A Business Model for Online Competency-Based Education

Goal:

Anticipating the need for alternative credentials and non-traditional sources of students, Radford University launched the Vinod Chachra IMPACT Lab in 2017 to offer online on-demand competency-based certificate programs and micro-credentials.  The university’s hopes and expectations for the Lab were for it to not only “float on its own bottom” financially, but to be a source of net new students and revenue.

Challenge:

By 2021, the Lab had obtained start-up investment dollars from the university and significant grant funding.  These sources of funds were used to build out the Lab’s infrastructure, develop several programs, and serve more than 5000 students.  Pressure inside the university was mounting to direct scarce dollars to a wide array of possibilities beyond the IMPACT Lab.  Little understanding about the true revenue and costs of Lab was evident, and a reasonable plan to transition the organization completely away from university funds to sustainable revenue sources was lacking.  The challenge was to identify longer-term revenue support for IMPACT and align university expectations and leadership talent with a realistic plan.

 Solution:

To address the challenge of long-term sustainability for the IMPACT Lab, a cost analysis was conducted and a self-supporting business model was developed.  The cost analysis provided a window on the each of the component costs associated with course development, marketing and sales, grants and contracts management, course delivery and administration. The business model separated curricular innovation from sales and operations, pointing different sources of revenue at each:  grants and contracts to fund curricular innovation and tuition to fund operations.  In addition, re-examining leadership roles for each form of revenue and executive coaching were provided to better equip IMPACT leadership to implement the new business model.

Outcomes and Impacts:

As a result of the business model development and the leadership capacity-building, the Vinod Chachra IMPACT Lab had the ability to justify the university’s support for a robust course development and marketing operation.  In addition, the Lab had a plan to transition away from university funds and a strategy to pursue public funds for continued curricular innovation and development.