As I travel I like to ask school chains, what are your educational assets?
If the answer is, “it’s our teachers”, I worry about all that high turnover in the international field.
If the answer is “mainly, it’s our schools”, I worry about the missed opportunities.
You see, I have commented before about the Copernican shift that is happening in the private school sector. As the large school groups attract higher and higher valuations (15 times, 20 times, 25 times…..!), they stand ready to shift, for good, the balance of power between front-line school providers and traditional education suppliers (publishers, software and hardware developers, furniture manufacturers, trainers, etc.).
The school providers are fast becoming the supermarkets who will be able to dictate terms and prices to the ‘farmers’ (i.e. the suppliers). The school chains are finding their way to the centre of their universe.
Before this moment, national governments around the world have controlled their own joined-up systems of copycat institutions connected to curriculum, assessment, qualifications, resources, teacher supply and teacher training. The governments were the centre of the universe but they never really grasped the full financial advantage that they had as the monopoly buyer. Some governments preferred to devolve purchase decisions; many others were happy to create a healthy eco-system in which private players would contribute valuable assets (textbooks, training etc.) and make some marginal gifts to the government system in return for their commercial returns. It all felt rather cosy.
It is new technology and the rapid expansion of the private sector, over the last 20 years, that has been ‘un-coupling’ these large, joined-up, national systems. And the fact that parents are no longer satisfied with vanilla.
The emergence of chains is bringing some tough business thinking into the relationship. A school chain can ask, why don’t I author my own textbooks? Or commission the books I need, at the price I want? Or run my own buses and make my furniture? Or accredit my own teachers? Are there any suppliers out there who will take a big cut in price in return for a long-term supply contract? Come to think of it, am I taking advantage of this huge army of specialist teachers I have, whose salaries already take up half my outlay?
Fundamentally, these are questions about the optimum business strategy for any global chain of schools. And they are questions about, what are the other educational assets (not just the schools) that you want to develop and control, going forward?
After two decades of relative conservatism, reflecting the largely cautious national systems that came before, the private schools sector is now ripe for business innovation. At last! There is technology, there is uncoupling, there is a power shift. Just as important, there is rising demand and, with every new private school that is built, consumers are becoming more cost-conscious.
These forces are immense.
It should be no surprise, then, that we can see:
- very rapid growth for a group like SABIS that has invested heavily in an approach that allows them to reproduce schools quickly and with quite exceptional reliability for this sector
- innovations where some schools offer more than one national system on site – consider the Global Schools Foundation which now combines Montessori, CBSE, IGCSE and IB in some of its school locations (almost inconceivable, just five years ago)
- hybrid ‘schools’ like ICademy Middle East that combine a powerful distance learning approach with the opportunity for students to visit a physical base when needed (talk about an idea that is ahead of its time…)
- new ‘affordable’ schools which deliver better student results than schools that cost two or even three times as much (are we even ready for the debate that raises about productivity?)
- cities where private schooling is already the de facto model
Personally, the things I look for in a school group – to justify a 15, 20 or 25 times ‘multiple’ – are those assets that reach beyond the Profit and Loss account for each, individual school. If a school chain could show me a richer set of assets, and a history of thinking and practices that have made reproduction, procurement and management both cheaper and easier, I would be much more willing to put up with the price tag.
