In 2014, Chris Montagnino arrived at Excelsior College to assess Educators Serving Educators (ESE), an ambitious and struggling attempt by the distance learning institution to leverage its expertise and diversify its finances following the 2007 financial crisis. Armed with years of experience in higher education, online learning, and organizational management, Montagnino embarked on a meticulous assessment of ESE’s viability as the only nonprofit within a space dominated by deep-pocketed for-profit companies and venture capitalists.
Her valuation – and inventive ideas on how to transform the division – eventually earned her the title of CEO of ESE and a permanent role as vice president of Extended Education at Excelsior. Sixteen months later, ESE’s revenues will exceed expenses for the first time and Montagnino has become a sought after resource for those looking to grow and diversify amid challenging economic times.
Her lesson: Understanding who you are not is just as important as understanding who you are.
Emulating vs pioneering
ESE was born of singular idea: to leverage Excelsior’s forty plus years of expertise serving the post-traditional learner by helping other institutions deliver their own online programming. In 2010, ESE opened its doors, becoming the first (and only) nonprofit Online Program Management (OPM) organization. A growing $1 billion market, OPMs assist institutions interested in delivering online programs by providing resources, upfront capital, and expertise.
“While it may seem counter-intuitive to create your own competition, with 37 million adults in this country with some college and no degree there are far more prospective students than any single institution can hope to serve,” said Montagnino. “Excelsior’s mission is to remove the barriers to the educational goals of working adults and far too often, one of those barriers is a lack of quality online education options. ESE was founded to change that.”
However, while ESE was uniquely experienced within the space and could imitate for-profit OPM competitors, it could not stomach their risk tolerance. The OPM business model requires significant upfront capital investments, long term contracts, and revenue-share arrangements. There is also substantial risk involved. Even successful programs can take five to six years to earn back the initial capital outlay (if ever).
ESE struggled and administrators searched for answers. Montagnino came aboard soon after.
“This was not the identity of a non-profit college,” said Montagnino. “We were diverging from our roots and the non-profit philosophy of maintaining a fiscally prudent culture, with low-risk investments. It also didn’t serve our client’s well.”
Finding a sustainable model became Excelsior’s challenge. The new hire recommended looking inward.
Montagnino knew the capital intensive nature of the OPM model was unsustainable. But Montagnino also understood something else: the idea of delivering online education programs for others challenged the College’s core beliefs, primarily that people – and the institutions they lead – can flourish if provided the proper tools and education.
Her goal was to transform ESE into an expert consulting service organization and a new vehicle to establish partnerships.
Soon, ESE was conducting on-site visits to determine whether an institution had the internal infrastructure, resources, and human capital to deliver its own online programs. If so, ESE consultants began to work with the institution on each phase of the academic process, from market research and program development to technology, marketing, and enrollment services.
“Under this new model, ESE works alongside an institution, embracing Excelsior College’s belief that acting as a true partner is critical to our peer institutions,” said Montagnino.
As a result of this pivot from a revenue-share to a fee-for-service consulting organization, Excelsior has built partnerships with a variety of institutions including the University of New Haven, Bridgeport University, and Wheelock College. In addition, ESE has signed agreements with educational solutions organizations such as EducateOnline and EducationDynamics, which will deliver services to institutions as needed based on ESE’s assessments.
Under this new model, ESE no longer has to fund the initial capital costs of bringing an institution online in hopes of breaking even years down the road. In addition, institutional partners are more eager to work with ESE, Montagnino says, because the new model allows them to retain control over their operations, deliverables, and intellectual property rights.
As a result, 2016 will be the first year that ESE delivers a positive margin to the college. More importantly, says Montagnino, Excelsior is attracting organizations that share in the College’s core values – organizations who want to remain in control of their programming, protect their legacy, and maintain their brand.
“The past few years were really a soul-searching process that required us to learn first, who we were not,” said Montagnino. “This important lesson then enabled us to capitalize on who we were.”