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
Contact Information

Stevens Strategy
Ph. 603-863-4704
Email: Info@StevensStrategy.com
 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.
 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
 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
 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
 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
 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?
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
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!
 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.

 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.
 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.
 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.
 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.
 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.
 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.
 Management Practices
Delegation of Authority
 Assign tasks coherently

 Put the assignment in writing

 Measure performance

 Insist on timely progress reports

 Enforce accountability
 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
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.