Education Business Strategy Report

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  • 1. Principles for Success in Education Markets What Education Can Learn From Business 2011 Authored by: Alan K Rudi
  • 2. Principles for Success in Education Markets What Education Can Learn From Business The US economy is now in the Knowledge Age. Long term economic prosperity, therefore, is based upon the effective development of knowledge and the ability to use that knowledge to create valued goods and services. Approximately 85% of the labor force is a Knowledge or Service Worker today. Yet at the same time, 84% of employers say schools are not doing a good job of preparing students for the workplace. 1 The US needs a workforce with highly developed critical thinking and innovation skills. As a result, Education is a changing marketplace strongly impacted by major demographic, economic, technology and competitive forces. High school enrollment growth rates to decline by half . Adult participation rates growing. For profits 45 states and DC entered non- traditional Education are in budget stress, causing markets, now Markets reductions in targeting key Principles for Success in Education Markets | 2/26/2011 traditional Changing funding and/or increase in fees. markets Internet, Information Services creating new learning and business models 1 Results That Matter, March 2006, Partnership for 21st Century SkillsAlan K Rudi 714-743-8344 1
  • 3. Educators and business leaders both imagine a world in which people develop their full God-given potential. Like any good business, schools must develop winning organizational (business) designs as part of how they develop students and their people for the world. It is important to note, however, that there are still great strengths to be found in the US education markets. And these strengths should be the basis for an education institutions strategic change. The university system remains the envy of the world and is rapidly being exported to global markets. “Popular western universities are acting more like businesses – moving closer to their customers by establishing satellite campuses in Asia and the Middle East, and teaming up with overseas universities that offer scholarly and marketing advantages to both sides.”2 And the conclusion of crisis in the K12 system should be challenged, though, like any market, there are issues: “If American education has been at risk for more than 25 years – some say 40 years – and continues to deteriorate…how can we explain the fact that America continues to be competitive?...American education has not been in crisis-at least not in the way reformers have suggested…Although not perfect, the US is perhaps one of the few countries in the world where individuals are valued…American education has traditionally created a culture that respects individual differences, endorses individual interests, and supports a broad range of interests…Our Asian counterparts have taken a very different, in fact opposite, approach in their education reform efforts. While the US is moving toward more standardization and centralization, the Asian countries are working hard to allow more flexibility and autonomy at the local level (like the traditional US education system).”3 Therefore, the following five principles4 are proposed to produce a winning strategy in any education organization. High academic Innovation is what Well designed quality is a must, students need to market strategy built on strengths of learn and schools drives growth andPrinciples for Success in Education Markets | 2/26/2011 an existing school need to develop in protects against Principles for Success in Education Markets | 2/26/2011 (or system) themselves economic change In the end, its Build financial about culture and strength to further people who can invest create strategic change 2 The Great Brain Race – How Global Universities are Reshaping the World, Ben Wildavsky, 2010, Princeton University Press 3 Catching Up or Leading the Way: American Education in the Age of Globalization, Yong Zhao, 2009, ACSD 4 Specific strategies will differ by organization based on history, current core capabilities, etc. Alan K Rudi 714-743-8344 2
  • 4. ACADEMIC QUALITY Jack Welch said "An organizations ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage." The ability to learn and provide quality in any business is simply a must in today’s economy. Whether it is a consumer good or an education, there are significantly more choices for people to consider when buying. More importantly, high academic quality develops a student’s ability to learn and thus a business’s ability to compete. Too little academic quality means the student enters the workforce potentially at a disadvantage. Based on a survey of “what do employers want in employees?” the following characteristics suggest a starting point for thinking about high education quality: 1. For people to be creative, imaginative and (yes) think outside the box 2. Humility and confidence 3. Excellent communication and presentation skills 4. Knowledgeable of a specific academic discipline, plus the employer’s product or service 5. High energy, an upbeat attitude and the willingness to take the initiative when needed 6. Problem solvers capable of seeing the big picture and identifying alternatives 7. A team player who can share the credit with the rest of the team 8. Ability to grow and develop personal skills 9. Have the ability to positively affect an employer and its change 10. Understands the world we live in, plus technology Principles for Success in Education Markets | 2/26/2011 Businesses want people with the ability to learn and think. Certainly this result is occurring in education today. Business leaders are saying, however, that an even higher level of academic quality is needed in order for them to compete. How does any organization go about improving the quality of a product or service? 1. Measure, measure, measure what you do 2. Learn, learn, learn 3. Continually improve everything 4. Set high standards 5. Allocate people’s time to explore and develop new ideas Education is a unique business as a high quality product is very dependent on human variables and variation – e.g., how a person is feeling that day, to multiple styles of learning, and to complex information to communicate. These methods for quality improvement, however, can also be applied to education. Question: Can information technology be used to create a more personalized education with high quality (similar to business models like Dell)?Alan K Rudi 714-743-8344 3
  • 5. INNOVATION "Innovation distinguishes between a leader and a follower. Innovation has nothing to do with how many R&D dollars you have...Its about the people you have, how theyre led, and how much you get it." Steve Jobs Increasingly, innovation is an organizational skill needed for any business and school to compete successfully in its market. Without innovation, education organizations will not be able to fully meet the needs of students or compete as effectively against the new for-profit companies that have the ability to generate higher levels of cash flow and capital. Some organizations are very innovative, unfortunately many are not. What stimulates innovation? Peter Drucker says it is “how we think” by analyzing potential sources of innovation: 1. Unexpected outcome – simply discover what you can learn from failure 2. Incongruities – examine the differences between your assumptions and reality 3. Process needs – apply an existing process solution in another area to a different type of problem 4. Industry and market changes – industries shift in how they conduct themselves, be on the look-out for new, emerging trends. 5. Demographic changes – a highly reliable predictor, but one that is often overlooked.Principles for Success in Education Markets | 2/26/2011 Study long term trends. Principles for Success in Education Markets | 2/26/2011 6. Changes in perception – is the glass half full or half empty? Discover new understanding by looking at things from multiple perspectives. 7. New knowledge – the typical view of the sources of innovation, but usually take a very long time to develop. What is a key innovation and growing trend in education today? “Online learning is transforming teaching, providing new instructional delivery models, and expanding access to education. Effective online instructional practices are increasingly supported by a growing evidence base that shows how various programs, courses, and instructional models can improve learning, increase student engagement, and catalyze innovation in education.” 5 5 Journal of Online Education, Volume 4 Issue 3, February/March 2008. Alan K Rudi 714-743-8344 4
  • 6. The US Department of Education, however, has concluded that “The difference between student outcomes for online and face-to-face classes was larger in those studies contrasting conditions that blended elements of online and face-to-face instruction with conditions taught entirely face-to-face. Analysts noted that these blended conditions often included additional learning time and instructional elements not received by students in control conditions.”6 Combining teachers working directly with students and the capabilities of technology is innovation, building on the strengths of the current school system (as Drucker described above). “Effective (learning) technology integration is achieved when its use supports curricular goals. It must support four key components of learning: active engagement, participation in groups, frequent interaction and feedback, and connection to real-world experts.”7 Below is a summary of the rapidly improving technology tools that are enhancing learning. Content Management Systems (CMS) Classroom Online Courses, Pre- Application Tools HW/ SW packaged Content, "Smart Classroom" Open Ed Resources Internet, off-the-shelf Projectors, PC Workstation with software and custom 80% of colleges offer online Internet, Sound systems, programs. 10% of students content providers for VCR/DVD, Document cameras, specific learning objectives have taken 1+ classes online. Wireless mice, Student within a course, e.g., wikis, Response Systems, Interactive 12% of colleges offer High simulations, games, You School online programs. Whiteboards, external Tube, Teacher Tube, Audio/video links, Integration 42 States have "significant podcasts, digital maps and into digital file. supplemental online learning libraries programs" in K-12. 2% of public enrollment is taking such courses (growing 50% per year). Principles for Success in Education Markets | 2/26/2011 Successful innovation, however, is just as much about managing people as it is about the technology developed. Question: What leadership styles create a culture of innovation? 6 Evaluation of Evidence Based Practices in Online Learning: A Meta-Analysis and Review of Online Learning Studies, Office of Planning, Evaluation, and Policy Development, September 2010. 7 Edutopia, The George Lucas Educational Foundation.Alan K Rudi 714-743-8344 5
  • 7. MARKET STRATEGY “Customers dont always know what they want. Most of the coffee people bought was stale and they werent enjoying it. Once they tasted ours and experienced a gathering place between home and work where they were treated with respect, they found we were filling a need they didnt know they had.” Howard Schultz, CEO, Starbucks The Starbucks brand is well recognized around the world. Brand building is also essential for education to identify, communicate and deliver on its core promises and values by defining… 1. The essence of the organization (Starbucks is both unique coffee and a “gathering place”) 2. The simple, believable, unassailable truths about the organization 3. That are adhered to in the face of adversity 4. And are principles people are passionate about. The best example of branding, however, is the USA with core values of life, liberty and the pursuit of happiness that have stood the test of time – 235 years. Branding works. Successful businesses are then continually developing their marketing strategies for profitable revenue growth, which for education, provides a critical source of cash for reinvestment into the organization. Effectiveness of marketing strategies gradually deteriorates over time as student populations’ change, competitors improve their methods, and new techniques to reach a target audience are developed. In education, it is necessary to deliver the message directly to the Net Generation. New methods utilized in business and increasingly in education include: a. Database Marketing: more targeted segmentation and messaging by developing customer andPrinciples for Success in Education Markets | 2/26/2011 Principles for Success in Education Markets | 2/26/2011 prospect marketing databases through Direct mail, email campaigns, and SEO/SEM. b. Virtual Events: webinars are increasingly a more standard part of marketing. Most organizations, however, have not really committed to virtual events that integrate a variety of rich media formats. It is naturally difficult for all prospective students to visit a campus. Therefore, more use of rich media can provide low-cost visibility to “visit a campus” and learn about its programs. c. Social Media for B2C Marketing: The use of social media has become a more prevalent part of B2 C marketing strategies. Social media builds the relationships between schools and parents while making an organization more searchable. d. Content Marketing to Differentiate: 21st century marketing is more and more about content publishing. Create content that prospective students identify as valuable (e.g., “how to adjust and fit in at college”). And then, syndicate that content to support thought leadership, brand awareness, and inquiry generation via blogging (updated to keep SEO high). Question: Does messaging clearly communicate the core values for what a school will do for students? Does marketing reach the Net Generation student where they are? Alan K Rudi 714-743-8344 6
  • 8. FINANCIAL RESULTS AND STRENGTH A healthy business is efficient in its use of financial resources. Warren Buffett makes three key points: 1. “Every day, in countless ways, the competitive position of each of our businesses grows either weaker or stronger. If we are delighting customers, eliminating unnecessary costs and improving our products and services, we gain strength.” In other words, a sound financial vision begins with knowing customers, and then designing and implementing a strong business strategy. 2. Buffett manages the balance sheet as much if not more than the income statement. How? By weighing every decision for its impact on the balance sheet. Adding assets and liabilities by nature increases business risk. An effective use of assets drives fiscal viability. The key question is - can a business or an organization repay debt if cash flows decrease below average? 3. There are fundamental questions used to evaluate any business, for which, the answers indicate the health today and the prospects for tomorrow. They are: o Is the business in an industry with good economics (not competing on price)? o Does the business have a brand name that commands loyalty? o Are revenues (and cash flows) increasing with healthy, consistent margins? o Is the debt-to-net assets ratio low or high? o Does the business have a high and consistent Return on Capital? o Does the business have a track record of retaining its Change in Net Assets (or profit) for investment in good opportunities? Principles for Success in Education Markets | 2/26/2011 o Does the business have high maintenance cost of operations? High capital expenditure? o Is the organization able to adjust prices for inflation? Financial security occurs when a profit is earned and the organization can absorb small demand changes without significant risk. Profit is far more than a return to stockholders or unspent money. Profit is an incentive that disciplines an organization to grow and effectively use its resources. Otherwise, it cannot invest to create its future. Question: Can a not-profit or a for-profit school be financially managed like a business while preserving what makes them unique?Alan K Rudi 714-743-8344 7
  • 9. CULTURE The dictionary defines culture as the “predominate attitudes and behavior that characterize the functioning of a group or organization. It is the intellectual and behavioral activity, and the works produced by it, created from the collective experience, training or education of people belonging to the group.” The culture of an organization is the major determinant of success or failure because the bottom-line is really about people. If an organization is profitable and has a reputation for high quality products, it is the result of how effective the leadership has been at designing a positive organizational environment, at attracting talented people dedicated to accomplishing the mission, and doing so in a coordinated process. A positive culture, however, can be destroyed by arrogance, selfishness, closed mindedness, or top-down management. Listen to what Lou Gerstner, who turned around IBM from the brink of bankruptcy, has to say about culture: “I have spent more than twenty-five years as a senior executive of three different corporations. Until I came to IBM, I probably would have told you that culture was just one among several important elements in any organization – along with vision, strategy, marketing, financials and the like…I came to see, in my time at IBM, that culture isn’t just one aspect of the game – it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.” (Excerpt taken from Gerstner’s book titled “Who Says Elephants Can’t Dance?”) Google’s cultural design provides an example to learn and consider in education. After all, it appears to work well. To build a successful culture requires that organizations decide what relationship they will have with customers and employees, and the work environment they will provide. They say…Principles for Success in Education Markets | 2/26/2011 Principles for Success in Education Markets | 2/26/2011 “Google is not a conventional company, and we dont intend to become one. True, we share attributes with the worlds most successful organizations – a focus on innovation and smart business practices comes to mind – but even as we continue to grow, were committed to retaining a small-company feel. At Google, we know that every employee has something important to say, and that every employee is integral to our success. Google has offices around the globe, but regardless of where we are, we nurture an invigorating, positive environment by hiring talented, local people who share our commitment to creating search perfection and want to have a great time doing it. Googlers thrive in small, focused teams and high-energy environments, believe in the ability of technology to change the world, and are as passionate about their lives as they are about their work.” Sounds like some schools. Alan K Rudi 714-743-8344 8
  • 10. Leadership Styles and Organizational Culture To create a positive, innovative culture leaders can model the following behaviors: 1. The innovation process is confusing, difficult and inefficient. Motivate people by making it safe to fail. The goal is to experiment, fail early, and learn throughout the process. Innovation occurs when people come together to solve a problem. Obtain ideas from many people throughout internal and external organizations. Do not suppress people’s identity in the process. Don’t have favorite people in the organization (all are valuable). 2. Create an “emotionally intelligent” organization – self-awareness, self-management, social awareness, and the ability to manage relationships. 3. Have a bias for action. Remove barriers, bureaucracy and obstacles. Set aggressive targets and do good work. 4. Thanks and appreciation will continue to engage and motivate people. Ask questions about peoples work and provide sincere recognition. Provide people instant access to the leader demonstrating you take their work seriously. 5. Develop employees’ expertise – technical, business and intellectual knowledge. Allocate time and resources for people to develop their skills (then they will know that what they do matters to the strategic direction of the organization). 6. Ask the toughest customers (students) about your organization’s services and how to make them better. Then communicate customers’ needs/wants to everyone. Expand the reach of employees as much as possible to participate with customers. 7. Start with the innovators – in every organization, 15% of the people are willing and able to develop technological change, they are just looking for an opportunity. Question: Can leaders change their beliefs and behaviors to meet the needs of students and changing markets, and to develop their organization? Principles for Success in Education Markets | 2/26/2011Alan K Rudi 714-743-8344 9
  • 11. About the Author Mr. Alan K Rudi is a results‐oriented, technology‐savvy global business executive with a history of driving double‐digit growth and turning around underperforming information services and higher education organizations. His broad leadership experience includes roles as a Chief Marketing Officer, a Chief Financial Officer, and a Chief Operating Officer. He thrives on the challenge of building successful businesses where he can bring to bear operational leadership abilities and strategic business development expertise. In senior line management positions over the last fifteen years, Alan has brought his industry expertise, strategic skills and talent for defining and executing growth plans to organizations that provide sophisticated database, online, analytical, and knowledge-based services. Alan is currently developing a new school blending classroom and online learning providing unique learning behavior measures by student. Alan graduated with a Bachelor of Science degree in Finance and Accounting from Northern Arizona University; an MBA in Strategy and Marketing from Oregon State University; and a Master’s of Science in Technology Management from Pepperdine University. Contact Information: Alan K Rudi 208 S Leandro Anaheim, CA 92807 USA Mobile: +1 714-743-8344 Email: alanrudi@sbcglobal.net Note: You are welcome to copy and distribute this report as often as you wish; I only request that you pleasePrinciples for Success in Education Markets | 2/26/2011 include the author’s information page when doing so. Thank you. Principles for Success in Education Markets | 2/26/2011 Alan K Rudi 714-743-8344 10