"Profiting" from Knowledge

06.05.2003

Is education becoming a big business?

The eminent educationists of the last Millennium will probably turn in their graves at the thought; given that education was always regarded as something noble and elevating. The so-called filthy lucre and financial engineering had not entered the domain in those decades. Similar to charities and other compassion-driven causes like healthcare and nursing (remember Florence Nightingale?), education evoked kindred spirits who went beyond the call of duty and conventional accountabilities. There was so much commitment, dedication and a selfless-service approach inbuilt that perished the thought of making money by imparting knowledge.

Teaching as a noble profession and knowledge as a gift, passed on from generation to generation, could not of course halt the march of the mercenaries. Soon the prospects of profiting from knowledge became less metaphysical and more material. Of course, we have since come a long way in the 'knowledge economy'; as we now call this age and time. University and higher education became expensive requiring considerable investments; not merely in teachers but also in physical and communication infrastructure. There is undoubtedly some concern creeping in, that education is becoming big business in many parts of the world. In the Fabian socialist days in the U.K. and in other European welfare states, education was subsidized with grants from the state from time to time until Margaret Thatcher (recall the 'milk snatcher title'!?) and Reagan-led Conservatives in the U.K. and the Republicans in the U.S., felt that such subsidies were distorted and produced inefficiencies. They removed these and gave considerable freedom to the education authorities to invite private capital and to accept corporate donations to remedy the shortfall.

More recently, the emphasis on specialist skills and the 'services sector' in the economy got a shot in the arm with the advent of technology. Internet and 'software boom' has meant that those with skills and knowledge in certain verticals (in tech-jargon) could command a premium in the job market and even businesses spawned to exploit the collective contribution of such clusters of knowledge-workers. The focus thus moved away from manufacturing or mining when the margins in the traditional businesses got squeezed.

It is in this context that education has emerged as the new frontier that has attracted the attention of the traditional businessmen, who see this as captive and consistent cash flow generators (cash cows in classical business lingo!). If established and equipped properly, the education-peddling business will not suffer from seasonalities and is practically recession-proof! Indeed during bad times, hardworking families spend more money on education in making sure that their wards attend the right schools, so that they have an edge in the competitive job markets and can replace the breadwinners.

Simultaneously the state-owned institutions no longer have been found to possess the motivation, the morale or the means to renew and reinvent themselves. Besides, in a global fiscal scenario of budgetary deficits, most governments are unable to cope with escalating expenditure on education, public health and utilities that prove to be such a drain (malapropisms!) on their elastic revenue sources. The fees that students pay just cannot be raised at will in state schools even in line with inflation. In any case, fees form little more than a trickle in the overall funding requirements of the education sector. In state-funded educational institutions, there is hardly any incentive for the staff to perform better than bare minimum. Many educational institutions have degenerated into entangled and enlarged bureaucracies themselves.

Of course there is no place for crass-commercialism in education. Privatisation has solved little in universities. On the other hand, in the U.S., some of the best universities are not state-funded. In fact, they zealously guard their independence and would not want to compromise their quality standards or brook any interference . The state that chooses to fund ends up putting its nominees in the governing boards of educational institutions and soon the bureaucrats try to remote-control.

At the basic level i.e. the junior and senior schools, community interests seem to be focused to establish schools that serve the sectarian (not cosmopolitan) causes well, even if they are in the private sector and not for profit purposes. Interested parties, may, for moral and other reasons, choose to make substantial charitable donations. Education at the higher level (i.e. in universities, post-graduate, management and business studies) sees a significant role for the private sector, not just in terms of assisting or operating institutions but also working with them to give them industrial / business training and clearly combining the rigours of business with those of academic disciplines.

Narrowing the relevance to this region, the Knowledge Village in Dubai is an important initiative. The clusters in the Healthcare City may result in a university college (say medical training with residence requirements). The various Higher Colleges of Technology have proved to be jewels in the crown. The Minister for Higher Education in the UAE encourages the best in higher education for the UAE nationals and this is worthy of emulation. He has often talked about the need to substantially step up the budget allocations, to meet the stream of students seeking higher education

I was also pleasantly surprised recently by the quality and commitment of the faculty and the excellent academic and all round performance of the Indian High School in Dubai, when they held a programme to celebrate the receipt of H.H. Sheikh Hamdan Award and to launch their new 'e' magazine in the hands of Mr. Mirza Al Sayegh. It was a delightful event and only shows how, over the years, this institution has flowered into one of the best campuses in this region. Full credit must go to the trustees and the management board but here again businessmen got together and gave a financial hawk eye as they are wont to but allowed full flow of academic excellence!

In many countries, there are established trusts that bring in the talent, skills and the businessmen with the cash flow, on board, to fund a corpus that can grow over time to meet capital expenditure (capex). The operating revenues from fees charged on near-commercial terms helps to meet opex (operating expenditure) as well as those needing additional financial aid by way of obtaining waiver of fees, assistance for books or scholarships, fellowships, associateships and the like. The system works well but usually, the profit motive propels organizations best; in order to perform well; albeit a little more aggressively and efficiently. It is debatable whether profit motive in all its 'venom' should be imputed into the educational mould.

In conclusion, profiting from knowledge is not just intended as a pun on words. There is no reason why businesses should not bring their organizational and financial muscles to establish good institutions. Large industrial houses could do so initially for the benefit of their labour work force. Perhaps sufficient tax incentives could provide the encouragement in certain countries. If recognition and reward can harness the best of business interests to put their money means to the pursuit of information and knowledge, then one should not quarrel over motives. In the final analysis, information is of limited value, if it does not turn out into knowledge. Knowledge itself goes up the value chain (tech-slang again!) when it ripens into wisdom. It is this maturity blend or distilled wisdom in the scientific, literary and technology domains, that should be nurtured.

The author is a CMO (EFS) and General Manager in Emirates Bank. The views expressed in this article are not necessarily shared by the Bank.

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