Joe Gottlieb: (00:02)

Welcome to transformed a Higher Digital podcast focused on the new whys, the new whats and the new hows in higher ed. In each episode, you will experience hosts and guests pulling for the resurgence of higher ed while identifying and discussing the best practices needed to accomplish that resurgence culture, strategy and tactics planning, and execution people, process and technology. It’s all on the menu because that’s, what’s required to truly transform. 

 

Joe Gottlieb: (00:35)

Hello and welcome to transformed. My name is Joe Gottlieb, president of Higher Digital. And today I am joined once again by Wayne Bovier Co-Founder and CEO of Higher Digital Wayne. Welcome back to transformed. 

 

Wayne Bovier: (00:54)

Thanks, Joe. It’s great to be with you today. What do you want to talk about? 

 

Joe Gottlieb: (00:58)

Well, there’s some big news to discuss Wayne 2U is acquiring edX, but that’s already been widely reported. In fact, that happened a couple of weeks ago. I want to talk to you about what it really means for the future of higher ed, a topic that of course is near and dear to both of our hearts. 

 

Wayne Bovier: (01:13)

Yeah, that sounds good. I mean, that announcement that happened a couple of weeks ago certainly shook up the global higher education industry. So it’s a big one with lots of different aspects to it. So where do you want to start?

 

Joe Gottlieb: (01:28)

First? I want to go over some basic fundamentals. We’ll talk a little bit about what edX is and then some basics in the deal, which I think has some interesting implications for what happens next. And then we’ll get onto the good stuff, you know, riffing on what this means for the industry and how in particular higher ed institutions should be thinking about this development and how it might affect their strategies for their futures. So, yeah, so edX you know, it ultimately reached a point and I think it’s, you at a point now as this transition, the transaction is happening where they have 160 partner institutions where higher ed institutions, many of them partnering with edX to put their courses online via this platform reaching more than 39 million learners. And they had exceeded 110 million course enrollments. 

 

Joe Gottlieb: (02:19)

Now we know, the debate on, on MOOCs massive open online courses was that they were a big splash, a lot of excitement, a lot of interest in terms of where this might go feeling very disruptive. There was a lot of criticism that there was a lot of abandonment of courses, right? So students would, would maybe start a course, but then never finish. And that was probably to be expected. And so I think the whole industry took a bit of a black eye or, or it was easy to criticize and even dismiss this development based upon that tendency. But as it played out, right, they were still reaching a ton of people. And, and what I know we’re going to be talking about is they were really forging ahead into a new unbundled education market, which I think is very, very distinct and important for how the rest of the higher ed market continues to perform. 

 

Joe Gottlieb: (03:19)

The transaction was really driven by as has been reported changes in the online learning market, mostly from COVID right, where with the global pandemic happening, we saw a lot of remote work happening. We saw a lot of remote learning happening, and you saw a lot of notoriety and, and his ability accumulate amongst the ed tech firms, particularly publicly traded ed tech firms that wound up getting huge injections of capital to make acquisitions, to build out the, the ed tech play. And obviously, yeah, a big part of that is, is online education. But it was increasingly challenging in this case for a nonprofit to keep pace. So when, when edX proclaims the primary driver here was the amount of investment going in to these platforms and the broad catalog of courses that need to be delivered to have critical mass. 

 

Joe Gottlieb: (04:20)

They were finding it challenging as a nonprofit to keep pace with all this investment. So that’s what triggered the deal, according to those closest to it. So a little bit on the structure, right? The structure of the deal is such that you get, you have some key edX assets, the courses that were already on the platform as packaged and merchandised by edX, the partnerships with the sources of those courses, many of them higher ed institutions, the customers, i.e. Frankly, the consumers that had accounts have accounts on edX and may or may not be taking courses at any one time, but that large customer base that we mentioned something like 110 million enrollments, right, or courses, reorganized as a public benefit if the company under 2U, so 2U gets these assets, but they’re going to park them in what is known as a public benefit company within their organization. 

 

Joe Gottlieb: (05:19)

So that yes, they’ll continue to compete with typical you know, for profit and unfettered structure in the bulk of their business. But the edX offering will be in this public benefit company. And what a public benefit company basically is, is it’s a law that exists in most states and allows benefit companies to have some legal protections that require them to commit to the public good. So they have to keep advancing the public good in this case, more access to education, both free and very, very inexpensive education, right? Lowered barriers. So that’s being viewed here as a defensible public good that warrants the benefits of a public benefit company. And that’s the structure that is being implemented here. And of course, for a commercial company that owns a public benefit company, they get to derive a halo effect from doing this public good, and they keep the structure clean enough. So that there’s some separation. Some key examples of benefit companies, just so people can compare like Patagonia is one Ben and Jerry’s is another, and MIT’s own innovation fund, The Engine, is also a benefit company. So some things to keep in mind there. Meanwhile, 

 

Wayne Bovier: (06:38)

My previous company, I don’t know if you know, this L’Oreal is public benefit. Awesome. Yeah. When I was there, they went through that process. So yeah, you’re covering a lot of really good ground here. And I think, you know, as we talk about the structure and kind of what’s happening, and I’ll let you can kind of continue yours essentially, you know looking at it through the lens of the transaction right through 2U and MIT and Harvard who were the main, you know, owners of edX, but I think both sides won, I think it, I think it made a whole lot of sense. And I can kind of explain a little bit why, but ultimately, what does this mean for the industry? What does this mean for, you know, an institution, community college, a private liberal arts, what does this mean? You know, how do they interpret this? And I don’t think we have all the answers, but I think as part of what we’re trying to explore today. 

 

Joe Gottlieb: (07:40)

Absolutely. So, you know, I think there are some immediate things to think about that we’ve happened talking about, but that I think take on an even more advanced form here as those structures are emerging in the industry as evidenced by this development that I think can help institutions better think about their options and what they might be up against increasingly with these developments. But just to close out then. So meanwhile, the other good thing that’s happening here, I totally agree with you both companies one, because edX gets a huge you know, uh, 2U gets this great new aspect of their business that allows them to participate more broadly in this unbundled education market. And as well as in their efforts to serve now through multiple packaging angles, they get to help serve their partner institutions, right with their platform. 

 

Joe Gottlieb: (08:39)

And then meanwhile, the open source platform that this stuff is running on the open edX platform will continue to be an open source project that the nonprofit org at MIT and Harvard will continue to run. So that’s a great outcome here as well, because what happens is, so now the edX public benefit company under 2U, that has all of these customers and courses in critical mass established they’ll, for the foreseeable future, continue to run on the open ed ex platform. But that platform will now continue to be, is really now actually more, more separated from a specific endeavor in industry, right, to now appeal to other players that might want to utilize it. And of course in the end, it will be an open choice for, 2U as to whether they stay on that platform or not. They’ll have that choice over time. 

 

Joe Gottlieb: (09:37)

Uh, but I imagine migrating would be, be difficult in the short term. So, um, there’s also a great injection of, you know, the, the sale price of $800 million allows this nonprofit org at MIT and Harvard to get a huge cash infusion to now drive what they want to do going forward. And what they’ve identified is they really want to harness technology to continue to advance how education can be more accessible. And in particular, they’ve mentioned using artificial intelligence to adapt education delivery, to learning styles. There’s been a lot of talk about learning styles, right? Everyone learns a little bit differently, well, being able to sense that, or know that via profile or both, and being able to adapt in real time via artificial intelligence, really, really interesting area that they’re going to look at, uh, which could be a great development and advancement in the future of education. 

 

Wayne Bovier: (10:31)

Yeah. For those that are listening that are, you know, that come from smaller, lesser known institutions than MIT and Harvard, I can imagine what they’re thinking, right? The rich getting, getting richer, in many ways, right. Because what is interesting when you, the entire spectrum of higher education, the institutions, right? Again, going on brand recognition, you know, all that history, MIT and Harvard, aren’t going away. Wherever 2U goes with this, uh, they’re not going to go away, you know, the other, the other piece to this and bringing this back to 2U, right. If you look at this again through the lens of marketing, right. Customer attain and the customer, costs, to obtain these, these new, you know, they essentially paid $800 million for 39 million students. 

 

Wayne Bovier: (11:33)

And what the technology and capability that 2U gains in addition to the 39 million learners is they really have lifelong learning capabilities, you know, from the smallest I call it kind of the great unbundling that’s happening in the industry. Right. And I can’t help, but my head always goes back to, you know, you go through your traditional courses, like, you know, and it’s, it’ll be interesting to see how long this lingers, but, you think about you’ve T you think a couple of courses, you know, uh, whether it’s right out of high school, or later on in life, you take a couple of courses you take, you know, for my community college, you got those credits, there’s a shelf life with those credits, right. For most, right. In order to use those credits to transfer into another institution or to continue to build what you got, you have to be current within a couple of years of that institution. 

 

Wayne Bovier: (12:33)

What ends up becoming interesting again, to this concept, which the industry has talked about for quite a long time is lifelong learning. You know, most institutions have struggled with engaging alumni, right beyond just donors and asking for money, you know, how do we engage with them in a more meaningful way? You know, how do we bring them back, right? And they’re still struggling with this. There’s lots of different ideas that are out there, but the concept of lifelong learning is an obvious one where an institution can provide those capabilities. So for 2U looking again through the lens of this deal, they’ve gained quite a lot and, you know, $800 million certainly is a lot of money, but when you understand the economics of client acquisition or customer acquisition through online means it’s actually ends up being a relatively affordable number. When you, when you look at it through those calculations. 

 

Joe Gottlieb: (13:29)

I mean, by my math, do I have this right? That’s like 20 bucks a customer, right. 800 million divided by 39 million. Yeah. That’s cheap. 

 

Wayne Bovier: (13:43)

That, that is a a hundred impression, Google ad 

 

Joe Gottlieb: (13:49)

Look at it. Right. So let’s break it down in terms of the percentage of, um, let’s say, a course I know Coursera just to bring Coursera into the mix here, right? If you look at Coursera is, um, all you can eat or, or lots, plenty to eat for one price, um, offering there, there that’s something like 150 bucks a year, right? And so if you take 20 bucks, $20 customer acquisition, um, to have what could be on average, $125 per year, uh, revenue stream, if they buy into that package, that’s really, really good. Now we can do some ratios here to see what conversion rates would be, but, but, but to your point, great, great call in terms of customer acquisition. I want to come back to what you were saying about lifelong learning though, and just, I love this idea of a longer shelf life for courses taken. 

 

Joe Gottlieb: (14:45)

And that is what a, um, OpenMarket for education. I unbundled education on an open market, such as these open markets and of course, digital credentials, right? That are, uh, owned by the student for their lifelong journey, their lifelong learning journey. When you start to pair those concepts together, now your concept of a much longer shelf life, perhaps a, an infinite, or at least for this lifetime shelf, life of that course taken is possible with one little twist, which actually makes it even more interesting, I think. And that is as we move towards, uh, education for the purposes of actual learning versus taking course and passing tests, but in fact demonstrating skill. So, right, let’s say you take a course and you get distracted and you come back two years later and you want to take course three after taking courses one and two, let’s say for sake of argument, course, two is a prerequisite, for course three, and whatever field of study you’re looking at, right? 

 

Joe Gottlieb: (15:55)

You could, it could be anything. Um, well, let’s give that credit for courses one and two. Let’s let that shelf life be infinite. As long as that person can test out again, when they start taking course three. So now, so you can, well, imagine that becomes this, this train, this train of, of, uh, education experiences that is either intact because it’s been timely enough, or because someone can test out or maybe take a refresher portion to test out, they get to continue back along the track. This just becomes so much more, an efficient and effective mechanism for educating the planet. And instead of being constrained by the models of old, it is innovating to figure out what works, what educates, right. I, I 

 

Wayne Bovier: (16:44)

Think, look, I think that’s a great example. I would also add another example on this. It’s like, and I think you and I have talked about this previously, you know, think about, you know, your average 17, 18 year old who’s co you know, who’s, who’s essentially GRA you know, graduating, uh, high school. Right. And, uh, or they don’t graduate, or they really struggle there. You know, they, you know, they have there’s, you know, we all have that. We don’t have, most of us don’t have things figured out when we’re 25, let alone 17. Right. So if you are on the right path and things, don’t line up well for you. And then the old model, which is really in many ways, the current model that’s being disrupted right now, you there’s, I would, I, you know, I would venture to guess 30% of high school graduates that don’t go to college, have a desire, have certainly many more have the capability, but the intimidation, right. 

 

Wayne Bovier: (17:41)

That you, like, I got to commit, and I’ve got to commit four years at the fastest to get a bachelor’s degree. Or I got to go to community college. And a lot of times it’s not convenient to go to community college. I gotta get a job, you know, like, and so what this great unbundling does and what ed ex and, and the, to you, the lifelong learning, it makes these courses approachable. And with your point as longer shelf life that I can ultimately, I think for a lot of potential students and learners that are out there regardless of age, it becomes less intimidating. And over time you can build more and more confidence, especially if you’re approaching it as a is like pass fail versus, you know, we’re gonna, w we’re we’re learning, and I’m going to keep taking the test until I master the subject. And then I can move on, which is really where a lot of these technologies are really supporting. It’s making sure that you master the subject, not like master it in this timeframe that we tell you to, but you continue to be, you know, you know, uh, diligent and learning and taking the tests and studying and so on and so forth. So, yeah. 

 

Joe Gottlieb: (18:47)

Oh, it’s, it’s, um, it’s re it’s really exciting. I, I, I think you mentioned intimidation, and so there’s intimidation in terms of commitment that I think you alluded to, there’s also intimidation in terms of judgment, right? When you, when you go into a classroom and you’re trying to be in a class, and you’re, you’re intimidated by whether you’re up for this learning, um, that’s a fearful situation, right. And so, and increasingly with courses being more interactive and things like that, right. You’re know you’re going to be exposed. And the, the, the standard environment doesn’t always nurture, uh, through and transcend that intimidation factor, which is a different one than you, the new reference, but net, net it’s real. And yet this other avenue through the process presents an alternative for those that either need to convenience and, or feel the intimidation and want to be able to get started in a, in a safer environment. 

 

Wayne Bovier: (19:44)

Yeah. That, that, that, yeah, that, that’s exactly right. And I, you know, I want to go back to something you said at the beginning, cause I think it’s, it’s something that’s just fascinating and I’m always fascinated in psychology and organizational psychology and all that. And, you know, for those of us that have been in higher education for, for awhile now, um, you know, this, the MOOCs, right? The massive open online courses when they first hit the market, the for, for, I would argue if solid two years, the market, I would classify as freaked out, freaked out, oh my God, the sky is falling. What do we do? You know? And, uh, and ultimately it got just kinda disappeared. And I think it, because it’s the, what I would, you know, th the, the business geek in me right. Is, you know, the innovator’s dilemma for those that don’t know that famous Clayton Christian book, um, talks about this natural dynamic that happens when you’re an entrenched incumbent and you underestimate these early entrance. 

 

Wayne Bovier: (20:45)

Right. And so MOOCs when they first hit were early entrance and boy, you know, for lots of reasons, they, they struggled. And so the hype and the hysteria that’s that, uh, circled this, um, really fizzled really quickly, but you fast forward to today, and you clearly the news about to you buying, uh, buying index. Um, well, for those of us that are geeks that pay attention to this stuff, um, we saw this as a big deal, but the industry seems to be relatively muted as a result. Um, and I think that there’s, you know, yes, everyone sees it, but I’m not seeing evidence of the earthquake when you, that when MOOCs hit the market back, you know, 10, 15 years ago that happened, um, compared, uh, today it seems a lot more muted and I’m not, I’m not sure why that is. It’s just, you know, but, but, but I also think the threat now compared to 15 years ago is even, is way more real, like more threatening than, than before. So I don’t know. What are your thoughts? I think there’s some 

 

Joe Gottlieb: (21:54)

Irony in there, right? A lot of things going on it, you know, from my point of view, there was great relief in the higher ed space that MOOCs stumbled because in its original form, it was very disruptive. It was like, remember what happened to software for awhile? And it, when it, when software was coping with the onslaught of open source and everything was going to be free, and everyone was just going to plug into this big development machine and it was all just going to work. And, uh, you know, w what about all that industry value that occurred in the software industry? Well, guess what, that drove it for software companies to deliver more value. It forced software companies to deliver hardware and software in the form of SAS services, then cloud layering happened. So some amazing innovations occurred after a very disruptive initial event that then shook out and allowed for new layers of value to, to settle. 

 

Joe Gottlieb: (22:51)

Same thing is going to happen here, I believe. And I think what we’ve seen initially is some hysteria about the disruption, some relief that it wasn’t an overnight killer. I now I think we have some denial about the, the slow and steady progress being made in this form. So let’s put ourselves right there in any given institution. And let’s think about this from that standpoint, because neither of us want to be, um, none of us want to over-hype and be alarmist about this, nor do we want to be dismissive. And I think that is the even keel sort of posture one needs to take, because institutions already had some enrollment challenges and some value, you know, value, construct challenges, uh, and sustainability challenges in the model. They had something that had the very, very good run that the, the, the, the, the contraption was not broken. 

 

Joe Gottlieb: (23:51)

So you didn’t fix it. Right. But there were some things nibbling, there’s some whispers, right? The amount of debt student debt students were walking away with, um, the pricing game that was happening in this very, very mature market for traditional education. Um, the, some of the, you know, some of the intermittent quality issues in education delivery were starting to crop up and half, half cropped up over time. And so people were starting to wonder is education in its traditional form, a great value anymore. Um, so we see this new market, this, this unbundled market being particularly well suited to lifelong learners and in particular learners in the workforce that need to add skills, re-skill, up-skill switch jobs, et cetera. Right. For sure. It’s that for sure, a big part of that market is a group of students that has to work for a living and can’t afford to stop, you know, earning money to, to, to, to go to school. And a lot, we know a lot of, um, disadvantaged people are, are, are in that situation. And therefore education ends up being, um, for the privileged. It has been traditionally, right? There’s a lot of that. 

 

Wayne Bovier: (25:09)

And so there’s this, well, 

 

Joe Gottlieb: (25:12)

Sorry to be a little long-winded. So, so the, so the, the, the point is, is there’s this massive market that’s starting to open up for lifelong learning and in particular, non traditional age students, and maybe disadvantaged students that need, that need an alternative avenue to, to obtain education than taking two or four years out. We also have the digital trays we’ve talked about, which are manufacturing straight to, um, very strong incomes in coding in particular, but also in technology administration and support staff. And there’s a variety of roles here that are happening in the digital trades. And for someone who can’t take the liberties of the luxury of, of even a two year, uh, diversified education, they may go straight to the digital trades. Those are growth markets, and they’re going to come at some expense of the traditional market, because some people that were, that were there were confined to the traditional market of a two or four year degree education. 

 

Joe Gottlieb: (26:06)

Um, we’re there because nothing else was available and they found a way to make it work. Some portion of that market is going to defect to these other markets. And these other markets are going to have a whole different part of the demographic and age population, age range population, to be a potential for growth for an institution. They’re going to have to make really thoughtful choices about where they put their strategic energy. And they’re going to need to compete a little harder in the traditional market, because it’s going to shrink a little bit. So that’s one thing they have to have on their minds, and they may want to participate in these big growth markets, but they only to do so with some balance of investment and strategic. 

 

Wayne Bovier: (26:47)

Yep. Yeah. I mean, yeah, it’s a lot there. And I think, you know, I think you said it well, you know, it’s simply put the, the, the there’s a supply and demand is challenge, right. Is that the demand and in this circumstance demand from businesses on more, you know, the better train, you know, higher quality, you know, not higher quality, higher, uh, Mo more education, right. More education is needed, more training is needed. And when you do work for us, you know, you read a bunch of workforce development, um, estimates and things like that, it’s going to explode, right. A more automation is required, more technology recording, higher skills. And so, you know, the current infrastructure that is in place is this industrial age. Right. And so, you know, the, the need in society, we’ve talked a lot about this as, you know, the, the need, you know, on the, you know, on the supply side, right. 

 

Wayne Bovier: (27:45)

To be able to get an education, to get it affordable, you know, regardless of where I live so on and so forth is, is, is an imperative. And so, you know, I think you’re seeing these, you know, these really big moves by two U and acquiring FedEx as a reaction to it as a way to fill the, the, the supply. Um, and when, when you put yourself in the shoes of institutional leaders, right. And to your point, um, you know, regardless of size, even like 500, you know, student institution, you know, they, they, they run all their own software. They have their own enrollment, they have their own financial aid. Yeah. They had their own, you know, student support, or they have their own LMS, they have their own student information system, they run it all. And, you know, you got to step back and start to think, Hmm, what do we really want to be good at? 

 

Wayne Bovier: (28:43)

And then, and then the other thought is in, in, in for many institutions, the top one, um, is really adapting a growth mindset, right. Is how do we innovate? How do we, you know, if you’re a traditional, you know, four year institution and you’ve offered bachelor’s degree for the last 200 years, um, yeah, it’s hard to start to think about how do we offer up certificate courses? How do we offer up badge courses? And the easy reaction is, oh, I’m just going to outsource that to, to you, if you don’t go through. And I’ll say, I kind of say it in my own words, if you don’t as an institution, my practical advice is if you don’t know really what your strategic advantages, and you’re making outsource decisions, you’re really playing with fire. Um, and you may really regret because some of these, some of these, uh, the terms are, uh, onerous, uh, they’re not, uh, they’re not revenue friendly, um, to the institutions. And so, you know, in many cases you could be outsourcing your future, um, uh, to a really what, what I would, I would, you know, for many, I think, uh, we’re classified as competitive. 

 

Joe Gottlieb: (29:57)

Well, yeah, I, we, that is back to the, um, OPM, uh, dilemma, right? Like, so, because that’s what these, that’s the business that these companies are in. Right. And so what we’re seeing here in the case of, to you picking up ed X is their bill. They’re, they’re picking up this amazing top of the funnel. Um, but they’re ultimately also trying to annex large portions of traditional education, business vis-a-vis and OPM. Right. And, and that you’re quite right. We are back to then how might you approach that differently? So, you know, when I was mentioning earlier, you’re going to probably need to compete more aggressively, more effectively in your traditional market and think about what that means. You’re going to, meanwhile, need to be smart about any participation in these growth markets. And, you know, if I take your recommendation, right? So first of all, don’t outsource lightly. 

 

Joe Gottlieb: (30:54)

We, and we’ve did a whole, a whole podcast on this, right? Don’t just, don’t just outsource with a big summary wholesale deal. That’s going to get you in the game. And you’re going to have to deal with that for five years and maybe, you know, in effect more kids, your future away, because those five years a lot can happen to the market evolution and therefore what you might need to do to be a going concern at the end of those five years, to be built for competition in the new era and the new market, you know, you could be ham, you could be totally handcuffed during that period, 

 

Wayne Bovier: (31:26)

For example, and you need to be nimble, right? You gotta, you gotta try some stuff out, right? Like that’s the other dynamic that has to happen is you gotta, you gotta innovate. You gotta, you gotta, you know, try, fail, learn, and try again and keep trying, um, and keep moving. One thing I will add we’ll add real quick is that I do think, you know, I would, I would, I would imagine that to you is, would, would argue saying, you know, we offer up a full, complete suite. You don’t need to outsource it all to us. You can go in and be like, oh, you guys want bootcamps, we have it. You know, you wanna, you want a fast masters program. We got it. Right. Like, I think the, what, you know, and, and to use being really smart, and I understand what they’re doing and I understand the value. 

 

Wayne Bovier: (32:13)

Um, I do think for a lot of institutions is a threat because they have a lot of this footprint, but, but I do think that to use argument is that the industry needs it. Certainly industry needs it. Um, you know, the higher education institutions need it. They don’t have a lot of this. They don’t have this muscle, so you don’t need to outsource at all. But I, that I, that I do think, you know, you’re right about, you know, we covered this in terms of the OPM and outsourcing and that, that strategy, but it just, it really, it really does require a focused mindset about really what we’re good at as an Institute. Yeah. I 

 

Joe Gottlieb: (32:48)

Personally, I like the idea. And with this move to you as a big player, all of a sudden, I like the idea of dabbling in this part of the market, the, the sort of the MOOCs prime market, let’s call it a sort of what derived from MOOCs. Um, I’d rather dabble in that and learn than outsourced in an OPM for a long period of time, because if I can dabble and learn, I might see, Ooh, you know what? Here’s a place, a place where I can start to invest in this and begin to develop some expertise and begin to participate in that market on my terms. Right. And it might take a little bit longer to get there, but it will be thoughtful and I’ll be, I’ll have more options to adapt to what I experience. You know, meanwhile, you know, you, you touched on a topic there, which made me think, you know, think about what you’re good at, right? When, when, when competition, when, when the market, when the industry is evolving and, and competition’s getting a little tougher, you really have to figure out what you’re 

 

Wayne Bovier: (33:48)

Good at. And customizing 

 

Joe Gottlieb: (33:52)

Software is not something anyone should be good at. So I’m going to bring it back to one of our favorite anti topics. And that is the customization of software, right? Like, are you really adding value by imposing your back office processes on SAS software that would rather just give you a relatively vanilla process that you can configure for your people to use, right. To get jobs X, Y, and Z done, you should be reserving your core, strategic innovation and, and, and capacity to build cool stuff, at least in teaching and learning, right? Like, like, 

 

Wayne Bovier: (34:29)

Yeah. And I think, look, I think so, let me just jump in and give two specific examples where the dynamic in most institutions are not good at dealing with. So if you’re head of enrollment or your head of financial aid, right, you essentially own the purse strings in many ways to, to the institution. And if you say, I got to have this little capability because it’s going to set us apart, right. That is customized. That ultimately has a long tail, a huge technical debt, which is a whole other subject, but you know, it is hard. There’s no firewalls for that. There’s nobody that says, I’m going to tell the head of enrollment who says, I’m not going to make my numbers if I don’t add this feature in there. Right? Like, so you have this, uh, this essentially a culture that doesn’t really, um, uh, have a process, have the capabilities that actually really vet this. 

 

Wayne Bovier: (35:29)

I mean, I would guess that, you know, you know, the mechanisms of enrollment reaching out all that kind of stuff is all the same. I think, I think the message, what you want to say is unique. I think financial aid is a decision-making process. That is absolutely not unique. Um, now I’m sure that in those, in the audience that have come from enrollment and financial aid are really upset with you right now. But the reality is when you, when you study enough higher education institutions, you study those processes. They’re not unique. They’re really not unique. And they’re not really that value add. There, there 

 

Joe Gottlieb: (36:05)

Are parallels here, look like, you know, think of Salesforce and now marketing automation, um, Salesforce as a, you know, CRM, big prevalent player, right? Obviously the point is, is, do you ever hear about someone bragging about how unique their Salesforce implementation is? 

 

Wayne Bovier: (36:23)

No, that’s it. I was just drinking. He spit that out. It comes, 

 

Joe Gottlieb: (36:29)

It comes down to pricing and packaging and execution, right? Or you use the software to be the workhorse of your sales life cycle. Sure. You sit your sales life cycle and you pay attention when you forecast to the way you’ve turned in your selling model, the different levels, but that’s configuration, that’s not customization marketing automation, same darn thing. That technology is getting very, very sophisticated, but it’s, it’s all relatively standard. It’s what content you pour into, what messaging you pour into it, the strategy for marketing. And so that becomes the place you’d differentiate. You don’t differentiate on back office processes. That’s a hundred percent, right. I think you’ve touched on an important point way in which is, you know, politically, they might have some control, some power, some purse strings to do what they want, even if that means, for example, protecting people or dealing with shorthanded, you know, groups, right. 

 

Joe Gottlieb: (37:18)

And, and budget constraints in terms of, you know, look, it’s going to be hard for me to take my small team and make that adaptation. It might be easier for me to not change my process. It’s just short-sighted. So it, it happens a lot and we understand why it happens, but we want to help people zoom out and look at the bigger picture. Right. And think about, okay, strategically, where should we be really investing our finite energy and personnel capacity and, and innovation rudder control. Right? So it’s gotta be more on the content versus the platform. In many of these cases, it’s in the way that you go compete on the merits, your programs. I alluded to teaching and learning earlier, just because, okay. That’s the one area where I could be more easily convinced that someone was going to do something radical because they were going to try to transform the way they constructed a lab environment. 

 

Joe Gottlieb: (38:07)

But I want to tell you a story. I was talking to someone yesterday, a relatively small college, uh, focused on, uh, nursing trade. Right. Okay. And they were, they were sharing the story about what happened during COVID for lab, the lab work. So it used to be that you worked on mannequins and the issue with the mannequins and the way the lab sections were set up is that they were five students sharing a mannequin when COVID happened. And they had to actually invest in some pretty technology to do virtual, um, uh, lab work on a virtual mannequin. Yep. Something amazing happened. The, the, the outcomes were better. The, the students actually wound up leaving that section of the, of the training of the education with better outcomes. And here’s why, when you have a physical mannequin in a physical lab, you have to share, you get one shot when you have it virtual, everyone can repeat the thing until they get it. 

 

Joe Gottlieb: (39:03)

Right. Boom. And I’m like, I’m like, I hear the story. I’m like, okay, there is an example right there where it would have been easy to presume. Now you got to you, you got to compare, okay. Mannequin compared to virtual mannequin. Sure. There’s some differences there. And with virtual technology, it’ll, it’ll probably have to evolve and maybe in some ways it couldn’t be superior, right. Be even more complex and what can be built into the mannequin, but that’s certainly going to be different if you’re not dealing with mannequins, you’re dealing with people. So interpersonal type things. Right. But even that is, is, is made, is able to be made virtual. The point is this, this innovation is going to keep happening. And we can’t, we, we got to develop a healthy openness to a range of methods where we might innovate using hybrid were available. But virtual becomes a really interesting opportunity to serve more students with potentially better education at lower cost. And we know that’s our triple mantra. 

 

Wayne Bovier: (40:06)

Right. That’s exactly. That’s exactly right. And, and ultimately bringing this back to, you know, ad X and, and to you, you know, uh, you know, the, yes, there a lot of money that was, that was traded, but the foundation, both of those companies, the vision was, was, uh, was very positive. It was beneficial, was looking at how do we lower the costs and provide more access because they were also seeing the same thing we are is that there’s, there’s a supply and demand imbalance. And, um, and how do you fix it? Right. And so, you know, this now gets back to the institutions is like, you know, it’s not all bad. It’s not all good. It’s not black and white, everything. There’s a gray. And, you know, in order to make the right decisions for you as an institution about how do you engage with a, with a FedEx at two you Coursera and others, you know, how do you do that? 

 

Wayne Bovier: (41:03)

You really need to look inward and really understand what you’re good at. I want to go back real quick to the financial aid example. Um, you know, to even just double down on your point about the SA the Salesforce, right? It’s if the innovation of efficiency actually produces better results, not throwing more people here. And so what I mean by that is where we have actually a client institution we’re familiar with that actually, uh, increased, uh, uh, acceptance rates, because they were able to make a decision on financial aid faster, and they use technology to streamline what it was a semi-automatic process and to almost a fully automatic process, um, that ultimately gave the prospect, um, their award way sooner than they traditionally have, and I’m talking days. Right. And so, you know, those are the types of things that institutions can control. They can actually do. They have the technology. What they have to do is they have to face this human problem and understand that ultimately automation is a good thing that, um, that you know, that the staff that they have and so on, there’s a lot of value. It’s just where do you focus them? Because a lot of stuff that they’re doing today is overly manual and inefficient and expensive. Well, 

 

Joe Gottlieb: (42:29)

And just to add a little bit to your example, which I love, so that institution, um, they got to that level of automation for financial aid, because I utilized a capability that was in the software rather than customized it, right. Let’s say they got there via customization. Okay. We want to innovate. We think this will be a competitive advantage. We want to get financial aid turn faster than anyone else we know, and we’re going to customize some software to do that. Well, that would be short-lived because if they customize the software, next thing you know, if it’s your own software, you don’t know how to evolve it, to add new features. If it’s SAS more, typically, you’re an, you’ve now customized and you can’t upgrade because you’re on a version that’s been customized for you and you alone. And if you upgrade, it’s all going to break. 

 

Joe Gottlieb: (43:19)

The point is, and we actually have data that proves this, um, centralized, uh, coordination of it. And the avoidance of customized software actually correlates with more process automation. And so being able to deliver this thing faster in this case, the financial aid decision would be way more sustainable if it was achieved without customization was actually just, um, enjoyed as part of the roadmap of their software supplier for this particular aspect of the institution. But if I bring it all the way back again, let’s, let’s bring this puppy to a close. Um, so what’s happening here is okay to you gets at, um, ed X. We now have a really interesting, um, pair of players, and there are other players, you know, in this unbundle education and OPM market. I think that’s good for competition. I think that’s good for value advancement. And ultimately that I think that will be generally good for the students. 

 

Joe Gottlieb: (44:17)

I think institutions need to not panic that there’s, there’s lots of time in this ball game, right? They don’t need to panic. They just have to be thoughtful about what’s developing there and the strategic choices they’re gonna make to learn more about what’s happening. And then online and a non-traditional age market, they may already be participating. They need to keep thinking about how they want to evolve that participation while also advancing their own. Let’s say, in the more traditional market, their ability to compete there, ideally with good practices that allow them to put more of their capacity and energy and money on the innovation, in their teaching and learning and other aspects of strategic delivery. Right. I think, you know, what we’re getting here is a, is a, the big funnel with, with ed at the NX platform and the OPNET X platform, more democratization of education. 

 

Joe Gottlieb: (45:09)

That’s a good thing, right? That’s going to continue to move along and we love that. It’s good for, it’s good for the entire industry, good for the planet. Um, and so with that, like I think we come back to, it’s a good place, a good space to keep your eyes on, um, be thinking about what it means for you in your own context and how you’re going to compete, uh, in your markets and which markets are those, uh, will they be changing over time and, uh, and, and continue to course correct as you learn more. So, 

 

Wayne Bovier: (45:38)

Yeah, I think you summarized that perfectly. I would just one, one small caveat, definitely don’t panic, but you gotta, you gotta, you gotta move forward with it with a serious sense of urgency. Um, and it’s going to be uncomfortable for especially institutions that have been around for centuries, uh, to actually try to do build new muscle. Um, the, the good news on that is that there are, you know, there are a lot of organizations out there that can help. Um, obviously, you know, we’re, we’re one of those, uh, that really focuses on that, on that, but th th the knowledge is out there, um, to help institutions do this 

 

Joe Gottlieb: (46:16)

Good guidance. Don’t panic have urgency, great point to end on Wayne. Thank you so much for joining me today and thanks to our guests for joining us as well, have a great day, and we’ll look forward to hosting you again on the next episode of transformed.