The value proposition and our business model

Oct 2, 2013 | Forward Thinking

Forward Thinking

Timothy J. Nelson, President, Northwestern Michigan College

NMC_campuslife1-7893A fundamental question for any organization, profit or not, is, “What do we do for whom at what value?” The answers to this ultimately define the business model for the enterprise. This then informs the cost structure, the market, and the pricing and revenue practices for the organization.  The current trend of students paying more in absolute and proportionate share of the cost to operate the college has limits and may postpone answering this fundamental question (College Board Advocacy & Policy Center, 2012). In community colleges, tuition alone does not generate enough revenue to create a positive net margin. There is a saying, “No margin, no mission.”

The traditional revenue model for community colleges is different among the 50 states. (Education Commission of the States, 2000) In Michigan, the original bargain was said to be one-third each for local, state, and students. Today, state funding is a combination of legacy and a funding distribution formula adopted in 2007. (Jonasson, 2013)

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Is health care reform our ‘canary in the mine?’

Oct 2, 2013 | Forward Thinking

Forward Thinking

Timothy J. Nelson, President, Northwestern Michigan College

Canary in the NMC tunnelWhen systems are in a transformative state, the underlying assumptions that influence their operations and purposes must be examined and questioned. One way to do this is to look at organizations or industries with similar characteristics and determine what we can learn and/or project from their journey. Thus, as higher education—in fact all of education—is faced with changing demands, changing demographics, technological advances and changing expectations we can look for a similar industry. I have long believed it is health care.

Consider that the federal government in 2010 passed the Health Care and Education Reconciliation Act. Looking at the health care reform component of this act and the sister Patient Protection and Affordability Act, is it worth asking, “What if these changes are applied to education and higher education?”

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