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Patricia McGuire

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Run It Like a Business? Really?

Posted: 06/22/2012 3:52 pm

Among the many piles of blogger fodder emanating from the spectacle at the University of Virginia, the discussion of "corporate v. academic" governance is particularly rich in mythology. Business leaders on university boards, so the story line goes, want to "run it like a business" while the academics apparently blather along with no particular sense of purpose or haste.

Let's consider this "run it like a business" idea. Do we really want our universities to be "run like,' oh, let's see, General Motors? Best Buy? Applebee's? Newspapers? J.P. Morgan or any of the 15 banks that Moodys just downgraded?

Seriously, the corporations that are also universities -- and guess what, we really are businesses, too -- actually tend to be among the more successful corporate enterprises in the nation. Yes, endowments took a hit in the recession, but they've rebounded. And who caused the recession? Universities? Well, no. Hmm. Might certain other businesses have had something to do with it?

What do people mean when they say that a university should be "run like a business?"

Judging from the emails between the Rector and Vice Rector of UVA, we might conclude that it means that we should leap on any idea promoted on the op-ed pages of the Wall Street Journal --- especially if the idea involves the most illusory seductive idea of the century, namely, that technology will make education less expensive.

Is that kind of snap judgment based on superficial information really a good business practice?

And if the CEO of the university doesn't quite agree with leaping immediately onto the iBandwagon, let's sack the president to indicate we really mean business, even if it wrecks the university, itself.

Yeah, that's a truly great business model. Not!

Yes, higher education certainly has some serious issues we must address. Affordability, innovation, infrastructure funding and finding the next generation of talent are urgent priorities. Academic governance is often painfully slow, and sometimes tradition trumps common sense when innovation stalls in the name of process. Most presidents really do get it about the need to keep pushing the faculty on the change agenda. But we also know that, quite often, the wisdom of the faculty when applied to programmatic ideas will ensure that the result is high quality, effective and durable. Sort of like letting doctors prescribe the cure rather than insurance agents. (Ooops, bad analogy!)

The bottom line is this: in the last 10 years, we've seen some pretty spectacular business catastrophes. The "take no prisoners" style of leadership and governance that some exalt as the "run it like a business" philosophy is in high disrepute. Fixation on excessive profit-taking created the subprime mortgage mess that brought us the Great Recession of 2008. We had the bailout of the auto industry and TARP for the banks. And let's not even think about Enron and the blessings of Sarbanes-Oxley that continue to haunt every business and board in America.

Let's stop trashing academic governance while exalting corporate governance as perfect. There's a need for governance reform in many different kinds of businesses -- for-profit and not-for-profit, academic and commercial -- and that need often coalesces around the same issues: innovation, speed to market, inclusion of those affected, ethics.

There's a lot to be said for the wisdom of the group, whether a board meeting in full session -- not in one-off emails or phone calls about vitally important decisions -- or academic committees vetting the latest great idea about new programs or technologies. In higher education we call this "shared governance," but it's not really just an academic notion. In fact, some of the best boards and companies in America honor exactly the same idea that the people affected by decisions should have some say in them.

Thomas Jefferson had something to say about that idea. He called it democracy -- the basis for our most fundamental principles of governance.

 

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