Nothing changes faster than a competitive market
They therefore have to understand that marketplace if they are to be viable and to thrive - a marketplace that has changed, is changing, and will continue to change, in terms of both demand and supply.
Let us look first at demand. The demography of Scotland is changing. The country's population, on present trends, faces long-term decline. Steep falls are to be expected in the numbers of young people. The population is ageing. There are major shifts in the regional distribution of the population. There are changes in the male and female activity rates in both work and learning. There are different expectations in those groups hitherto relatively inactive in work and learning - the disabled and the economically inactive or underactive.
But the stark truth is that if colleges are to maintain or grow their student numbers to meet falling demand in their traditional customer base, then they need to be thinking very hard - now - about what they have to do.
The learning and skill needs of the population are also changing. Let us remember that for the great majority of the population it is not the availability of supply of courses, or their content, which is the main attraction of further or higher education. It is the prospect of a reasonably satisfying and well paid job beyond that.
What drives demand primarily is not the learning market, but the labour market.
For some colleges, perhaps many, the problem can be that there is heavy demand for some courses where the labour market is tight. There is then an ethical dilemma. Does the college continue to recruit and grow in these disciplines in heavy demand even when it is known that job prospects at the end of the course are limited?
What is more important: the welfare of the student or the welfare of the college?
All of this also means, of course, being sharper and more flexible in adjusting supply. Changing courses, dropping courses, putting on new courses - and at times to suit their customers. Newspapers often run stories about the huge changes in our behaviour and in society at large as a consequence of an increasingly widespread 24-hour culture, largely driven by the service sector industries. Many colleges have already adapted their provision to some extent to meet the new needs, but more pressure to do so can be expected.
There will, of course, be operational costs and consequences of doing so.
This kind of all-day, all-week, all-year operation will require more flexible and time-limited contracts; more hiring and firing; less stability in the workforce - and almost certainly more complaints, more tension and more challenge from staff representative bodies - so more negotiation and more tribunals. And so a need for college management to have ready access to high-quality human resources expertise.
And what of the products? I often think that a college or a university is like a supermarket. They have a range of products on offer - some of which are well-established national brands, others "own label", and some premium niche products. And just as a supermarket will be more or less successful through its skill in mixing the range of products made available, and in its promotions, so a college has to give a great deal of thought and attention to much the same issues.
In fact, most colleges, and the sector as a whole, have been pretty good at this. I used to point out to international visitors that it was not many years ago that Scotland was dependent for its prosperity on heavy engineering and many of our colleges were geared to meeting the training needs of these industries.
In the relatively short period of three to four decades, Scotland has transformed itself into a successful service sector and light industry economy, and colleges have played an important part in that transformation process, in serving the skill needs both of the national and local economies.
But, as we all know, the process of economic and industrial change is speeding up. A few years ago a number of colleges were gearing up to train call centre staff: now we see huge numbers of these jobs moving overseas.
Much the same has been happening with our IT manufacturers. The challenge for colleges, as much as for business, is therefore to keep ahead of the curve.
Again coming back to the point, colleges will need to remain close to their markets and be fleet of foot in keeping pace with the rapidly changing market conditions. But they should also have in place the analytical, strategic decision-making and delivery processes to enable them to make the crucial decisions at the right time.
Ed Weeple is former head of the lifelong learning group in the Scottish Executive.