VET News

Increased Professionalism in the VET Sector Said to be Driven by Cultural Change

The coming of age of evidence-based strategy in VET

Some hold the mistaken view that the VET sector is entirely made up of ‘mom and pop’ operators. While it is undoubtedly true that the sector is fragmented, with a long-tail of small providers, the sector has always been highly commercial, and is becoming increasingly professionalised.

The increasing professionalisation of the sector has been driven by four key factors.

• The introduction of contestable models of funding has pushed RTOs to become more responsive to government funding and the market.
• The decline in public funding for VET over time has made RTOs much more focussed on revenue diversification, especially in the fee-for-service market, both domestically and internationally.
• The rise and fall of mega providers like Vocation Ltd – primarily as a result of excessive reliance on a single source of government funding – has made RTOs more attuned to the sustainability of their business models.
• The interest in VET from highly commercial boards, from public shareholders (following IPOs), and/or from private equity owners has induced a step change in governance and management rigour.

The most significant driver however is simply cultural change across RTOs. A new generation of senior managers from both inside and outside of the VET sector are emerging, bringing a new set of capabilities and perspectives.

This increased professionalisation is in turn driving an expectation of evidence-based strategy. Strategy has been simply defined by Michael Porter as “Where to play and how to win”. Evidence-based strategy in VET therefore can encompass:

• Go/No-Go decisions: Decision whether to commence, continue or cease delivery in a given market. Market may be defined according to particular customer segments, geographic regions or industries/sectors.
• Product development decisions: Decisions in relation to the design and delivery of courses, including course curriculum, delivery mode, and distinctive features.
• Market positioning decisions: Decisions as to what market segments and regions to target, including the RTO brand narrative, course level differentiators, marketing channels, and setting of specific marketing and recruitment targets.

The great thing about VET is that it is a data rich environment. But an excess of data creates its own problems. The data dictionary for the NCVER’s portal to AVETMISS, TVA and other data runs to 193 pages. Accessing the data is free and relatively easy. Analysing data with an understanding of the detailed and subtle nuances of the various datasets is a potential risk for RTOs. The most significant issue however is not the ability to access the data or to use it well, but rather being able to synthesise the evidence into meaningful insights.

It is important to recognise that quantitative data is only part of the picture. Quite often internal business intelligence initiatives fail because organisations fail to blend numbers on the page with the understanding stored in the minds of its resident experts.

There are thus hard and soft requirements for implementing effective evidence-based strategy within an RTO. These are summarised in Figure 1 below.

Many RTOs are looking to increase their reliance on evidence to inform strategy, particularly those in a growth phase faced with the questions of what to offer, how to operate, and where to market. In order to address the hard and soft requirements listed, RTOs should look to harness both internal and external expertise — including off-the-shelf data reports currently being developed for Velg Training members.

This article appeared in the 10th Edition of Velg Training’s free eZine.  Jonathan Chew presented at the 2017 VVS.

Date posted Nov 23, 2017