Organizational capital includes routines, procedures, information systems, databases, and a cultural climate that support the ongoing operations of an enterprise. Alfred P. Sloan, the CEO of General Motors, who in a short period destroyed forever Ford's early dominance of the nascent auto industry, reckoned that organizational capital was more important than economic capital. He stated "Take my assets - but leave me my organization and in five years I'll have it all back."
In the first few months of 2020, many universities started the shift to online classes and embarked on an intensive organizational capital creation exercise to equip themselves to operate under the cloud of Covid-19 amid changing government directives that in some cases reversed within hours. Software to support online classes was rapidly installed and faculty educated in its use. The first wave of quick creation and investment in new organizational capital was generally successful.
For a variety of economic reasons, as discussed in an earlier post, a significant number of US universities have set a goal of reopening their campuses in August or September. I will use data from the University of Georgia as an example of one of those opting to return, because I have followed its efforts over the last few months and because I think it is typical of the serious and diligent planning of many universities.
Over 140 faculty and staff were part of nine committees that prepared a 225-page document detailing how the university would return to campus operations while Covid-19 was still a major health threat. Every classroom on campus was assessed for capacity under social distancing to decide how to assign students to each session of a course based on a hybrid model of in-person and online. Some students would attend as few as one in six in-person classes of some courses because of social distancing. The sudden need to create so much organizational capital in a short period of time was stressful for many and a massive diversion of human capital.
Some universities, such as the California State System, quickly opted to stay online. They eschewed investing in creating organizational capital to handle what hopefully turns out to be a short-term disruption.
Both camps had to refresh organizational capital that made no sense in either a partial or fully online mode. Some of this might have been an overdue adjustment to changing educational opportunities.
Organizational capital is usually a long-term investment, as IS practitioners and scholars know. The payback is in years not in months. However, those who decided to resume campus operations may generate long-term social and symbolic capital that results in stronger societal support. If these plans fail, then the opposite may occur.
The Chancellor of the of University of Maryland stated, "Opting for a hybrid model - combining in-person and remote learning - is, by no stretch, an easy out. It doesn't save us money, it doesn't save us time, it doesn't save us planning. It's a high-cost, high-effort undertaking."
The capital creation outcomes of any decision are complex and difficult to assess in advance. Did the openers focus on economic, social, and symbolic outcomes? Did the continue on-liners decide the short-term organizational capital creation costs were too high and risky and there was little long-term upside?
Who made the right decision? Was it worth the effort? We will likely get a partial answer in the next few months and the longer-term consequences might not emerge for years.
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Rick Watson
University of Georgia
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