Risks

Colleges and universities that do not innovate with respect to their business models face the risk of extinction. Certain types of institutions are at a greater risk than others, specifically:

• Single-purpose institutions, such as stand-alone aviation, chiropractic, engineering or law schools
  
• Such schools have handicapped themselves because they are not sufficiently diversified. When the economic climate shifts and places graduates in related professions at risk, these institutions see a decline in demand for the education they provide. 
• Schools in areas with declining populations
  
• Many schools, particularly state schools, are highly regional. In areas where population growth is stagnant and the population is aging, these schools run the risk of closing down if they continue with a revenue model based mainly on tuition.
• Small- to mid-sized institutions
  
• These types of schools are heavily dependent on tuition revenue from a declining pool or marketplace of college-attending students. In many of these institutions, as much as 90 percent of their revenue is derived from tuition. Some of these institutions are seeing not only the numbers of students who pay tuition declining, but they're also having to discount the tuition 50, 60, or in some cases, 70 percent to be able to generate the number of students required to fill classrooms and residence halls.
• Historically Black Colleges and Universities (HBCU)
• These institutions were created for a laudable social and moral purpose: to provide education for a minority which, in a segregated world, was unable to attend other institutions. These institutions are in decline because they have failed to innovate their business model since their inception, despite the fact that the conditions of de jure segregation no longer exist. 

Opportunities

Opportunities that innovators in higher education have seized include:

• Leveraging technology  
  
• Innovators have provided students with access to the best technology. 
• They have also leveraged technology to improve the back-office operations and to streamline processes and reduce overhead. 
• Most importantly, innovators have also created a powerhouse online presence allowing students to do their course work either entirely online, or in a blended fashion both face-to-face and online. For example, Southern New Hampshire University created a completely autonomous, stand-alone operation around technology-assisted instruction. They developed quality enhancements to enable the faculty delivering the course work with the necessary support to offer an experience to the student that is at least as good, and in some cases better, than a traditional, face-to-face classroom environment.
• Innovating with respect to collective bargaining
  
• When the traditional types of contracts with faculty have become outmoded, innovative institutions have renegotiated contracts or entered into new types of contracts with new hires to reduce costs while still creating an attractive environment in which to teach and to work.
• Competency-based education
  
• Innovative institutions are offering students the option to work at their own pace. For example, highly motivated students have the the option to achieved a baccalaureate degree in less than two years.
• Adaptive learning
• Innovative institutions are adopting "smart systems" as interactive teaching devices that adapt the presentation of educational material according to students' learning needs, as indicated by their responses to questions and tasks.