Norman Augustine Applies Industry Lessons to Higher Education

Former Lockheed Martin Chair and USM Regent Norman Augustine tells UMUC audience there are “enormous opportunities to be found in periods of change,” provided you “truly understand the world as it is, and likely to become, not as you would wish it to become”

Higher education institutions must accept that fundamental change is coming and adapt to it or face failure, Norman Augustine, former chairman of Lockheed Martin and a member of the University System of Maryland Board of Regents, told an audience of University of Maryland University College faculty, staff, and students.

Few things are more hidebound in its traditions than academia, he said, but it must understand five realities that rapidly are challenging it.

“The essence of this is to truly understand the world as it is, and likely to become, not as you would wish it to become,” Augustine said, “even though that may seem rather harsh.”

Augustine was speaking at UMUC on March 25 as part of the annual Orkand Chair Distinguished Lecture Series. (Watch the video.) He drew on his experience in shepherding one of the biggest defense conglomerates through radical transformation at the end of the Cold War.

When the Berlin Wall fell, the free world’s aerospace businesses collapsed along with it. Within about five years, he recalled, 40 percent of the aerospace employees (about 640,000 people) and three-fourths of the companies in the industry were gone.

“That is what I call change,” Augustine said.

At that time, Augustine was chief executive of the aerospace firm Martin Marietta. It seemed very clear to him that if the company was going to survive, it needed a clear strategy and a strong commitment to carrying it out.

That strategy, which included combining with competitors, eliminating inefficiencies, and concentrating on capturing market share, worked.

Martin Marietta merged with Lockheed and emerged as Lockheed Martin, a dynamic company that had 180,000 employees—including 82,000 engineers—when Augustine retired as CEO in 1997.

Augustine cited a recent story in the Economist magazine that reported on the failure rate of mergers of equals, and the only example of a good one was Lockheed Martin.

That happened only by facing reality.

“The trick is to preserve one’s core values while changing just about everything else around you,” he said.

For Lockheed Martin, he said, those core values were “operate ethically, take care of your customers, and treat people with respect.”

Other corporations were not so lucky, he said. Such giants as Kodak, Montgomery Ward, Penn Central, and Woolworths declined or simply vanished because they could not adapt to changing technology and business practices. Of the 100 largest firms in 1900, he pointed out, only one still existed at the beginning of this century.

From his experience in industry, Augustine related the lessons he learned to the challenges facing higher education as it looks to the future and tries to innovate.

Most states have decided to disinvest in higher education, thereby de facto privatizing state universities, he said. But state institutions have not amassed huge endowments like their private counterparts.

In the last five years in the United States, there has been a 32 percent decline, on average, in state funding per student.

This shortfall has been offset, in large part, by increases in federal Pell Grants. But the average increase in state tuition at public universities has increased by 90 percent over those five years, he said, while family income has increased by only 5 percent.

“Clearly we are moving into unsustainable ground financially,” he said.

In Maryland, state support for higher education has been maintained far beyond what other states are providing, he said, but the pressures on the state budget will make this more difficult. And with payment on debt and for entitlements engulfing the federal budget, states cannot count on the federal government picking up the tab.

He noted that the lion’s share of income to public universities has been reversed, from a state-supported model to a tuition-driven model.

But higher education is a difficult institution to change, he said. Because of such practices as tenure, changing the workforce is problematic. It’s harder to measure results in academia. Education is a fundamental, long-term undertaking while business is short term—and often short sighted.

Arguably, no institution has more successfully resisted change over the past two centuries than higher education, he said, with the possible exception of the church. “It’s even been said that higher education celebrates 200 years of tradition unimpeded by progress.”

However, there are very few institutions in America that are more important to the future of the nation than higher education, he emphasized. The good news, he said, is that there are enormous opportunities to be found in periods of change.

UMUC has been dynamic in making change, he said, but this process is compounded by being lumped together with for-profit education companies that don’t hold themselves to the same high standards that the University System of Maryland demands of UMUC.

The second reality of higher education that cannot be wished away is the impact of technology, he said. While UMUC has been at the forefront in distance learning for decades, it is not immune to the massive disruption underway.

“The ultimate outcome will be some form of blended learning,” he said, “but the nature of that blend is not clear to me.”

If the outcome is lower cost and more accessibility, he said, it will be a good change.

The third reality, he said, is the advent of knowledge-based certifications that give students credit for knowing things without having to sit through a class to learn it. Industry will accept these if they are confident that the certifications really attest to the knowledge the students have.

UMUC is poised to take advantage of this shift, he said, as long as it has the backing of the university system.

The fourth reality is the education gap and the huge influx of immigrants coming to the United States, he said. Given current trends, by the 2040s, minorities will represent a majority of the United States population.

Students in the top quartile academically of their high school class who come from parents at the bottom of the economic ladder already have a harder time graduating from college than students coming from the bottom quartile of their class academically but whose parents are more affluent.

The inequality of education is one of the greatest threats to the nation, he said, but UMUC is best prepared to provide an educational pathway for many of America’s less fortunate, less wealthy, but extremely capable, motivated citizens.

The fifth reality, he said, is that only 43 percent of students graduating from high school are ready for college work, according to the College Board, and just 15 percent have the skills to study engineering.

If the United States wants to produce one PhD in engineering by 2030, it must start with a pool of 3,000 eighth graders today, Augustine said.

In K–12 the problem is not money, he added, because the United States spends more per pupil in kindergarten through twelfth grade than any other country except Switzerland.

UMUC is in a position to take advantage of all of these new realities to provide a top-level education for students at a reasonable cost, he said. But it faces two hazards.

First, as the leader in online education, UMUC may question why it needs to change. And second, as the leader in the field, everyone else is making UMUC a target. If UMUC is convinced it is the leader, challenging the status quo is difficult. But not challenging the status quo will lead to failure as others catch up and surpass it.

One important way to bring about change is to gather different perspectives on a problem. A particularly important lesson he learned from industry became one of what he calls “Augustine’s Laws.” That law states: “The best way to think outside the box is to listen to someone who isn’t in the box.”

Take nothing for granted and always be on the lookout for discontinuities, he said, such as those technological innovations that have disrupted the newspaper industry, changes to public policy that impacted the airline industry, or changes that swayed the nation’s attitude and behavior toward smoking.

At the same time, Augustine encouraged universities to look for synergies across two or more disciplines that seem unrelated, which can foster new ideas and innovation.

Even as higher education institutions implement change, he sees even more disruption. “We’ll see more private, small universities follow the dinosaur,” he cautioned. “We’ll see more public universities that will seek to trade government financial support for more freedom in such areas as compensation and procurement.”

“UMUC is enormously well prepared to take on what is an enormous challenge,” Augustine concluded. “The organization is well led and has many strong ingredients of what is needed. There will be a premium in this new world on knowledge and on lifelong learning, both things at which UMUC is very good.”

The principal trend in education in the years ahead, he said, will be personalized adaptive learning where a combination of faculty and tutors will be available to students 24 hours a day, seven days a week, providing in essence a personal tutor, he said.

“Simply trying to do harder what you’ve been doing all along, is a formula for failure.”

Norman R. Augustine attended Princeton University, where he graduated with a BSE and MSE in aeronautical engineering. He has served as undersecretary and acting secretary of the Army, CEO of Lockheed Martin, and lecturer with the rank of professor on the faculty of Princeton University.

Augustine was chairman and principal officer of the American Red Cross for nine years and chairman of the National Academy of Engineering, the Aerospace Industries Association, and the congressionally mandated NIH Scientific Management Review Board. He is a member of the National Academy of Sciences and the Council on Foreign Relations and a fellow of the National Academy of Arts and Sciences and the Explorers Club. He holds 33 honorary degrees. He has been a member of the University System of Maryland Board of Regents since 2008.

About the Orkand Chair Distinguished Lecture Series

The Orkand Chair Distinguished Lecture Series promotes research and scholarship and features internationally acclaimed speakers in the fields of management, technology, and education, discussing trends and advances in their respective fields.

The series is sponsored by UMUC and the university’s Center for Innovation in Learning and Student Success (CILSS), which serves as a laboratory for continuous improvements to the university’s curriculum, learning models, and approaches to student support.

The Orkand Chair was established through an endowment from Donald S. Orkand, founder of the Orkand Corporation and former chair of UMUC’s Board of Visitors, to advance research and scholarship at UMUC by bringing scholars of national reputation to serve in its Graduate School.