing strategy advertising campaigns admission tactics new programs financial and cost structure

7. Market Driven Strategy 101 – Critical Performance Measures  Competitive condition - market share, net price & cost/student.  Yields – inquiry, admission new students  Enrollment – new students and program  Net tuition  Net income  Cash  Total financial resources to fte students  Composite Financial Index

8. Market Driven Strategy 101 Identify Strengths and Weaknesses  Based on data and observation, where does the college excel, and where does it fall short?  What internal or external marketing opportunities and threats can the college anticipate in the areas of pricing, academics, student services, and competitive practices?

9. Critical Market Driven Strategic Planning Events  Prepare five-year forecasts enrollment; student services; operating and capital budgets; and demand for faculty, equipment, and services  Anticipate how competitors could distort forecasts.  Determine and remedy major gaps in strategy pricing, recruiting, marketing, academic programs, and student services  Establish the college’s desired position reputation, market share, pricing, tuition discounts, academic programs, and services

10. Critical Market Driven Strategic Planning Events (cont’d)  Prepare college goals operating divisions, academic programs, student services, finance, building and grounds, etc.  Design operational plans for each goal who, what, when, how much  Establish a monitoring system track the implementation of every goal  Design dashboard track critical indicators of performance.  Conduct annual reviews  Make changes!

11. Guidelines for the Strategic Plan Strategy  Build strategy by integrating finance, academic programs, student services, and marketing.  Incorporate a monitoring plan.  Review and respond to changes at least annually.

12. Guidelines for the Strategic Plan Finance  Fund net price discounts or grow net price.  Generate positive operating margins (including depreciation).  Balance revenue and expense growth rates (including net income in expenses).  Build financial and cash reserves.  Track uncollectible receivables closely.  Minimize debt by funding all or a portion of capital expenses.  Generate positive net income from all auxiliaries (after depreciation).  Find alternative uses for fixed assets to generate additional revenue.  Maintain a Composite Financial Index score greater than three.  Use trend analysis to spot changes.

13. Guidelines for the Strategic Plan Academic Programs  Design market-responsive academic programs.  Modify programs regularly to compensate for changes in job and technology markets.  Customize academic programs to better benefit students.  Track trends in class size, faculty work, student performance, and net by program.  Remember the primary mission of the college: to provide a credible education program.

14. Guidelines for the Strategic Plan Student Services  Design a student service strategy that allows for personal attention.  Foster links between academic programs, graduate schools, and employers.  Encourage a community of students through academic and recreational activities.

15. Guidelines for the Strategic Plan Marketing  Identify preferred enrollees - location, motivation, price sensitivity, academic and personal characteristics.  Compile characteristics of current and prospective students.  Craft a financial aid program that targets preferred students.  Project a distinctive niche for the college to enhance its reputation.  Reinforce the college’s mission with symbols and the written word.  Minimize attrition and attract former students.  Monitor admissions, enrollment, marketing, and financial aid.  Link public relations to advertising.  Stay alert to new revenue-generating opportunities.

16. Guidelines for the Strategic Plan Administrative Services & Governance  Simplify everything, consolidate where reasonable, and cut expenses.  Treat the student as customer and provide one-stop shopping.  Make administrators accountable for their work and their offices.  Reward people for good work.

17. Management Practices Coordination and Control  Nothing destabilizes a small college more than fragmentation of loyalties and bickering among offices over designated workloads.  Leaders must clearly define and reasonably assign responsibilities.

18. Management Practices Delegation of Authority  Assign tasks coherently  Put the assignment in writing  Measure performance  Insist on timely progress reports  Enforce accountability

19. Business Practices  Seek and Evaluate Alternatives  Look at the Big Picture  Treat Major Financial Decisions as Investment Decisions  Justify the Decision Presidents should assume nothing but the burden of proof. Leaders must take it upon themselves to persuade their boards of the need for change through concise, coherent, written statements and analyses. A board should not approve a decision or project unless it understands how such will serve the goals of its college

20. Strategic Planning – Keep in Mind….  Do the data – it provides insight  Involve critical segments of the college  Be realistic about goals  Leadership and accountability are keys to success  Monitor Progress  Support the plan with policies & procedures  Remember - Strategy provides a context to balance opportunities with risks and college goals with student needs.  Strategy should allow colleges to mobilize quickly anchored by expressed goals and guidelines.