Schools–Education or Business? Is this a dichotomy?

Confessions of a Community College Dean: Moral Dilemma: “No, brother bones, schools provide the opportunity to learn and experts to help students to do so. They are not businesses. ”

The above quote comes out of a very lengthy thread on the Community College Dean’s blog. There are many tangents that have come out of that thread, and this is the first one I have chosen to discuss.

This is not the first time I have heard the argument that “education is not a business.” I would have to agree. Educators have a responsibility to provide an education, to convey material to learners in an environment, and with pedagogical approaches, that enhance the opportunity for the learners to actually grasp and internalize the material. I would then also argue that McDonalds (or, Lone Star Steak House, or any other restaurant), Barnes and Noble (and other perveyors of books), Bloomingdales… none of these are businesses either. They exist to meet a requirement, or satisfy a want, for people that have a need or want. In tfact, they too actually want people to “grasp” and (in the case of restaurants literally, and bookstores not so… ) internalize the materials.

In all these cases the contact person–the educator, the bookstore clerk, the customer specialist, or the counter-kid at McDonalds, needs to focus not on the business aspect of the firm, but on the customer’s satisfaction. The “best” businesses do that–focus on the customer, understanding that the rest will follow.

Specifically, and this is the most critical point, if people see value in what they receive they will pay for it as they are able. If they don’t–they won’t!

Education, and other not-for-profit endeavours are a bit different, in that schools and public broadcasting, and often hospitals, are able to get people in general to see the benefit, and pay for services they themselves might not directly receive, but they do it because the see, and wish to encourage, the product to continue to be provided. (I wish it were possible to go to Barnes and Noble and have someone offer to subsidize my book purchases, but alas, that doesn’t happen.)

So what wordplay am I conducting here? Well, business is, according to is “A continuous and regular activity that has income or profit as its primary purpose.” Hmmm… so perhaps, either I am just creating a smoke-screen to obfuscate the point about education, or education has as its primary purpose making money. Or perhaps their is another option–the ‘legal’ definition of a business doesn’t actually fit what we in business actually do.

Businesses most often are in the business of generating revenue. Without revenue no operation can continue. Be it public radio and televion, or the local university, or the local McDonalds, all need revenue to survive. But by the same token all businesses understand that they exist to satisfy some perceived want or need, and that they can only survive through providing that.

Here’s the bottom line: yes, educators, you are not “business people.” Your charter is to serve your institution by delivering the best educational experience possible to the students in your care, and doing all you can to ensure they grasp the material and are hopefully changed by it. That is just like a counter-kid at McDonalds has as their mission to keep the customer “lovin’ it.” It’s the role of the administration, and the management, to ensure the revenue keeps coming in, and that the books either remain “balanced” (not for profits) or stay positive to satisfy the stakeholders.

So if it appears that a conflict exists, then I suggest you ask these simple questions:

1. Does the actions of the administration take the school/college/university away from it’s mission of education?

(critical point here: do not ask yourself if it takes away specific areas of education, such as medieval studies, but rather if it has changed the mission–say to providing conferences and hotel space, without an educational element.)

2. Does the administration make clear the long-term strategic direction for this change?
(perhaps outlining either a) the fiscal need that perhaps ensures survival, such as at Tulane, or b) reaches an as yet untapped clientele with the educational mission, as the discussion at the Dean’s blog has as its base.)

These are only two questions. Perhaps you have more.

I welcome a lengthy discussion here, as well.

The Professor


7 thoughts on “Schools–Education or Business? Is this a dichotomy?

  1. That’s what I don’t get about the discussion of schools not being a business. On that other blog, the dean is acting as a contractor by subing out his workers (faculty) to increase income (tuition) through new clientel (homeschool students) without changing the direction of the community college’s mission (affordable education for the masses).

    The business matrix is very simple: offer a specialized service at an affordable price. Expansion is also a simple matrix: offer novel services in keeping with core competencies to expand clientel and increase revenue. Growth can also be found without expansion through increased specialization into a niche market while shedding unprofitable services. Whether expanding into new markets or specializing in core clientel the common element in sustainability is better service at a lower cost than the competitor.

    This is age old business practices. Centuries of wisdom come into play on this issue and to dismiss it with the “school is not a business” wishful thinking is irresponsible.

  2. Of course schools are not businesses. They are non-profits. Businesses seek to maximize profits. Non-profits seek to maximize impact. These are very different things. There may be similarities, because all institutions require revenues to exist, but you’ve expanded the definition of “business” to “any entity which handles money.” By your expanded definition, governments and churches are businesses too. By eliding over the differences between the types of insititutions, you imply a commonality which does not exist.

  3. Kimmitt,

    Perhaps you missed where I elucidated the difference between teh delivery of education, and the management of what can, in my opinion, best be described as the business of education.

    I would ask you though, if you could–what benefit is accrued through insisting that education is not a business? How do you see things operating differently because they are different?

  4. There may be similarities, because all institutions require revenues to exist, but you’ve expanded the definition of “business” to “any entity which handles money.”

    Actually my definition was “any entity which provides a service for a fee”.

    This doesn’t necessarilly include churches, charities or the various NGO non-profits that provide services in exchange for charitable contributions as the services they provide are not generally used by those that pay the fee.

    Governments are a mixture in organization. Some government agencies provide services directly to those that pay (Post Office, Amtrak – sortof, Interstate Highways) other services are provided to those who don’t pay (welfare, Medicaid) and still other services are provided to those that paid in the past for the benefit of previous generations (Social Security, Medicare).

    Schools do provide services in exchange for fees directly to those who pay the fees (grants and scholarships not-with-standing).

    These agencies still need to understand the business side of what they do; improve services, streamline administration, reduce costs.

  5. I have to disagree with b_b — public (and many private) schools don’t provide a service for a fee; they provide a service which costs much more than the fee as part of a mission of providing the service. The fee helps to defray the costs (and serves as a screening mechanism for those serious about receiving the benefits) but is often not the full cost of providing the service.

    This is important (to answer the Professor’s question) because it means that schools are making different kinds of decisions than businesses. Businesses ask, “After we take all the costs and benefits into account, is what I’m doing bringing in more revenue than it’s costing me?” Non-profits ask, “After we take all the costs and benefits into account, is what I’m doing giving more impact to the community than other alternatives?”

    Again, there are lots of commonalities; it’s hard to have impact without money. But it also explains why a (public) school might, for example, forego opportunities to teach courses which are “watered down,” or seek out a particular class of persons to attempt to increase their enrollment, or any of a number of other things which are not necessarily relevant to a profit-based model. That is, schools (like all nonprofits) have missions which are more complicated than the missions businesses have* and therefore have to keep them in mind. In addition, people who work at nonprofits often take a pay cut explicitly for the purpose of furthering their shared goals, which means that the employees can be very interested in maintaining the profit/impact distinction.

    *This is not to imply in any way that a profit motive is inferior to other motives; we all gotta eat, and we want to live in a world which rewards innovators.

  6. That is, schools (like all nonprofits) have missions which are more complicated than the missions businesses have

    I disagree, the mission is the same: provide the best service at the most competitive cost. That public schools are heavily subsidized only serves to dilute their ability to make rational decisions regarding the services they offer.

    The perception is that public schools are free. This perception causes friction with the public when budgetary cuts are required (why can’t schools do all things for all people?).

    But now we’re going beyond the original scope of this discussion. We were originally discussing colleges. K-12 schools are a different sort.

    There’s a pretty elitist classism that goes along with this as well. Take away the government monopoly on public schools and I would bet 90% would close within a year. Not because people don’t want schools. But, because they are highly ineffectual.

    Acedemics think they’re above the dirtyness of capitalism. But they’re not. Schools are still subject to market forces. Offer up a better choice at a competitive price and schools will start shutting down all over the country. Which isn’t a bad thing. If you can’t handle the competition, you go out of business. It’s as simple as that.

    This may be why academic types fear the business label. They know that as soon as that label sticks in the public consciousness they’re out of a job. I wouldn’t worry tho. Most people still think schools are free.

  7. kimmitt:
    This is important (to answer the Professor’s question) because it means that schools are making different kinds of decisions than businesses.

    Different kinds of businesses make different kinds of decisions. I think your narrow definition of “business” is the problem with this discussion. As I have said on the DD blog, the real problem is not schools being run as businesses (the assertion by hog_jockey that “wanna be robber-barons” are ruining education) but that educators (and non-profits in general) often destroy themselves by not understanding well enough the dynamics of their own business in order to be able to survive.

    I am a huge advocate of a liberal arts education and all sorts of programs that don’t appear to be “money makers.” But I am also a huge advocate of expanding programs, pay raises and reasonable rates for faculty and staff, new dorms for students that meet basic housing standards, etc. All of these require that the Administration manage their money (from all sources) extremely well. I want the best and brightest at my institution. That requires, in addition to great faculty and course offerings, good marketing and placement so that students know how good we are. And so on…

    To quote myself:
    So education is a business and those that do not understand this will never be able to fully realize the business of educating our students.

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