Public vs Private – the future of tertiary education

Original Post on B/Hert, 11.05.2016

It’s time to reset the thinking around what a private tertiary education provider is and does. Let’s put aside the seemingly endless stories about dodgy vocational schools rorting FEE-HELP/HECS and gaming the immigration, indigenous and regional support systems. There are many reasons for why these schools are able to exist, exploit and ultimately fail, but the simple fact that they were private providers isn’t one of them. After all, many of the best education institutions in the world are private (e.g. Harvard, MIT, Stanford, Yale, INSEAD).

It’s time to reset the thinking around what a private tertiary education provider is and does. Let’s put aside the seemingly endless stories about dodgy vocational schools rorting FEE-HELP/HECS and gaming the immigration, indigenous and regional support systems. There are many reasons for why these schools are able to exist, exploit and ultimately fail, but the simple fact that they were private providers isn’t one of them. After all, many of the best education institutions in the world are private (e.g. Harvard, MIT, Stanford, Yale, INSEAD).

To see the forefront of innovation in professional education today, we need to look at private educators like General Assembly, Coursera, PluralSight and LinkedIn. They are redefining the value proposition of study and skill development. They are going beyond the undisputed domain of universities – content and place. These providers focus on delivering experience and value – not just for the students, but for employers and even the educators.

What’s the issue with traditional professional education?

The current approach to qualification and certification was developed for the industrial revolution era – a world of specialised roles relying on the mastery of employing one or more tools, machines or processes. Once learned, one could count on being able to apply that mastery in any job that used the same skill sets, processes or tools.

Those jobs are rapidly disappearing. Today’s employees are creating new processes and customised tools on the fly. Productivity and profitability comes from the ability to adapt and optimise, to innovate on the run. Launching into a new market? You might need to build an app for that. Yesterday’s rigid frameworks of qualification are losing relevance in this post-industrial, digital era. As a result, accreditation and certification institutions are having the same urgent discussions – what can they do to remain relevant? In parallel, private educators are forging ahead, leaving the formal qualifications behind.

What are these new private educators doing?

The new educators focus on two tactics: finding expert teachers and course designers, and asking their customers what they want.

They do this because they want to build programs that deliver exactly what the customers wants, in the best and most efficient manner, within a purpose-built ecosystem. Traditional higher education providers, on the other hand, don’t ask what their customer want, they are instead looking for ways to fund current buildings and researchers.

The private educators that focus on employability are creating courses that ensure students have a relevant portfolio and referential network. For example, General Assembly hires leading industry experts from companies like Google to develop courses using the latest, most-demanded web and mobile technologies. The students are given real-world projects reflective of the software being built in the companies that will be employing them. They are also coached in how to use these projects to demonstrate their skills and interests to an employer. At “demo day”, prospective employers are brought in and the students present what they’ve developed. Within a few months, many of the graduates have job offers.

Private educators are increasingly employing teachers that are recognised leaders in their field, and are providing interesting facilities/locations for program. Here at intersective, for example, we create project-based learning where student participate in real projects with leading companies, which encourages them to feel like they’re “part of the team”. Rather than theory, they’re given the opportunity to learn directly from professionals who have “been there”. They are set up to struggle and eventually succeed, because such experiences create confidence, which is highly valued by employers.

When people talk about these new types of programs, they don’t ask about the academic qualifications of the instructors, or which certification authority has signed off on the course. Rather, the students and their future employers want to know about the professional qualifications of the instructors and course creators, the timeliness and relevance of the material, and the ability to demonstrate skills at the completion.

What does this mean for employers?

A consistent message from business executives is that they are focusing on demonstrated skills over qualifications when evaluating talent. While qualifications are still a filter used by traditional talent pipelines (recruiters, HR), a larger percentage of candidates (60%) come from social networks and other non-traditional routes (hackathons, open innovation challenges, freelance contract projects). These other pathways often give candidates a chance to show what they can do first, then present qualifications if necessary.

Employers are increasingly evaluating candidates without traditional degrees. These candidates will have assembled a “skills narrative” that includes online course certificates, uncertified private programs, portfolios of project work, freelance work and other un-accredited qualifications.

In the short term, this could increase the burden on employers to evaluate and validate skills – particularly in areas like IT, where some of the best candidates are coming through these new programs. The upside is that these candidates know they have to prove themselves. Agile employers can work with this by using paid internships, temp-to-hire, and probationary periods with contingent compensation to evaluate the candidates in action.

Major professional service firms have responded to these trends by changing recruitment strategies to emphasize applied skills over credentials. For example, EY have now removed the requirement for a minimum degree classification for graduates, are hiding all details of schools and universities from the recruiters, and choose applicants based on online tests.

In parallel, enterprising Universities are attempting to “fill the credentialing gap” by accrediting prior work experience toward new and existing degree programs. For example, Deakin Digital offers a professional skills testing/certification service ($500 per skill assessed). These certificates can stand alone, or can be combined as recognition of prior learning against up to 2/3rds of a Masters of Professional Practice in IT degree. In theory, this saves a student with qualifying experience both fees and time.

These new offerings are exciting, and have the potential to change the way people gain and demonstrate employable skills. However it will be very important for universities that play in this space to ensure they are not “rubber stamping” the skills credentialing as a loss leader to drive enrolments/revenue. If they do, employers will devalue the degree, which could damage the reputation of the broader academic institution.

What does this mean for employees and jobseekers?

For many roles, the connection between course/degree and specific jobs will become much tighter. For example, a company looking for an app developer will favor candidates with “Front End Developer” courses over a generic Masters in IT. Prospective students who go into the education process with a clear goal and who research the options will be able to have more certainty of employment and optimize their time and cost parameters better.

For mid-career employees, there will be a more regular need to upskill in order to stay relevant, and at several points complete retraining might be necessary. Employers that provide and enable regular upskilling will be highly valued by employees. These smart employers will realize that the benefit of keeping their talent relevant is greater than the cost of high churn and business stagnation due to skills that aren’t keeping pace with the competition.

What does this mean for universities?

Universities are increasingly using their respected positioning to collaborate with large businesses on developing unique education products. These programs offer students direct access to employers of choice, while providing academic integrity and a supportive learning environment. Some examples of these programs include:

  • NEXT, a B/HERT award-winning program that brings together CSIRO, Deloitte, Westpac, IAG and others to help students apply technology innovation to national/global scale problems
  • EY Asian Century Growth Initiative, recognized as an outstanding collaboration by B/HERT, gives students the chance to develop Asian market growth opportunities for real EY clients such as ANZ, BMW and FlightCentre.

Another major source of competitive advantage for universities, but sorely underutilized in Australia, is the alumni network. A well-activated alumni network can create massive long-term value for students. In early years it may lead to employment, in later years it can help provide a trusted source of talent, opportunities for mentoring and professional development, and a potential to create a legacy even if naming rights on a building are out of reach.

Even for students who value the university experience, traditional degree programs will be increasingly seen as out of touch and an ineffective use of early career years, which could be better spent in apprenticeships or skill/business incubators facilitated by more agile providers.

Of course, not all students are employability-focused; there are several disciplines where a traditional university education will continue to be the best choice for some students:

  • Research-intensive or knowledge creation fields, such as theoretical science, maths and arts
  • Cutting-edge disciplines like nano-technology, where the industry is either not yet established or too nascent and universities have the most advanced/only laboratories set up for learning

For those more interested in broadening their mindset over immediate employability, universities will continue to be the place to go; their ecosystems are designed to nurture and support the development of critical thinking and reasoning skills. Universities also can offer a more holistic experience from campus life to extracurricular activities and sports that aren’t usually offered by the private providers.

What does this mean for the Vocational sector?

Not all vocational disciplines are being disrupted – some still have highly regulated education requirements. However the rise of Uber shows that even regulated industries can be disrupted with new technology.

For those vocational areas that are less regulated, such as IT, new private educators rapidly gaining in popularity, even though in many cases they’re substantially more expensive than their public counterparts and in many cases don’t qualify for FEE-HELP. Instead, the providers target demographics with different value drivers. For example, General Assembly’s immersive web design course is $11,500 – nearly 3x the price of a 2 year diploma in software development from TAFE. But General Assembly’s customers aren’t price shopping. Whether they value the brand, the instructors or the compressed timeframe (2-3 months full time), they are willing to accept the price difference or the lack of fee assistance.

If this trend continues, the stronger traditional vocational providers may be those that can collaborate with emerging private providers to achieve agility in keeping courses relevant, as well as outsourcing aspects that can be better/more cost effectively serviced by those

So what’s the future going to look like?

Based on data gathered over the last decade of working with employers and educational institutions, we observe the following trends:

  • Degrees, certifications and grades will continue to matter less and less to employers
  • Portfolios that demonstrate relevant skills, and networks that validate/support those skills will become more important
  • Employers, particularly SMEs, will increase collaboration with private providers offering project-based learning as a way to evaluate talent.
  • Private providers will become particularly important for mid-career transitions, upskilling and re-training.
  • The growth in “premium” private providers targeting niche markets like Web/Mobile will increase substantially.
  • If state/federal government gets the policy mix right, there could be a decline in “generic” private vocational providers and a re-focusing of the public institutions on mainstream trades, retraining and regional/low SES support.

For proactive and flexible students and employers, the future is bright. There are an increasing number of great ways to develop skills and demonstrate capability. Employers will be able to match skills to jobs at a more granular level. Since these skills may not be relevant for very long, there will be more retraining and regular upskilling. As more people actively participate in this “lifelong learning”, higher education institutions, public and private will respond with new offerings to fit the changing needs.


What do you think about the future of tertiary education?
Have your say on twitter via the B/HERT page @BHERT1 using the hashtag #UNIfied

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