Who Benefits from the The #ASUonline / #Starbucks Partnership?

While there were many highlights from the 2015 ASU+GSV Summit, for me it was the interview with Michael Crow, President of Arizona State University and Howard Schultz, CEO of Starbucks. Nearing a year into their widely touted partnership, the two came together at the Summit to retell the story of the partnership, the vision, and possibilities for the future.

In case you’ve missed the media over the past ten months, in 2014 Arizona State University online and Starbucks announced a partnership that provided a discounted tuition to Starbucks employees around the globe. When a student successfully completes a certain number of credits, that student gets a full reimbursement…with no strings attached. While partnerships between Universities are nothing new, many are more about equipping employees with skills related to their current work, but that is not the focus of the ASU/Starbucks deal.

Both agreed that their partnership was not simply about workforce development. This was not a partnership focused exclusively on a University helping a company better or further equip employees. Instead, Shultz cast a vision for how a publicly held company can help people pursue their life goals. This is a no-strings-attached perk for Starbucks employees. The partnership covers the tuition and employee are free to stay or leave Starbucks upon completion of the degree. This is a University/company model that doesn’t simply treat the employee as a human resource to help increase shareholder value. Indeed, the employees do that, but Shultz has demonstrated a commitment to investing in the quality of life for employees beyond simple measures of increasing shareholder wealth. This was demonstrated with a 350 million dollar investment in healthcare for employees (an amount that Shultz mentioned far exceeds what they pay for coffee in a decade), along with this newer 250 million dollar investment in the educational goals and broader aspirations of current employees.

According to Michael Crow, their vision is not for this single partnership to transform society. However, he is hopeful that other “value-driven Universities and value-driven companies” will do the same thing. They are establishing an exemplar for other Universities and companies on the public good of investing in human potential. Ultimately, this is about something bigger than the well-being of a single company. This is a for-profit business embracing social entrepreneurship.

Increasing shareholder wealth remains a critical part of Starbucks, as it does for all public companies. With that in mind, how does such a partnership fit? A $250 million dollar investment in the education of employees is well over double what Starbucks spent on advertising in 2013. There is no question that the media coverage from such a partnership strengthened the already robust company brand, but it might be a challenge to suggest that there is an evident and solid financial return on this effort. This is simply about more than the bottom line. As best as I can tell, this is about a set of core values, about defining and living out a social vision for the company.

What about ASU? What benefits do they get from this partnership? That one is easier to see. I’ve not reviewed financials to discover how much ASU spends on marketing for their online programs, but online recruitment is an expensive endeavor, with some online programs putting well beyond 20% of tuition toward marketing and recruiting new students. As such, a partnership like this allows a University to contribute what looks like a generous tuition discount without losing money on the deal. In essence, the partnership provides a stream of students and gets an amazing brand like Starbucks to market the ASU program from within the company. There is immense value in that. As such, a partnership like this makes it possible for a University to contribute a discount directly to students instead of having to spend that same money on marketing.

What is next for this partnership? They didn’t discuss this much in the interview, but Michael Crow certainly took the opportunity to give a glimpse into how efforts like this partnership represent a larger vision for ASU. He stated that higher education has “reached its maximum in its current form. The only way forward is through innovations like college completion and lifelong education” through modes like online learning. It is time, according to Crow, for us to “move beyond the notion that college is something that you do between the age of 17 and 22” (if you happen to come from a wealthy enough background). Crow knows the stats as well as anyone. That population of traditional college age residential students is the minority in higher education today, and there is every indication that the “non-traditional” learner will continue to become the norm. With this in mind, Crow continued with a challenge. “Who is willing to step out and start evolving the next form of higher education?” ASU is stepping up to the challenge, and we see countless others stepping forward as well; not to mention the many startups and education companies that are not officially labeled as “higher education providers” but are actively offering products and services that were once limited to traditional learning organizations. Welcome to the digital-age learning revolution.