Broken business models leak cash

Answer #8 to the question: Why are college costs soaring?

When any business model is broken, the customers are not satisfied with what they get for their money. The employees are wringing their hands in frustration. The managers have too many problems on their plates to solve any effectively. Problems with no easy solutions are multiplying and crises become a common occurrence. With so many things going wrong, survival of the enterprise is in jeopardy. It appears this is a time to "spare no expense" to restore order and get things back on track. Enterprises with broken business models hemorrhage cash profusely.

Business models become broken for many different reasons. Here's a few that colleges and universities are experiencing:

• Dramatic changes in what the customers need, want and expect for their time, effort and money
• Introduction of new technologies that change the rules of the game, not just save time and expense
• New rivals that raise the bar, change the standards or deliver superior quality at a lesser price
• High turnover in top leadership positions where the newest execs are still learning the ropes when they get replaced
• Confusion among those who deliver and use the formerly reliable services because of so many policy revisions and reorganizations
• Grandiose pronouncements about significant improvements that never materialize which make everyone more cynical
• Blatant attempts to bribe the customers to they stick around by dishing out freebies, swag and token efforts

When things get this crazy for a college or university, there's no way to calm down enough to address soaring costs issues. Everyone is frantic, scatterbrained and stressed out. It appears that spending less money will looking like quitting, giving up the fight or admitting defeat. They feel compelled to spend big bucks to make a big impression that covers up the broken business model that's leaking cash rapidly.