I imagine there are few things more satisfying for a school Principal or Board than receiving an enrolment report showing another year of growth.

It must mean the school is doing something right.

And perhaps it is.

But I've been wondering whether we place too much confidence in enrolment growth as a measure of strategic success. Particularly when the financial, operational, and educational consequences of that growth can be much harder to see.

Could a school become less sustainable while appearing increasingly successful? Possibly.

It's an awkward idea, but I think it deserves much more attention.

According to the Australian Bureau of Statistics, independent school enrolments increased by 15.3% between 2021 and 2025, rising from 620,781 to 715,822 students. Over the same period, enrolments across all Australian schools grew by just 3.2%.

That's a game-changing difference.

Last year, I explored this remarkable demand in Schools Face Cozzie Livs Turbulence, But Enrolments Are Still Taking Off. At the time, I was particularly interested in why families continued investing in independent education despite growing financial pressures.

This time, I'm more interested in what happens inside schools when that demand translates into growth.

Because independent school enrolment growth and growing organisational strength are not necessarily the same thing.

The growth trap: When more becomes less

In his influential 1996 Harvard Business Review article, What Is Strategy?, Michael Porter explored what he called the growth trap.

His argument was that organisations can become so preoccupied with growth that they gradually compromise the strategic choices responsible for their original success.

They broaden their offerings, pursue additional customers, imitate competitors, and gradually blur the differences that once made them distinctive.

More recently, management educator Constantinos Markides revisited this concept in Don't Let Growth Muddle Your Company's Strategy.

I find this particularly relevant to independent schools.

Imagine a school with a strong reputation for personalised learning, exceptional pastoral care, and a close-knit community.

Naturally, families are drawn to these qualities. So, demand strengthens, and the Board approves further expansion.

Nothing particularly concerning about that.

Eventually, classrooms fill, leaving teachers and support staff less time for each student. More programs meet broader expectations, the campus expands, and leaders spend more time managing organisational complexity.

The school continues growing.

Yet the qualities that originally differentiated the school’s value proposition start becoming harder to deliver.

The danger isn't necessarily that the school becomes too large.

It's that the school becomes too large for the promise it continues making.

When independent school enrolment growth outpaces financial capacity

I suspect one of the most easily overlooked aspects of school growth is that costs don't always increase in proportion to enrolments.

Sometimes additional students contribute positively to financial sustainability without requiring significant additional expenditure.

A classroom has spare capacity. The teacher is already employed. The facilities and support services are already in place.

An additional enrolment can be financially attractive.

But schools don't operate on perfectly smooth cost curves.

Consider a year level operating three classes close to its preferred maximum class size.

A handful of additional students might trigger the need for a fourth class. Suddenly, the school needs additional teaching capacity, timetable adjustments, access to another learning space, and potentially more learning support.

What initially looked like a modest increase in enrolment income has triggered a considerably larger increase in recurring expenditure.

That doesn't necessarily make the expansion a poor decision. Over time, the fourth class might attract enough additional students to become self-sustaining.

The problem arises when the school celebrates additional enrolments without fully understanding the financial and operational thresholds it has crossed.

The same principle applies to facilities.

Independent Schools Australia notes that enrolment growth has placed considerable pressure on capital development, including buildings, grounds, and equipment.

New facilities can improve the educational experience and support future growth. But they also introduce capital commitments, ongoing maintenance, utilities, depreciation, and potentially debt servicing.

The decision to build might be entirely justified. However, the question is whether the school has developed a sufficiently robust view of the future to understand what that commitment will require.

I would want to know whether growing enrolments are improving the school's financial resilience, rather than simply increasing its income.

Because those are two very different outcomes.

Growth can consume the capacity needed to improve

Financial sustainability is only part of the equation.

Schools are extraordinarily people-intensive organisations. Their success depends heavily on the knowledge, relationships, judgment, and energy of their staff.

And those resources aren't infinitely expandable.

A growing school may require additional staffing and operational support. Yet increasing the number of employees doesn't automatically mean that organisational capability grows at the same rate.

New staff need effective onboarding and leadership, while additional students may introduce more complex requirements.

Meanwhile, existing staff are often expected to maintain the standards that attracted families in the first place.

Aon's 2026 Independent Schools Risk Report provides some useful context. Among participating school leaders, the ability to attract and retain talent was the second-highest ranked risk, while the mental health of staff and students ranked third.

Of course, these risks can’t be laid solely at the feet of enrolment growth.

But I think they highlight why workforce capacity should be considered alongside demand, particularly when schools are planning to expand.

What concerns me is the possibility that growing enrolments could consume the very capacity a school needs to improve.

For example, a larger student body brings more immediate operational demands, absorbing leadership attention and staff resources. As a result, strategic initiatives that could genuinely strengthen teaching, learning, or organisational effectiveness receive less attention.

The school becomes busier.

But is it becoming better?

I've increasingly come to believe that organisational capacity should be treated as a strategic resource.

The hidden cost of becoming everything to everyone

There's another aspect of the growth trap that I find particularly interesting.

As schools grow, they naturally encounter more diverse expectations.

Some families want stronger academic offerings while others value a greater pastoral perspective.

The temptation, however, can be to accommodate almost every expectation in pursuit of greater enrolment appeal.

Individually, it seems fine, but collectively, they can create an increasingly complicated school that is trying to satisfy too many competing expectations.

This is where I think Porter's ideas about strategic trade-offs become especially relevant.

Strategy requires choices.

In A Plan Is Not a Strategy, I explored why meaningful school strategy requires deliberate decisions about where to focus and how to create distinctive value.

That principle doesn't disappear when enrolments are strong.

In fact, it might become more important.

A school that continually expands its offerings to capture additional demand risks losing clarity about what it does exceptionally well.

Resources become spread across more activities and leaders find it harder to establish priorities. Staff are expected to sustain programs that may have relatively little connection to the school's desired future.

Ironically, the pursuit of more students can encourage schools to become increasingly similar to their competitors.

I wonder how often schools ask themselves whether a proposed expansion will genuinely strengthen their strategic position. Or whether they are simply responding to an opportunity because demand already exists.

What should Boards measure beyond enrolment growth?

Healthy enrolments can strengthen financial sustainability, support educational investment, broaden opportunities for students, and provide the resources needed to deliver a school's mission.

But growth needs to be understood in context.

For Boards, I would be inclined to place much greater emphasis on the relationship between enrolments and a small number of complementary measures.

For example:

• Financial resilience: Are additional enrolments improving operating margins and future cash flow after accounting for the staffing, facilities, and support costs they generate?
• Organisational capacity: Is the school developing the workforce, leadership capability, and operating systems required to sustain its increasing complexity?
• Educational experience: Are student learning, wellbeing, engagement, and family experiences improving as enrolments grow?
• Strategic differentiation: Is growth reinforcing what makes the school distinctive, or encouraging compromises that weaken its position?
• Future sustainability: Could the school maintain its commitments if enrolment growth slowed or stopped?

I’d also like these questions to be considered across several years, rather than within a single annual budget.

A school might be experiencing perfectly manageable growth today while approaching a significant financial or operational threshold two or three years from now.

Understanding that trajectory could fundamentally change the decisions its Board makes today.

The purpose of these measures should be to inform better strategic choices.

If the evidence suggests that the school's capacity is becoming stretched, leaders should feel empowered to adjust taking on further commitments.

Sometimes choosing not to grow quite so quickly might be the more strategically ambitious decision.

Growth should follow strategy, not determine it

The distinction I keep returning to is whether a school's strategy is driving its growth or whether growth is gradually rewriting its strategy.

In the first situation, the school has made deliberate choices about the educational experience it wants to deliver, the families and communities it intends to serve, and the capabilities it needs to succeed.

Growth becomes an outcome of those choices.

In the second, additional demand begins determining what the school offers, how it operates, where it invests, and what it prioritises.

And strategy gets crowded out and becomes increasingly reactive.

Neither financial performance nor enrolment numbers alone will necessarily reveal when that transition occurs. But I suspect staff, students, and families may begin experiencing its consequences well before the numbers signal a problem.

Schools need a clear understanding of what sustainable enrolment growth looks like in the context of their individual circumstances. A considered understanding of the distinctive experience they intend to sustain.

Because bigger isn't necessarily better.

And smaller isn't necessarily more sustainable either.

The goal should be a school whose growth strengthens its ability to deliver on its promise, rather than progressively compromising it.