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  • 1.  Organizational capital - the cost for re-opening

    Posted 07-27-2020 10:49:00 AM

    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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  • 2.  RE: Organizational capital - the cost for re-opening

    Posted 07-30-2020 04:00:00 PM
    Thank you Professor Watson for sharing your insights!

    In my opinion there are, at least, three additional interesting questions:
    1. I would say that both camps are creating different types of organisational capital. One improves the capability to teach online, the other to open its campuses again under these conditions/hybrid-teaching. How do these capabilities interact with others to generate the specific output? Short- and Long-term.
    2. Which configurations of capabilities lead to which results?
    3. From a dynamic capability perspective, how could higher education institutions develop a certain agility in sensing and responding to comparable threats in the future (does it count to OC or human capital?).
    Best regards
    Tobias


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    Tobias Guggenberger
    Scientific Assistant
    TU Dortmund University
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  • 3.  RE: Organizational capital - the cost for re-opening

    Posted 07-31-2020 04:25:00 PM
    G'day Tobias

    Thanks for the comments.

    Building OC to teach online is probably a good investment, though does everyone need to do it? It's a bit like writing a text book. As long as we have about 10 texts for a topic we probably have enough choice and every professor is free to select one of them or none. What if we had about 10 online courses for each topic, and professors could pick the one they wanted for their class. Then they could focus on developing localized learning problems and passing tacit knowledge to students. 

    Education, like healthcare, needs to find ways to lower its cost rather than increasing it as it has done for decades. Covid-19 might be the time to pod and poke the sacred cows of academia and deflate a few to lower costs.

    I would argue for a future based on building an educational system, at least at the undergraduate level, where costs decrease for at least a decade for so.  Let's give our customers a better deal.




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    Rick Watson
    University of Georgia
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  • 4.  RE: Organizational capital - the cost for re-opening

    Posted 08-02-2020 11:36:00 AM
    Dear Richard,

    thank you for sharing your thoughts. I perfectly agree to, at least, the second paragraph on the efficiency of education systems.
    I interpreted OC more as the capability to teach online/hold online courses, not on building complete courses to be replicated yearly.
    Regarding to your last paragraph, I would argue for building cooperations between institutions to build networks and concentrate on their core competencies. Then teach large "MOOC-style" courses for fundamental topics that do not need intensive interactions with the teacher.

    I am very excited how C-19 will change the education systems and how this will be differing between the countries/cultures.

    Best
    Tobias

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    Tobias Guggenberger
    Scientific Assistant
    TU Dortmund University
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  • 5.  RE: Organizational capital - the cost for re-opening

    Posted 08-08-2020 02:35:00 PM
    A cooperative MOOC approach is a path to efficiency. 

    For example, the University System of Georgia has 26 higher education institutions and a common core for all undergraduate students to enable transfers between institutions. One MOOC for each common course might become a necessity as funding is reduced to cover the disruption debt.

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    Rick Watson
    University of Georgia
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