The Education Business Blog

We Are Teachers has a bitter sweet post up about the funny things people say to teachers - with appropriate responses.
Here is a sample:

The comment: “Johnny NEVER misbehaves/has trouble paying attention/hits other kids/acts out at home. I wonder what you’re doing in the classroom to make that happen.”

The comeback: “That is strange that Johnny has such different behavior in the classroom. Let’s figure out a way to get to the bottom of this. You’re welcome to observe my teaching any time you want. When can I come to your house?”

It is worth 5 minutes of your morning to get a refresher on why teachers deserve more respect than they are getting.

Related Post:

What Do Teachers Make

In 1972, deep in the generational culture wars, Will the Circle Be Unbroken was released as a 3 LP set. A that time I was a budding 14 year old banjo player. It was refreshing to hear the Nitty Gritty Dirt Band fusing their hippie sensibility with the mastery of more mature musicians like Earl Scruggs and Vassar Clements. It opened up a world of possibilities I hadn't heard before.

To this day their take on Soldier's Joy remains my favorite banjo song to play or listen to. IMHO all other versions pale in comparison.

Scruggs was both a master craftsman and a transformational musical innovator, a very rare combination. Bluegrass simply wouldn't be what it is without him. Be like Earl and goodness will ensue.

I chose to play folk Clawhammer banjo, the older style that Scrugg's bluegrass picking supplanted. But I absorbed every lick and kick that he put into his music.

Enjoy*:

As this video attests - Scruggs was musician and human being first. He worked with anyone whose music he respected, regardless of style or politics. We need more of that spirit not less - he will be missed.

*Foggy Mountain Breakdown - Earl Scruggs with Glen Duncan, Randy Scruggs, Steve Martin, Vince Gill, Marty Stuart, Gary Scruggs, Albert Lee, Paul Shaffer, Jerry Douglas, and Leon Russell.

My last post, Apple's iPad Textbooks Cost 5x More Than Print, touched a live wire.

The majority of comments were positive. The general tone was support for iPads in the classroom (a position I share) but an appreciation for the realistic view of what it will cost to implement the vision today.

Oops - I Underestimated

The actual cost of iTexts vs. printed textbooks may be more than 6x-7x based on the experience of several Technology Directors.

In their experience a 2 year lifespan for an iPad was more realistic than the 4 years I used. The iPods they purchased just 2-3 years ago can't run iOS 5 and are pretty banged up.

Another astute reader pointed out that I'd assumed 5 full year classes when a more realistic assumption is that a student takes a mix of semester length and annual courses - 7-8 textbooks rather than the 5 I used is probably a better baseline. This assumes 10 courses with textbooks with 2-3 of them being full year courses.

These changes move the needle further into negative territory for the iPad Textbooks.

Classroom Use Will Be Broader Than iTextbooks

Several people pointed out, quite fairly, that iPads in the classroom will be used for far more than just textbooks. I hope so! I think replacing textbooks will be the LEAST interesting use of the technology in the classroom.

But that wasn't my focus - I was only looking at the economic impact on a typical high school. If a school chose not to implement textbooks at all on iPads they would still incur a huge incremental cost over their current spending if they give an iPad to every student (plus the cost of any apps).

However, if a school is planning on using iPad for more than just readers then the low end model I used in my analysis probably won't cut it - shooting and editing video for example would require more memory. I haven't made this change to the model since my focus was on textbooks - but if this is something your school is considering you should probably use the $599 32gb model in the spreadsheet.

The only case where this isn't an incremental hit to the budget is if a school already has a 1:1 laptop program. Those schools should actually see a savings and ought to be moving in this direction as quickly as they can.

Teacher Training

A few readers took issue with how I accounted for the incremental planning time for teachers - generally stating that this is something good teachers do willingly and regularly. I agree completely with their point - good teachers are constantly titrating the content they use to the specific group of students they are working with - this is where the true art of teaching is practiced at its highest level.

But my focus was purely on the economic impact. Unless the readers meant to imply that the teachers should donate this time for free (they didn't say that) then from an economic standpoint this prep time crowds out other activities and ought to be accounted for in this initiative.

To be fair this may not be a true incremental cost but it is a direct cost so I'm leaving it in.

Next

I'm still working on my post on the positive impact the technology can have in the classroom as well as a post on the impact on publisher economics. Keep an eye out for those in the coming weeks and keep the comments and suggestions coming.

For more detail on the discussion visit the comment thread on the original post (link below).

Several folks requested the spreadsheet so they could put their school's specific information in (# students, # teachers, cost of textbooks, instructional days, etc.). Email me at info at headway strategies dot com if you want a copy. I've updated the spreadsheet to reflect the great feedback I've already received.

Link to prior post

From a Publisher's perspective Apple's iPad textbook initiative is a decent 1.0 release with promise. I've had a few weeks to play with iBooks Author and iBooks2 and discuss them with colleagues. I'll write about the many positives in future posts.

But there is a worm in this apple. All the sweet promises Apple is making are going to slam headfirst into the funding issue. It will cost a school 552% more to implement iPad textbooks than it does to deploy books. That ain't happening in THIS economy. The press reports I've seen have completely missed this because Apple "hand waved" their way around it.

Update - A follow on post discussion of reader responses is here.

Follow me down into the details where the devil resides….

THINGS DON'T ADD UP (or they do and it is a lot of money…)

There are five components to the cost and we'll examine each.

Apple is targeting High Schools so this is the baseline we'll use. The average high school has 752 students, 43 teachers, and a total budget of $7.7 million (data sourced from NCES).*1

The right way to compare the cost of a textbook and an iText is on an annualized basis per student - this provides the fairest apples to apples (ahem) evaluation. I've amortized the various components based on their usual lifespan. I've tried to stick to per student per class pricing - this is the most scalable unit of measurement for schools of all sizes.*2

This analysis looks at the economics from a school's perspective, in the future I'll address how this new model affects publishers' business model.

If you want the spreadsheet so you can tweak the variables email me at info@headwaystrategies.com for a copy.

CONTENT - Advantage Print

At the heart of Apple's messaging is the idea that at $14.99 an iText is significantly less expensive than a $60 textbook. The nicest way I can think of to characterize this promise is that it is a follicly challenged prevarication.*3 Apple should know better.

When a school buys a $60 textbook today they use it for an average of 5-7 years for a per student cost of about $10. When a school buys an Apple iText it costs them $14.99 per student - per year.

You also have to factor in the teacher edition - I used $200 for a print version and $49.99 for a digital version (this is frequently the most expensive piece to produce in print because of the low number of units created). For large deals publishers often provide a free TE for every 30 student editions purchased - but I've handicapped the print by including it at full cost.

The annual content cost per student per class comes out to $10.38 per student for a printed textbook and $15.24 for the digital. The digital version is 34% more expensive.*4

Right out the gate using a true annualized cost Apple's claims fall apart.

MANAGEMENT - Advantage Digital

In both cases there is some management involved in getting the right materials to the right student. We'll call it $2 a year for a textbook - districts have to catalog it, repair it, and store it somewhere over the summer. On the digital side I used $0.25 for getting the right download code to the right student, this also involves cataloging and has an annual purchase cycle (vs. the 1 time buy for the book). No storage or repair gives digital a huge advantage.

A big plus to bytes vs. dead trees on this score.

DEVICE - Advantage Print

Apple's price comparison completely ignored the fact that consuming the digital content requires an iPad that the district is obligated to provide. In private schools and Universities the institution can mandate that students bring their own device (BYOD). That doesn't work in public K12 schools. If the content requires an iPad then the school also has to provide it to make sure there is equitable educational opportunity.

There is a huge upfront cost to doing this and the iPads will also need to be replaced on a regular basis (every 4-5 years). iPads also need service contracts and insurance - teenagers are not known for handling their things particularly well.

I used current pricing from Apple for the low end Wi-Fi only iPad, AppleCare service contract, and an insurance policy from a third party provider (damage, theft, etc.). The annual cost per device is $206, or $163,300 per year for the average high school. Assuming 5 courses this comes out to $43.44 per class per student.

Books are their own device so there is $0 annual additional cost. The device is a pure add-on cost from the district's perspective.

Yes - because of Moore's Law these costs will fall with time. But no matter how low they go they will always be incremental over the cost of a book.

NETWORK - Advantage Print

Putting an additional 750 devices on a wireless network isn't a trivial exercise. A school isn't like an office environment where usage by any one user is fairly random over the course of the day. A school runs on a bell schedule so most of those 750 devices are likely to be hitting the network at the same time. When you are relying on the iPad no network equals no learning - which isn't acceptable.

A cheap $50 wireless access point from Best Buy isn't going to hack it in this environment. Schools will need industrial grade access points with load balancing and several other features to handle the spiky volume. These typically run in the $500 range. A school will need about 30 of these to support 800 users (don't forget the teachers).

I've assumed for the purposes of this exercise that the school is fully wired. If a school has to lay cable, punch through walls, etc. that would be on top of my estimates. But I think it safe to say that most high schools have been through that upgrade by now.

In addition to the access points an additional 4-5 T1 lines will be needed to handle the network volume. I've assumed 4 lines at an eRate cost of $400 a month/line. This is an informed guess on the bandwidth needs.

All-in the network infrastructure will run about $21,750 a year per school. or $6.94 per student per class. Like the device this is purely incremental on the digital side of the ledger.

I consider this estimate to be very conservative - an actual schools' costs could be dramatically higher depending on the quality of their existing IT infrastructure.

TRAINING - Advantage Print

Teacher training is a bit complicated, but it bakes down into up-front training and annual tune-ups.

Textbooks are a known entity, schools and publishers have developed pretty efficient mechanisms to getting teachers oriented to a new textbook. The iText adds a need to train teachers on how to incorporate the devices into their classroom practice.

On an annual basis once a teacher has incorporated a textbook into their lesson plans there is very little fine tuning until the book changes. With a digital text the content should update every year requiring tweaks and updates to the teacher's plans. Current content is a huge advantage for the digital text and one of the prime reasons to consider moving in this direction. But from a budget standpoint it comes with a real cost that can't be ignored.

I peg the amortized cost of teacher training for a textbook at $1.88 per student per class and the digital text at $6.94. Most of the difference is attributable to the annual updates.

PUTTING IT ALL TOGETHER

At every level except management the iPad texts are more expensive. The single biggest contributor to the imbalance is the iPad itself, followed by the network. There will be widespread trials over the next couple of years, some of them quite large and visible. But the mass of the market won't move until there is clear evidence of efficacy and the budget situation for schools improves.

There is a case to be made that an interactive digital experience is a more powerful learning tool and thus worth more, but Apple didn't really make that claim. We are likely to hear lots of bleating about engagement and how much the kids love to work with these devices. To which educators should respond with "great - where is the objective data on improved outcomes?" There are enough schools deploying the devices now that a preliminary study or two ought to be available. As a long term advocate of ed-tech I hope the data supports the thesis, but until we see the proof, claims along these lines ought to be regarded as aspirational marketing.

If the political will was there on the national level an additional $6.5 billion per year would do the trick. That would be stimulating.

FINAL RANT

One more thing. The next time some ignorant bloviator refers to "outrageously priced textbooks" remind them that at 6 cents per day a textbook is about as efficient as you are going to get for high quality, well designed, instructionally sound, standards aligned, and globally permissioned materials.

Update - A follow on post discussion of reader responses is here.

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*1 Wherever possible I've used data from a reputable source and noted that in the spreadsheet. I did have to make a few assumptions (e.g. the lifespan of an iPad). If you want to play with the spreadsheet yourself to tweak the variables please email me at info@headwaystrategies.com and I'll send you a copy.

*2 It is complicated because some of the costs are per student (the text), some per teacher (training), and some per school (networks). Breaking these back down to a per student basis is the only common denominator that works well.

*3 Bald lie

*4 I didn't factor in student mobility, but since the iText is registered to the student's Apple ID not the school's once a student uses a download code it expires. If that student leaves during the school year the district can't simply pass the iText along to the new student the way they would with a book. I think Apple and the publishers will come up with a solution for this so I didn't think it was fair to include it - but it is a real issue as things stand right now.

UPDATE: For those who took offense at this graphic know that as I saw it the teachers' drinking was a result of the cycle, not the cause. I interpreted this graphic as a slag on parents (myself included). If you are a teacher and were offended please accept my apology. If you are a parent and were offended - go volunteer in your local school. Regular readers will know that I have nothing but the highest respect for teachers.

One simple graphic from the always brilliant Jessica Hagy untangles the whole complicated mess.

Nuff said.

Keep it short and simple.

Brevity is a sign of respect for your reader's time and attention.

Really.

This post originally ran in May 2007

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Related Posts

Email Etiquette for a Busy Age

Numbered lists on blogs are all the rage, particularly at the turn of a new year.

Since mid December my RSS feed has been stuffed with 10 best if 2011, 20 ways to do that, and 12 things to look for in the new year. Oh February please come soon.

If you find yourself falling for this brand of year-end-birdbrainery consider the following 5 points.

4. Lists Are Cliche

At this point there is nothing original in banging out a list. Do you want your blog to stand out for original content or do you want to be just another hamster on the wheel?

2. They Are Cheap Salvation

Reading a list about making your life better is just like making it better - only quicker and easier. Right?

5. They Are Arbitrary Link Bait

I scanned "30 Ways to Make Your Life Better" and wished the authors had taken the brain power to consolidate down to 3. Instead they dumped a truckload of self-help books in a messy pile.

Yeah, shame on me for clicking on it.

3. Forwarding Them is Passive Aggressive Advice Giving

If you want to make your point with barbed humor use the content over at Passive Aggressive Notes. We are all Amy Misto.

1. There Is More - buy why bother.

Don't say you weren't warned. Now, where is my TPS report?

Alright kids, get off my lawn.

OPOL

My guess is that if you are in the office today you aren't all that busy. So take 7 minutes and watch this great little video, particularly if you are skeptic about video games and learning.

Video - Tangential Learning

His central point, that a well designed game experience tees up personally directed learning actually extends far beyond games.

Another Example

I'm currently reading Neal Stephenson's Baroque Cycle - a Sci-Fi trilogy set in the Baroque era that weaves in a huge range of historical figures (sample: Leibniz, Louis IV, and Ben Franklin) and which plumbs the emergence of modern finance (including war, piracy, the invention of calculus, etc.).

Since I'm already on my iPad I keep Wikipanion at the ready. Every 5-10 pages I take a detour to learn more about a character or an issue which in turn informs my understanding of the subtleties in the novel. The technology enables this just in time learning approach in a way that would be impossible in print.

A sample of my searches:

Quicksilver
Isaac Newton
Malabar Coast
Jean Bart
Whig (British Political Party)
Jacobitism

Put another way - I'm reading a great book AND getting a survey history course in the Baroque era. A creative teacher could have a field day with this approach while weaving between english and social studies with a good dose of math tossed in as a bonus.

If you are not familiar with Stephenson's work he is a master storyteller, a brilliant writer, and absolutely hilarious. Start with Snow Crash and work up from there. If you want to call yourself literate in the digital age this is a must read.

Is the instructional materials market in the tank? I've spoken with people at a dozen companies who are all seeing the same thing - since November 1st a moderately down market has dropped like a stone. A senior executive at one of the big 4 publishers flatly stated that this was the worst he'd seen it in 35 years. I'm inclined to agree.

Since this appears to be an industry wide phenomena how should companies react? That depends on whether you think this is a temporary stall or a permanent realignment of funding for materials. How you see that depends on whether you focus on the supplemental or basal market.

For the supplemental market the evidence points towards a stall - at least so far. Low sales numbers don't match the funding availability, there is no evidence that a huge amount of funding has been pulled from the market all of a sudden, What we do have is an abundance of uncertainty which is prompting districts to sit on the funds they have.

On the basal side it is another story. In general states are stalling, canceling, and opening up their adoptions as a means of responding to budget shortfalls. Given the long wave nature of adoptions even stalling is more than a temporary problem for the large publishers. The large publishers have reacted accordingly with McGraw-Hill laying off over 500 people and HMH a smaller number. It appears that the brunt of those layoffs occurred in adoption states. States also appear to be using the crisis as an opportunity to reform adoption rules in ways that open them up to new media and competitors (technology).

As a general rule a down market for basal materials means an up market for supplemental as schools fill gaps and extend the range of the basal programs. In this market the best we can hope for is probably level funding for supplemental, which given the dismal numbers on the basal side amounts to the same thing. As the old joke says "I don't have to outrun the bear, I just have to outrun you…"

The current market is a noxious intersection of several trends.

1. Stimulus - Everyone was expecting a cooling in the market when the stimulus program came to an end in September. Then the Feds announced that they would grant extensions through next September to pretty much anyone who applied. Prudent districts will sit on these funds until next summer when they have more information about all funding sources. Technically this isn't bad news - but it doesn't help us right now.

We may also be experiencing a "stimulus hangover" similar to a sales dip in the car market after a huge round of incentive driven purchases.

2. Adoptions - While state tax receipts have stabilized and even started a very slow crawl back they are still too low to fund essential services. Witness California cutting $1 billion from K12 and Higher education. Numerous states have cancelled or postponed adoptions and there is some evidence that this whole market mechanism is unravelling before our eyes. Since many districts don't know when they will be able to buy core materials they are husbanding their available funds for a much broader array of products than in the past - competition is more intense.

3. Technology - The success of blended print/technology products is upending the traditional buying processes in districts. This is the result of new regulations on the adoptions that are moving along that allow districts to purchase in many media rather than requiring a book. New product evaluation procedures need to bring both textbook purchasing and technology experts together. This is taking some time to figure out and gumming things up.

4. Waivers - The Department of Education has created uncertainty about accountability requirements by moving ahead with the waiver process. This is really a result of Congress's inability to pass a reauthorization of ESEA (NCLB). Something had to be done.. The new guidance districts are getting from the feds is often in conflict with existing regulations at the state level - until this is resolved districts won't be comfortable releasing funds they already have.

5. Budget - The Super Committee failure at the end of October aligns almost perfectly with the stall. Correlation isn't causation, but in this case a good argument can be made that uncertainty about the availability of federal funds cascaded through the decision making processes under way at districts. As of the end of December the new budget actually increases Title 1 and IDEA. This was too late to help with December sales but should free up Title 1funds in particular in the new year.

6. Rescissions - As part of the DOE applying the existing rules in a tight budget they are getting stricter with states about rules and regulations. This has resulted in some states seeing rescissions of already allocated funds. These are not large amounts - 1-1.5% in average. But for cash strapped states who can't make up the difference it is creating a huge problem. Until people at the district level have certainty on the funds they can spend they will wait.

Decisions Decisions

So what should companies do? Do you take short term actions to tide you through a couple more months of uncertainty or do you plan for a different future? Market mavens are counseling a wait and see attitude - expecting that once the budget issues are resolved in the next 6-8 weeks that the funding levels will be pretty close to flat. They are urging supplemental publishers to refrain from doing anything drastic until we have more information.

From the outside the layoffs at McGraw-Hill and HMH are linked primarily to the cratering adoption market and teeing up new investment in technology solutions. There may be some correlation to the short term dip, but they appear to be strategic moves addressing longer term trends. In other words they probably are not harbingers of what smaller companies should be considering.

In the end every company will have to make their own informed decision and accept the consequences. Get out there and talk to some customers, consult the folks who track funding, look at your product pipeline, and match your response to your findings. There will be no "right answer."

As the delegation returned to our hotel in smoggy dusk a lime green rickshaw was playing chicken with a big tan BMW 7 sedan. Some unseen signal passed between the cyclist and driver and the tangle resolved itself smoothly; the perfect metaphor for my adventures in China last week.

The country is a fascinating jumble of the old and new, the Chinese are inventing new ways of working together on the fly in the midst of unprecedented growth and change. The whole country smells of wet concrete. Construction is everywhere.

In the spirit of “Beginners Eyes” I've captured in this post a few of the things that caught my attention over my 6 day visit. We'll be making an announcement soon about the business venture we worked on, but in this initial post I'll focus on my personal experiences.

Patterns

22 hours of travel took me from the warmth of Austin to the winter chill of Beijing. As we descended the street patterns of the communities on the flight path caught my attention. Everything is catawampus, it has an organic and erratic look to it. Villages, large apartment complexes, and farms all have irregular layouts.

The Cartesian orderliness valued in North America isn't that important here - even in the most modern zones. As much as architecture reflects patterns of thought this aerial perspective provided some insight on cross-cultural differences. The Chinese are at home with complexity.

Nightlife

My bleary eyed search for dinner took me in a taxi to Huhai, a restaurant and bar district encircling a small lake in the center of the city.

Strolling around the lake I heard emo girls with guitars, a tight hard-rocking house band, and blind erhu (Chinese violin) players. I had to shake off numerous touts ("Lady Bar?") who could give Bourbon Street's dollar-a-holler hustlers a lesson or two in persistence. The scene was a pleasing mix of cultural vibrancy and the peace of the lights reflected around the lake.

About the Food

That first night the menu featured turtle, bullfrog, fish heads, intestines, duck feet, alongside spring rolls and pork. Over the course of the week we ate rabbit, conch, foie gras, yak, duck eggs, bamboo, and all variety of chicken, pork, beef, and lamb. I don't think we had squeal, quack, or moo, but if it could be cooked it found it's way onto the table. Every bite was delicious and my personal favorite was a spicy Sichuan chicken dish that left your mouth numb. The yak was damn fine too.

I discovered quickly that the trick to surviving a Chinese banquet is taking just one bite of each dish. When 15-20 dishes are served it adds up to a full meal with a head spinning range of tastes and textures. I found it far more interesting than having just one dish to yourself.

You should try the corn juice too.

In a case of stereotyping and thoughtfulness the Chinese assume we want ketchup with everything. I was also amused to see a full display of Tabasco sauce products in our Sichuan hotel. Sichuan sets a high bar globally for spicy hot food, they do everyday things with peppers the Cajuns only dream of. And yet, there was Louisiana’s finest front and center.

The Sights

My first full day was a chance to see the city and adjust to the 14 hour time shift. I headed off to the Forbidden City and had my first full contact encounter with Beijing cueing protocol. After I got skunked on the first subway I got into the spirit of the thing and muscled my way onto the second one.

The Palace was clearly built for intimidation - the scale must have been awe inducing when it was an active residence of the emperor. But the funny thing is the hordes of tourists clung together in the center of the passage through the various squares - leaving acres of empty space to the left and right. The scale remains intimidating even today.

Wandering in the hutongs (alleyways) behind the Palace gave a small taste of daily life in the city. Mountains of vegetables, laundry lines, and construction everywhere.

Where the heck are the trash cans? It isn’t like there is a lot of litter (there isn’t) but I spent half my time with trash jammed in my pockets.

Driving

During the long taxi ride out to the 798 Art Zone I noted that the question of front seat vs. back seat in cabs has a generational split to it. Older more egalitarian comrades ride shotgun while the new generation sits in back.

Anyone who learned to drive in Boston feels at home with the traffic patterns in China. Aggression mixed with a fine sense of when to give ground, a general disregard for lanes and lights, and a love affair with the horn are hallmarks of Chinese automotive arts.

Chinese trucks are impressively built, not fancy but engineered for power and scale. Half of them seem to be dragging great loads of brush and trees that spill out of the cargo area.

Seatbelts in cars and helmets on the ubiquitous motor bikes are entirely optional. In most of the cabs I rode the seat belt tab was hidden too deep in the seat to be used.

Arts and Culture

798 is a wonder – artists colonized and then overwhelmed an East German Bauhaus factory center about 10 miles northeast of the city center. Galleries, cafes, and shops spread over 10-15 blocks and feature a mix of local and international artists. The local scene is vibrant and ranged from deeply profound to kitschy (Maobama!). The streets are littered with sculpture mixed in with industrial detritus that creates an enervating contrast.

In one magic moment I emerged from the 798 Building into a small courtyard. An icy breeze brushed the trees and all the leaves came down at once. Essence of autumn.

Soaking the Laowai (foreigners) who want to remain in their cocoon is a finely tuned art. A 25 minute taxi ride back to my hotel was less than a cup of regular coffee in the hotel lobby. It was also 10x what I paid in a local café earlier in the day.

State sanctioned media (China Daily) mixes decent straight reporting with eyebrow raising howlers like “Kids Keen To Learn Financial Management.” I am not making that headline up. Things are not THAT different around the world.

Morning

I hit the streets for a walk at 5:30 AM (3:30 PM in wide awake Austin). We were staying in the financial district so you wouldn’t expect it to be vibrant. But it was totally dead. A few taxis idled sulkily and that was it. No pedestrians, no early morning coffee shops, no traffic. Nothing. I noticed a similar pattern in Sichuan a few days later.

As a night owl myself this makes total sense to me. Perhaps millennia of civilization have taught the Chinese that the early worm gets eaten.

A semaphore for income inequality – they still have payphones everywhere.

Ceremony

We were lucky enough to attend the HLHL Foundation awards in Beijing, the Chinese equivalent of the Nobel Prize. As guests of one of the founders we were given seats in the VIP section and added a touch of the West to the event.

All the judges and VIPs spent the better part of the ceremonies flipping pages of the documents they had been provided. This, rather than attending to the speakers, seemed to be the polite thing to do. They were very nicely printed documents and fortunately there were enough pictures to keep me entertained.

Dining protocol for business dinners is strict. The host always sits with his back to the wall facing the door, honored guests are placed in a pecking order in the seats radiating away from the host. I guess I expected something a little more egalitarian in a Communist culture but it seemed to work well for making sure people at the same level in the different organizations were able to interact.

Chinese toothpick style is a habit we should adopt in Texas. They cover their mouth with one hand while the other manages the excavation hidden from view.

Outside Beijing

From there we headed to Sichuan Province in the center of the country. The parts of Beijing I saw were comparable to other world cities I’ve visited – Prague, Toronto, San Antonio. Just bigger – much bigger. Arriving in Sichuan felt a bit like landing in Mexico. It is a roiling dynamic area of construction and growth, but it also has more visible poverty. One block from our elegant hotel were broken windows, open markets, and obvious signs of economic stress.

The pollution is choking. If you can recall what LA was like in the ‘70’s double it and you will get some sense of the chemical fog that is a part of everyday life. If Made in China products are cheaper because of laxer environmental regulations we are doing nothing more than externalizing the health costs onto people who are least able to deal with them. Its taken the better part of a week for my lungs to clear, and I was only in Sichuan two and a half days.

This may be an inevitable part of industrialization but you would think we’d have learned better in the 150 years since London choked with smoke and the 40 years since Cleveland’s rivers were aflame.

Homeward

I rose before dawn on my last day for my flight to Taiwan. On a dark and empty boulevard someone tossed a bundle of firecrackers that crackled in the industrial fog. It was a punctuation mark for the end of my first visit.

I’ll be back. I love this place.

This made my day!

The kids are all right.

eBooks, iPads, and the Kindle are changing the fundamental structure of the publishing industry. From a strategic perspective they are having the largest impact on the development and pricing of products. In other words it is affecting the "what" deeply. The "how" has not changed all that much, regardless of whether you are selling print and/or technology.

There are four fundamental strategies for a growing a company in the K12 sector because even in the best of times K12 is (mostly) a zero sum game. In 2008 I wrote a post about this competitive dynamic:

In normal times education budgets grow at 2%-5% a year. Most start-ups or new products need to grow at a huge multiple of that - 30% to 300% or even more. Mathematically in order for you to grow someone else is must lose out.

We are most definitely not living in "normal times" these days. Any growth strategy in today's market is fighting gravity as school budgets are expected to fall next year after the stimulus has expired.

K12 Growth Strategies

How does a company go about "stealing" share from other players in the market? Below we look at innovation, distribution, acquisition, and diversification.

1. Innovation - This is the most obvious - if you build a better product people will flock to you while ignoring the tired offerings of your competitors.

The best example in the market today is interactive white boards which are now in over 60% of classrooms (70% is considered market saturation for most technologies). This has mostly happened over the last 5 years.

Since this platform is now ubiquitous a new innovation frontier is content for these devices like Saddleback's excellent math programs.

PCI published our award winning PCI Reading Program - the first research based comprehensive program for intellectually disabled students in decades. It is designed for today's Special Ed population, including a much higher number of students with autism. Tellingly it is a combination of print and software. This product line has seen explosive growth in a rough market.

Success requires a clear vision of market needs and how to apply new tools to those needs in an economically efficient way. Easy to say, really hard to do.

2. Distribution - Distribution is the achilles heel of all K12 start ups. If you have something innovative making more people aware of your innovative solution will drive new business. The problem is that there are 3.8 million teachers in the US and they are bombarded with marketing messages. Cutting through that clutter at that scale takes time and money.

The largest publishers have actually contracted their distribution networks in the last five years. They collapsed their supplemental teams into their core basal teams with the predictable result that the supplemental business has shrunk. There is a fair debate on how much of this shrinkage is falling demand on the customers' side and how much is publisher neglect. What is clear is that the publishers' actions have fueled the fire at some level.

This has created opportunities for mid-market players with niche distribution networks to fill the gaps at both ends - with their own products and as distributors for larger and smaller players. As I noted last fall:

"...[in the attention economy] access to expertise becomes very valuable and companies that can help their customers make informed, relevant, and effective decisions will thrive."

An investor once asked me what it took to build a distribution network in K12. My answer was most definitely not what he wanted to hear - 10 years and a lot of patience. Most new companies don't think in that kind of time frame but the survivors will all tell you that the trick was a long term bloody minded dedication to the challenge. There is no quick fix here.

3. Acquisition - Between starts ups innovating new learning technologies and mature mid-market companies seeking exits Education is a target rich environment for those seeking acquisitions.

The core challenge has more to do with investor expectations for returns on capital and the speed at which the education market moves. Due to the stickiness of education solutions once they are adopted they pay out nicely over a long period of time. Put another way - the payoff is there in this market but most investors are not patient enough to earn it.

Right now the larger publishers seem to be sitting this out but people looking to enter the market - like News Corp - are active. Private Equity groups are circling as well but many probably see education as a low risk hedge rather than a core investment. The VCs are quite active - but they are investing in small innovative start ups.

One of the more interesting plays may be marrying the playbook of the PE and VC camps. Leverage the distribution muscle of an established player than can reach across the market with the disruptive innovations coming from the smaller players through creative acquisitions. Culturally and operationally there are significant challenges in this approach, but the payoff if done correctly is a dramatic reduction in the time to market for innovations at a time of disruptive change.

4. Diversification - Another approach is branching into new markets. There are opportunities in corporate learning, education systems in other countries, tutoring, trade publishing, home schoolers, etc. for publishers who currently sell just to schools.

This mistake that may company's make is underestimating both the changes in product design and the distribution challenges associated with moving into other markets.

Does your box say "program" instead of "programme"? At a minimum you will need a new box if not a complete page review and spelling update for the guts of your program if you want to sell it in the UK or Australia. Are you ready for the rough and tumble of trade publishing or corporate learning?

Moving into new markets requires sustained discipline as you learn the rules of the road and a willingness to invest over a long haul. If you are looking for a quick hit don't waste your time on this approach.

Summary

If you are thinking about how to grow your business (rather than just holding on in tough times) then some combination of the four approaches outlined above is where you will probably end up. Your vision, access to capital, and discipline will determine what the right mix is for your company.

I've probably missed some obvious alternative to the four core growth strategies outlined above. Feel free to drop me an email or comment and we'll update the list.