Thursday, March 14, 2019

A Stab in the Dark - A New York Story


There’s a particular type of grime that accumulates on the soles of your slippers at Kings County Hospital.  It’s black with a matted sheen-- no doubt from the accumulated grease and grunge covering the hallways and wards of this large metro hospital.   You can’t really see this dirt on the floor but, when you carefully lift up your legs as you fall back into bed, you can see it on the bottom of your slippers.  It’s disgusting.   I thought they gave me the slippers to keep my toes warm but it was really to keep them clean.
 

The hospital ward is filled to capacity. Starting at around 6:30 in the morning, four or five TVs click on and compete in a multinational mash-up of languages and programming. One is a ‘house’ television located so high up on a wall it’s impossible to see clearly – and no one seems able to change the channel anyway.  The din continues all day.
I’m flanked by two new-found friends, but we have nothing in common except violence.  I am clearly an outsider in this ward.   The guy on my left is in his mid-twenties, a little younger than I.  He’s here for a minor gunshot wound-- if there is such a thing – sustained when he was mugged for “a quarter and a subway token.”  We were together in Kings County for five days, but I never saw anyone visit him.
 

The guy to my right is slightly more gregarious. I never found out why he was in the hospital but he keeps telling anyone who will listen that he’s convinced he has HIV.  There doesn’t appear to be any reason to believe it—it’s the eighties and the doctors and nurses treat him no differently than anyone else.   We have some curious conversations over the course of my week-long stay but none I remember clearly.  One occasion I do remember: He has the curtain around his bed drawn—possibly because I am attended by an animated nurse telling me a story.  In her excitement, she waves her arms around and hits my neighbor through the curtain right across the bridge of his nose. We hear a muted “ouch”.   It’s like a scene from the movie Airplane!
 

It’s relatively rare in life to be completely transported outside your normal, predictable existence.  It happens when you travel to countries where you are a true outsider, and that’s what makes travel fun.   But to be transported to a completely different world just miles from your own home is more than disconcerting—it’s scary, confusing and, in my case, very depressing.   When I was brought up to this ward at 4 am on a Saturday morning, I was still in Brooklyn but it was a foreign country: There was a gurney parked near the door flanked by cops. On it was a patient handcuffed to the side rails. I started to refer to this as the prison hospital.
 

The day before had been the end of my first week of work at Macmillan, Inc.--March 17, 1989.  It wasn’t late--around 9pm--and I was almost home.  Someone grabbed me from behind, stole my briefcase and stabbed me in the leg.  He did it deliberately – he stepped in closer to me, reached around and knifed my quad through my coat.  He had no need to do this whatsoever.   I’d been in New York since late 1988, sleeping on a friend’s couch and looking for a job but I’d finally landed a great position and had moved in to this apartment three weeks earlier.   Direct deposit hadn’t yet been set up and my first week’s paycheck was in my wallet--now gone.  But that was the least of my worries: I managed to make it to my apartment building and walk up the steps, but collapsed in the lobby as my blood pressure dropped like a rock.  Before blacking out, I had time to tell the super to call an ambulance. When he asked why, I just looked down and we both watched my blood pool around my shoes.    I recall very little else until I woke up in the ER later that night.  I have a sketchy recollection of the EMS crew trying to wake me up in the ambulance but, other than that, nothing. Until I awakened to find myself in a large room with more than 30 gurneys haphazardly pressed together.
 

By this time it was around 11 pm on a Friday night in an emergency room in Brooklyn—what I suspect is “show time.”   In the room near me, one large muscular victim was attended by two overly made-up ladies - one his wife, the other his girlfriend – who spent the time arguing with each other and tending to the stricken guy.  I later learned that one of these ladies had aggressively inserted a steak knife into the guy’s chest. I never worked out which one was the perp.   But with all of the apologizing going on, I actually think he was enjoying the attention.
 

On another gurney, accompanied by his wife, was a rotund gent who kept moaning “I’m having a heart attack” over and over again.  Occasionally, a nurse came in and disdainfully told him “relax, you’re not having a heart attack”.  Other patients (myself included) were getting tired of this.  
 

Around 1 am, I was bandaged up and more than ready to get out of the ER. A friend of mine had been able to make it to the hospital so I was cleared for discharge.  Still very light-headed, I knew I wasn’t right but they let me go.  As we walked down the hall to the exit, my friend saw I was bleeding down my leg.  Later, it transpired that the knife had nicked a blood vessel, which was also why my blood pressure never returned to normal.   But they were going to let me out.  Back I went to the holding pen where Mr. I’m-Having-a-Heart-Attack was still going strong. 
 

The doctors decided they had to admit me but the hospital was so busy there were no beds.  Which is why it wasn’t until 4 am that I made it to the ward.  I often wonder what happened to the person who vacated that bed in the middle of the night.  Through the central door, the ward extended to the left and right; it was entirely dark except for a single beam of light focused on the prisoner cuffed to the gurney, the two cops keeping watch over him in the night.  It was like the baby Jesus in the manger . . . only different.
 

In addition to my other troubles, I had the misfortune to arrive in Kings Country on a Friday: It was determined I’d need a minor operation to fix the blood vessel (at first they thought it would “fix itself”) but there were no surgeons available until Monday.   The weekend came and went. Monday came and went. My slippers got blacker and blacker. But the surgeon finally performed the fix on Tuesday.   By this time my parents had flown in from the UK and, boy, were they surprised.  The only part of Brooklyn they had ever seen flashed by on the way in from JFK.  
 

I didn’t eat the entire time I was in the hospital.  On Saturday, a nurse came by with dinner--the whole offering was an unappetizing shade of brown.  The tray, the food, the plates.  It looked horrible.  I declined and, for some inexplicable reason, the nurse said “I’ll put it over here in case you want it later.”  She popped the entire tray full of food in the drawer of the nightstand.  On Tuesday, another nurse found it and wondered what the hell it was doing in there.   By then, it just looked like a brown sculpture.
 

Was I happy to get out of there! Violence in NY in the late 1980s was far more common than it is today but, even then, it didn’t seem as if it could possibly affect a white, middle-class, budding corporate exec.  There was a sense of unreality about the whole experience, in spite of all the very real, shocking things that happened.  My life jolted out of the norm but, within a few weeks of the event, the impact began to dissipate.   I found it interesting that my parents heard stories from their friends about similar things happening to their kids.  None as extreme as my version, but the casual crime and violence was very prevalent at the time.  What I recall most is the arbitrariness of the violence: The guy next to me robbed for a quarter and a subway token . . . stuck in the hospital for weeks.
 

As I had started at Macmillan just that week I had no health insurance.  Someone I knew mentioned an agency called the Crime Victims Review Board which would reimburse victims for lost wages, costs and bills.  This turned out to be such a useful resource: My hospital bed cost $825 per day and I was in there for five days.  The bill for the ambulance arrived by mail before I was even discharged.  But Crime Victims paid for all of it.
After getting out of Kings County, I spent the next five days in a suite at the Barclay Intercontinental (my father’s employer) so it kind of evened out.   I had landed the job at Macmillan with the help of a classmate from Georgetown who was already working there.   There was a developing relationship and we had been planning to have brunch on the Sunday following the incident.  She was unaware of what had happened and had been leaving increasingly obnoxious messages on my answer phone when I didn’t return her calls.   That turned out okay though.  I remind her occasionally things could have been worse.   She edits my stuff now.  Not a lot of people know this story.  30 years ago.

Harvard Business Publishing Partners with Degreed

From their press release and interesting announcement from Harvard Business Publishing.
Harvard Business Publishing Corporate Learning and Degreed today announced a partnership to help organizations address their most critical talent development and skill gaps through a personalized, learner-driven solution. The next release of Harvard ManageMentor® Spark™ brings together world-class leadership and management expertise with an industry-leading learning platform to help organizations foster a culture of continuous workforce learning. Harvard ManageMentor Spark provides employees with a personalized, learner-driven experience that allows them to explore their interests and develop their skills to keep pace with the ever-changing business world.
 Harvard also has a blog post discussing the fundamentals of personalized learning as they relate to this announcement.  Post.

Readers may also recall my post on continuous and life long learning from late last year:
Three macro-economic changes facing traditional publishers will help open up a market of 200 million potential students far beyond their existing markets.  Expanding their reach beyond college level students to employer-based education, certification and life long learning programs relies on existing competencies but also presents significant operational and strategic challenges.  The rewards will be considerable.

Wednesday, March 13, 2019

Report: Tech Giants Should Release Customer Data

From the FT, reporting on a report published by the UK Government on internet competition.
Professor Furman said: “The focus should be doing what we can to increase competition, not to punish incumbents, but make it easier for new companies to enter the market.” “This is a report for the UK and the option of breaking up Google, for example, is not a policy option for the UK,” he added, stressing that at this stage the emphasis should be on changing the behaviour of tech giants. The central suggestion in the report is to force companies to release their stranglehold on data, which enhances their ability to develop artificial intelligence and prevents start-ups competing for business on a level playing field. The data held was often more valuable to tech companies than the services provided free to customers and the lack of competition allowed tech giants to avoid both paying users for their data and taking adequate steps to keep it secure.
Here is a link to the 150 page report:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/785547/unlocking_digital_competition_furman_review_web.pdf

From the exec summary: 
We believe the standard tools of competition policy, evaluating whether mergers can proceed and whether antitrust action is warranted to remedy abuses by companies, can play a role in helping to promote competition and the associated better outcomes for consumers and innovation. To do so, competition policy will need to be updated to address the novel challenges posed by the digital economy. Some of these updates can happen within current powers, but legal changes are important to ensure that this job can be done effectively.The biggest gains, however, will come from going beyond these tools to focus on policies that actively promote competition, foster entry by new competitors, and benefit consumers. This will entail a code of conduct for the most significant digital platforms, measures to promote data mobility and systems with open standards, and expanding data openness. By working with businesses and other stakeholders to set up predictable rules in advance, this can create a regime that allows competition and innovation to thrive.

Tuesday, February 19, 2019

Pearson Sells K-12 Business for $250MM

Long on the list of 'discontinued operations' Pearson has finally completed a sale of their troubled K-12 education business.

From Reuters:
British education company Pearson said on Monday it had agreed to sell its U.S. K12 courseware business to Nexus Capital Management LP for $250 million as it shifts its focus from textbooks to digital.  Nexus will pay an initial $25 million and a further $225 million by way of a vendor note due in the next three to five years for the business, which provides textbooks and resources for students from kindergarten to 12th grade.
Following the repayment of the vendor note, Pearson said it would be entitled to 20 percent of cash flows to equity holders and 20 percent of proceeds in the event the business was sold.



Publishing Technology Report 2019 - available 2/25/2019

Thursday, January 31, 2019

The Auto Textbook Algorithm



There are many dire predictions that have all human workers being replaced by machines in the not too distant future, so this article from MIT Technology Review is likely to make educational textbook staff nervous.  That said, the underlying content from Wikipedia wasn't created by a robot - at least as far as we know...

The article explores how a group of researchers were able to create viable textbooks by building an algorithm which sources Wikipedea content.
That raises an interesting question. Given the advances in artificial intelligence in recent years, is there a way to automatically edit Wikipedia content so as to create a coherent whole that is useful as a textbook?
Enter Shahar Admati and colleagues at the Ben-Gurion University of the Negev in Israel. These guys have developed a way to automatically generate Wikibooks using machine learning. They call their machine the Wikibook-bot. “The novelty of our technique is that it is aimed at generating an entire Wikibook, without human involvement,” they say
The approach is relatively straightforward. The researchers began by identifying a set of existing Wikibooks that can act as a training data set. They started with 6,700 Wikibooks included in a data set made available by Wikipedia for this kind of academic study.
MIT Technology Review Link

Tuesday, January 08, 2019

Tracking the Technical Velocity of Publishing Software



One of the interesting aspects of the review I am engaged in for my annual publishing technology forecast, relates to the transition publishing industry software providers are undergoing with respect to their technology architecture.   Companies in this segment may be slow to the service oriented architecture (SOA) dance but, be that as it may, we are seeing important and significant redevelopment undertaken by the leading players.  In my report, I’ve tried to represent this as a reflection of ‘velocity’ by suggesting that those companies which are faster to adopt SOA and API driven architectures will accelerate their revenue growth and market share at the expense of other providers.

This chart represents my estimate of where some of these companies are in their development (names removed in this version).  Based on my interviews and interactions with these companies, there is a clear inflection point where companies are beginning to re-architect their platforms.  For any company, this would not be an inconsequential effort but it is especially risky for relatively small, low capitalized software development companies which characterizes this segment.  The investment effort therefore needs to be deliberate and controlled.




To reflect their development paths, I’ve estimated where I see each company’s starting point and how I expect them to move through my (self-defined) velocity funnel over the next few years.  Several segment leaders, which are advanced in their development, will move further and faster through the funnel as they convert older clients to their new solution and bring on new customers from competitors.   Those companies which are slower to invest may see customers defect and may not be able to fund further advancement through the funnel.

There will be more details on these and other market dynamics in my technology report which will be published at the end of January.

Monday, December 17, 2018

The Price is Right for Cengage


Cengage CEO Michael Hansen discussed the launch of their single price subscription at the recent Bank of Montreal Back to School Conference.

Cengage announced this week that they have extended their “all you can eat” digital subscription package to the Amazon.com store.   Since the company launched this subscription model, students have been able to gain digital access to everything the company publishes, all for $119.99 a semester and $179.99 for the full year (Corrected).   Other publishers are watching carefully from the sidelines – perhaps half hoping this experiment fails miserably – to see how this program does in the market.  This expansion into the Amazon store could be an act of desperation or inspiration.  Either way, I believe it represents a fundamental shift in the way educational materials will be sold and will accelerate the disappearance of the textbook.

At a recent conference, I heard Michael Hansen, CEO of Cengage, discuss his new program and the “affordability crisis” in higher education.  He noted that the industry has long heard that their products are too expensive and that not one person would say that college textbooks represent ‘good value’ for money’.  Pretty damning comments from the head of a college publisher.  But his company is tackling this issue by choosing a “radical change in the model and pricing”.  He went on to say that the notion that “taking the old print model and transferring it to digital, expecting everything to be fine. is simply not viable”.  Cengage proposes a model whereby the student can get everything for $120 per year – forget individual pricing, codes, complicated discount schedules, etc.  It is one simple solution for the student and, under this model, they get hundreds of dollars’ worth of content.

There are many publishers in the college market whose answer to stagnant or declining print textbook sales has been to add more complication: Unintelligible discount models, multiple and conflicting channel relationships, rental programs with demand driven pricing and other models, all designed to prop up a format – print – that is increasingly irrelevant in most other publishing segments.  Most effective will be simple pricing models, supporting an easy to understand value proposition which seems to be the road Cengage is traveling.

Interestingly, Hansen also discussed how their business arrived at this strategy.  Naturally, they did research and found a few things of interest.  Some were obvious, such as the process to deliver student materials is expensive, inefficient and often painful (in a shopping sense) for the student.  They also questioned the idea that ‘faculty don’t care about price’ which I’ve heard a lot and had some experience with at SharedBook.com.  Cengage research showed that faculty did care when they were shown that this subscription option could be available for students because they are concerned about drop-out rates and unprepared students who can’t or won’t buy the textbooks.  (The ‘performance’ of faculty and schools in delivering a quality education was a recurring theme noted in other sessions as increasingly important and educational materials, to the extent they affect faculty performance, are a component of this evaluation).  Another key research finding was that subscription models and different concepts of ownership are already familiar to students and students wouldn’t resist applying those to education content.  In some cases, students may welcome it.  For example, in certain situations, the student may want to subscribe for a set period, drop the subscription and then pick it up later.  This is exactly their experience with other subscription programs like Netflix and Spotify.

Hansen went on to suggest that the educational market and products need to move away from the “expensive” textbook and ‘inadequate’ materials to focus on what publishers are really good at and that is to produce effective course materials.  Hansen believes the top publishers have some inherent strength including ‘franchise’ authors and products and the opportunity and capability to address much wider markets (see my last blog post).  If Cengage can combine affordability and strong branded content Hansen believes, as a company, they have long-term advantages.

During the question-and-answer session, Hansen was asked why other publishers haven’t followed suit.   This is, in my view, inevitable.  But he did note some of the infrastructure and administrative obstacles that were overcome in their own transition to this model.  Real change requires answering the difficult questions and, he noted, their relationship with authors which have been problematic:  At a basic level, does the publisher have the right to include the content in this form?  Cengage believes their author contracts support their online model.  Can the publisher’s infrastructure handle it?  This online subscription model can produce a massive increase in usage and the company better make sure their platforms are saleable and that the user interface (UI) is simple and intuitive to use.

The final point he made was to emphasize that all primary stakeholders need to be aligned and he specifically mentioned his management team and board directors.  The Cengage model really is a case of ‘making it up in volume’ since a massive decrease in pricing has to be made up in higher (subscription) units.   Many scholarly and academic publishers know this ‘valley of death’ from their digital transformations during the late 1990s and 2000s; it can look dire when high-priced print volumes free fall and web subscriptions haven’t caught up yet.   If not well messaged and anticipated this journey can make for some very difficult management and board meetings.  Hansen is not surprised that his competitors have not followed because Cengage is clearly accepting significant risk.  

It is worth noting that Hansen spent time at Elsevier Health and does have a deep awareness of the business benefit of online versus print access to content and the potential upside this transition will have on Cengage’s prospects.   This will be particularly true as students gain access to online materials and the efficacy of the materials becomes transparent creating more accountability and market power in understanding what works and what doesn’t.  Together with the enhanced ability to rapidly deploy more expansive and interesting products, Cengage is positioning itself to move ahead of the field in delivering more effective educational materials for students. Watch this space as other publishers begin to test their own single price models, and I believe we will finally see real change in how we think about the textbook: It will finally disappear completely.

Note: Cengage reached out to me and asked me to correct the pricing above and they also let me know that on their recent investor call they announced over 500,000 Cengage Unlimited subscribers in the first 8 weeks since the Aug. 1 launch. They expect Cengage Unlimited will save students up to $60 million this academic year.

Michael Cairns is a business strategy consultant and executive. He can be reached at michael.cairns@infomediapartners.com or (908) 938 4889 for project work or executive roles.

Monday, December 10, 2018

Newsletter Update. Hot Articles and Happy Holidays!

https://mailchi.mp/infomediapartners.com/200-million-students-await

Periodically and irregularly I circulate a collection of recent articles via my email newsletter.  In case you missed it, take a look at a selection of my articles from this year which generated a lot of traffic.  

Take a look at some of my recent projects and let's talk if you are looking for strategy consulting expertise or you have a C-Level search or board role I can help support.  - 

Michael Cairns

Happy holidays and Merry Christmas.

Monday, November 12, 2018

The Opportunity in 200 Million Students: Education Publishers Must Retool


Three macro-economic changes facing traditional publishers will help open up a market of 200 million potential students far beyond their existing markets.  Expanding their reach beyond college level students to employer-based education, certification and life long learning programs relies on existing competencies but also presents significant operational and strategic challenges.  The rewards will be considerable. 

Textbook publishers have but a fleeting opportunity to sell their books to students.  Each student for that Psych 101 textbook is replaced from one semester to another.  Despite owning “franchise” titles which hold high value for the purchase decision makers – administrators, board members and faculty – the student is generally indifferent, exerts little control over the selection of this content and frequently they don’t even buy it.  In the best of cases, the publisher has a ‘one-off’ relationship with the student and over the past 15 years the only thing making this a sustainable model for publishers has been the constant raising of textbook prices.

Looking forward, sustainability for textbooks publishers will be defined by the significant macro-economic changes which are forcing them to reexamine every aspect of their business – no longer just the price, but their addressable market, the concept of ‘product’ and their delivery options.  Some publishers, such as Cengage, are showing flexibility and creativity as these challenges manifest, but many will find it difficult or impossible.   My consulting work with publishing company executives provides me with a unique opportunity to evaluate how publishers are addressing these changes.  Success is far from certain as more focused and nimble competitors present themselves.

Market expansion: The order breaks down.

The paradigm for delivering education content is largely the same as it was 100 years ago:  Top down, prescriptive and generic.  In today’s environment, as technology and culture change at an ever-faster rate, it becomes increasingly clear that not only do our skills not match basic job requirements, but they fall short at an ever-increasing rate.   So, education needs to do two things: Provide a solid basis for students entering the workforce and supply a mechanism to further develop and expand skills to meet new and changing job requirements across their career.   The good news for publishers is that their addressable market has expanded significantly: There are 200 million people of working age in the US.

One particular issue facing college students concerns the relevancy of their education program.  The bottom line is will it provide them with meaningful employment when they graduate?  (43% of college graduates are underemployed in their first job). Evidence shows that students (and their parents) are becoming more discriminating about education choices based on desired outcomes, and prospective students are forcing schools to provide real data that proves the ability of the school to graduate employable students.  Additionally, these students are also exerting influence over the career management advice and skills guidance they receive during their schooling. 

As students question the practicality and relevancy of their educational choices and concern themselves more deeply with the outcome of their education programs, we will see a breakdown of the traditional four- year degree program.  Students will increasingly want to ‘drop in and drop out’ of structured education as they make early career choices, adopt new interests and seek fresh skills.  This doesn’t mean they won’t graduate with BAs and MBAs but they may also get certifications, credits, badges and other credentials.  Collectively these awards establish core foundations and will contribute credits toward traditional degree programs and give employers confidence in the abilities of the student.  Parchment as one example is helping students in this space.

So education will not end with the “traditional” degree.  Recent research shows that a newly graduated engineer will hit a career roadblock within 10 years of graduation.  That exerts tremendous costs on the employer not least because many workers exit their chosen career at this point.  Businesses also suffer as they must continually find and train brand new employees.  A far better and more cost-effective outcome would be for employers to develop proactive continuing education programs to help employees maintain and develop their skills.  We are beginning to see publishers, educational institutions and businesses partner to create a broader market for their content, materials and programs.  Education and life-long learning programs tied to continued employment success will eventually play a far larger role in our lives from ‘cradle to first job’ to ‘cradle to retirement’.  Increasingly the greater market opportunity for education is not in the delivery of foundational skills (K-16) but in the delivery of life skills, career-based programs and personal fulfillment.  As noted, this market is several orders of magnitude larger than the market for traditional education.

Concept of product: Decoupling content and the separation between knowledge and proficiency

Traditional textbook publishers are adapting and changing to address the larger market opportunities springing up and some have made acquisitions to broaden their product lines.  But more fundamental changes are in play.  When education needs to be delivered ‘on demand’, the content must be decoupled from traditional “containers” and processes.  This is happening fastest around the edges of the traditional education marketplace which is developing into a vibrant and expanding marketplace, of ‘alternative’ education services and providers.  These encompass skills-based training (such as code academies) as well as companies like UConnect which help students pass assessment and accreditation tests.  Additionally, traditional modes of education delivery are being expanded as colleges and universities leverage their brands and educational reputations to wider regional and global markets.  Companies such as Embanet, 2U and Wiley offer Online Program Manager (OPM) solutions to universities to do just this and Wiley recently paid $200mm to acquire Learning House an OPM provider.

Textbook content can be expensive to produce, franchise product market share can be hard to break down and direct connection to students hard to establish.  In a decoupled world, business cases, problem sets, test prep and other similar components can attain more value than a full textbook especially when those component items are tied directly to achievement and/or certifications.  This environment provides new market entrants the opportunity to think differently about the competitive environment and dispense with old assumptions about content development, marketing and sales. 

Perhaps creating a whole educational program is not the right approach to entering the market.  I met a company recently named UConnect.  They are not an ‘educational publisher’ in the traditional sense, yet they have been able to draw a direct connection between the 'publishing' content they produce and student achievement.  UConnect is building a highly profitable and expanding business based on creating problem sets, test prep and achievement tests tied to established test programs such as MCAT, LSAT, NCLEX and even SAT and AP.  Not only is their approach to “content” creation (building test modules) different from traditional publishers but their subscription model for students is easy and simple to understand.  Proof of their different approach and their aspirations can be seen in the types of employees they are seeking to hire.  UConnect understands that in a decoupled content environment they can draw a distinct line between the students skills and knowledge – which their products help assess – and the students’ ability to pass a critical achievement test. 

Delivery options - Certifications, job training and lifelong learning: “Think differently about the diploma”

Delivery isn’t only about the method of delivery, but also about the form and function of the delivery.  If education occurs increasingly throughout a person’s life and career, the delivery can’t (only) be via a structured program.  Those companies and institutions which benefited from the old paradigm where methods were tightly prescribed, and outcomes hazily defined (or completely ignored) will need to adapt or die.  Partnerships between traditional publishers and corporations as well as investment by large companies like Oracle in learning platforms indicate how important the post-college education market has become.  Employers have a lot at stake: They want to retain employees who have basic skills when hired to easily source new skills over their career to match the company’s changed priorities.  HR policies will not only become oriented around career development but should also become competitive advantages.  Publishers which maintain large content libraries have advantages if they can de-couple that content from traditional packaging (as do legacy education institutions, which still retain significant market brand power).   UConnect’s product offering genesis evolved out of a medical student’s specific problem:  How to better prepare for the MCAT test.  By placing a relentless focus on the goal of the student (acing a test) the company has expanded their products significantly and grown dramatically. 

All traditional publishers have test banks, but they don’t necessarily think of them as foundational or standalone products (or product platforms in and of themselves).  Their publishing activities are still tied to the limited textbook ‘container,’ which is a liability in a decoupled world.  Another advantage UConnect (and companies like them) have established is a direct sales relationship with the student and they use this access to seek their advice during their product development cycles.  This is very different from the model of traditional publishers who rarely dealt directly with students and certainly would not allow them an active role in the product development as UConnect does.

The dynamics of the education market are changing rapidly, in part due to macro-economic changes in the way education supports career development, corporate objectives and student fulfillment.  We all want to feel valued and fulfilled in our personal and work lives and how we interact with learning sources will become more dynamic and more evenly distributed over our lives.  Current and future generations of K-16 students will expect to be continually educated over their lifetimes and traditional publishers, institutions and employers will need to position themselves to support those expectations. And if that is not enough change, the direction of education on a global level will be even more profound as globalization creates large middle-class populations in developing nations who will demand education programs to support their personal and professional objects.

Publishers and institutions which fail to understand the relevance of the macro changes impacting education and fail to position themselves to participate in the market for career and life long learning will be pushed aside.  The bigger market opportunity will dwarf traditional education markets and will produce larger, more aggressive competitors and, if traditional education players aren’t ready, they will fail their biggest test.

Michael Cairns is a business strategy consultant and executive.  He can be reached at michael.cairns@infomediapartners.com or (908) 938 4889 for project work or executive roles.

Wednesday, November 07, 2018

McKinsey Article - Digital strategy: The four fights you have to win.

Interesting article from McKinsey about how to address challenges in executing a digital strategy:
Leaders in many organizations lack clarity on what “digital” means for strategy. They underestimate the degree to which digital is disrupting the economic underpinnings of their businesses. They also overlook the speed with which digital ecosystems are blurring industry boundaries and shifting the competitive balance. (For more on why companies often fall short, see “Why digital strategies fail.”) What’s more, responding to digital by building new businesses and shifting resources away from old ones can be threatening to individual executives, who may therefore be slow to embrace (much less drive) the needed change.
https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-strategy-the-four-fights-you-have-to-win

Saturday, October 20, 2018

K-12 Education Market Survey Report for Publishers

I completed this overview of the education market dynamics with publishers and content owners as the intended audience for a recent client. Also of interest to private equity and other investors.

Saturday, September 08, 2018

Paywall: The Business of Scholarship (CC BY 4.0)

Paywall: The Business of Scholarship, produced by Jason Schmitt, provides focus on the need for open access to research and science, questions the rationale behind the $25.2 billion a year that flows into for-profit academic publishers, examines the 35-40% profit margin associated with the top academic publisher Elsevier and looks at how that profit margin is often greater than some of the most profitable tech companies like Apple, Facebook and Google. This film is free to view both in personal and public venues.

Friday, August 31, 2018

During the investor week, I stayed in London and found myself at the Mayfair Holiday Inn on Friday morning.   This sounds more salubrious than it was and the fact my room was immediately over the loading dock in the alley out back only made that more obvious.   I’d just returned to my room with my coffee after some exercise when the fire alarm went off.   It went on and on and on.   Since I was on a tight schedule and drenched with sweat I decide to get going any way.  So I put in some ear plugs took a shower and got dressed for the investor meeting at 8:30.  The alarm finally went off after 40mins.  I left my room, waited for the lift and got on.  There were three large firemen in the lift.  Not a word was said.  The doors open on the lobby floor and there is a large plate glass window to the street immediately opposite the door to the lift.  As the doors open I see the entire hotel standing out on the street, hair messed up, in their jimmy jams and otherwise very unhappy.   I come out fully dressed up and bolt immediately out of the hotel on my way.  No one said a word.  Later when I got to the first meeting (actually I was early) there was a sign saying they would be testing the fire alarms that day.

Friday, August 17, 2018

The Publishing Industry’s Blindspot: Technology Spending

I wrote the following for the BISG newsletter this month:
Sharing operational data and information does not come easily for publishing companies. Many other industries benefit from benchmarking data that enables business improvement but, as an industry, publishing seems uninterested in this philosophy of continuous improvement.
Seeking detailed information about technology spending for a series of investor presentations, I found that this information doesn’t exist. While the Association of American Publishers (AAP) has long collected high-level sales and operating data, this effort is of marginal value if a business is truly committed to benchmarking and measuring their performance across a set of key performance measures.
The AAP numbers do have value, but they lack the specificity and detail needed for true and close comparisons of operating data that can drive performance improvement. Based on my experience, the way that publishing thinks about data has not changed even as the industry migrates from legacy-based technology and operating environments (where “fixed” models rule) to one where flexibility drives everything from content packages to cloud-based applications. 

Wednesday, August 08, 2018

AP Report: New ways for publishers to capture digital revenue

The AP has released a report on ways publishers can generate digital revenues:
Converting audiences into paying customers is core to building a sustainable future for journalism. To provide a broad view of capturing digital revenue — from industry standard paywalls to emerging alternative methods of capturing digital revenue — we spoke with experts and practitioners from news organizations, related startups in the space and the big tech platforms.
In this report, we look at many of the models being implemented and explored, breaking out best practices where available, highlighting ideas that are still looking for a foothold in the marketplace, and evaluating what experiments haven’t borne fruit and why.
Report:  https://insights.ap.org/industry-trends/new-ways-to-capture-digital-revenue

Tuesday, July 31, 2018

M&A Activity in Digital Services H1/18 is Very Active

Some interesting observations from boutique M/A advisor Pharus Advisors on the state of play for transactions in the digital services sector:

From their report:

Acquirer appetites for digitally-focused services firms are becoming increasingly voracious
  • There have been 147 digital and innovation services transactions in H1 2018, up 58% from H1 2017
  • Dentsu and Accenture remain very active in 2018
  • Consultancies such as EY, Deloitte, KPMG, and smaller agencies such as M&C Saatchi have been active acquirers
  • PE acquirers have doubled their digital services platform acquisitions from a year ago - a trend we predicted in our 2017 report
Buyers seek subject matter and technical expertise, as well as impressive client lists and local market leadership
  • Sought-after specialties include digital design, as well as cloud consulting and cloud migration services capabilities
  • Subject matter expertise within financial services, healthcare, cyber and retail has also been in high demand
  • Leadership in a particular geography (e.g. ANZ, Benelux) has been particularly attractive to large global buyers
  • Data-focused and tech-enabled services firms remain in high demand
A diminishing supply of targets with highly-valued capabilities are pushing multiples higher
  • When coupled with buyer competition, higher multiples and better terms for sellers of the most unique firms are more attainable
Unique differentiators include top-tier management and industry leadership, as well as scalable business and service delivery models
 Pharus.com

Monday, July 23, 2018

Blockchain Discussion Document

Recently developed this short discussion document to start discussions about blockchain and the possible development of 'proof of concept' ideas. Get in touch if you are interested in a similar discussion.

Monday, July 16, 2018

Thomson Reuters Up in the Clouds


Almost 10 years ago, Thomson Reuters embarked on the development of their Elektron Data Platform and sold it as a mechanism to get faster as a data provider and closer to their customers.  As part of this effort they built data centers around the world to support their objectives and the efforts were highly successful.  That said, the rapidity by which technology advances is now encouraging the company to place their financial data into the cloud supported not by their own technology but by Amazon and the AWS products.

Financial data is highly transacted and Thomson Reuters counts as clients most financial companies of any consequence.   As a result of this implementation to AWS, their clients will gain increased flexibility in how they use data and how clients can develop new products based on this data.   Not only do clients not have to build and maintain their own data centers (obviously they can if they want) but they can build their own applications on AWS which in turn will allow them to be more flexible in how they service their customers.  The model Thomson Reuters is establishing could be revolutionary in the manner in which users manage financial data and service customers. 
"The enhancement to the Elektron Data Platform will initially provide access to real-time data on the secure and scalable Amazon Web Service (AWS) Cloud in North America, with plans to expand to Europe and Asia later this year. With the cloud API, data can be consumed natively on AWS, directed to applications based in other cloud environments, or to an on-premise environment.
As a simplified, conflated real-time service, the real-time in the cloud service can power up to three client applications at three updates per second across 50,000 instruments at the same time, which can be selected from the full universe of over 70 million instruments covered by the Elektron Data Platform."

No less important from this announcement is that by using AWS, Thomson Reuters will be buying in to a set of standards and protocols which will encourage application development, experimentation and likely broader usage.  This will lower the barriers to entry for many existing and new customers.

As the sheer amount of data increases and complexity grows, Thomson Reuters have taken the view that making data accessible can reduce complexity and help companies focus more on the delivery of analytics, machine learning applications and other innovations.   Enabling this without a cumbersome back end technical architecture will be the strategy all data managers will begin to execute.

(Press Release)

Michael Cairns is a business strategy consultant and executive.  He can be reached at michael.cairns@infomediapartners.com for project work or executive roles.  See here for examples of recent work.

Friday, July 13, 2018

From Awareness to Funding Summary Report Voter Perceptions and Support of Public Libraries in 2018

A report from OCLC takes a look at voter perceptions of public libraries.
In 2008, OCLC published From Awareness to Funding: A Study of Library Support in America, a national study of the awareness, attitudes, and underlying motivations among US voters for supporting library funding. The research, which was led by OCLC with funding by the Bill & Melinda Gates Foundation and conducted by Leo Burnett USA, dispelled long-held assumptions and provided eye-opening insights about who supports public library funding and for what reasons.
A decade later, OCLC has partnered with the American Library Association (ALA) and its Public Library Association (PLA) division to investigate current perceptions and support among US voters and how they may have shifted in the intervening years. The partners re-engaged Leo Burnett USA and revisited the survey instrument used in the original research

Full Report