With the college admissions scandal still top of mind, I recently reflected on how university leaders could have prevented such wide-scale abuse. It brought to mind my own experience leading a for-profit college. I resigned as CEO in July 2014. A year later, the 150-year-old institution was forced to shut down. My perspective from that experience remains highly relevant to anyone leading in today’s complex world. Before sharing lessons learned, however, a bit of context is necessary.
When I joined the institution in 2013, the Obama administration had tightened regulations governing for-profit colleges. New companies were entering the space seeking to disrupt traditional higher education. And the public increasingly began to question the value of a college degree. I had a strong belief that for-profit colleges would be competed, innovated, or regulated out of existence. I argued that, while the mission was admirable, the underlying value proposition of for-profit schools (and incidentally non-profit schools as well) was deeply flawed. Far too many schools focused on maximizing enrollment while failing to deliver quality education and student outcomes.
The college had a small window of opportunity to act, but it had to do so immediately. Despite my best efforts, I could not convince the board and key stakeholders to take the necessary drastic action in the short term in order to protect the institution over the long term. In July 2014, once it became apparent that I did not have the full support of my board, and having made the options and associated tradeoffs clear, I resigned.
If you are a leader, you are likely to face similar issues at one point or another. While the circumstances and stakes may be different, here are the six lessons I learned and the common guiding principles I believe are critical to navigating the complexity inherent in these types of situations.
1. As a leader, it is critical that your worldview, vision, and strategy are aligned with the objectives of your board and ownership.
The right business model and strategy will fail without strong support from critical constituencies.
2. You must elevate purpose to at least equal status to profit.
Leaders must trust that focusing on delivering value to customers will result in profitable growth and enterprise value creation over the long term, not the other way around. Had our institution and its peers focused on slower growth and invested in serving students exceptionally well, it would likely have avoided much of the regulatory backlash and would have created the space to build sustainable organizations.
3. You need to build strong cultures, in which distinctive organizational behaviors and values are clearly understood and actually rewarded.
When you hire and fire based on values, you know you have fulfilled your responsibility as a leader to be the steward of your company’s culture. In my case, the vast majority of for-profit colleges had cultures that valued growth above anything else.
4. You must be paranoid.
Complacency is perhaps the most dangerous symptom within an organization. I inherited a very proud organization. The company had a long history and the pride was justified. Yet, its history bred complacency — “We’ve been around for a long time, we’re better than everyone else,” etc. A leader’s job is to honor the company’s legacy but not shy away from challenging the organization to rethink its business model and to strive to be much better. I recognized that I needed to instill a sense of urgency without unduly alarming the organization. Getting this balance right is difficult but critical.
5. You must have the courage to act on your conviction.
The job of a leader is to understand the key industry trends, identify early threats, and recognize quickly whether preemptive, disruptive action is warranted. Acting preemptively requires foresight, courage and a rare alignment of interests among leadership, board, and shareholders.
Like the prophet Cassandra, who was given the gift of prophecy along with the curse of never being believed, leaders who can see around the corner are oftentimes unable to convince their organizations to act preemptively. I saw and created a strategy to deal with the impending danger. What proved to be impossible, however, was convincing key stakeholders that the only way to survive was to disrupt the existing way of doing business.
6. You need to clearly understand and hold inviolate a set of principles, and then act with the utmost integrity in staying true to those principles.
When those principles are challenged, it is imperative to explain and defend them, even when unpopular or when short-term exigencies seem to require a different course of action.
I was clear about my principles. We had to act with urgency and challenge conventional thinking. Everything we did needed to be anchored by and centered around delivering an exceptional student experience. And we needed to invest in building a culture where employees were empowered, where teachers were valued and developed and where culture and mission drove every decision. When it became clear that I would need to compromise these principles, I no longer was willing to serve. This is the ultimate test and sign of real leadership.
Let me be clear. None of this is easy. In any industry undergoing rapid change, leaders are faced with numerous challenges. The answers to complex strategic questions are oftentimes unclear. Deciding how and when to instill a sense of urgency in an organization, how to reconcile purpose and profit, and how to build healthy and enduring cultures is fraught with complexity and nuance. Yet, one thing is clear. Continuing with the status quo in times of change is simply unacceptable and irresponsible. A leader’s job is to listen, apply judgment and act. The failure to do so can have catastrophic consequences, as we are seeing being played out in higher education and across industries.