Practical Pursuits Moving Forward

All of the positive reasons we identify seem to make the canvas an excellent tool for higher education applications. And it is; however, there are some cautions and potential pitfalls that need to be better understood before being able to deploy the tool effectively. The education industry is a special case that suggests modification of the canvas before it can achieve wider acceptance. Some of these changes are cultural and semantic and can be dealt with through careful choice of language. Others deal with the factor of public support for higher education and the contribution of education to both civic and economic prosperity. These factors complicate conversations about higher education business models and require some distinctions. Still others revolve around the complexity, situational nature, and difficulty of measuring learning experiences and outcomes. Moreover, most institutions generate multiple outcomes – learning, human development, research, knowledge generation, public service, and economic development. Combine these factors with the insights we have gained using the canvas over the past few years, which can save practitioners time and energy and ensure impactful applications.

The special case of the education industry. Several factors make the industry stand out as a special case for consideration when working with the canvas: 1) culture, language, and semantics, 2) higher education as a public good, 3) the illusive nature of learning; and 4) the multiple outcomes and stakeholders of higher education.

The culture and language of educational institutions is unique. Slowly over time, institutions of higher education have assimilated the tools of business to improve the efficiency and effectiveness of their planning and operations. However, most academics resist thinking of education as a “business” and viscerally reject language that is adapted from business applications. This artifact of the culture of institutions creates a special situation where language and semantics must be modified and translated to fully engage institutional members, especially the faculty. Terms of art from the business world are rejected as “jargon.” For example, the term “customer” is resisted by many academicians who believe their relationships with students are both deeper and more multifaceted than a mere customer relationship. To deal with these sensitivities, the language used in the canvas must be reviewed and refined to be acceptable to potential academic users in most cases, and fully replaced in others. Customer is the most obvious target for refinement. This is the term most likely to repulse potential academic users. This affects the entire right side of canvas as the word “customer” appears in most of the building blocks. There is, however, no simple substitute and this deepens the mystery of higher education culture. Simply using the term “student” works for some academic programs and with some campus groups like faculty, but it leaves out a long list of other customer groups like employers, the public, parents, and graduate schools who often admit recent undergraduate degree attainers. Use of the terms “beneficiary” or “stakeholder” might pass muster. Stakeholder would also expand the concept to include not just direct beneficiaries but indirect parties such as parents and employers. These cultural anomalies expose an even more difficult aspect of the higher education business model.

Higher education is dependent on public support in its financial model. Higher education evolved over the years, and especially in the last 50, as a public good. Public and private institutions benefit from direct and indirect public support from federal, state and local sources. Tax relief and student financial aid are two areas in which even private institutions receive tremendous benefits from government funding or forgiveness. Such benefits are given because the public understands that education provides both personal and public benefits, including civic and economic prosperity in our communities and to the nation as a whole. This complicates the canvas in several ways, both on the cost and revenue sides, as public entities like the Federal government, states, and counties provide support for institutions, offset costs to parents and students, and place demands and accountabilities on outcomes. The canvas is useful in better exploring and understanding the role of government and the public interest in the value proposition of the education industry. The canvas can be utilized to analyze and deconstruct the role of government and the nature of the public interest in the higher education industry. It can be used to illuminate the value proposition for public investment in education. Understanding the nature and dividends from public support is an important issue. Elements of the public interest can be portrayed in various parts of the business model. They can be used in the difficult task of diagnosing the competing and countervailing roles of government. They can also be used to illustrate how state and federal government can both be a partner and at the same time retard success. To make the issue even more complicated, the impact of the public investment in higher education is uneven and diminishing over time. There are myriad legal statuses of institutions from nonprofit public and privates to for profit S and C corporations that can be publically or privately held. Our experience is one of significant challenge to represent all of these stakeholders at the institutional level in a single or small number of canvases.

The true nature of learning is neither well understood nor adequately measured within the industry. Value propositions are at the heart of the canvas and there is ongoing confusion and lack of clarity, and perhaps even lack of trust, about the primary value that higher education provides. For some, especially first-time college goers and undergraduates, the prized outcome is a job after graduate. For others, it is the learning about oneself and the world that is the key outcome. For others further from the direct learning, it’s the development of an educated population or employee base. The fact is that the industry serves all of these outcomes and others, which requires a multidimensional canvas to fully represent the layered value propositions. To complicate the matter further, the true nature of learning remains undefined. Even experts have trouble explaining what is learning and how it can be measured. Is learning measured by test scores in any given class or is more about an individual's ability to navigate the world over a lifetime to achieve happiness? Moreover, research and advances in personalized learning are revealing vast differences in how individuals learn; so far, these insights have not been widely deployed in operational practice. These challenges are magnified by the fact that the learning needs and expectations of individuals change depending on one’s age and stage of life and career. Given these challenges, understanding learning remains a difficult hurdle to overcome on the institutional level with the canvas. These challenges are not as great on the program or auxiliary enterprise levels.

Multiple stakeholders and outcomes complicate unpacking and crafting value propositions and generating simple building blocks. The current state of the higher education industry from its culture, to the role of government, to the illusive nature of learning complicates the simple and elegant nature of the business model canvas. The fourth aspect of the special case of higher education adds to the difficulties. Clearly articulating a single value proposition is difficult when the outcomes produced by an institution are both transactional and developmental, involve both curricular and co-curricular experiences, and benefit multiple stakeholders. For example, over the length of an undergraduate’s degree, they may take 40 or more individual courses, participate in clubs, organizations, and athletics, volunteer, living in housing, participate in study abroad, internships, and cooperatives, and take a number of leadership position. The cumulative effect of these experiences provide the student with many benefits such as helping them prepare for a job and career, develop stronger social and occupational networks, help them develop as individuals and citizens, and to gain independence from their families economically and socially. It becomes difficult to determine the extent to which any one of the inputs generated value along any one of the outputs. Such complexities require simplification in deploying the canvas and an understanding of the simplified nature of such representations, while at the same time requiring a number of canvases to best understand the full impact of the program and supporting experiences. What we also have learned is that the value of the undergraduate degree changes in perception of the course of the decade or so that follows graduation. In the first year or two, graduates place high value on gaining entry to certain graduate programs or landing the first job. Later in their career, this value shifts to career preparation and others like appreciation of the arts, cultures, or human understanding. Complicated indeed!

An adapted canvas for higher education – Introducing the Education Business Model Ecosystem-Canvas. How then can we modify the existing Business Model Canvas to overcome the challenges presented by the special case of the education industry and reap the rewards of all of the benefits we espouse?  Our revised Education Ecosystem-Canvas is an industry specific modification of the traditional business model canvas tailored for higher education institutions. We chose to revise the layout of the traditional canvas from rectilinear to circular to enhance the concept of flows through the model and interchanges with the environment. The ecosystem model introduces an outer shell to help manage the multiple elements that can influence any individual business model by allowing the opportunity to identify additional value propositions, stakeholder groups, or influences from internal or external forces.

The following element definitions use language that may be more suitable for cultures in educational institutions:

• Learner Centered Value Proposition: Institutions seek to solve learner problems and satisfy learner needs with value propositions. They represent the reason that learners choose one institution over competitors. These propositions articulate the value delivered to the learner. They may describe the learner’s problems that are being solved and which needs are being satisfied. Some value propositions may be differentiated to target several distinct learner or stakeholder segments.

• Stakeholder Channels: Value propositions are delivered to learners and stakeholder through channels that cover communication, distribution, and sales. This element describes the channel in detail including all of the touch points for each stakeholder segment. Channels help raise awareness about products and services, help stakeholder understand the value proposition, allow stakeholder to purchase products and services, and provide support.

• Stakeholder Relationships: Relationships are established and maintained with each stakeholder segment. There are a wide variety of ways institutions can maintain relationships with stakeholder segments, from close personal relationships to more automated contacts and interactions. These are shaped by stakeholder expectations and vary depending on institutional capacities and how the relationships can be integrated with the rest of the business model.

• Stakeholder Segments: An institution serves one or several learner and stakeholder segments. This element defines the different groups of people or organizations an institution hopes to reach and serve. These segments should be separated out if they have different needs, have their own channel, require different kinds of relationships, or have substantially different characteristics.

• Revenue: Value propositions successfully embraced by learners and stakeholders generate revenue streams. These revenue streams represent the cash an institution generates from each stakeholder segment in exchange for products and services. Transaction revenues result from one-time payments while recurring revenues result from ongoing payments.

• Key Partners: Partners can be engaged to provide resources and activities; some activities are outsourced and some resources are acquired outside the institution. Partnerships are increasingly important in institutions. They can be created to optimize a business model, reduce risk, acquire resources, or add value to any part of the business model. There are four kinds of partnerships: strategic alliances with non-competitors; cooperative partnerships between competitors; joint ventures to develop new business; or buyer-supplier relationships to assure continuing supplies.

• Key Resources: Key resources are the assets required to offer and deliver value to the learners and stakeholders through the key activities of the institution. These resources are fundamental to making the business model work. They can include physical, financial, intellectual, human, or other resources. They may be owned by the institution, leased as needed, or acquired from key partners.

• Key Activities: These are the critical functions necessary to offer and deliver value to the learners and stakeholders. These activities are the most important things an institution must do to make the business model work; actions an institution takes to be successful. They can fall into categories of production or problem solving; can occur in platforms or networks, or may be expressed in other kinds of ways.

• Costs: The business model elements combine to generate the cost structure. This element describes the most important costs to operate a business model. Costs should be calculated after defining the Key Resources, Key Activities, and Key Partnership elements.

• Other Stakeholders: An institution may serves other stakeholder segments beyond the learners. This element includes the additional groups of people or organizations an institution hopes to reach and serve. Stakeholder groups should be separated out if they have different needs, have their own channel, require different kinds of relationships, or have substantially different characteristics.

• Interdependent Value Propositions: Additional value propositions are delivered to stakeholders that may or may not be related to the core value proposition to learners. Each interdependent value proposition should be separated out if they address different needs, channels, relationships, or have substantially different characteristics.

• Other Institutional Factors: Forces internal to the institution impact the overall ecosystem and should be noted here. These may impact any element of the business model, but may have special impacts on key resources or key activities.
• Other Environmental Factors: Forces external to the institution impact the overall ecosystem and should be noted here. These may impact any element of the business model, but may have special impacts on key partners or stakeholders.