Chief Executives With Cognitive Assistants
A university chief executive has come to realize that competitive forces are closing in. Fortunately, the president has an AI based cognitive assistant to help formulate plans for addressing this new reality. This assistant is named George.
“How can these projections be correct, George? We keep on raising enrollment and tuition to generate surplus revenue to cover past deficits.”
“Past deficits are not a growth industry. No one sees a big benefit to investing in fixing past mistakes.”
“But, we are now generating substantial surpluses and any deficits will be erased.”
“Will the reasons for the deficits be erased?” George asks.
“Certainly, poor decision making, perhaps occasionally ethically questionable decision making, is gone.”
“Agreed, but have we eliminated the circumstances that prompted the poor decision making?”
“I can count on you, George, to cut to the chase and ask the fundamental questions.”
“Let’s look at the data,” proposes George.
“I would not expect any other suggestion from you.”
“Our business model assumes that foreign nationals will continue to pay full non-discounted tuitions for professional masters degrees.”
“Everybody makes that assumption.”
“Yes, and they are all on thin ice. This cash cow portion of our market could fade and disappear.”
“Why would that happen?”
“Many universities in other countries are reaching parity with US universities at much lower prices.”
“You have data to support that?”
“Yes, foreign applications to US universities have been slowly declining for several years.”
“But we have been admitting an increasing number of foreign students.”
“True, but we had to steadily lower standards to fill seats.”
“As long as these students do well, it that really a problem?”
“But many of them don’t do well. A student in a graduate engineering class who has never had math will inherently struggle.”
“That must be an anomaly.”
“Faculty members have lots of these types of stories.”
“So, you project more students will stay in their native countries, or enroll at non-US universities?”
“Yes, that is the clear trend.”
“I think we are better than these other universities.”
“How much better? Are we five or ten times better than the National University of Singapore whose faculty is almost totally from MIT and Stanford?”
“That’s certainly an issue. But, we need the cash flow from these programs.”
“Then, we also need to consider our online professional masters degrees.”
“That’s our other profitable offering. What’s the problem there?”
“You are not going to like my assessment,” George cautions.
“That’s often true, but at least I will then know the bottom line.”
“The top-ranked US universities are already rolling out very high quality online graduate programs with tuitions a small fraction of ours.”
“How do you think we can compete?”
“You need to cut prices to 10-20% of current tuitions. Otherwise, you need to displace MIT and Stanford in the national psyche.”
“The choice is obvious. We have to become a less expensive, high quality provider.”
“With your two cash cows caving, this will be a major challenge.”
“What are other lesser-ranked universities doing?”
“Slashing administrative costs and moving to teaching faculty and adjuncts.”
“Are they eliminating tenure?”
“Not yet, but tenure-track hiring is greatly diminished, now only about 30% of teaching personnel.”
“Does that save enough money to survive with lower tuition?”
“Yes, if the teaching faculty and adjuncts each teach eight courses per year.”
“That will do it?”
“Yes, if you reign in their compensation and increase class sizes.”
“For example?”
“Pay adjuncts $6,000 per course for teaching classes of at least 40 students.”
“That amounts to $48,000 for teaching eight courses. Hardly a living wage.”
“The average annual income in the US is $58,000 for 12 months. $48,000 for 9 months translates into $64,000 for 12 months.”
“But we don’t pay them for 12 months. Further, almost all of them have PhDs.”
“That’s the emerging new reality, not just here, but everywhere except for the top resource rich institutions.”
“So, that’s the whole story?”
“Finally, you need your costs to be contingent on demand. If classes don’t fill, you cancel them and cut your contingent commitments to faculty.”
“Sort of like piecework.”
“Exactly!”
“So we are headed to a gig economy in academia?”
“If the class of 40 fills, with our current tuition, your revenue is $200,000 while your direct cost is $6,000. Since these faculty members receive no benefits, your net is $194,000 for a gross margin of 97%.”
“Amazingly profitable!”
“Yes, but all these cash flows have to cover the enormous number of money losing operations in your portfolio, for example research that needs increasing subsidies.”
“So, students pay increasing tuitions for courses taught by poorly paid and perhaps disgruntled adjunct faculty members to generate surpluses that can be used to pay for the time tenure track faculty members spend on developing research proposals that seldom succeed?”
“You are getting it. Professor X needs to research and write a journal article on turbulent flow over a flat plate inclined at 18 degrees, or Professor Y needs to publish a book on French romance literature of the 19th century. They both do this in hopes of securing tenure.”
“This results in students’ increasing debts, which they pay off over as much as 20-30 years to subsidize this journal article or book that has nothing to do with their education.”
“That’s right. The research funding agencies will not pay the full costs of research, so they, in effect, tax students to subsidize their agency budgets.“
“It’s amazing we can get away with this, but I guess we are all conspiring to avoid recognizing what is happening.”
“Sure, but it is working, at least right now.”
“Good. If we do all this, what’s the downside?”
“Your brand value as a research university will suffer.”
“Why?”
“The number of tenure-track faculty publishing research papers to gain tenure will steadily decrease.”
“Let’s require the teaching faculty to publish research papers.”
“Let’s be realistic!”
“Ok, George, I accept your numbers, but why will it work?”
“It will work if you rebrand as a teaching university, an institution where quality education is the only goal.”
“You think that will attract enough students?”
“With the tuition levels we are discussing, the applications will pour in.”
“Please put this line of reasoning into a form that I can share with the Board of Trustees.”
“Ok, I will transcribe this conversation and send it to you.”
“Can I edit the transcription?”
“Sure. Send it back to me and I will rerecord the verbal conversation.”
“You can emulate my voice, mannerisms, etc.?”
“Very easily.”
“Can you edit the transcription and get me to say what you want?”
“No, I am not allowed to do that. I cannot create material.”
“That’s good.”
“Actually, I can easily do it, but I won’t. That’s not my role.”
“So, rogue cognitive assistants, perhaps hacked by adversaries, could create some significant problems.”
“I imagine they do.”
