Trusteeship Podcast Episode 45: Digital Transformation

Barbara McCuen Jones:
Welcome to the Trusteeship Podcast from AGB, the Association of Governing Boards of universities and colleges. We cover everything higher education leaders need to know about the challenges facing our nation’s colleges and universities. More important, we provide the facts and insight you need to solve those challenges and to be the storytellers and advocates higher education needs.

Digital transformation in higher education is driven by changing student expectations, technological advances, and the need for flexibility. Institutions need to develop a strategic plan and align technology with their goals. Today we’re talking with AGB senior consultant, Amy Hilbelink, who most recently served as campus president of Pittsburgh Online at South College, and Chris Maloney, associate vice president and associate managing principal of AGB Consulting about the crucial role board members and trustees play in digital transformation.

Chris and Amy, thanks so much for joining us today. I’m looking forward to our conversation. Amy, I’m going to start with a question for you. What is digital transformation and what are the forces driving it?

Amy Hilbelink:
The big question. Digital transformation, I think a lot of folks get overwhelmed by the term. Digital transformation, it just sounds so huge. And I think one of the things we need to do is take a step back and dig into what it really means.

Institutions have been transforming in many ways for many, many years, and they’ve been talking about digital for a long time. Digital’s been around for a long time. I think what we have to take stock of is that things are changing today in our environments. Students and faculty and staff have different expectations today for what an institution provides them. The remote access has changed. Students and faculty and staff are very interested in the remote. And students today are also very interested in flexibility in the approaches. So students take a huge piece of thought into your digital process. And then there’s explosion and technological advances.

So I think you don’t want to be overwhelmed with the term, but instead take a step back and think about what your strategy is. So what are your strategic goals? Do you want to improve retention? Do you want to retain your staff? Do you want to make sure that you have higher enrollments? Once you have your strategic plan, then you think about how technologies are going to help you to achieve those goals. I think institutions and board members really have to understand who their students are today. They’re not necessarily the 18 to 21 year olds. There are still a lot of those around, but the populations are changing. So we have a lot more older students. That’s a demographic that some folks aren’t giving thought to. And these students need to have different opportunity. They need more flexibility. So, much more student support.

And then of course, you have new technologies that are also pushing the envelope a bit from the outside.

So artificial intelligence, right? So a lot of people think of digital transformation as the incorporation of artificial intelligence into your place. That’s not the case. You don’t have to think about it that way. Artificial intelligence has been around for a long time, and it’s not digital transformation. And likewise, digital transformation is not just artificial intelligence. Artificial intelligence is something that schools need to take stock of, be aware of, and create policies around. Not so much just that students use it properly, but we need to be training students on how to use AI because these are the folks that are going to be out there working with all sorts of aspects of AI. So that’s a big push into institutions as well and every sort of workplace. So I think I’d stop right there and see what other questions or, Chris, if you want to add to that.

Chris Moloney:
Amy, you just hit one of the key driving forces, I think, which is changing sort of student behaviors and student [inaudible 00:04:06] and consumer behaviors and their desire to seek flexibility, et cetera. The most overused phrase or term is the broken business model of higher education. We hear that all the time. I keep hearing consistently from board members, from leaders, “We understand what that is,” but there’s still this them-not-us sort of mentality that that broken business model maybe doesn’t apply to us, but it applies to everybody else. It applies to everybody.

The key driving force at the root of everything that’s going on in higher ed right now is that we just have fewer people, fewer students available to funnel in and fill that pipeline of traditional high school grads going into our colleges and universities. When I do a presentation, I’ll usually start with a simple line chart, and it shows the U.S. birth rate from the mid-1950s to now, and projecting out further. The birth rate was 24 for every thousand people in the 19 50s. It’s 12 now. It’s going to drop even low. That’s the core root of the issue. There’s just fewer traditional-age students. And we built colleges and universities and their business models around the steady supply of students over many, many decades. That’s simply not the case anymore.

And as a result of that, you now have heightened competition for a shrinking number of available students. Fundamentally, we just don’t have enough students to supply all of these seats that are available in higher ed. One of the other factors that’s played in here is that we’ve been far too slow to anticipate all of these trends, which were predictable. We knew that the birth rate was going to decline. Regardless of all of that, and the fact that we could have seen and could have been anticipatory, we weren’t, as an industry, and that’s led us into this downward spiral, right? Declining enrollments, declining revenues, tuition discounting that we’re getting behind on our loans, on our debts, in deferred maintenance and it’s just the vicious, vicious cycle, and that’s disrupting public higher ed, independent higher ed. Pretty much everybody is experiencing similar things.

Then layer on technology, okay? I’ll give you one little quick data point here. It doesn’t have anything to do with education, but it just shows what an accelerator the Covid pandemic was in terms of technological adoption. In December of 2019, there were 10 million daily Zoom users. We know that the pandemic arrived somewhere around February, March in a big way. By June of 2020, there were 300 million daily Zoom users, okay? And we know that-

Amy Hilbelink:
I was in lots of those.

Chris Moloney:
Yeah. And we all have, right? So I don’t think we can stress enough for trustees, for board members, for leaders out there what the pandemic did in terms of how far it moved. We skipped a decade probably in terms of people just slowly evolving and adopting. We had to overnight make a huge shift into these technologies. And we realized over a number of years that, “Okay, they’re pretty effective. We can do that.” And then you have to couple what Amy mentioned earlier, we already have this generation of students who we’re very comfortable in that kind of a hybrid learning environment, in a virtual environment.

The last thing I’ll mention here, because I’m going to call back to this later on in the podcast, is this technology adoption curve. So Amy’s familiar with that. I think the big takeaway for trustees, for leaders in higher ed is that if you look at that curve, roughly 50% of folks under that curve will be late or very late to adopting any new technology. And another 34% roughly will be sort of eager to do it, but they’re going to need a lot of data. They’re going to have to see how it solves a problem.

So most of us are going to be risk averse, we’re going to be really slow and extrapolate that to any industry, but especially higher ed. That’s not necessarily a good thing when you look at how fast and how rapidly technology is scaling and how people’s interests and desires are changing. So I’m going to come back to that a little bit later on, but Barb, I want to throw it back to you because I know that we do want to get into a little bit more concrete discussion around roles and responsibilities and how folks can actually drive this drive change in a meaningful way.

Barbara McCuen Jones:
Thanks, Chris, for that. So Amy, I’d like to start with you. Given all this, in what ways can trustees and the board play a role in digital transformation? And what advice do you have to help institutions and boards get started or to make progress?

Amy Hilbelink:
Sure. Right, because it can be overwhelming. I’ll share an anecdote from EDUCAUSE conference that I attended this past fall. What I heard and Chris heard over and over again were a number of CIOs and CTOs who were feeling out of the loop with what was needed on the ground on their campus. So for instance, one institution told the CIO, “We’re going to add 15 new full-time faculty.” But they detect the tech department wasn’t going to get a nickel more, right? So it’s like how is that going to work? There’s a real disjointed effort there between what the IT folks are trying to accomplish and need to accomplish on campus because they really are the soul of the campus, and then the boards who don’t fully communicate with the CIOs and CTOs. So I think that’s one thing that boards and trustees need to really give some serious thought to. How are you going to reach across those lines?

Now, we don’t want the boards to get into operations, absolutely not, but they need to be aware of what the institutional needs are. Likewise with the students, as Chris mentioned, the board and trustee members need to understand who their students are. So they need to be asking, I think, the right questions. The boards and trustees can’t just be focusing on the financials. So subcommittees would be a great way to go. So that committee is talking to the right people or having the CIOs, or the head of IT, whomever that is, come and talk to that subgroup or the board if possible. But at least talk to the subgroup and make the board aware quarterly at least what the needs are of the institution.

The other thing is to take stock of who is on your board, right? Make sure that you’ve got folks on that board, at least one or two, that are familiar enough with what’s going on in the world so that’s beyond the borders of the campus, so that they can help to influence the decision-making and the strategic planning for the institution. That’s where I’d start.

Chris Moloney:
Amy’s exactly right in all those ways. Amy, and I’ll give her a shout-out here, she did a conference presentation at AGB’s National Conference on Trusteeship in Boston just a month or so on this kind of a topic, I think titled the session, “Empowering Trustees to Confidently Navigate Digital Transformation Context” or something similar to that. That’s a great way to summarize sort of AGB’s general focus here, which is we do want to empower trustees to confidently navigate all kinds of different issues and help be great stewards of the mission and great guides and great leaders. And in this context, we especially want to help them confidently navigate the digital revolution, evolution, digital transformation, and change technology adoption, et cetera.

Two things that I want to mention here as resources for folks, just as a quick call out, AGB has a publication called Top Strategic Issues. Business model innovation and digital transformation is one of the top four strategic issues. So when folks get a chance to read that, I highly encourage you to do so. The other resource that I want to call attention to is called Principles of Trusteeship. It’s a foundational resource and it helps reinforce some of the good behaviors, the things you should be doing if you serve on a higher education governing board, if you want to be highly effective as an individual, but as a collective body as well. So if everybody embraces and embodies their principles of trusteeship, you’ll have a really high functioning, really strong strategic support.

One of the principles I want to mention is the principle of thinking strategically. So there’s really three things that go into that principle. One is fundamentally understanding the mission of the institution that you serve, the context within which that institution is operating, and then the stakeholders, the people. So Amy mentioned right off the top, understanding your students and being strategic and sort of understanding what your institution needs to do to deliver high-quality education that meets the needs or anticipates the needs of your students. So again, being strategic, focusing on the future and staying at that high strategic level.

Our interim CEO, Ellen Chaffee, uses the example of a helicopter, right? The board should be up in a helicopter hovering above the ship, not down on the ship. You want them at a high level, having strategic forward-looking conversations, certainly understanding the finances of the institution and the financial health. But even more than that, looking to the future. And as Amy mentioned, asking insightful questions, the right questions so that they can have better, more strategic conversation.

We mentioned that broken record of the business model earlier. Viability is really important. So the board has to ask this question of, “Can we do it on our own?” Maybe you can go two years, three years, four years, five years, but you have to understand, can we exist in this changing environment by ourselves? I think there’s a lot of institutions that are caught up right now in a really tough place where they want to believe they can do it on their own, but objectively from the outside, they probably can’t. You’ve got to ask that question. And you’ve got to understand, if you’re a board member, what makes you confident that you can do it on your own? And then you need to ask the related question, do we have the internal capacity and the capability? Or do we need a partner?

I want to mention two brief surveys here from a company called HolonIQ, and they do lots of projections out into the future. Lots of surveys and data reports on a number of different industries, but education especially. In 2023, they did a survey where they asked higher ed institutions and their leaders, “What’s your top strategic priority?” They found in that survey that only 11% of folks in higher ed who responded were focused on new technologies. That’s 2023. Only 11%. More people in that survey were focused just on operational improvements. So day-to-day, just making little incremental adjustments. And more than a quarter were just focused on their existing market, right? So just the status quo.

That’s really troubling. If you step back, again, if you’re a board member of a higher ed institution, you’ve got to be more future-focused. It’s hard to get out of that because it’s just a day-to-day and you’ve got to survive, and that’s part of the dynamic that’s going on. But at the board level, you have to elevate and you have to look forward to the future more.

In another report, the same company outlined five likely scenarios for education by 2030. So that’s only six years away. Two of those five scenarios were deeply, deeply, deeply centered around how technology is going to evolve and revolutionize education. By 2030, the landscape of higher education is going to be vastly different. If you’re a board member, be a consumer of good data of reports like those and try to tee up as best you can, whether it’s in committees as Amy mentioned, or at the board as a whole, or bring in somebody from the outside to help facilitate those conversations and start having meaningful strategic conversations about the future.

Before you can innovate, you have to understand where you are, right? So you have to understand that context. And you have to understand what’s realistic for your institution. And you have to be fully committed to change, and that’s where you need that tie-in and that collaboration between the board and the leadership. But you need transparency across the campus to help everybody understand where we are and where we need to go in order to be successful.

I mentioned that technology adoption curve earlier. Only 2.5% of folks will be innovators, right? They’ll be at the very front lines and only 13% will be early adopters. Again, translate that to industry, it tells us that generally speaking, we’re all going to be pretty slow. We’re going to be too risk-averse. We’re in an age right now, in my opinion, where being highly risk-averse and being really slow is not a recipe for success. You’re going to get left behind.

And as technologies scale and the way we interact changes more and more, you will see the folks who have been early adopters seize more and more of that “market share” to use that business terminology. They’ll have more and more students because students will say, “Well, I can get a credential or a certificate or a degree from this really great brand institution at a reasonable cost. I don’t have to necessarily even go there. I can have access to great faculty.” And all the other institutions that have been slow where they’ve said, “Oh, I don’t know if we need to make that change, et cetera, et cetera,” they’re going to get left behind, and you don’t want to be in that category.

So Amy, I’ll just throw it back to you. I know I’ve teed up a lot of things, and I’ve mentioned you’ve probably had these experiences, so I want to give you a chance to jump in here.

Amy Hilbelink:
Chris, great points. I mean, it’s a crazy situation out there. There’s no doubt. Things are changing rapidly. I don’t think higher ed is at the right pace. So let’s talk about pace. Higher ed typically moves slower than most other interest rates. I mean, one, students aren’t graduating for four years, six years, whatever. It takes years for a student to get through the program.

One of the nice things about digital is that you have the data and you can get the data that Chris is talking about. I keep harping on who the students are, but that’s where you are. You can think of them as your customers, if you will, to some degree. They are the ones that come in and paid funds and you need to provide them with the product at the end. Students want what students want and how they want it. And they’re the consumers, they’re driving you to make these changes. So they won’t come to your institution if it’s not flexible enough.

If you require the first and second-year students to live on your campus, well, they’ll do that but they may be taking your courses online, right? So you have to understand that dynamic at play. And that students who are working off campus, even the 18 to 21-year-olds, very few of them can go to a four-year institution. It’s really a luxury these days at the cost because of the cost. So many of them will have other jobs and they want this flexibility. And there is no time to waste, I would say.

Change management is the word, right? That’s the point I want to make, is that you have to be ahead of the curve. You have to be talking to the right people. And also I would say, when you ask those questions and push, push on those questions, expect answers. Expect answers from the people that you’re asking them from. Don’t just put a question out there like, “Why don’t we do this?” Let’s get the right answers and really put that into your strategic thinking.

Chris Moloney:
Yeah. Amy, thank you for using the phrase change management, because that’s critical, right? You can read about it, and there’s been lots of smart people that have written about innovation. So innovation’s the key word, but we know very, very few of us and very few enterprises or organizations are going to be innovators. 2.5%, that’s not a lot.

Why do we struggle so much there? Because most of us are sort of more reactionary, right? It’s just natural to start doing what you do, get comfortable with that, and then if things come in, you kind of respond and deal with those. It’s much harder to be strategic and anticipatory. I think it was Kotter that says you have to build urgency for change. So there’s a role for the board to play with the leadership to help build that urgency. But as you said, Amy, you’ve got to translate that throughout the campus. It’s hard in higher ed. You’ve got shared governance.

Amy Hilbelink:
That’s right.

Chris Moloney:
You’ve got faculty, you’ve got staff, you’ve got students. Everybody needs to sort of be on that ship together and understand where we’ve got to go. Otherwise, you will end up in these really difficult processes where you sort of make incremental progress and then you go backwards and then you hit brick walls and those types of things. So I’ll turn it back to you, Barb. I know we want to wrap up here shortly.

Barbara McCuen Jones:
Thanks Chris and Amy, there’s no time to waste. There’s an urgency for change. You both are very clear about that. So Amy, just let me get your final takeaways for our listeners, our board members.

Amy Hilbelink:
So again, I go back to the beginning and say, think about your strategic plan. What is your strategic goals? Now, I will say the term innovation gets thrown around a lot, right? People think, “We’ve got to be innovative. We’ve got to be innovative.” Well, what does that mean to you really? Innovation can be changing your four-year degree to a three-year degree. It can be offering different programs that are unique to your area so that you don’t create one more MBA program online because we’ve got plenty of those. So be innovative in thinking about what your goals are going to be. And also your goals can be very simple. Improving retention, that’s a big one that schools are not looking at. So whatever your goals are, however you want to think about innovation in changing, look at ed tech or academic technologies and see how that can help you achieve your goals. Don’t just throw money at technology for that sake. Use the technology to get you to a better place.

Chris Moloney:
Yeah, Amy, that’s well said. Here’s what I would say, Barb, to sort of round it out and close us out. More change is coming and it’s going to be coming very, very rapidly. So you need to be anticipatory, especially if you’re at the board level. You have to be intentional in the conversations that you’re having at the board level and in collaboration with leadership on where you are, where you hope to go, what you need to do to get there. And if you need to talk to experts or listen to experts, do that. Be a consumer of that information and that data. And lastly, if you are on a board, you do have a great and a heavy responsibility for ensuring that resources are allocated appropriately to the things that are most important, right? So there’s a tie in here to building a strategic framework and a strategy for the future. If you put it in your strategy, you will probably allocate resources to it.

Barbara McCuen Jones:
Great. Thanks so much, Amy and Chris, for joining us today and for sharing your insights on digital transformation. We really appreciate it. We’ll share some more resources with our listeners. Thank you both very much.

Amy Hilbelink:
Thank you.

Chris Moloney:
Thank you.

Barbara McCuen Jones:
Chris and Amy, thanks so much for joining us today and for your insights on digital transformation. AGB’s top strategic issues for boards and principles of Trusteeship are both available at agb.org. AGB consultants are available to work with your institution on digital transformation. For more information, see AGB.org/Consulting.