Over the past decade, a plethora of articles and books in management literature have described a concept called the blue ocean strategy, developed by W. Chan Kim and Renée Mauborgne, professors at INSEAD, an international graduate school of business. Put simply, organizations that employ blue ocean thinking consider opportunities to create new markets for their services, rather than focusing solely on improving their position within the existing market. Although this strategy is about gaining market share, its inherent message is about breaking from the status quo and solving problems by looking at them through a new lens.
I recently saw the spirit of blue ocean thinking demonstrated in a trip to Winchester Thurston School (Pennsylvania). Nestled between the University of Pittsburgh and Carnegie Mellon University, the school has a small campus in terms of square footage. So what do you do when you don’t have a large campus upon which to build and grow? You adopt the city as your campus. Winchester Thurston’s innovative City as Our Campus program extends the classroom through experiential learning that connects students in pre-K through grade 12 with a world of artists, community activists, policy makers, educators, entrepreneurs, and other experts. What some saw as a liability, Winchester Thurston turned into an asset.
Of course, programs such as City as Our Campus are not just responses to space limitations. They tie into much of the recent brain-science research on learning. Winchester Thurston’s program amplifies student engagement by creating authentic learning about societal issues and by tapping into student interests. It also acknowledges that schools are no longer the sole source of learning. As the school’s website notes, “Libraries, museums, workshops, labs, and even the digital space have a place in the learning ecosystem.”
As schools think about the changing landscape, blue ocean thinking is taking root in many ways.
In the boardroom, trustees are devoting more time to generative conversations — that is, asking questions and making sense of their circumstances to best prepare the school for the future. In the generative mode, trustees have an opportunity to dispense with immediate problem solving and move to problem framing. As William Ryan, one of the authors of Governance as Leadership stated, “Generative thinking frames the problems that we solve, it determines what needs deciding before we make decisions, and it suggests what’s worth a strategy before we develop a strategic plan.”
One issue that many boards have been struggling with is pricing. In the past two decades, tuitions have risen faster than income, due in large part to the addition of the specialized services and personnel that families desire. Since the financial crisis of 2007–2008 and the recession that followed, heads and business officers have been looking at the concept of school cost through a new lens, trying to adopt alternative practices to stem rising tuitions. Some schools are also looking at cost through the eyes of their customers — examining how the school’s approachability is limited by its price.
As a result of the latter exercise, a number of independent schools have opted to move to an indexed tuition model, developed by Frank Roosevelt, an economist and grandson of Franklin D. Roosevelt, in which families pay what they can afford according to a sliding scale. In a 2014 New York Times article, Dave Michelman, head of Duke School (North Carolina), described how and why his school decided to take this approach: “We got to indexed tuition as a philosophical journey. We’re committed to socioeconomic diversity. If you’re committed to that, it seems a little off-putting to say, if you come here we’ll give you charity. That’s what financial aid sounds like.” Instead, he added, the school said: “We’re going to charge the right amount of tuition for you.”
Although indexed tuition may not be the best fit for every school — since it still requires a school to meet the actual cost of educating each child through some means other than financial aid — this new way to frame tuition may make independent schools more approachable for many families.
When it comes to cutting costs, Marguerite Roza, director of the Edunomics Lab at Georgetown University, in her recent NAIS Independent Ideas blog post, “How to Contain Costs of School Offerings Amid the Demand for Personalization,” took on some long-standing financial sacred cows and suggested five strategies for looking at those costs differently. Some people might not consider these as blue ocean thinking, but I do — because they all address issues that, in many schools, have been considered sacrosanct. These include:
•offsetting the costs of small classes with some larger ones;
•rethinking the frequency of how often a school needs to offer certain classes;
•considering nontraditional providers or partnerships to make class costs more affordable;
•leveraging learning labs; and
•allowing students to opt out of redundant classes (e.g., similar ones they may have taken outside their current school).
Small private colleges have faced similar challenges with their business models and also are employing some blue ocean thinking. An article in Academic Impressions, “Small but Mighty: Four Small Colleges Thriving in a Disruptive Environment,” describes how a group of colleges puts blue ocean thinking into practice to ensure sustainability.
During the recent recession, when private schools and colleges were having difficulty balancing their budgets, many hunkered down, made cuts, and tried to weather the storm. At Saint Leo University in Florida, leaders embraced budget cutting but also took the stance that this is precisely the time to grow. They began by applying a discipline that is admittedly hard for all mission-based organizations, but especially schools: abandoning activities that are not deemed productive enough in order to free up resources for growth in other areas.
The Saint Leo story is an interesting case study for independent schools. When Art Kirk became president in 1997, he reallocated $600,000 by cutting programs and using that money to invest in an online program. The budget was very tight at that time and there was extreme need throughout the institution, so investing in online infrastructure and programs was not a high priority among many of the faculty and staff. That year, the online program brought in only $90,000 in revenue. But in 2015, the online program will exceed $85 million in revenue. Kirk says of this approach, “When I explain the university’s budget discipline in our internal leadership development program for administrators and faculty chairs, I ask them where we would be today if we had waited back then for an extra $600,000 to invest in online programs. My answer: Still waiting.”
Growth and development are in the DNA of Bay Path University, a women’s college (with coeducational graduate programs) in Massachusetts. The school has a rigorous idea-generating machine and new product process. To fund this growth, leaders created an innovation fund and had donors contribute to it. With this approach, they believe they combat the concern that allocations to one department come at the expense of others, and they ensure they have the resources to move forward when an opportunity comes their way.
Most independent schools, of course, have different needs than those of Saint Leo and Bay Path Universities'. But the creative thinking about institutional challenges at both colleges holds valuable lessons for all schools. The challenges of changing times are also opportunities.
Perhaps the best example of blue ocean thinking for independent schools is looking at the problem of long-term financial sustainability from a different perspective entirely. There are millions of children in the United States in need of a quality education. What kind of financial model could independent schools construct in order to educate more of them?
A number of schools have taken up this challenge in different ways, from launching charter schools to creating micro-schools that are within the financial reach of a larger portion of the school-age population. Like the one-room schoolhouse of yesteryear, micro-schools are small, often do not group kids by age, have both a high-tech and high-touch approach, and tout a very personalized education. AltSchool is one of the best known of the current micro-schools, with roots in San Francisco and now located in multiple major U.S. cities. A number of independent schools are now looking very seriously at the micro-school concept themselves.
Independent schools have always been known for their ability to innovate in the classroom; the business model is the next frontier. The good news is that this undertaking can both strengthen schools and create opportunities for many more children to experience a high-quality education.
