Blog Archives

Reducing the Cost of Higher Education

In a past post about a new educational model Massive Open Online Courses (MOOCs).  It seems that more and more well know universities are offering MOOCs.  Allowing anyone to have access to some of the best professors in their fields for free.

This movement has started to cause people to examine the question of what should the cost of higher education really be?  The question is being raised often enough that a post on the HBR blog has started to address it.

The biggest challenge is getting employers to understand the value of the MOOCs.  They still don’t know what to think about them.

According to a recent Financial Times article, many employers are unsure of what to make of MOOC education — unsurprising, since many new technologies and business models go through multiple evolutions. The good news, according to the article, is that 80% of respondents surveyed would accept MOOC-like education for their internal employee development. We can extrapolate from this survey that the employer demand for online education exists — and, moreover, that it is only a matter of time until universities and well-funded venture capitalists will respond to this white space in the market very soon.

Employers find it great for already hired and in the workforce people but what about using the system to get a college degree?  Would it be totally free?

Georgia Tech, in fact, has already responded; in January, it will begin offering a master’s degree in computer science, delivered through MOOCs, for $6,600. The courses that lead to the degree are available for free to anyone through Udacity, but students admitted to the degree program (and paying the fee) would receive extra services like tutoring and office hours, as well as proctored exams.

In the near future, higher education will cost nothing and will be available to anyone in the world. Degrees may not be free, but the cost of getting some core education will be. All a student needs is a computing device and internet access. Official credentialing from an on-ground university may cost more; in early 2012, MIT’s MOOC, MITx, started to offer online courses with credentials, for “a small fee” available for successful students — and we’re eager to see how Georgia Tech’s MOOC degree will transform the education model.

This seems reasonable to me.  You can take the courses for free, but to get the degree or access to office hours, tutoring and other services you pay a fee.

So now the student has the power to decide whether they pay for the learning or not.  The next step is to make a database that shows the student took the class and completed it.  Nothing more.  Then a person could list it on their resume and employers have a way to validate the person actually did it.  Maybe universities can change to have access to the database?

I find the MOOC system very intriguing.  As someone who has two elementary school aged kids, I am very interested in how the educational system will start to transform over the next decade and how employers will except the changes.

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You Don’t Deserve a Profit!

My wife saw a post by a shop owner on Etsy this week that just drove us both absolutely crazy.  The shop owner posted how you should determine your wholesale and retail pricing.

The first step was to determine your costs.  What are your costs of materials?  Even what is the cost of your time?  While I agree with that logic, the cost of my time can be very subjective, but it makes sense.  There was a exhaustive list of what to include in determining the cost of a product.  A very large portion of it we agreed with.

After this is when it got interesting.

According to the shop owner, your wholesale pricing should be double your costs.  Your retail pricing should be double your wholesale pricing.

The shop owner was very firm that this is the only way to price.

Based on this logic, you are entitled to a 75% profit margin when selling it in retail and a 50% margin when you are selling wholesale.

So why are people going out of business?

Because, this is not correct at all.  The price is set by the consumer.  If the consumer, sees value in your product at that price then they will pay for it.  If they don’t, they won’t.

As a shop owner, it is your responsibility to control your costs to help control your profit.  If your costs are low and the market is willing to pay a very high price then you will get a large profit margin, but if the opposite is true then you may lose money.

If everyone deserved a 75% profit margin then no one would be going out of business.  Just because you are in business does not mean you deserve a profit.  If you want a profit…earn it.  Know your market.  Set the price appropriately and then control your costs.

This is the heart of entrepreneurship.

My Kids’ School Eliminates Waste in Cafeteria

It’s that time of year again when I spend a day working at my kids’ school.  It is always a lot of fun to be with the kids in their classrooms and help with activities.  Every year I learn something new from a visual management perspective or from some other aspect of lean.  The school is not “using lean” but there are always elements of it around.

This year I noticed some small improvements that were great ways to element small amounts of waste that would add up over time.  One example was the placement of the silverware in the lunch line.  It used to be the first thing in the line so every kid would grab one of each piece of silverware before choosing their lunch and knowing what they would actually need for their lunch.  Now the silverware is the very last thing in the lunch line.  The kids can choose their food and then pick the appropriate utensils.  This eliminates the cleaning silverware that was never used, saving time in putting silverware away as well as possibly reducing the number of dishwasher cycles needed to clean the dishes.

A second small improvement I saw had to do with reducing food waste.  As part of the lunch, students get milk in cartons, yogurt cups or other food items that are packaged.  In years past, if the student didn’t want it they threw it in the trash.  At the same time, other students might want an extra milk or yogurt and would have to pay extra for it.

Now the school has the “share table”.  It is a small table where students that don’t want their milk carton or packaged food item can put it on the table for other students to eat.  If another student wants an extra milk they can ask to go to the “share table” and pick an item.  Less food in the trash and less cost to parents of kids who want a little extra.  What a great idea!

It is amazing at all the learning that I still get every year I go into my kids’ school.  We can learn ways to reduce waste and communicate visually anywhere.  We just have to keep our eyes and minds open.

Waiting is Less Expensive

“Paying people to produce excess product cost more than paying people to do nothing.”

-Jean Cunningham

This is a quote I like to use when trying to change people’s mindsets around the 7 wastes.  It is human nature for people to want to look busy or “do something” when they are at work.  Especially, in today because our minds start to think, “If I’m not doing anything, they will think I’m not needed and cut my job.”  The managers and supervisors feed this mindset by pushing people to produce more and “keep the machines running” in a manufacturing world.

We need to switch this mindset and let it be known it is alright to be doing nothing if there is nothing to produce.

Overproduction (producing more than is needed or producing too early) is the waste that can create the other 6 wastes which in turn adds product costs.

It may be hard to see someone standing and waiting, but if a person is waiting and not working when there is no production needed they are not adding any more cost to the product.  They aren’t building up inventory of components that may not be used or later are found to be defective or become defective from sitting around waiting to be used.

Also, when a person is standing around waiting it highlights the imbalance in the work flow and can lead to problem solving around creating a better flow further reducing costs.

We should try to eliminate the waste of waiting, but we should do it the right way.  By highlighting the imbalance in the work and then create a better process that eliminates the waiting time.

In the end, waiting is less expensive then over producing product you don’t need.

Guest Post: The Importance of a Quality Management System

Today’s post comes from Alice Rose.  Alice is a freelance copywriter working for QMS International plc, a business certification company specializing in ISO 9001 http://www.qmsuk.com/iso-9001.php.

As the recession hit many businesses began to think of the best ways to cope and short-term solutions such as cutting staffing levels and reducing marketing costs were some of the most popular. But, as time has progressed and consumers are still being very cautious with their spending, I want to touch on some other ways that you can try and beat the big squeeze.

What is a quality management system?

A Quality Management system is the processes, procedures, organizational structure and resources that come together to ensure that a business provides a consistent and reliable service. It emphasizes different principles within a business such as leadership, continual improvement, staff involvement and different approaches to decision making.

It’s all about the consumer

The first thing to remember is that if you provide a great product or a brilliant service to the consumer then they are going to keep coming back. One way to check that your company is running a high quality business is to put a quality management system into place. Quality management systems often incorporate a ‘customer service’ element to them, ensuring that there are procedures in place so customers can record a complaint which means that issues can be addressed and reduced in the future.

Manufacturing industry

If you are manufacturing a product there are certain steps that you can take to ensure that the final product will arrive with the consumer in a high quality state. This can start at the beginning of the production chain, in the factory for example. Simple tasks such as ensuring your workplace is clean will lead to the creation of a better final product. As the product progresses along the chain if simple manufacturing tasks are conducted in a more streamlined fashion the consumer is more likely to receive a high quality product – which will also lead to less waste on your part, reducing costs.

Service industry

The services industry is not immune to the economic downturn and there are simple changes that your company can take to ensure that the customers are still happy. One of the simplest ways to find out if you are providing a good service is by encouraging customer feedback – if you know where you are falling down it’s easier to pick yourself back up.

Setting an example

It is important that quality management systems are considered as a priority by business management who have the facility and knowledge to implement these systems and who, leading by example, will encourage greater productivity and performance across the board as well as locating new areas of the business for growth.