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Commitment to Service as the New Competitive Advantage

Delivering on the Promise Made
University Business, Sep 2006

In an age of learning, society looks to universities for much more than mastery in academic disciplines. Government and business need research that can be applied toward solutions; a new breed of workers who, in addition to credentials and expertise, are also capable of solving problems, leading and working in teams and strengthening capabilities for lifelong learning.

Directly or indirectly higher education now serves an expanded community of learning that includes, traditional and non-traditional students, alumni, trustees and employers; business, government and community organizations; faculty and staff. This article proposes a fundamental re-alignment of institutions with those they serve as the starting point for change, and the foundation of competitive advantage in the knowledge age.

The academic mindset looks inward for answers: studies, committees, strategic plans. We suggest looking outward-not for magical answers but for learning relationships and opportunities for co-creation with those they serve.

Higher education institutions must accept that, no matter how prestigious their brand and erudite their content, they operate in the same environment as other service industries: one of sophisticated consumers of all ages, expecting unique new experiences, high quality service and customization to individual styles and needs.

It is true that institutions are taking service to students more seriously. There is still, however, a considerable gap between stated intent and the reality of the customer experience (learner, parent, even faculty and staff). Many colleges and universities believe that they can fulfill their promise of a focus on the learner (customer) by simply adding individual programs and initiatives on the surface of organizations that, in all other respects, remain fundamentally focused on the provider. Re-orienting an organization to focus on value to today's "customer" requires building new capabilities-processes, competencies, mindset, measures of success, culture-that support the new direction.

Serving the customer is usually mistaken for capitulating to whims and demands and abandoning academic integrity. By value-based strategy we refer to a dynamic relationship based on continuously increasing value to both parties, rather than passively fulfilling requests. Value resides in the way an organization, product or service is actually experienced by the end user. This is why the focus is on outcomes. All strategies are driven by the shared goal of continuously increasing value by making these experiences as memorable, worthwhile, and beneficial to the recipient as possible.

The distinctive way that an organization makes its products or experiences meaningful and worthwhile to a customer is its value proposition. It represents the premium experience of its value; the reason customers should choose a particular organization over another. We maintain that fundamental regeneration can only be achieved by creating substantially fresh value propositions.

The New York Law School (, one of the oldest independent law schools in the United States, is refocusing its strategy around a new value proposition. For more than a century the School made it possible for generations of immigrants, and others that elite law schools would not admit or accommodate, to gain access to legal education and careers. NYLS languished in the 1990's searching for a new purpose and identity in a changed city. Richard Matasar, Dean and President since 2000, set the School on a new trajectory by applying its historic legacy of service to a new context. Instead of focusing all efforts on the path of least resistance, improving US News & World Report rankings, he tapped into the school's traditional strengths, such as flexibility to diverse student needs, to establish competitive advantage. NYLS is successfully establishing itself as the law school for a new breed of nimble, entrepreneurial lawyers, attuned to the needs of the knowledge age, capable of using law to solve problems that are not limited to law. Since 2000 NYLS' enrollment has grown significantly and the number of applications continues to rise. Most importantly, however, the quality measured by undergraduate GPA's and LSAT scores has improved by several points.

Value-focused strategies are not dependent as much on additional resources, as they are on innovation, engagement and co-creation. They, therefore, require people with the capacity to exercise judgment, take initiative, manage relationships, learn and develop new competencies. Above all, they need leaders, willing to commit to developing these capabilities. To implement and sustain a strategic re-direction leaders must:

They must see clearly the necessity and value of a long-term process, even when it is not obvious to others. Commitment must be translated into tolerance for mistakes and risks; hard work and willingness to make tough choices.

Inspiring rhetoric or the threat of consequences are not enough to compel stakeholders to abandon their comfort zone and undergo a wrenching process of change. Effective leaders strive to understand how this change is relevant to the daily reality of each and every stakeholder: faculty, leadership team, front-line workers, alumni, etc. Without direct links to the roles, responsibilities, values and motivations of employees, vision statements are in danger of becoming platitudes rather than rallying points.

There is a place for learning through external surveys and analyses of the market. Yet planning and development must directly engage faculty and staff in the discovery process for a new direction to take root. Remember also that today's markets often shift faster than formal assessment instruments can report. We engaged stakeholders in a college concerned about alumni giving, by establishing small, cross-functional teams from areas currently or potentially impacting alumni needs: development, continuing education, academic departments. They were guided to interview a variety of alumni, and understand their needs and values in a larger continuum of life-long learning. In this way, they discovered and assessed directly a range of needs and opportunities that they would never be convinced of, had they been confronted with someone else's conclusions. Beyond getting new information, they cultivated relationships, and arrived jointly at fresh solutions.

When new initiatives are simply added on top of existing work loads, faculty and staff become overwhelmed or resentful. A client university was successful in engaging academic advisors, career counselors and faculty in charge of research centers by designing a pilot project that was tied to their regular work load and objectives. The pilot delivered some of the existing services in a new way, driven by student needs rather than administrative units.

We helped a research university reach new corporate markets and engage key faculty in non-academic teaching by directly including them in the process of discovery and project design. We formed three joint corporate-university teams and guided them to design research projects around areas of mutual value. The results included the development of a concept for an incubator, identification of resources and creation of a system for profit-sharing. The companies would boost their retention and boost innovation among their chief scientists through focused projects serving as "laboratories." Faculty would get funding and other resources for key research initiatives, and the university would boost enrollment and reputation by designing unique clinical experiences for students.

A recent client--a medical school on the West Coast--had determined that their weaknesses in student services were due to factors that had fairly clear-cut, tactical solutions, such as: weak process design, poor employees and lack of staff training. However, we found that the real gaps were in the foundational elements of leadership, management and culture. For example, it became clear from the staff's accounts of daily interactions with customers that most perceived customers as nuisances. While formal statements and marketing material advocated individualized and high quality service, staff experienced customers as "disruptions" of their "real work" (which they defined in terms of completion of assigned tasks). Job descriptions, incentives and rewards reinforced this attitude by rewarding efficiency rather than quality of service and relationships. Poor service would not be solved simply by firing employees or putting them through a course on customer service. Instead, root problems had to be address, especially the absence of interest in listening to, and learning from, their customers as well as each other.

Identifying capability gaps is a key component in an institution's re-direction. Capabilities that need to be cultivated include:

Understanding the value of an organization's assets for a variety of constituencies is not an automatic result of intelligence or familiarity. It requires the ability to see the familiar through the unfamiliar eyes of others, and the foresight into changing criteria for judging value. All too often identifying value seems self evident and not worth lingering on. Without the proper lens, however, the optimal strategic direction cannot be detected. Consider the following example:

Without a highly ranked engineering school, a client university determined that it could not compete with other universities for lucrative contracts and donor support in the booming technology sector of that region. However, when we assessed the value constituencies outside academia placed on its assets, we discovered an untapped source of value. This was the large number of alumni, with loyalty to the university, who occupied positions of considerable authority in that industry. "Unlocking" that source did not involve costly research or forced campaign slogans, but relationship-building and personal engagement.

We drew out alumni to relate the "stories" of their experiences as students, the importance of key memorable and transformative moments, their vision for their school's future, their concerns and advice. Storytelling and increasing engagement became the gateways for renewing their interest and garnering their support.

They inspired commitments for support, fueled communities of interest in that region, yielded new trustees and spawned expeditionary projects.

Discovering and regenerating value is not akin to a public relations or branding campaign. It is based on profound understanding of the core elements of an institution's legacy, and creativity in applying value in ways that are relevant to the needs of different constituencies. A case in point is the Smithsonian's transformation.

In the 70s the Smithsonian Institution expanded its role from serving as a repository of culture, to becoming an indispensable piece of America's experience of its culture. Instigated by Sec. Dillon Ripley, this transformation was anchored in imaginative extensions of the Smithsonian experience: the launching of a new membership arm, educational programs and annual performance events, such as the Folklife Festival, the Smithsonian magazine, etc. The implications were far reaching for the entire museum sector. The Smithsonian had in essence pioneered a new way for experiencing museums and cultural institutions. By transforming the institution and the museum sector, however, the Smithsonian did not depart from its core mission of "increasing and diffusing knowledge." Instead, it re-examined its mission with fresh eyes and from the perspective of its constituencies; those thirsting for deeper engagement with communities of meaning, and shared experiences of American identity. Innovation was exercised in the re-mixing of elements, and the shift in emphasis from the "increase to the diffusion" of knowledge.

Hocking College (Ohio) is an example of achieving strategic differentiation by leveraging its core assets and traditions and partnering with those it serves. The school's historic commitment to the community led to numerous partnerships that greatly contributed to regional economic development. Its joint projects and networks of strategic partnerships, in turn, allowed it to utilize both natural environment and local organizations as extensions of its campus. Today the school has carved a distinctive niche as the "place where education comes alive, and where you learn by doing," that has increased enrollment and reputation and provided cohesion in its offerings and identity.

To embody a value focused strategy in the way business is done, innovation is not limited to individual endeavors but is integrated into the entire organization or sector, often inventing or reconfiguring rules and categories rather than limiting possibilities by those already in existence. A case in point is the Boston Consortium, seeking solutions outside the model of vertical processes within independent institutions.

Established in the fall of 1995 by the Chief Financial Officers of 11 Boston-area colleges and universities, the Consortium has created a value and action-oriented community of practice, as opposed to just another forum for discussion. Participants solve problems, outside customary boundaries such as departments, disciplines or administrative functions. Through original research, varied projects, professional and leadership development programs and entrepreneurial co-ventures they decrease operational costs by sharing resources, and expand their institutions' innovation capabilities.

Leaders contemplating any strategic re-direction must go beyond policy and programs to envision the kind of organization that will emerge. A major shift-such as one from a largely bureaucratic, provider-focused culture to a culture of pervasive innovation and customer-focus-- is actually experienced in terms of a different way of "doing business"--settings daily priorities, approaching relationships, evaluating progress and rewarding performance. The experience includes:

Value creation is used to evaluate progress and performance in terms of outcomes, and provides criteria for setting priorities.

If your school touts innovation as a core value in its mission statement, use it as a criterion for hiring and promotion. If it claims a focus on the learner, reward the ability to solve customer problems and facilitate the learning experience over seniority or the mere performance of tasks. Unless values are reflected in action, they remain unfulfilled promises.

In a similar vein, stated vision is not compelling and motivating unless it is fully reflected in daily experience, and the substantive choices of where investments of resources and energy will be made.

One cannot create sustainable value through cookie-cutter approaches. Innovation and risk-taking must be cultivated and rewarded. Employees are rewarded for results, and the capabilities they develop for improving results, and not simply for longevity or performing assigned tasks.

Rules and procedures are understood as means for serving people and strategic objectives, rather than limits to innovation or service.

There is a shift from autonomous professionals rewarded only on the basis of expertise, to individuals who contribute to organizational goals. Individual innovation is valued but is harnessed to benefit larger strategic objectives. Individual projects--no matter how small-are understood and managed as intrinsic pieces of the larger mosaic.

The organization seeks external input and is open to dialogue with customers, partners and other stakeholders. In contrast, provider-focused, highly bureaucratic organizations are focused internally on the approval of colleagues and supervisors rather than service to customers.

The goal of constantly renewing and increasing value builds capacity rather than short-term advantage. A new course, degree or service can be quickly duplicated by competitors and, thus, a university's lead in a given area can be short-lived. However, developing capacities for innovation, or cultivating life-long, learning relationships with alumni, can generate new programs or endowments on a continuing basis. It makes the need to choose between the academic and business elements of an institution in strategy formulation irrelevant. Discovering distinctive value through fundamental innovation calls for integration, reconfiguration and reinvention of assets rather than linear choices. It provides a different starting point for planning and shortens the distance between articulating and realizing innovation.

Anna Caraveli is Senior Consultant, Anthony Knerr & Associates (, an international consulting firm that assists leading higher education and other nonprofit institutions successfully solve complex strategic problems. In a career spanning over 20 years, Dr. Caraveli has assisted many complex, constituency-based organizations-universities, research and cultural institutions-increase their customer base, identify new niches for leadership and strengthen their value to their constituencies-members, students, alumni, donors and other stakeholders. She can be contacted at

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