The University of Phoenix – Business model mystery solved
This take on the University of Phoenix (UoP) is complements of Michael Gerber. Gerber has written a number of books targeted for small business owners.
Gerber is probably most famous for this concept of the E-myth with a book of the same name. The E-Myth: Why Most small Businesses Don’t Work and What to Do About It.
The e-myth is stated below- It is the “fatal assumption” and why many small businesses fail.
“E-Myth stands for the “entrepreneurial myth,” the end product of which is most often a business and life disaster. The E-Myth says that technicians suffering from an entrepreneurial seizure believe that because they understand how to do the work of the business they intend to start, they are automatically gifted with an understanding about how to build and grow a business that does that work.”
But enough of that – if you want to read Gerber’s E-Myth books – have at it.
I mention the E-Myth in the larger context of Gerber’s analysis of what makes a business successful.
Back to the University of Phoenix (UoP) and Gerber’s take on this.
Gerber uses UoP as an example of the clarity one must have in setting up a business. That is, clarity of your business model – clarity in which category you compete; clarity of who your customers are; clarity in what product you are offering; clarity in what your customers expect, and so on, and so on, and so on.
The Chimera of the University of Phoenix
At first take, it might not be so clear on any of the above as applied to the University of Phoenix. In fact, the UoP might be a “misdirection” – a sort of “slight of hand” with regard to what business it is really in. It’s true customer, category, product, and business model in general might not be so clear. It may be the opposite of what you expect. But maybe that’s why it (UoP) is so successful and works so well.
On category, on business model in general, and product…
It can easily be demonstrated that the University of Phoenix is not the best place to go for education. Frankly, it doesn’t compete in that category. What’s more, it doesn’t pretend to. If UoP were to try to compete in that category they would fail. No, the University of Phoenix is in the business of providing low-cost, easy-access degrees. They are selling degrees, not education.
UoP doesn’t pretend to compete in the education category. Yale, Harvard, Dartmouth, and the like, all compete in the education category. A degree from Harvard is worth significantly more to the graduate of Harvard than a degree from UoP is to their graduates.
And what product does UoP manufacture?
To the Customer, the question is not whether the University of Phoenix offers as good an education as Harvard does. The only question is “How do I get a degree at all?” The University of Phoenix is a manufacturer of low-cost, easily acquired degrees that can be earned while continuing in a full-time job. You can’t do that at Harvard.
And clarity on business model…
The University of Phoenix’s Business Model is priced, delivered, and developed for the Customer who is determined to get a degree he can afford in terms of time and money. The Harvard Business Model is priced, delivered, and developed for Customers who want the very best, exclusive, elite education for their children and can afford to pay for it. The University of Phoenix’s customer is not the parent of the student but the student him or herself; a working adult who is determined to get a better job, position, career than the one they can get without a college degree. Again, it’s not the education they want, but the degree.
The success of UoP is based on this clarity of product, category, customer, and business model
That is why the University of Phoenix is such a brilliant business idea and Business Model. They know what business they are in. They are in the business of providing degrees to people who couldn’t get them if it weren’t for the University of Phoenix. And so they have developed a perfect model to make the process as painless, as inexpensive, and as productive as they possibly can.
The “get” on this one is linked to a previous article cited on this blog
“With roughly 6.7 million jobs lost since the start of the recession, it’s tempting – and often a great idea – to launch your own business. That way, of course, you can take matters into your own hands. No more rolling your eyes at the boss; it’s your show.
…There’s this very sad pattern about how people start businesses,” says Scott Shane, an entrepreneurship professor at Case Western Reserve University in Cleveland, Ohio. “People are most likely to start businesses in industries where start-ups are most likely to fail.
The “get” is that small business failure is predictable – esp by those suffering the “fatal assumption” of the E-Myth. The UoP is a really good example of clarity. Clarity of who the customer is; the clarity in which category one competes, clarity of the product you are delivering; and clarity of the overall business model.
If the segment of the 6.7 million people who lost their jobs that start their own business would have such clarity as UoP then the rate of business failure of start-up’s would not be so high. The majority of employees on the path to “business owner” seldom have a written business plan. It’s not so much about having a written formal business plan just to have a written formal business plan. It’s about having a written business plan to demonstrate that you have thought it all through and that the business is a viable market opportunity and you have understood all the aspects (in advance) that you need to do to execute.
As regards the University of Phoenix – duped again. I thought that people enrolled in UoP were there to get an education. Now I got an education. According to Gerber, UoP is not in the education business. I guess I really did not understand who the customer of the UoP really was and the product they wanted to consume. I suspect that if you got a hold of the UoP business plan you’d find that Gerber’s is exactly correct in his analysis.
An interesting post on business school and a cultural eduction –