Market Forces

Change happens when it is forced.  The force can be an opportunity or a threat, perhaps embodied in a crisis.  In many domains, the forces for change are manifested as market forces.  Competitors, large or small, recognized or unrecognized, are the sources of market forces.  Thus, change happens when there is competition to meet market needs with better performance, quality, service and/or prices.

Change is much less likely to happen when there is little or no competition.  The stewards of the status quo can then argue that everything is great — as good as it can be within the prevailing constraints.  If competitors are not offering viable alternatives, it is difficult to convincingly argue that the stewards of the status quo are wrong.  Consequently, all investments are focused on preserving the status quo.

Healthcare is currently in crisis.  New alternatives are being driven by information and incentives.  Information will improve overall efficiency, but also enable health consumers to know the best providers, the best treatments, and the best pricing. Changing incentives focused on pay for outcomes will cause providers to focus on procedures that improve outcomes because those are the only ones for which they will be paid.

Higher education is a crisis in waiting.  Costs of administration (per student) have soared while expenditures on education and research (per student) have steadily declined.  At the same time, the merits of the old argument that a college education is always worth it have faded.  Unfortunately, there is a dearth of viable alternatives.  Online education has some benefits, but campus-based education provides a much richer growth experience.

What we need is an alternative that retains the benefits of campus-based education with much less overhead.  How about a university with a president, provost, deans and department heads, with NO vice presidents, vice provosts, associate vice presidents, associate vice provosts, etc.?  How about a university where the faculty members are the majority of employees?  Those two rules alone would constitute a dramatic change.

No mainstream university would agree to these rules.  There are far too many stewards of the status quo to allow this to happen.  But, there could be new universities, perhaps populated by faculty disaffected with the mainstream, which could operate this way.  The result might be a first-rate education for less than $10,000 per year — no fees added, no hidden charges.

This type of alternative would force change.  The best students would opt for this new alternative.  The mainstream universities, with increasingly bloated costs, would attract mediocre students from financially well-off families.  These students and their families would be more attracted to suites at the football stadium than science labs.  This would enable mainstream universities to cut back expenditures on the more academic side of things to focus on campus amenities and intramural enrichments.

How would we convince students — and their parents — that the degree from Alternative U is as valuable, or more valuable, than a degree from Mainstream U?  There are two key elements of making this case.  First, the quality of the faculty could be superb due to the enormous savings from salaries of non-faculty. Faculty members could be paid quite well since the typical five university staff members per faculty member would not exist.

Second, close alliances with industry and, to an extent, government would create great opportunities for internships and virtually guaranteed employment upon graduation.  There would be no graduates from Alternative U with marginal work knowledge and skills.  Everyone would be really good at something, ranging from design and engineering to journalism, theatre and media.  The graduates of Alternative U would run the world, and the students at Alternative U would know this.

Mainstream U could pursue the Alternative U mission, actually much easier than those who would have to start from scratch.  But, Mainstream U will not pursue this opportunity to innovate — they are much too busy.  There are hundreds of faculty members to manage and thousands of staff members to pay and promote.  The administrative assistant to the Deputy Associate Vice Provost has filed a complaint requesting the title of Assistant Deputy Associate Vice Provost and the university’s legal counsel has advised that this be settled out of court.


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