DOES OLD IVY HAVE AN E-STRATEGY?
Part 1: New customers and brand management

Copyright © 2000, Adam Corson-Finnerty

Does Old Ivy have an e-Strategy? Inquiring minds are asking. Never heard of Old Ivy? That's understandable, since it is an amalgam of the nation's elite research universities. Schools such as Harvard, Berkeley, Stanford, Chicago, and Penn. Schools which not only pride themselves upon their excellent colleges, but which also cite their research prowess, their Nobel and MacArthur prize-winners, their top-tier professional schools, and their access to the ears of the nation's leaders, nay, to the ears of the *world's* leaders.

Old Ivy has been experiencing good times. Its endowment has been growing, its alumni/ae have been increasingly generous, its applicant pool keeps expanding, its professors are regularly pressed for their views by the Wall Street Journal and the New York Times, and its corporate and government-financed research dollars keep going up.

Recently, however, Old Ivy's President has been pressed by a few of his trustees for his "e-Strategy." Having themselves recently joined the ranks of the converted, his interlocutors seem unsure of whether he "gets it," to use the latest e-biz buzzphrase.

From the President's point of view, Old Ivy *has* an e-strategy: to use technology wherever it can enhance the school's educational mission. After all, computers are everywhere in view: in the libraries, in the lounges, in the dorms, at every faculty desk, and in its new multi-media classrooms. The school's deans are savvy, its faculty is entrepreneurial, and the network infrastructure is constantly being upgraded. In a phrase, Pipes and Tools, with which smart men and smart women can construct great things.

What else needs to be provided? Perhaps nothing. Old Ivy is allowing a thousand flowers to bloom. Some of them may not grow, but some may prove to be industry-leading, even world-shaking. So perhaps it would be better to ask-aside from Pipes and Tools-does Old Ivy *need* an e-strategy?

The short answer is yes. In my neighborhood, there is a fellow who delivers fresh produce to salad bars. He has one truck, and emblazoned on the front and sides is this URL: www.joessalads.com. Joe has gone to the trouble of creating a Website, and whatever happens when one navigates to that site will be determined in part by his e-strategy, however primitive.

The New York Times' Education Life supplement of November 7, 1999, contains no less than 73 webified display advertisements for colleges and universities ranging from Harvard and Stanford to St. George's University in the West Indies. All of them contain URLs, just like Joe's Salads. The question is: what happens when someone goes to one of these addresses?

Perhaps one finds nothing but "brochureware" at the site. That is, a few pictures, a smidgen of text, and a phone number. The "strategy" behind such a simple site is pretty basic: visitors will learn about as much as they would from a brochure, and will hopefully call if they want to register, apply, or get more information.

Joe has a more elaborate strategy. He has created four information sub-directories that give prices, delivery options, menu ideas, and business references. What's more, Joe allows a merchant to order online, and even to pay for the order with a credit card. Joe is e-commerce enabled, which is more than can be said for most of America's colleges and universities, Old Ivy included.

So is *that* what e-strategy is about, getting e-commerce enabled? Sorry. If you think *that's* what it's all about, then you don't "get it".

E-Commerce and All That.

There is probably no more breathless mainstream advocate for e-commerce than Business Week Magazine. Every issue contains a cover teaser article for e-business, much as Cosmopolitan is sure to include a cover article on sex. Fortune and Forbes are not far behind, perhaps modestly influenced by the fact that vast amounts of money are being spent by dot.com advertisers, but also by the awareness that their readers are suffering from e-anxiety. "Every businessperson I call on today is filled with greed or fear when it comes to the Internet," asserts James Barksdale, who as CEO of Netscape experienced both at close range.

In the pages of Business Week, there is no question about it: every company needs an e-strategy. In fact, it may almost be too late! Try these lines from a fictional memo by middle-management upstart Paul Revere to corporate CEO J.R. Biggenslow:

We have to get off our butts and get wired. Not just E-mail. Not just Web browsers or a Web site. I mean the big kahuna: electronic commerce. Our future depends on nothing less than transforming our company into a full-fledged E-business. Now.

Or else we're roadkill.

("What Every CEO Needs to Know About Electronic Business," a special section in Business Week, March 22, 1999. Quote is taken from the lead article by Robert D. Hof.)

How times change. Three years ago, most traditional business leaders thought the Internet was a toy, and irrelevant to their industry. Two years ago, the same people could give you cogent arguments for why the Internet might be revolutionizing industry X, but could assure you why it would not affect *their* industry. In 1999, everyone seems to have woken up to the fact that their lunch, dinner, breakfast, and late-night snack could be eaten by an Internet newbie-or a rival who is moving fast. That was the first part of "getting it." The second part was truly understanding why this could happen. And the third, most powerful, factor was realizing that if their Board (and stockholders) thought they didn't "get it," they might have to get out.

In the Gospel According to Business Week, adding a buy-online option to a corporate Web site is not sufficient cause for sanctification. Corporations must consider every aspect of their business, from how they distribute goods, to how they interact with suppliers, and how they communicate internally. The changes may be profound, and may include the flattening of the management structure, the abandonment of lines of business, the outsourcing of important IT functions, and even the creation of Internet spin-offs that "cannibalize" the mother unit. This is not just "e-commerce enabling," says Business Week, this is "E-Engineering."

("From Reengineering to E-Engineering," by Andy Reinhardt, in "What Every CEO Needs to Know About Electronic Business," a special section in Business Week, March 22, 1999)

Some Questions:

Like most educational institutions, Old Ivy wants to operate in a "businesslike" manner, and gain the efficiencies that come from professional management practices. Therefore, there is much in the e-commerce revolution that may be of interest to the university's administrators. To its credit, Old Ivy recently established an electronic procurement system, and it is looking at supplying "smartcards" to its staff. It has junked its legacy HR software, and has purchased the hottest product from the coolest vendor (which last year was Peoplesoft). It has even created a committee to ponder whether tuition payments can be made online.

To reiterate, Old Ivy is already "wired," and is getting more wired every day. Its faculty, staff, and students are increasingly "computer literate," and are using their new skills in highly creative ways. It is moving in its usual stately fashion into adopting certain e-commerce applications. Does this not an e-strategy make?

Perhaps. Yet consider some questions that Ivy's President currently faces:

• Now that we can offer classes over the Internet, who is our customer?
• What computerized services should I outsource, what should I build, and what should I consider selling or licensing to others for a profit?
• How strongly should I push the notion that the University owns the copyright to online courses that have been created in partnership with the faculty? If Old Ivy creates the courses, are there patentable procedures being created that we should "protect"?
• Since Old Ivy has struggled long and hard to establish its top-shelf reputation, how do I manage Ivy's "brand" in cyberspace?

WHO IS OUR CUSTOMER?

The most critical question that Old Ivy faces is: who is our customer?

Until recently, Old Ivy was crystal clear about who its customers were: first-rate students from around the world, to continually fill its residential undergraduate and graduate programs. The number of such students was limited by the size of the physical plant, and by other physical constraints, such as teacher-student ratios. In some cases, class sizes have been adjusted to yield greater revenue, or greater selectivity. Thus, Ivy's customer base has been highly delimited.

But in the new era, these limits are being tested. Internet-enabled classes allow for Old Ivy to expand its offerings to the following customers:

• Busy Executives who want "Executive Education" classes, but don't want to travel to campus;
• College graduates who want to achieve advanced degrees online;
• Smart high school students, who would like to take college-level courses online;
• Professional School alumni, who need to take "re-certification" courses on a regular basis;
• Undergraduate alumni, who want to take "enrichment" courses online;
• Non-alumni degree holders, who want any or all of the above;
• Non-U.S. students, government officials, and business executives, who want any or all of the above.

Get it?

BRAND-MANAGEMENT IN CYBERSPACE

The November 8, 1999 edition of the New York Times carried a story that probably did not sit well with Old Ivy's Dean of Engineering. It reported that M.I.T. had just closed a deal with the University of Cambridge "to develop technologies, products and companies to improve the productivity and competitiveness of British manufacturing industries...." Such lofty alliances are formed all the time, but this one is unique in that the British government is putting $108 million into the deal.

The arrangement will be given substance through exchanges of students and faculty between the two institutions, and through the creation of "virtual classrooms that span the Atlantic Ocean."

Virtual classrooms; Big Deal. Old Ivy could have constructed those in a heartbeat. And Ivy's engineers are pretty savvy, and entrepreneurial, and willing to travel. However, Ivy doesn't have M.I.T.'s "brand." As the Times went on to state, no doubt drawing from M.I.T.'s press release:

M.I.T. has extensive experience working with profit-making companies to develop new methods of engineering and manufacturing, and the university's faculty members, students and alumni have had a hand in the founding of more than 4,000 companies... [which] in 1994 alone generated $232 billion in sales around the world.

("U of Cambridge and M.I.T in Joint Research Venture," by Edward Wyatt in the New York Times, November 8, 1999.)

Thus are great reputations underscored. "We're seeing the emergence of a world market for name-brand education," comments Robert M. Zemsky, Director of the Institute for Research in Higher Education, in the same article.

When administrators of top-tier research universities get together, they sometimes like to scare each other by raising the specter of the University of Phoenix. This for-profit university offers courses off-line and online, for a much lower fee, and at convenient times for working people and at-home parents. The University of Phoenix currently enrolls over 60,000 students-10,000 of whom are taking online courses-and runs classes at shopping malls and office buildings in 15 states, Canada, and Puerto Rico.

(Source: "U. of Phoenix Reports 22% Rise in Enrollment," in the Chronicle of Higher Education, October 29, 1999.)

But Phoenix doesn't really scare Ivy administrators. What scares them most is--each other. Phoenix is not really competing for the Ivies' traditional customer base. It is selling "down-market," to use a phrase from Harvard's Business School dean. That is to say, not to the intellectual and corporate elite.

Phoenix is not going to eat Harvard's lunch. Harvard is not interested in a slice of pizza and a Coke. Harvard likes chateaubriand and a good burgundy. But so does Columbia. And Stanford, and Michigan, and Duke. *They* want to sell to Harvard's market, and they *especially* want to sell to the global market, where even Harvard has to hustle-at least a little-for students.

B-SCHOOLS LEAD THE WAY

The best preview of what might happen should the "Ivies" start to really hustle can be found by studying their business schools.

When I listed Old Ivy's potential new customers, astute readers may have already recognized that elite universities are already extending themselves to these audiences. In some cases, the efforts are tentative and experimental, in other cases a greater commitment is being made.

For elite business schools, the new customer segment is mid-level and top-level corporate managers, based anywhere in the world. In the "old days," B-schools competed to lure such lucrative students to their campuses. Occasionally, a team would hold an off-site "executive education" session to gather up regional customers. But the Internet allows for a dramatic shift-a shift to hyper-drive-and Columbia and Duke appear to be the first runners off the starting blocks.

The B-School Internet race is well described in a remarkable cover story by The Industry Standard, a magazine that follows "The Internet Economy." Entitled "Ivy Online," the article begins with a dramatic surprise announcement by Meyer Feldberg, "The hard-driving dean of Columbia University's business school,"

...Columbia students and faculty learned ... that the 245-year-old institution had become a net player. Columbia agreed to license its name and contribute business courses to Knowledge University, now an independent company named UNext.com. In return, Columbia would get a piece of the action-in this case, shares in a potentially lucrative initial public offering....

(Source: "Ivy Online," in The Industry Standard, November 1, 1999, pages 109-128)

Unext.com is minority-controlled by a conglomerate called Knowledge Universe, the brainchild of former financier Michael Milken. Milken's partners include his brother Lowell, and Oracle CEO Larry Ellison. A 1998 profile by Fortune Magazine noted Milken's first career as "the junk-bond king," and his post-prison career as a philanthropist. "Now get ready for Mike Milken 3.0, a fusion of the other two, at once troubled by the woeful state of American education and excited by the money to be made teaching kids-and business people-what they need to know for 21st-century life."

(Source: "Lifelong Learning Spells Earnings," by Justin Martin, Fortune Magazine, July 6, 1998.)

Milken and his partners see "education" as one enormous market, whether it is pre-school, high school, college, post-baccalaureate, or Elderhostel. A market measured as $665 billion yearly by Fortune in 1998, and "more than is spent on national defense."

In order to move into corporate education in a big way, KU set aside $100 million and went shopping for partners. Columbia's Dean Feldberg negotiated what sounds like a terrific deal. As detailed in The Industry Standard, Columbia retains control over how its name is used by UNext.com. It also can veto partnerships with other universities. And it is guaranteed at least $20 million in royalties over the first five years, plus it has stock and stock options. Finally, Columbia has been offered a seat on the board of UNext.

With Columbia on board, KU quickly recruited several other name-brand schools. To whit, the University of Chicago, Stanford, the London School of Economics, and Carnegie-Mellon University.

Having been aced out by Columbia, Harvard's Business School and Penn's Wharton School have decided to forego Internet competition and cede the ground to their New York rival. Not.

Wharton and HBS were among the first schools on Milken's shopping trip. They both declined, motivated by the desire to have more control over their digital fate. As a stopgap measure, both schools signed non-exclusive course marketing deals with a rival Internet company, called Pensare. (Pensare is ambitious in its own right, and scored a first round victory by teaming up with Duke University to offer a complete online MBA program.

If there was any doubt about Wharton's intentions, such doubts will have been erased by the appointment of its new dean. The 41 year old Patrick Harker was picked from a field of 200. One of his main qualifications was that he had overseen the creation of Wharton's E-Commerce major, as well as the expansion of its distance learning programs. In announcing his appointment, Penn's President, Judith Rodin, made clear her own determination to move into cyberspace in a big way: "Pat has been one of the major advocates for...how [Wharton] will own the technology space and own the global environment."

And Dean Harker had plenty to say about his plans:

"What we're talking about is not cheap, but I don't think we have a choice. The game we are playing right now is a high-stakes game. It's the future of education. ...It's a three- or four-horse race [meaning the other top B-Schools]. We've got to break out of that pack right now. I wouldn't have taken the job if I didn't think I could."

(The Daily Pennsylvanian, February 9, 2000)

Harvard clearly thinks it can take a more leisurely "Nordstrom's" approach to coming on line. Sit back, watch what the others do, and then move in bigtime. Says Jon Winder, a Harvard Business School VP, "When you spend 350 years building what is a worldwide recognition factor, as Harvard has done, it isn't something to be given out lightly." The HBS Dean, Kim Clark directed the school to launch one of its famous Case Studies to consider what it should do. "People worried about the brand, the diversion of resources, whether this would take the school down-market, whether we would lose focus. Then people recognized that this is a very powerful technology and a good opportunity." (Translation, HBS has every intention of jumping into the ring.)

The Harvard Case Study, by the way, is considered confidential and is not available to the public. After all, does Macys tell Gimbels?

"Ivy Online," is valuable reading for anyone who wants to probe the perils, promises and pitfalls of an e-Strategy for elite institutions. To its credit, the article covers some of the serious issues that arise from such deals: If Columbia accepts its seat on UNext, could its "Board" responsibilities conflict with its duties to its students? Should Dean Feldberg have negotiated this deal without consulting his faculty, as apparently he did? Should B-Schools develop and market their own courses directly, even if the per-course cost may be $1 million? If faculty develop a course through a partnership with a company like UNext, who has the copyright and who gets the royalties? (Not the faculty, says Columbia's Feldberg, they will get additional compensation or time off.)

One cannot help but raise an additional question: Are the elite B-Schools hitching a ride on the back of a tiger? UNext has already created a marketable name for itself: Cardean University. Cardean; it sounds sort of tweedy and upscale, rather like a new scent from Ralph Lauren. Cardean, we are told, plans to offer its own MBA degree down the line. Might this be a new Higher Ed mega-brand in the making?

TAKING THE PLUNGE

Singling out the B-Schools may be somewhat misleading. In terms of sheer numbers, Business ranks a clear second in cyberspace to the Humanities. A massive survey by the U.S. Department of Education found that 1,680 institutions offered approximately 54,000 Internet-based courses in 1998, and the greatest number of courses were in English, the humanities, and the social and behavioral sciences. Business and management were next, with 55 per cent. Furthermore, public institutions in higher education were far ahead of private institutions in their degree of "wired" instruction. A full 79% of public four-year institutions offered online courses, versus only 22% of private four-year schools.

("Survey Finds 72% Rise in Number of Distance-Education Programs," by Dan Carnevale in the Chronicle of Higher Education. January 7, 2000.)

One could spend a significant amount of time probing more deeply into these figures, and the differences between "public" and "private" ambitions. We will restrain ourselves, except to note that the publics are getting far more experience with what works and does not work in cyberspace, and that from Old Ivy's perspective, rivals such as the University of California and the University of Michigan should not be ignored.

Let us imagine that Old Ivy has decided that it does not intend to sit on the sidelines and watch Columbia and Duke and Berkeley aggregate the best online students for themselves. Old Ivy decides to "take the plunge," and marshal a major foray into this brave new world.

Old Ivy will immediately confront a vast number of small and large decisions that have to be made:

• How much should we invest in this initiative, and should we expect it to be a money-maker or a money-loser?
• Who can lead this effort from within the current community?
• What talent and expertise do we need to recruit from outside Old Ivy?
• Is our IT Department up to the challenge? Can it be scaled up for this undertaking?
• If not, what IT functions should we consider outsourcing, and which ones are part of the "core competence" of the university, and therefore should be preserved even if they are more costly than outsourcing?
• What partnerships should we form with "sister" institutions, and what partnerships with commercial companies?
• Can our Intellectual Property office handle the flood of copyrightable and patentable ideas that will be generated by this venture?
• Will the faculty, who are used to the comforts and constraints of the current model, balk at this major change in how we deliver educational services?
• How do we promote our "brand" in cyberspace, and what are our major "sticky portals."? (More on this below.)
• Should our Alumni Programs Office be completely re-thought? After all, in the new era, our graduates are our "customer base," and the best source of repeat business.

STANDING PAT

Having considered the possibilities, and weighed the gains and losses, Old Ivy might very well decide not to dive into a full-tilt competition for online students with Columbia, Penn, and Stanford. And that would also be a legitimate e-Strategy: Stand Pat.

Old Ivy's reputation has not been built upon selling more and more widgets every quarter. And even though it sometimes sells services, it is not a service business (like, say, EDS or Razorfish.com). Old Ivy's definition of "customer" is rather different than that of most corporations, and it is not at all clear that Old Ivy wants *more* customers. It may simply want to continue getting the *right* number of the *right* customers, thus perpetuating a "virtuous circle" of customers who become leaders, and leaders who become customers-and donors-and friends-in-high-places.

The nation's elite universities have long had the option to franchise or "satellite" their businesses, yet apart from a few art programs and study-abroad centers, they have resisted this dilution of their brand. No doubt there were strong emotional reasons for retaining one operation: would Princeton Men happily go off to a reunion at the Akron, Ohio satellite campus?

Furthermore, the elite universities are still money-losing propositions. No matter how large their endowments, they always manage to overspend the income, and their physical plants are ivy-encrusted monetary sinkholes. More campuses would simply mean more deficits.

As for aggressive competition in cyberspace-that will be very expensive. Any of the Ivies, Harvard included, could end up overextending itself, wasting a lot of money, placing faculty in an uproar, and watching its elite status erode as its "student" population mushrooms and its IT structure collapses in upon itself.

Therefore, it might be very cunning to let the dot-coms take the risk. And there is plenty of risk. For instance, most of the commercial higher education companies saw their stock drop in 1999. Companies like Apollo, Argosy, Computer Learning Centers, and Sylvan. Some were down almost 80% from their trading high point. (CHRE, January 7, 2000)

Knowledge Universe, and its UNext spin-off, may not be tigers at all, only paper tigers, blown out of proportion by the current Internet mania. Sure, they might get a Big Win, but they are more likely to chalk up a Big Loss.

So there. If Old Ivy's President needs a well-thought-through rationale for inaction, this may be just the ticket. Experiment a little here, try a class or two online there, and don't risk any sticking out of the neck. Once the Internet Bubble bursts, and all the dot.com funny money dries up, the trustees will calm down and realize that "the Halls of Ivy" are still at the center of the known universe.

A word about the role of the digital library in Old Ivy's E-Strategy

END OF PART 1

Having started this exploration, I quickly realized that the issue of university e-Strategy leads to *many* interesting questions. Far beyond who-is-our-customer, brand-management, and the library. So, I have decided to keep going. Initially for my own edification, but eventually to share with others. If you would be interested in seeing Old Ivy, Parts 2, 3 and X, please send me an email to that effect. I am thinking of "open sourcing" this discussion. That is, collecting interesting comments and including them (with attribution) in further iterations. So, lengthy comments and criticisms are invited. Please indicate whether your comments can be added to future rounds, or not. If you don't indicate, I will check back with you. Included below is a teaser for Old Ivy, Part 2. A teaser because I am still working on it. Adam Corson-Finnerty corsonf@fund-online.com

DOES OLD IVY HAVE AN E-STRATEGY?
Part 2: Open

Old Ivy's President now has two clear options for an e-Strategy: (1) Steal a page from Dean Feldberg of Columbia and start making deals right and left. Or, (2) Stand Pat, with minor nods to experimentation, and wait for Columbia and Duke to bomb out; which, mayhap, they will. This leaves only the minor problem of dealing with OPEN. OPEN is a recently formed faculty group that is pressing for an e-Strategy of a very different sort. "OPEN" stands for "Organized Professors for an Enlightened Network," which was the best acronym anyone could think of at their founding lunch at the Faculty Inn. OPEN argues that Old Ivy is not a dot.com and that "the bottom line" is not its bottom line. They want Old Ivy to remember that it is a "dot.edu," and its ultimate goal is nothing short of the preservation and continual renewal of human society. The group maintains that the University, joined by dozens of other great universities, should be striving to create a global information commons, on a vast scale, "in which the citizens of the world can wander, learn, and delight." Cleverly, they advocate an "E-Strategy" for Old Ivy, with the "E" standing for Education. This, they claim, can be forwarded through three simple tactics: --First, by supporting the creation of a "global information commons," to which creators of new knowledge can freely contribute, and from which they can freely take. --Second, by building and maintaining a first-rate academic IT structure, so that Old Ivy can make original contributions not only to the content but also to the underlying structure of the global information commons; --Third, by tilting in favor of the "open-source movement," as a matter of academic policy and academic integrity. OPEN presents an acute problem for Old Ivy's President. But not a managerial problem. From a managerial point of view, it would be easy to deal with a gadfly faculty group like OPEN. All one has to do is form a committee, give it a vague mandate and no deadlines, pick a weak chairperson, and let everyone talk themselves to death. That is not the problem. The problem is that the President *agrees* with OPEN. (To be continued)

Adam Corson-Finnerty is Director of Development for the Library of the University of Pennsylvania. He is the co-author of Fundraising and Friend-Raising on the Web (ALA Editions, 1998). For other articles by Adam Corson-Finnerty, see the Online Fundraising Resource Center website (/musings/index.html). Does Old Ivy Have an e-Strategy, Parts 1 & 2 are copyrighted by the author, February, 2000 The opinions expressed are those of the author. Adam Corson-Finnerty corsonf@fund-online.com 215-635-4084 PERMISSION IS GRANTED TO FORWARD, COPY, AND DISTRIBUTE THIS DOCUMENT, SO LONG AS THERE IS NO CHARGE FOR SUCH DISTRIBUTION, AND THE AUTHOR'S NAME, EMAIL ADDRESS, AND COPYRIGHT ARE INCLUDED.