We should have anticipated higher education’s ‘Grey Rhinos’

• This blog is contributed by Dr Gert Jan Scheurwater, Director of Strategy and Foresight at Delft University of Technology in the Netherlands and Mike Boxall, an independent consultant and regular contributor to HEPI blogs.

It is not difficult, with the power of hindsight, to identify the three Grey Rhinos, and institutions’ responses to them, that have underpinned the current crisis facing UK universities.  Grey Rhinos are defined as “highly probable, high impact but yet neglected” systemic disruptions; they are not random surprises (like Black Swan events) but occur after clear warnings and accumulating evidence.  In UK higher education they have been:

• unfettered competition for domestic students and their tuition fees that has produced divisions between a few winners and many losers across the sector
• uncritical resort to the premium fees of international students to prop up a loss-making business model, leading to today’s existential vulnerability to falling overseas demand
• burgeoning levels of borrowing to finance investment in competitive advantage, both in facilities and staffing levels, which has lifted institutions’ cost base above incomes .

We have all watched each of these cumulative dynamics and their predictable effects unfolding over the past decade, but few universities appear to have anticipated or prepared for them.  Instead, institutional strategies have almost uniformly chased more-of-the-same growth targets based on over-optimistic assumptions that they could escape the pull of economic gravity.  Criticisms that this represented a system-wide Ponzi scheme, feasible with continued market growth but fatal when that growth stops, are not unjustified. A rising tide can lift all boats – until it turns.

While UK universities agonise about the precarity of their funding model and the atrophy of the international student money tree, a growing number of European universities has begun to explore better ways of future proofing themselves against the known- and unknown-knowns of the mid-century knowledge economy. Along with – among others – ETH Zurich and the National University of Singapore, Delft University of Technology (TU Delft) in the Netherlands has been exploring the potential of Strategic Foresight to help them anticipate and prepare for the next waves of challenges and opportunities for their futures. 

Strategic Foresight offers a range of systematic approaches to thinking about future uncertainties, envisaging, evaluating and anticipating potential developments in global and sectoral environments. First associated with Shell in the 1970s (when it was known as Scenario Planning), it has been refined and adopted across many business sectors and by international governmental organisations including the United Nations, the European Commission and the OECD, as well as a pioneering unit in the UK Government Office for Science. It essentially consists of framing answers to forward-looking questions, including:

• What trends and events are (potentially) emerging in our business outlook?
• What are the possible impacts, threats and opportunities posed by these developments?
• What plausible futures can we envision based on these developments? 
• What should we be doing now to do to anticipate these potential futures?

TU Delft is among a growing number of universities institutionalising Strategic Foresight as a means of bridging ‘back from the future’ to anticipate and prepare for the next wave of Grey Rhino events. Some of these are already with us, notably global climate change and the push for net zero, and the retreat from “flat world” open globalisation caused by geopolitical polarisation and conflicts.  Others are emerging, especially the complex and double-edged impacts of Artificial Intelligence on social wellbeing, and also structural shifts in global demographics from the combination of falling birth rates and rising migration.  All of these outlooks challenge the presumptions of continuity and stability on which most universities continue to plan ahead.

Applied to the UK experience, the concepts of Strategic Foresight pose two, quite different questions.  One is whether and in what ways (OK, two questions) universities might have acted differently during the past decade if they had recognised the Grey Rhinos marching towards them? And the other (more fruitful) is, how might forward-looking universities use the tools of Strategic Foresight to harness the next wave of Grey Rhino developments to build more resilient and sustainable futures?

For the first years of the twenty-teens, the Rhinos seemed quite friendly. The shift to £9,000 undergraduate tuition fees represented a significant uplift to previous levels of funding per student; demand from both home and international students was growing dependably, year on year; and bankers were pushing multi-million pound loans and bonds at nominal interest rates.  Treasury officials reportedly regarded the sector as “awash with cash”.

It is perhaps unsurprising that few institutions faced with this benign combination of windfalls felt impelled to plan for the adverse futures that Strategic Foresight might have warned against.  Earlier applications of Strategic Foresight tools such as stress testing of key assumptions and plausible worst-case scenarios could have prompted the kinds of contingency measures – market diversification, more realistic targets, greater caution over investments, better informed cost management – that the Office for Students has recently, and belatedly, recommended.

Such hindsight is all very well and not all that useful, except as a warning against ignoring the next wave of Grey Rhinos already massing on the near horizon. We can see what some of these will be, for example:

• changes in the scale, mix and expectations of the student population: the proportion of the 17 and 18 year old cohort (itself declining) opting for three expensive years of full-time study appears to have peaked, as does the volume of Chinese and Indian students willing to pay  eyewatering fees and other expenses to study here, while alternative pathways and providers are made more attractive by the Lifelong Learning Entitlement, especially for mature learners
• a retreat from open globalisation: increased geopolitical tensions, greater concerns for national and regional knowledge autonomy and security, and reduced trans-national mobility (boosted by the pursuit of carbon neutrality) will all threaten the high levels of open international engagement (driving enrolments, faculty and research) which UK universities have rightly been proud of and dependent upon
• the promises and threats of digital personalisation: compared to most other sectors, and the wider experiences of students’ lifestyles, the university sector has been relatively cautious in adopting to the blandishments of digital provision, instead deploying digital technologies to facilitate and enrich the essentially inter-personal nature of higher education; this relationship will be challenged and redefined by the inevitable but unpredictable progress of Artificial Intelligence.

Using Strategic Foresight to identify the next Grey Rhinos will not, of itself, divert their disruptive implications for higher education systems and structures.  But it should enable institution leaders and planners to anticipate and prepare for their effects, and perhaps to turn potential threats into new opportunities.