Thursday, 25 April 2013

“Education Inc”

Ever wonder what would happen if Education was a start up looking for investment from venture capitalists?

Last week I tuned in to the InnoTech summit which is billed as “The only event designed to accelerate the UK Tech Economy by bringing together policy makers, business leaders and investors”

As I highlight in my last post "Start Up Education," I have a lot of time for start ups. I find the energy, passion, fortitude, enthusiasm and overall culture they establish can create a really great work environment... I also find that educators share many of these attributes and qualities.

However, I did find myself wondering at how keen the government seems to be associated with (and listens to!), the ideas, innovations and needs of the various stakeholders that make up the exciting "start up scene."   

The government being so attentive to startups may be somewhat ironic to educators, as this same organisation all but stifles any new ideas & innovations that the experts within the education sector come up with.

Policy makers certainly don't seem to be listening to education in the same way they do with the "in vogue" entrepreneurs - and educators are their colleagues/employees! Talk about familiarity breeding contempt! Then I thought, if you can’t beat ‘em... 

I slipped into a daydream* about what would happen if "Education Inc" was formed and went looking for Venture Capital Investment at a startup event like InnoTech**.

* A throw back to my own school days I'm afraid! In the event that any educators like this particular day dream, do me a favour and go easy on your current class daydreamers... One day they just might be one of your biggest fans!

** This Edu-Day-Dream-Blog-Post is completely fictional. Names, characters, incidents and locations (Particularly relating to "Education Inc" & "Kids Futures" VCs) are the product of this bloggers bizarre imagination. Any resemblance to actual people or events are completely coincidental... as coincidental as a Dr Seuss allegory (specifically thinking of Yertle the Turtle here).

Kids Futures  
An investment prospectus arrives at the offices of Kids Futures (Keep Investments Decidedly Simple Futures), Venture Capitalists who invest in businesses with really, really simple business models. This prospectus is for “Education Inc” and looks quite impressive;

"Education Inc Provides extensive personal and professional development for millions of customers at over 30,000 training centres. Our business is instrumental in assisting our customers to find their ideal role within the many professions and organisations within "UK PLC" 

The VC’s at Kids Futures decide to take a closer look. They arrange a visit to Education Inc's HQ to check the health of the company, to consider any risks of investing and assess what the return of investment might be. 

“Education Inc”

Kids Futures meet a number of people and departments at the company, and it soon becomes apparent that the model is not as simple as the prospectus suggested. In fact, it appears that Education Inc is in some disarray.

One of Education Inc’s associate companies, Off the Mark, who is responsible for quality control, is discussing how their role is to liaise between HQ and each of the local training centres. 

The discussion turns to how the company treats their customers. Off the Mark details how their customers are at the heart of what they do. Every branch has strict procedures to ensure that the views of their customers are heard... and they have a plethora of evidence to prove it! It seems like the most trivial details have to be documented to demonstrate that every process and procedure is being adhered to. 

During this meeting a disgruntled customer, Suli Breaks, is at reception and asks to speak to someone about his poor customer experience. It turns out that he’s not had the best training or advice, he gets an "unsatisfactory" response from the company's representatives and leaves without any answers. He is undeterred and leaves with resolve and that  “he will not let an exam result decide his fate” 

Off the Mark tries to pass this user experience as a “one off,” but Suli Breaks has detailed his complaint on You Tube and has over 800,000 views within a few weeks. Concerned "Kids Futures" asks to see the Customer Service Centre... and find that the department is in chaos!

Phones are ringing off the hook, millions of customers are calling to complain that they have been misled, the training they received has not helped them to find their ideal role within “UK PLC”. There are lots of great opportunities, but the training did not cover the skills required to allow customers to benefit from them. This obviously affects UK PLC's growth plans too.

Many unhappy customers hang up without speaking to anyone, despite their call “being important to the company” being caller number 1 million is quite a long queue, and people run out of credit before they get through... after all they only have £54 a week to live on. 

With over 1 million employees at Education Inc and revenues of £56 billion, albiet through a somewhat unpopular subscription model, how can this be the current state of the training provision? 

Understandably the experience at the Customer Service Centre raises some alarm for Kids Future regarding the quality and relevance of Education Inc's training. They continue to research the history, management, employees, culture & communications of the organisation.

History – An Out Dated Business Model?
Given Suli Break’s comments and the fact that over 2.5 million young people have had training which hasn't helped them, Kid’s Futures wonders how this company ever managed to get to thousands of branches with millions of customers.

When researching Education Inc’s history market analysts like Sir Ken Robinson, Sugata Mitra & Seth Godin highlight that this was, until recently, a reasonably efficient provider. The problem is that they have not seen and/or managed to keep up with the changes. The training methods used were designed for an economy that is all but gone, so is becoming more and more out dated.

This is not an uncommon scenario to the venture capitalists, they know that incumbent market leaders can be slow to see the changes - Board Members at large established companies can become set in their ways, and see any new industry ideas as “just a fad.” Their hubris means that the company starts to become obsolete... new ideas and business models emerge and take advantage of any inefficiencies or gaps in the market. 

While Education Inc's Head Office ignore the changes, other stakeholders are painfully aware of how out of touch the Directors are. The out dated nature of Education Inc’s business practices is having a detrimental impact on its customers, employees and the many UK PLC companies who employ Education Inc’s customers.

Off the Mark assured Kids Future that their customers are at the core of what they do, but Kids Futures findings suggest that while this may be the intention… it is not always the case, other preoccupations and distractions appear to get in the way.


Board of Directors
The Board do not use their own services, they elect to use a more expensive competitor PrivateEd. Never in the history of the company have Kids Futures ever invested in a company where the owners used a competitors’ services?! 

Chairman of the Board
The Chairman is on a number of boards, so only checks in on Education Inc once in a while, but the Operation Director keeps him up to date with day to day operations and strategic decisions.

Director of Operations 
The Operations Director does not appear to have a good working relationship with his branch managers, he seems to implement ideas with little consultation and/or does not appear to listen to any of his employees ideas or concerns.

Kids Futures are shocked to see the negativity between Education Inc HQ and the local branches. Branch staff tend to use Social Media, and HQ use other methods. 

Off the Mark
Off the Mark claims to work with each of the branches to ensure that quality control is high, but the relationship appears to be a fraught one. There seems to be a lot of animosity, which is a result of too much criticism and not much praise. It is interesting to note that the rival PrivateEd companies have high quality training, but do not have the same preoccupation with generating so much paperwork.

The companies that employ Education Inc's customers highlight that it really can be "a bit of a mixed bag” some of the people & training they provide is great… others not so good. UK PLC agreed that "Education Inc" really hadn’t changed with the times, One company put it very well;

“We fully appreciate how difficult it is to keep up with the pace of change, and understand that it must be difficult to train people for jobs that haven't even been invented yet! We have the same problem. In order for our business to keep up with these unknown changes it’s creativity and attitude/values that really seem to make the difference in the people they send us, but there doesn't seem to be too much emphasis on this.

It's hard to anticipate how business might change in the next 3-4 years and we’re not asking anyone to predict the future... But if Education Inc could just let the people who know their customers best - the people on the shop floor - and let them instill a sense of curiosity, a love of learning then I think we’d all be better off”


Branch Managers 
The Branch Managers showed genuine concern for the quality of training they provided, as well as for the culture they established for their customers and colleagues. However, many did feel that the red tape, out dated procedures, lack of budget and little trust was having a negative influence. The decisions of head office seemed to be having a detrimental impact in almost every area of the Branch Managers work... including their ability to make the much needed changes that could update & improve the training provision.

Customer Service & Trainers

The one group that demonstrated how important the customer was, and what their needs were, were the local Customer Service staff and Trainers.

They were able to demonstrate the most detailed knowledge of each and every user - their strengths & weaknesses, their hopes & aspirations, as well as their training needs & learning styles. The kind of comments we got when we asked “What can you tell us about your customers” were along the lines of; 

“How long have you got… I’ve been working with our customers for 30 years and have taught 3,600 students, I have cared a great deal about each and every customer... so this could take a while.”

When this group was asked about the culture of the organisation, they confirmed the VCs observations - employees at the local centres are doing great work under very tough conditions, but the support from Education Inc HQ "could be better," the lack of respect and trust was disappointing and frustrating.

When asked why they have stayed with the company, the VC's found the kind of resolve, passion, vision and enthusiasm for "creative disruption" that they expect to see in the companies they invest in;

“This is what I was born to do, I’m an educator. The feeling you get when you’re working with a customer who's struggling to understand a concept and then, suddenly, it clicks! They get that 'Ah Ha” moment!'... Or when a customer comes into your class with no confidence, but during the training starts to come out of their shell... Or hearing that the customer who had never been given a chance, who 'didn't think they were "very bright" is heading off to university"... This makes all the negative aspects of the job bearable!” 

When the out dated systems are mentioned the trainers agree that they are obsolete, but their response was "we find ways to work around the system, its not always easy but we care about our customers... Some of these kids face huge challenges and disadvantages, and if we don’t care and try to make a difference to these people's lives… who will?"

It was obvious that the Customer Service Managers and Trainers were intelligent, capable and care a great deal about their customers. They were clearly trying to do great work… but were having to operate from some rigid company policies, which is outdated and/or no longer fit for purpose. 

Culture & Communications 

Just like all the other processes and procedures, the culture and communications at Education Inc was more like what you’d find in the industrial age factory - A top-down, one-way, prescriptive communication method, countless memos to company employees on how they should behave in almost any setting. Every branch and every employee had to behave in a uniform manner regardless of any differences there may be regarding the branch location, individual customer needs or what each staff members' strengths or personality type was.

As with many companies Education Inc say all the right things in their mission statements and annual reports but, the reality is that there are shortcomings with;

1) The relevance of training they provide their customers 

2) Their ability to keep up to date with industires needs 
3) How their employees feel about the way they are treated

Significant improvements would be needed before Education Inc would be of interest to Kids Futures. The recommendations that would need to be implemented before any  Kids Futures investment was made are included below.

Kids Futures... A Reasonable Investment?
When the prospectus for Education Inc arrived it looked like a great investment opportunity, but it’s just too fragmented and bureaucratic. Like other incumbent market leaders since the digital revolution, Education Inc have resisted change and have lost touch with their customer base. 

The music industry made things difficult for the innovative companies like Apple by refusing to allow their music on iTunes. They also threatened users who wanted a digital alternative to CDs with legal action, which alienated their customer base and expedited their demise.     

This is not to say that Education Inc can’t be a great experience for each and every one of its users, it just needs a re-boot and an upgrade.

Complex System – But User Friendly
Any business with over 1 million employees and thousands of branches, which serves an extremely diverse customer base is going to have a lot of complex operational issues.

However, regardless of how complex the business is, in order to be a truly great company, it must be an intuitive, bespoke and enjoyable experience for the user... and, of course, be relevant to their needs.

Google have an army of coders, a city of servers and the most complex algorithms working behind the scenes, but the customer never has any indication of this complexity. All the user needs to do is type their search query into the text box… anyone who can use a keyboard can use Google. The search is relevant, bespoke, easy to use and meets the users needs.

The reason that Apple have great products is because they understand this, and always think of the user experience;

Mac User Manual -   Should be written in a way that a 3rd Grader can understand it.
Ipod -                           You should be able to find any song you are looking for within 3 clicks

Iphone -                        Steve Jobs insisted on the iPhone having a single button. His engineers said for 6 months it was "Impossible" but Jobs, always thinking of the user experience, insisted they found a way to achieve this.

As individuals the people at Head Office were knowledgeable and intelligent, but seemed extremely preoccupied with how popular they were. This has led to the Directors spending vast amounts of time looking for ways to blame others regarding any company shortcomings. This creates something of a toxic organsational culture, where accepting responsibility is perceived as being detrimental to career progression and/or as a sign of weakness. 

While this negative culture could seep into the local branches, the Branch Managers were aware of its disruptive influence and, wherever possible, try to limit its impact. 

We found some of the best people we have ever met at the local branches! These are the kind of people that are needed if Kids Futures are to get a good ROI from Education Inc, not to mention providing better training for their customers, or to help UK PLC to achieve their strategic goals and meet it's forecasts and growth projections.  

Millions trust these people with their children every day (although not the company’s Directors!), indeed Education Inc employs some of the most trusted people, but the Board do not seem to realise this.

Something that any investor will look for is how passionate are the people about what they do? Do they “love what they do; and do what they love.”

Many at Head Office appeared to be jaded, unenthusiastic, closed minded & uninspiring... even though many had only been in post for 2-3 years. However, there was plenty of passion within each branch.

Not only did many employees tell us that teaching is what they always wanted to do but, when customers were asked about any positive experiences they had with Education Inc, each and every one included comments about Education Inc employees who;

“Clearly loved what they did! And it showed! They made learning engaging and fun… They brought the subject to life... In fact I work in the field I do today because of Mr/Mrs X's passion for the subject. He/she was so enthusiastic about the subject that is was infectious… it was contagious... and I guess I caught the bug!”

The dichotomy of practices between Head Office and the Local Branches was evident in the culture.

Kid’s Futures was delighted to hear that there were regular board meetings at Education Inc HQ every Wednesday, but to sit in on the meeting was really something of an experience... the potential investors were quite shocked!

The meeting was chaos from start to finish, the entire time was spent arguing about why one department was doing a “less worse job” than all the other departments. From what the VC's observed nothing productive was achieved from the meeting… the scene was more like one of the rowdiest playgrounds they visited rather than a board meeting.

It was obvious that this group was in charge of commissioning Off the Mark with the company’s quality control, their idea of improvement was not dissimilar to these board meetings - to constantly criticise and humiliate – as well as threatening Branch Managers with redundancy and closure if productivity was not improved upon.

While there were complaints about Head Office practices and culture at each branch, the Branch Managers worked around this to make the most of what they had. Sure there were some disillusioned employees, a result of living with yeas of criticism about their ability and productivity but, in the main, everyone just got on with it and made the best of the situation... and endeavoured to make the customer experience as positive as possible.

This confusing relationship between Head Office and Branch Employees seemed to cause something of an ambivalent relationship with all Education Inc’s stakeholders - their customers, employees and UK PLC companies. 

In order for Kids Futures make any investment this would 
need to be addressed, with a lot less criticism and a lot more collaboration! Kids Futures' recommendations would be to look at the oganisational culture of companies like Google, Apple, Zappos and other successful companies, as Frances Cairneross observes;

"The common characteristic of success is the deliberate creation of a positive culture"

Education Inc & Kids Futures - Making an Investment
How might Education Inc achieve this kind of culture with thousands of centres, a million employees and millions of customers? 

Trust the people on the ground! They are doing a great job! But they are constrained, give them more autonomy! Tell them to get creative, collaborate with any and all stakeholders who want to help - whether at a local, regional or national level.

Will this mean Education Inc is standardised? No! But is PrivateEd Standardised?
Will giving up control be counter intuitive and scary? Absolutely!
Will mistakes be made? Almost certainly!
Lisa Endersby highlights that it might even be a bit of a messy process
Would the "people on the ground" make any worse of a job than the current system?

A Wake Up Call

...Unfortunately at this point I was abruptly awoken from my day dream (but at least it wasn't due to a flying duster! For the benefit of younger students - and teachers - a duster is a block of wood which was an old fashioned delete button. The flying part is because there was once a time when it was the teachers who threw stuff about if they were in a strop... Oh, how the times have changed).

But I did wonder if we might ever get to the stage where we took a bite out of Apple's model and have an Education System where the government provides the central platform (iTunes Store) but we have a million developers creating their own apps (Educators) that their users (Learners) love because there is more choice, the learning material is more suited to their needs... and more fun.

Is there a precedent for this?

Obviously there is the Finnish Education System which has no standardized tests, teachers are trained to assess children using independent tests they create themselves; or Private Education where there is minimal intervention...

But these examples don't really help to suggest how you might go from a centralised system to a local model. Are there other precedents where a once very centralised system has been changed to one where more decisions are made by the individual? 

I remember reading a article about how the US Army was moving from their rigid system of giving orders to each unit to a more efficient method of communication. What did they come up with? By telling the troops what the overall objective was.

So, if the mission was "to protect this hill" then each unit would obviously utilise their training and experience, but were also empowered to use their initiative to achieve the goal. It's fitting that this featured in an article about how great leaders beak the rules!

What's the worst that could happen if policy makers said

"Go Educate our young people? Find out what their goals are... then find whoever you need to (within or outside the school/college), whoever might be able help give each student the skills, encouragement, motivation or whatever else to help them achieve their goals"

Don't know the Answer? Get into groups and discuss it... Collaborate!
It's perhaps worth asking how does the success rate of any top-down education initiatives compare with any projects that are established because someone is passionate about their idea?

If any "top-down" ideas are unpopular with educators, how passionate will they be about the initiative? If there is little enthusiasm for it, how successful is it likely to be?

When we see programmes like "Jamie's Dream Schools," or Bank of Daves "PopUp Talent Shop" etc these are neither uniform or standardised... they aren't even conventional! But one thing that they all share is that the people involved are passionate about making it work. They share their vision and get "buy in" from whoever they need to achieve their goal... which usually involves changing the status quo and making a difference.

At the InnoTech Conference I found out about one of these fantastic and "unique relationships" between Ogilvy and Ravensbourne... I wonder if Kid Futures would be more likely to invest in this particular branch of "Education Inc"?  

A similar initiative that could help compliment and assist educators in paving the way, and help set students on the right path is - Pave (who needs to hurry up with their roll out across the USA and get over here).

Initiatives like these look like ones that just might set Suli Breaks and his friends down a different road... and that will have made all the difference!

Educators want to make a difference and will tell you the status quo is not working for far too many students... so if the Government has the time and enthusiasm for InnoTech and are willing to listen to the start up scene; then why not have InnoEdu "An event designed to accelerate innovation and reform in UK Education by bringing together educators, policy makers, business leaders and investors”

... If this doesn't happen you can't help get the feeling that the "exciting startup scene" won't be all that exciting for very long. If these start ups can't find people with the skills, attitudes, values or whatever abilities are required to allow students to take advantage of the opportunities that will help these emerging start ups to develop and grow.

...Here's the Pitch
Maybe the answer to when would Kids Futures invest in Education Inc would be when the model is simplified enough for a 3rd grade user to understand 

"At Education Inc we have passionate and highly skilled educators who we trust and empower to inspire our young people. We encourage them to be passionate and creative, to find and collaborate with anyone who can help our customers to find their place within UK PLC" 

NB I've no money to invest... but I am happy to invest all the time in the world for anyone with this kind of business model!

Maybe the answer to such a simple business model has a simple solution. Let educators take the lead more... then sit back and enjoy the ride! 

It might just be the upgrade "Education Inc" and "UK PLC" is looking for... It's got to be a better business plan than one that involves living in the past with an out dated system.

If you liked this post you may like "Are you Smart Enough to Work at Google" by William Poundstone; "Linchpin" by Seth Godin and "Confessions of an Ad Man" by David Ogilvy.

PS Suli Breaks If you read this... Great video! You may also be interested to know that I failed O-Grade English three times... (sat it 3 times because I was told it was important) got 3 "D" Grades but I did alright without it... Like you, I decided not to let my (rather poor) exam results decide my fate...

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