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PUBLIC PURPOSE AT A PUBLIC FLAGSHIP: BRINGING THE OpenStateU PROGRAM TO LIFE

A case study written by: Bill Ashby, Doctoral Candidate Center for the Study of Higher Education, University of Virginia P.O. Box 400701 University of Virginia – Newcomb Hall Charlottesville, VA 22904 bashby@virginia.edu Carolyn Livingston, Doctoral Candidate Center for the Study of Higher Education, University of Virginia Mari Normyle, Doctoral Candidate Center for the Study of Higher Education, University of Virginia July 2006


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Even the Assistant Vice-President for University Relations at State University1, a seasoned media handler, must have been surprised by the headline, “Low-Income Rank Shocks State U.” The news appeared in the local paper just one day after the university’s governing board approved a $1.88 billon budget at the conclusion of their spring meeting. A national newspaper report, released just two days earlier, identified State University (State U.) as the flagship state institution enrolling the lowest percentage of undergraduate students in the bottom half of the national income distribution. According to the article, only 8% of its undergraduates qualified for federal Pell grants, down from 11% a decade earlier. Additionally, 58% of State U. undergraduates came from households with annual incomes of $100,000 or more. One governing board member captured the broader university sentiment when he remarked, “I know we are all pretty embarrassed about it.” How had the public flagship university, whose founder believed that the survival of democracy depended on developing an educated citizenry, become an elite institution heavily populated by wealthy in-state students? The Executive Vice-President and Chief Operating Officer, wanted the public to know that State U. leaders recognized the apparent contradiction and they were formulating an ambitious plan to change the face of State U. by making an unprecedented committed to need-based financial aid. Higher Education Funding: A Changing Landscape Increased accessibility was a defining legacy of American higher education through the 19th and 20th centuries. From the founding of Harvard in 1636 to the mid-1800’s, college attendance was reserved for the sons of wealthy, White landowners and prospective clergy. As the fledgling country expanded westward and the economy grew, a pressing need for an educated citizenry arose. The Morrill Land Grant Act of 1862 stimulated public colleges and university 1

The names of the university and individuals analyzed in this case have been changed or excluded. The case is designed as a teaching tool intended to demonstrate the organizational and leadership challenges involved in implementing an institutional need-based financial aid program at a public university.


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construction and significantly increased postsecondary enrollment capacity. After the G.I. Bill passed in 1944, the number of citizens seeking postsecondary education grew. The Civil Rights Movement, associated legislation, and new public policies opened the gates to the “Ivory Tower” even wider through the 1960’s and 1970’s. Some have suggested that the American commitment to accessible and affordable higher education is waning in the early 21st century. Economic recession in the 1980’s and 1990’s contributed to declining subsidies for higher education in most states. By 2004, state funding accounted for only 8% of State U.’s operating budget. The broader statistical trends that highlight declining financial support for low-income students are telling. In 1980, sending a student to a public four-year college required 13% of income for families in the lowest income quartile. By 2000, the percentage of income requirement to support attendance jumped to 25%. In 1986, the average federal Pell Grant covered 98% of tuition at a public four-year college. By 1998, the same grant covered only 57% of tuition. The financing formula also shifted significantly during this period. In 1981, the average student financial aid package was comprised of 45% loans, 52% grants, and 3% work aid. By 2000, loans accounted for 58% of financial aid packages leaving only 41% covered by grants (with the remaining 1% in work aid). The fact that students from low-income families are less prone borrow to cover the cost of attending college and the potential for debt to limit career choices for graduates highlight the broader social consequences of funding formulas weighted heavily towards loans. Additionally, recent federal legislation has the potential to increase the cost of borrowing by eliminating government subsidized loans. Finally, the character of the grant aid portion of the funding formula has also shifted. According to College Board statistics, between 1982 and 2002, the percentage of financial aid that is not need-based increased from approximately 10% to over


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25%. The Georgia HOPE scholarship program and similar merit-based aid programs provide a means for policy makers to extend state subsidized financial aid to middle-income families, but the funding for these programs typically results in decreased funding for need-based programs. A zero-sum mentality prevails—if funding for merit aid is increased, then funding for need-based aid decreases. Colleges and Universities Respond Some colleges and universities, struggling to remain solvent through the topsy-turvy funding cycles of the 1990’s, lost sight of their public purpose. Recently, competitive pressure, public and political relations, and genuine concern about trend has inspired a handful of public and private institutions to develop innovative financial aid programs. The new programs are often funded with private gifts and donations that are realized using aggressive fund-raising campaigns. Carrying catchy names like Carolina Covenant (University of North CarolinaChapel Hill (UNC)), Longhorn Opportunity Scholarship (University of Texas-Austin (UTA)), and AccessUVa (University of Virginia (UVa)), the programs are typically unveiled with a flashy promotional campaign and at public press conferences to insure plentiful media coverage. In 2001, Princeton University replaced loans with grants and other ivy-league institutions such as Harvard, Yale, and Brown University followed Princeton’s direction. The Carolina Covenant, replaced loans for low-income students with grants in exchange for an agreement with the student to work 10 to 12 hours a week on campus. UNC became the first selective public university to remove loans from financial aid packages offered to its neediest students. The competition among selective institutions for highly qualified students is fierce. Although in 2005, U.S. News & World Report placed State U. high in its public university rankings, and the pressure to maintain national pre-eminence is intense. While serving the public


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good has long been recognized as an important compact between states and their public universities, leaders at these institutions now recognize that institution-based financial aid programs, supporting low and middle-income students, have the potential to bolster the standing of the public flagship universities with state politicians and constituents, potentially offering the institution a competitive advantage. In many states, greater autonomy in operating practices is granted to public universities in exchange for assurances that they will meet negotiated accountability standards. Maintaining and enhancing a commitment to access and affordability for low-income students is often one of the most important and most intensely negotiated accountability measures. The Mandate and the Challenge at State U. At a governing board meeting in October 2003, the President of State U. challenged the university’s financial aid staff to create a new program tailored to meet the needs of both prospective low-income students and the institution. He envisioned a program that not only insured that a State U. education was affordable for the lowest-income students, but one that also addressed the growing concerns of middle-income families, who are increasingly squeezed by rising tuition resulting from decreased state financial support for postsecondary education. Four months later, in February 2004, State U. officials announced plans for OpenStateU—an ambitious financial aid plan designed to keep higher education affordable for all students who qualify for admission, regardless of their economic circumstances. The Executive Vice-President characterized OpenStateU, a $20 million a year financial aid program targeting low-income prospective students, as a “gigantic commitment” to preserving the public purpose of the institution. An aggressive media campaign, starring an alumnus television actor, well known with the target teenage audience, was unveiled.


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The leadership in three State U. administrative departments, Financial Services, Admissions, and University Relations, were now confronted with the challenge of implementing OpenStateU during the fall admission and financial aid recruiting cycle. Adopting a new operating paradigm can be challenging, particularly when the environment is constantly and rapidly changing. This case study explores, through the eyes of three individuals with significant responsibility for bringing the OpenStateU program to life, one public flagship university’s effort to implement an innovative need-based financial aid program within a very short timeframe and the organizational challenges associated with implementing the program. Who is responsible for the OpenStateU program? The State U. governing board approved a resolution to fund OpenStateU in February 2004 and high profile media coverage followed the formal announcement. Beginning as early as 2001, the President suggested to the governing board and his cabinet that these emerging programs had the potential to transform the financial aid model at public universities. He believed that to retain its stature as a top-ranked, public flagship, State U. had to consider implement a similar program. The Director of Student Financial Services reflected on the initial discussions as follows, “We were investigating whether to expand meeting more need with grant funds for all of our students or focusing on a particular cohort when [our competitor] announced their program.” At this point, it became clear that the talk about having a plan had to be translated into action. With competitive pressure from peer public flagships, a formal mandate from the governing board, and a compelling vision offered by the President, the most pressing question for State U. became, “How do we make this happen?” It was no surprise to State U’s Dean of Admission, that his office was expected to play a major role in the implementation. “As soon as I heard the President’s remarks, it was clear that this office would be central to the


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effort,” offered the Dean. The Director of University Relations shared a similar sentiment remarking: I cannot remember the exact time, but I knew the President had charged the folks from Student Financial Services with the job of creating a program expressly for State U. students…I knew that we in University Relations would be key in the promotion of any program that might be created. The three area directors had all been employed in leadership roles at the University long enough to know that their respective offices would play key roles in bringing OpenStateU to life; however, none of them were ever provided explicit orders or direction about how to shape the new program—a program the President and governing board believed would shape one of the University’s most critical strategic directions in its recent history and serve as the linchpin in redefining the institution’s relationship with the state government. Consider the Assistant VicePresident of University Relations response to questions about the invitation to participate in developing the program, “I don’t know that anyone asked or told me, I just knew it would fall to our department to take it up and get it done.” A “can-do” attitude prevailed among the three managers, but given the urgency of the mandate and the aggressive implementation timeline, the first OpenStateU students had to be admitted immediately, the lack of clear roles and responsibilities intensified the challenge. In addition to reworking the inner operations of their respective departments to accommodate OpenStateU efforts, the three managers also had to create new methods for daily communication and collaboration between their offices. The lack of a clearly designated “point person” complicated the process. The managers recognized that they would need to work together differently than they had in the past. The Director of Student Financial Services stated,


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“The different offices have different parts of the mission, and different schedules, so it was important that we maintained contact and ensured that we were all working towards the same end.” Initially, OpenStateU working and advisory groups were created to facilitate cooperation. The Assistant Vice-President of University Relations was charged with leading the working group, but after a few months it was determined that the Director of Student Financial Services might be best suited for the role. All of the organizational structuring and re-structuring occurred concurrent with efforts to establish the mechanics of the program, conduct market testing, and train the front-line staff. The Director of Student Financial Services reflected on the challenge of assuming the steering committee chair role, one that required her to be a leader among leaders, as follows, “Being chair of the steering committee is a bit of a challenge for me—it is a different role to be responsible for a pan-university initiative. I usually play a very supportive role, and this role is different—to help the offices involved coordinate their efforts. As you can tell, I’m still working on this new role.” Additionally, while the group added a member from the State U’s institutional studies department to insure that data collection and measurement were ingrained in the new processes, there was minimal time for consideration of how the university community and the needs of individual students might change as enrollment demographics shift through the implementation and expansion of OpenStateU. The majority of the planning efforts were focused on short-term needs. How is State U. going to support the new program? While it is difficult to characterize OpenStateU, with a $20 million commitment to needbased financial aid, an unfunded mandate, most of the funding was earmarked for direct financial assistance to students. During the process of moving from planning to implementation, many funding and resource allocation questions remained unaddressed. When asked about early


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frustrations in the implementation process, the Assistant Vice-President for University Relations remarked, “More internal resource frustrations. We [University Relations] paid for all of the initial marketing efforts out of our carry-forward money and hired a part-time person out of our budget. There initially were no funds earmarked for marketing efforts.” In order for the University to make a dramatic entrance into the access “movement”, following the lead of its competitors, and given the recent national media attention focused on State U’s affluent student population, the media campaign had to be modern and aggressive. The “initial marketing efforts” the Assistant Vice-President alluded to included television advertising spots during football game broadcasts, website redesign, and professional quality brochures and posters for widespread distribution at in-state high schools. Additionally, because the target audience for OpenStateU includes many students who become the first in their family to attend college, intensive personal outreach, and education efforts are necessary. Regarding initial efforts, the Dean of Admission suggested, “We have started the process of finding and enrolling highly talented, low-income students. It will be a long process.” The commitment to “finding and enrolling” talent requires significant changes to traditional Admission efforts and most of the changes make the process more labor intensive. The adjusted recruiting process requires additional time and staff. The Director of Student Financial Services articulated the strategy for spreading the word as follows, “We want to have a plan that makes a difference—not just provide information on the web, but active tangible benefits.” For her, the OpenStateU effort is about more than just enrolling students at the university, she described it as a “financial literacy” effort. She explained the scope of the effort as follows, “We have a map of the state that shows where low-income students reside who graduated from high school, and another map that shows where low-income students come from


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who go to college.” The Director imagines a time when the two maps will be redundant, but she admitted that the University must dramatically increase its outreach efforts, in her words, “first in the local seven county area and then more throughout the state.” Does the Dean of Admission currently have the staffing required to make personal contact with the expanded population of prospective students that the Director of Student Financial Services believes the university must reach? As she explained, “Low-income students will always take a special [marketing] focus and I don’t think we’ve created our development of that yet.” By June 2004, the Director of Student Financial Services realized she needed to increase a part-time position, focused on the mechanics of the OpenStateU funding process, into a full time position. The University receives many more applications for admission than can be accommodated, and the reading and screening process is very complex and time consuming. With an additional step added to application review, designed specifically to identify students who qualify for OpenStateU funding, the already complex process became more involved. During first year of OpenStateU implementation, additional staffing was not provided in the Admission Office. Questions about funding the infrastructure required to promote, execute, support, and expand OpenStateU linger. Initially, the university was able to redirect internal funds to support the effort because the President and governing board had made it clear that the program was a high priority. The need to re-direct internal funds was obvious; however, can an ad-hoc funding model be sustained over time? Questions about allocating a portion of the funding intended to provide financial aid to students to program overhead must be addresses. In addition, the potential challenges involved with supporting the needs of a demographically re-shaped student population must be considered.


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Implementing a coordinated strategy within a decentralized organization State U. is considered a highly decentralized institution with 11 vice presidents reporting directly to the President of the University. The vice presidents represent different functional areas of the University and maintain autonomous leadership and management philosophies and responsibilities. Specifically, the Dean of Admission reports to the Vice President and Provost of the University. The Director of Student Financial Services reports to the University Comptroller who then reports to the Vice President of Finance. The Assistant Vice-President for University Relations reports to the Senior Vice-President for Development. Although they report to three different vice-presidents, the managers were expected to collaborate on the implementation, marketing, and outreach of OpenStateU. They met one month after the public announcement of OpenStateU to discuss how their offices might work together to create an effective and integrated approach that would reach and serve prospective students. Reflecting back on the past year and a half, the three managers commented that the decentralized organizational structure has been advantageous because it facilitated input and feedback from across the campus, while at the same time allowing offices to maintain a degree of independence in carrying out their assigned tasks. However, the decentralized nature of the efforts also challenged the managers. Some of the challenges came originated with the vice-presidents. Two of the managers lobbied for a full time, OpenStateU Director who would report directly to the Provost and provide centralized communication and coordination until the program was fully implemented. The Vice-President for Finance argued that individual offices should handle coordination efforts. She particularly felt that the Dean of Admission should own the OpenStateU. project. Additionally, while the Senior Vice-President for Development believed that the marketing


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materials featuring the prominent actor and alumnus should not be used after three months, the three managers believed that the high-cost, professionally produced materials were highly effective and should be used for another year. Another structural challenge originated within the individual offices. During the initial stages of OpenStateU implementation, the Director of Student Financial Services retained a financial aid consultant, who was a major architect of UNC’s Carolina Covenant, to assist in creating a multi-year project plan. The Assistant Vice-President for University Relations hired a marketing agency to assist with the development of a strategic marketing plan as well as a unified marketing concept for OpenStateU. The Dean of Admission briefed his office on OpenStateU components and asked all staff to mention OpenStateU in their information sessions. At times, it was unclear to the individual offices what directions and strategies the other two offices were pursuing. Additionally, clear channels for communicating concerns and frustrations were not formally established. The leaders were all director level managers who reported to different vice-presidents, who did not regularly communicate with each other about OpenStateU, and who were not consistently involved in decisions made by offices outside of their reporting structure. While the leaders of the individual offices intuitively understood that they needed to collaborate, they each had more to worry about than OpenStateU, many of their internal processes operated on different timelines, and they each reported to a different vice president. The task was ambiguous and a firm accountability mechanism did not exist. Sustaining the OpenStateU Effort The three managers understood what was expected of them. According to the Director of Student Financial Services, “When the President and Executive Vice-President asked for proposals, it was my responsibility as director of financial aid to put those proposals together and


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make them work.” In the search for model programs at peer institutions, they found only one major public institution that had developed a comparable program. Other public institution had not attempted to privately finance public education, and State U. officials believed that the Ivy League need-based programs were very different for the program they envisioned for their institution. The managers had to develop the program mechanics and devise measurable goals for OpenStateU—goals they continue to struggle with developing because they are charting new territory. While the Dean of Admission and Assistant Vice-President for University Relations believe that the purpose of OpenStateU is to change the composition of the student body by providing matriculation opportunities for a larger number of students who previously believed that they could not afford to attend the university, the Director of Student Financial Service’s vision for OpenStateU is broader. Her prior involvement in the development and implementation of the Office of New Student Orientation leads her to believe that not only can OpenStateU increase socio-economic diversity at the university, but that it can also reduce student dependency on loans and improve student financial literacy. She also believes that increasing the socio-economic diversity of the University will change perceptions about the University and strengthen the public purpose covenant with the state. Each manager has assessed the affects of OpenStateU implementation on their individual offices. The Dean of Admission reported, “OpenStateU has had a dramatic impact on our office for me and all of the Admission officer[s]. It has added on a new set of schools to visit. It has caused us to delay our reading process in order to wait for information from the Financial Aid Office, often putting our normal process in turmoil.” The Assistant Vice-President for University Relations commented, “I did not originally anticipate that it would have more [of an impact] than


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any other new program, but it clearly took on a life of its own and several of us…spent a great deal of time on OpenStateU.” The Director of Student Financial Services reflected, “We would add to [our operations] an intensive outreach to our low-income students, outreach to the community and schools, and a changed relationship with the Admission office. We would require staff to modify how they do their jobs, requiring some retraining. We anticipated a couple of very stressful years.” On a personal note, she offered, “For me, this has been a difficult adjustment as the type of work is very different, much more philosophical. I have been a director who is intimately involved in the process—and I’ve had to learn to let other people run the major operations so as to allow me to deal more with outside events.” Despite unclear directions from the governing board and the President as to how to achieve the goals of OpenStateU, the three managers believe their efforts have been successful. The Dean of Admission cited an increase in the numbers of low-income students in the first year class as a significant achievement of OpenStateU while the Assistant Vice-President for University Relations pointed to the positive attention associated with the media coverage of the program. The Director of Student Financial Services reflected about the satisfaction associated with implementing the goals of the governing board but shared frustrations she experienced when “sometimes the project got ahead of the communications—and often very much ahead of the data. We were asked continually for information that we had not developed processes to retrieve—or asked for results before the process was complete.” Today, the future organization and direction of OpenStateU remains unclear. Because of the competitive advantage and the political capital that the program provides the University, it will persist, but at what size and in what form are still being considered. Although the Dean of Admission remarked that OpenStateU would be successful when many more low-income


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students enroll at State U. and graduate, the other two managers are hesitant to define success. The Director of Student Financial Services admitted that this question was hard for her to answer and finally offered, “Ask me in 10 years.” She believes that OpenStateU is “not just about money and funding—it’s about culture, and support, and outreach. We know that we can’t change State U. without changing the state we all live in. Each year we will review where we are, the direction we’ve moved in, what we’ve accomplished and consider whether it’s what we anticipated and if it’s what we (the entire university) wanted.” The Assistant Vice-President for University Relations firmly believes that success should be measured by the President and the governing board. She knows that the institution will be better prepared to answer the question in three years. Although they are in it for the long haul, the managers have little time to think beyond the present moment. Case Summary In a highly competitive higher education environment, the President of State University, with support from the governing board, challenged three operational units to develop a plan to increase enrollment of low-income students at the University and redesign the financial aid system for low- and middle-income students. Implementation of this major strategic direction was to occur in the middle of the admissions cycle and immediately influence the incoming class—the initial phase was designed and implemented in less than a year. The challenge arose within a highly decentralized organizational structure, with ambiguous directives and leadership and operational roles that were not clearly defined. While the fundamental goal of the program is to enroll more students from low-income families, the long-term goals and the best measure(s) of success are not formally established. To some degree, State U.’s competitors forced the institution to venture into new territory. Such conditions could have been a recipe for disaster,


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but initial results indicate that low-income student enrollment has increased. Questions remain about the financial and operational sustainability of the program.


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Discussion Questions Use the case narrative to discuss the following questions: 1.

What core values of State University are expressed through OpenStateU? In what ways have these values contributed to the implementation of OpenStateU?

2.

Analyze this case using structural, human resources, political and symbolic organizational perspectives (see Reframing Organizations by Bolman and Deal). a. Do you see any evidence that the individual department heads may have been operating from different perspectives? If so, identify the differences and discuss them in more detail.

3.

Describe the affect that organizational change had on the operational units and their leaders. How did the leaders respond to the need for change? a. Discuss how the mandate for OpenStateU created the need to address the following: professional identity/role clarification, realignment, conflict, and loss.

4.

What organizational changes is OpenStateU facilitating at the institutional, unit (office) and individual (personal) levels? Are these changes driven by external/competitive pressures or internal needs? Is organizational change being managed strategically or as a reaction to environmental influences? What are the implications of the approaches you identify?

5.

What are some of the threats facing State U.? From an organizational perspective, how should State U. address the threats? What are some of the opportunities facing State U.? From an organizational perspective, how can State U. leverage these opportunities?

6.

In a decentralized and political environment, how can the leaders profiled for this case study insure the future success of OpenStateU? What recommendations should they make to the President and governing board regarding the future of the program and the institution?


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7.

What leadership theories and/or practices are used by the individuals profiled for the case? Are different leadership styles/theories present?

8.

Is there evidence that the leadership beliefs and behaviors of any of the key characters in this case have changed because of his/her involvement in OpenStateU? If so, whose leadership has changed most as a result of their role in OpenStateU?

9.

Imagine that you are the president of a college or university facing the challenge of expanding access for students from low and middle-income families. How would you use the OpenStateU experience to guide your approach? From an organizational theory perspective, what would you replicate from State University’s experience? What would you do differently? Why?


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REFRENCES Bolman, L. and Deal, T. (2003). Reframing organizations: artistry, choice and leadership. San Francisco: Jossey-Bass. College Board. (2004). Trends in college pricing 2004. Washington, D.C.: The College Board. Collins, J. (2001). Good to great. New York: Harper Colllins. Cooperative Institutional Research Program (CIRP). (2003). 2003 CIRP Institutional Summary. Retrieved December 2, 2005, from http://www.web.virginia.edu/iaas/data_catalog/assessment/survey/under/CIRP_03.pdf Ehrenberg, R. G. (2005, September 23-24). Reducing inequality in higher education: where do we go from here? Paper presented at the Conference on Economic Inequality and Higher Education: Access, Persistence and Success, Syracuse University. Gibson, B. (2005, May 26). Low-income rank shocks U.Va. The Daily Progress. Leonhardt, D. (2005, May 24). The college dropout boom. The New York Times, p. A1. The National Center for Public Policy and Higher Education. (2002). Losing ground: a national status report on the affordability of American higher education. San Jose: The National Center for Public Policy and Higher Education. Northouse, P.G. (2004). Leadership: theory and practice. London: Sage Publications. University of Virginia Website. (2005). Facts at glance. Retrieved November 22, 2005, from http://www.virginia.edu/Facts/


Public Purpose at a Public Flagship: A Case Study