Feb 19, 2018

Recalibrating an Industry > It’s About the Ecosystem, Stupid


What do luxury retailers and brands know that perhaps private schools do not yet understand?  I think they know with relative certainty that a high price/low volume enterprise is very difficult to sustain in challenging market conditions.  Think of many luxury brands of considerable retail expense, such as German import cars (Mercedes, Audi, BMW) or Swiss watches (Rolex, Tag), and you will find that they have had to diversify their offerings into an ecosystem of different price points in order to build a long term financial model.  Even Apple understands the value of getting people onto their ecosystem with a “gateway drug”, such as the iPod or iPhone, in order to build a system of consumers.

It turns out that colleges and universities have been doing this for over 20 years.  When the market for full pay undergraduate, residential consumers dwindled in the 1990’s as Baby Boomers had fewer college age children, colleges went after parents with online learning, degree completion programs, MBA’s, and graduate degrees.  Universities built a strong ecosystems of schools and colleges with a variety of delivery models and access points that would enable them to weather the uncertain luxury retail consumer storm.

Independent and private schools are learning the hard way that, for most of them – the relatively underfunded and low endowed schools – they cannot sustain themselves on high price, high selectivity, and low volume models.  They will have to diversify their offerings in the future in order to sustain themselves.  They are going to have to remove the barriers to access and leverage their brands in order to build sustainability into their financial model.  With the innovative learning approaches taking place throughout education including lower entry price points and different delivery models, private schools are going to have to adjust to the changing times.  And, if the industry and their schools are strategic, they will use this opportunity to remove barriers and address access, diversity, and inclusion efforts in a financially responsible way.  There are so many opportunities on the horizon to build a strong ecosystem, serve a variety of different type of students, diversity our audiences, and enlarge the footprint of our industry.  

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