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BOS Moves

Peirce College

Peirce College Blue Ocean Strategy Strategic Move

In 1990, Peirce College in Philadelphia, PA launched a national presidential search with an aim to recruit a leader with a strong background in both higher education and commerce who would receive a mandate from a forward-thinking Board of Trustees to chart a new course for a 21st century, post-secondary institution. Dr. Arthur J. Lendo became the College’s sixth president on July 1, 1991 after holding senior positions in both higher learning and a Fortune 500 high technology company.

Peirce was founded in 1865 to train the returning veterans of the American Civil War for participation in the workforce expansion and economic development emerging from the Industrial Revolution. Peirce offered a practical curriculum primarily in business, legal and technical education emphasizing state-of the-art technology, shifting its focus over the years from serving war veterans to educating traditional-age students between the ages of 18 and 21. By the late 1980s, the College had joined other regional colleges to compete in the red ocean of post-secondary education. Despite a good regional reputation, Peirce College faced mounting challenges.

Peirce started its journey of value innovation by looking at unmet needs of noncustomers. Whereas most colleges were focusing on serving traditional-age students, a vast pool of learners was overlooked or under served. Working adults, for example, found it hard to complete an on-campus degree program while fulfilling their duties at work. Moreover, as adult learners mostly sought to improve their career prospects through enhancing their academic credentials, community and regional colleges that only offered associate degrees were less attractive to them. Traditional campus-based learning models also failed to suit the needs of military personal and those who worked in employment sectors that required constant relocation. Finally, there existed a vast number of learners residing in other regions or even in foreign countries that Peirce never considered as its potential customers. Exploring the commonalities across these people provided Peirce with important insights for market reconstruction to pull in all-new demand.

Peirce reconstructed market boundaries by looking across strategic groups of post-secondary education. In the traditional market of undergraduate education, there were mainly two strategic groups: community and junior colleges that offered two-year associate degree programs and accredited colleges and universities that focused on offering four-year baccalaureate programs. As the internet age dawned, for-profit institutions began to enter the market by offering online courses. Cutting across these strategic groups, Peirce diversified its offering from two year to four year collegiate status and delivered the baccalaureate degree programs through the completely interchangeable platforms of on-campus, online, and onsite learning.

Reconstruction also came from identifying a complementary time trend that was clear, irreversible and decisive to the college’s business. With the advent of the information age, internet-based learning model was clearly gaining momentum. And Peirce actually benefitted substantially from the massive ability of for-profit entities to educate sophisticated consumers about the many advantages of online learning.

In the meantime, Peirce managed to achieve all these breakthroughs in value for learners at the lowest possible costs. To fund the needed technological growth and development for delivering an unprecedented learning experience, Peirce diverted resources from those taken-for-granted areas of expenditure into areas that are central to learner’s academic experience. To this end, the College eliminated and reduced unnecessary facilities and programs that were largely irrelevant to core academic activities. The Dean’s House was sold, and student dormitories and extracurricular programs were scaled downas they incurred much resources while adult learners did not benefit much from the offerings. In this way, Peirce was able to free resources to fund technology development needed for delivering the educational content. As the College borrowed less, it in turn achieved further cost savings due to reduced debt and interest payments. Such a cost-effective business model has allowed one of the lowest private college tuition rates to students and has supported and sustained its delivery of other key value factors to a vast pool of adult learners.

For strategic, systemic organizational change to have a meaningful and lasting impact, the employees in all areas of the College have to advance en masse. Peirce recruited and develop a team of kingpins to drive the institutional transformation. Peirce College adhered to the mutually reinforcing components of fair process –engagement, explanation, and clarity of expectations- to develop its own, unique human resource development tool to facilitate organizational change, progress, and achievement. The overall goal was to drive a performance-based culture. The underlying philosophy was that the educational needs of the students were of primary importance. Employee needs were vital, but excellent salaries, benefits, and working conditions as well as individual professional growth could only be derived from effectively and efficiently addressing the educational requirements of the college’s adult students. Peirce’s faculty, staff, and administrators have worked together to fulfill its institutional mission because their work has been respected and acknowledged; recommendations have been seriously considered and implemented; and important information, especially financial data, has been fully and openly disclosed.

Positive results emerged quickly. Online enrollment forecasts were exceeded by 300% in the first year alone. Today, about 65% of the College’s total annual tuition revenue comes from Peirce Online – a delivery system and source which did not exist ten years ago. The market penetration moved across the country. The College has achieved a national scope with international reach in less than a decade. Total enrollments have nearly tripled. The College has enjoyed strong financial performance with a string of annual operating surpluses. This has enabled the College to properly resource further expansion; increase scholarship funds; avoid borrowing; improve employee compensation; and maintain one of the lowest private college tuition rates.