Digital Thoughts – McEducation
Last week, Boston played host to a small education related conference. Attended by mainly universities interested in trends in the post-secondary market, it remains largely unattended by those in our space. Similar to Ad:Tech, the show did have exhibitors, but they numbered fewer than ten and all fit within a medium size conference room. Almost all of the exhibitors were service providers for companies offering some form of online education – technologies for delivering course content, for making that content more engaging, student assessment, and so on. Those in our space think of the post-secondary education market in terms of those who advertise the most – Phoenix, AIU, CTU, Kaplan, etc. For those working in the post-secondary market, they have seen the nature of their business change dramatically in the past five to ten years, in no small part due to the successes of the for-profit institutions. And one company more than any other drew the ire of the other institutions, the University of Phoenix.
Often, the most successful in a space make for the biggest target, and the University of Phoenix is no exception. Founded in 1976 by Dr. John Sperling, this for-profit university aimed at working adults took thirteen years before it had 5000 students. Today, they enroll 200,000 students making them the single largest university in the world. A look at the conference sessions explained the impact Phoenix and others have had. While sessions on technology and regulation existed, the most attended and most vocal were those covering marketing and student recruitment. They included such topics as “How Non-Profits Compete and Succeed,” “Online Distance Education: The Age of Competition,” and “The State as an Entrepreneurial Organization.” Reading through the subtext, the sessions really dealt with “How to Compete against Phoenix.”
More than one attendee described Phoenix as the “Evil Empire,” their comments reminiscent of attackers of Wal-Mart and Microsoft. But who is Phoenix? Interestingly enough, the President of the University of Phoenix gave the keynote address on the morning of the second day. A packed house, it felt as though many attended more to see the enemy up close than to listen to what Dr. Laura Palmer Noone, Ph.D., J.D. had to say. Instead of defending her company, Dr. Noone took a tactical approach. She titled her presentation, “For-Profit Eye for the Non-Profit Guy,” a spoof on the popular TV show. Similar to the show, her presentation contained four main areas: Fashion, Food, Beauty, and Cool. Each of the four traits – Fashion, Food, Beauty, and Cool – maps to core components of Phoenix’s operations. Fashion for instance, refers not to a dress code but to the University’s mission, serving working adults. Food in this case refers to the Academics, as it is the “meat” of their mission and business. Their Beauty is the technology and IT staff that make it all possible. Finally, Cool deals with the innovations created to service hundreds of thousands of students and tens of thousands of staff and teachers.
Those without any preconceived notions of Phoenix and their role in the post-secondary education market most likely left the speech impressed. Here is a company that lifted up its hood and showed why they have taken the dominant position in the marketplace and for whom second place does not seem a possibility in the near future. The University emphasizes a “Hi Tech & Hi Touch” approach to teaching and business. They are a company that has plans to service 500,000 students by 2010, uses e-learning not just for its classroom but all employees, employs mass customization similar to Amazon.com, yet understands that without proper curriculum their incredible technology and efficiency would not add value. Others dislike them because they understand marketing and can execute better and faster than almost anyone else. They are unburdened in their strategy by the layers of bureaucracy that plague more traditional institutions trying to enter this space. They push the envelope, and in cases where they get too close to crossing the line they can react quickly enough to insure they don’t. That responsiveness and market competitiveness is what makes the more traditional companies frustrated. And for being good at their mission, that is why Phoenix gets referred to as McEducation. They unabashedly admit that their students are customers and that treating them as such does not diminish the company’s ability to educate effectively.
The online post-secondary education market, while older than Internet advertising, still feels young. Enrollments to institutions in this space have surged, and they continue to be among some of the web’s most prolific advertisers. The surge of activity feels reminiscent of the dot-com boom with new player after new player entering the market. Similar to the dot-com bust, aside from the guaranteed consolidation that will occur, we can count on not all surviving. That is why the attention on companies such as Phoenix is arguably misguided. While large, they represent perhaps 4% of all degrees granted. In the end, the traditional brands will thrive. Traditional retailers felt threatened by the slew of online companies entering their space. The bricks and mortar took longer to enter and often did so less gracefully, but in the end, only a handful of online only stores survived, with a large number of clicks and mortar successfully migrating. What those attending this conference might not have realized is that both Nordstrom and Wal-Mart can coexist. One doesn’t have to worry about Wal-Mart’s success, if in the end, those shopping at Wal-Mart aren’t the customers you want.
