The University Of Adam Smith

About halfway through "," Andrew Rosen relates a story from a consultant who was hired by a small private college to help it implement the once-trendy concept of Total Quality Management. The consultant began by asking the school's administrators and staff a question: "Who is your customer?" The provost said that "basically everyone is our customer." Two of the school's deans named "the faculty" as their main customer. The college president picked "the trustees." The faculty itself found the word "customer" offensive. The consultant was eventually fired.

Mr. Rosen, who is chief executive of Kaplan Inc., one of the largest for-profit higher-education providers in the country, has a way with an anecdote, and "" is a lively read thanks to his in-person interviews and firsthand reporting at colleges across the country. As the customer-related anecdote suggests, one of the book's themes is that most colleges and universities have trouble identifying exactly whom they are trying to please and thus what exactly they are supposed to be doing.

And little wonder—think only of the tangled network of income sources and self-interested constituencies that vie for the attention of a college administrator. There are of course students and the parents who pay the tuition bill. There are taxpayers, who underwrite college subsidies in one form or another (including research grants and financial aid). There are alumni, whose donations are a key to university solvency. There are even sports fans, whose enthusiasm plays no small role in college branding and consumer appeal.

Unfortunately, this mix of financial imperatives can lead colleges to focus too little on what students are learning in the classroom. Money and effort, instead, go to moving up the prestige ladder, often by enhancing "selectivity." In a chapter called "Harvard Envy," Mr. Rosen notes:

"Under the existing rules of higher education, a college is defined as 'better' by turning away more potential students—no different than a nightclub that's 'hot' because its system of bouncers and velvet ropes leaves a critical mass of people on the outside, noses pressed to the glass."

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