I wrote about arriving at a break point a couple of weeks ago, and I intend to follow it up with more concrete plans now. I am fast arriving at a point of crisis, when I have started questioning the worth of my day-to-day activities, even if they are financially rewarding. The desire to do something meaningful gets me out of the bed every morning, and after spending twenty years in For-Profit education companies in various sizes and forms, I have started questioning whether I have always been barking up the wrong tree. I have a theory about commercial enterprises - that companies can only make money serving a socially useful purpose - and I shall claim that my early career spent in IT education proved that this was indeed the case. However, as I traveled, I have started discovering the other side of the coin, progressively, encountering in various opportunistic enterprises with business models founded on exploiting arbitrage and extracting the advantages of regulatory failure. I have remained true to my original premise and tried to steer the course, wherever I worked, on the 'greater purpose' thesis: I must admit I had only a few takers.
I shall claim that this may have resulted in underachievement, at least in financial and career terms, on my part. I was never playing the game I was in. I was almost always too idealistic, and often, ridiculously so. There were moments of self-realization when I would think of giving in and adjusting to the 'spirit of the age', but I have failed. To give an example, most of the For Profit higher education industry thrive on information asymmetry, the opportunities presented because educational opportunities are never exactly comparable and because the students don't know what to ask for, but I have missed this point (though I understood it to be a common practice) and believed that a sustainable profitable education enterprise can only be founded on openness and transparency. I have been laughed at, and indeed lived through the moments of crisis of confidence believing I got it all wrong. However, so far, another theory, which I developed along the way, that sustainable commercial education companies can only be built within a robust regulatory environment, which creates the right incentives by discouraging information asymmetry and insisting on students' rights, not in the absence of it.
However, in most of the For Profit education sector, such talk is taboo. The denial goes under the label of 'action orientation', that one would rather do things than think about it, or more crudely, make hay while the sun shines. Modern entrepreneurship seems to have borrowed more from robber barons than the honest traders who built foundations of great businesses, at least some of them. I have spent most of my growing up years with my grandfather, who was a businessman who believed in paying taxes, hard work and honest dealings, of whom I have written previously (How I Got Here, Lessons I Never Learnt, and Entrepreneurship Redux), but he obviously taught me business lessons which were no longer valid. Now, while I obviously understand this, the question is what to do: Whether I sign up to what's around me, or keep resisting (and preaching a way of life that is apparently impractical).
I remain convinced, however, that the For-Profit Higher Education has an unique social purpose (see here), and it should exist alongside other forms of Higher Education. It is not one or the other question, but it is about developing an ecology of education institutions serving different segments. I believe one needs to think what the right ownership structure is to serve this social role appropriately. Owner-Operator models, as in Britain, have their own limitation, and it sits uneasily as a poor cousin of public universities, who, with their publicly funded infrastructure, scoff on the sector for the lack of it. Private Equity often gets it wrong too: They are usually very smart people with a hammer, which presents a double problem, as they not only see nails everywhere, they can even reason why it should be nails everywhere. In short, their squeeze the margins approach does not work, because it is not about squeezing the margins in Higher Ed that makes it profitable; it is being able to create long term value. Companies driven by public capital markets do no better, as the quarter-by-quarter growth requirements fits badly with education's capacity-first business model.
However, one must remember that most of the world's finest universities are private universities. In the US, land of universities, public money only contributes less than 20% of even a state university's budget. There are obviously successful business models in the sector one needs to look at. Agreed that all the universities that I am referring to are not for profit, but they generate surpluses which will make any for profit salivate. My key point is while For Profit may remain For Profit, getting rewarded for playing their social role, they must also learn from successful business models in the sector. There could surely be socially accountable (not just financially accountable) governance structure - it is a no-brainer if one accepts that profits is a reflection of social value the institution creates. There are buzzwords like social enterprise which gets thrown around for such formations, but we can simply call them purpose-driven businesses (strangely, not all businesses are purpose-driven), which puts customers first, employees second and shareholders thereafter, but operate on a win-win principle.
It is important to recognize that For-Profit does not have to be Profit First, and maximizing margins is not the best way to run an education business. Rather, maximizing social contribution, which then feeds the reputation, which in turn creates profits, is the way to go. It is as measurable as anything, if that is a problem for fund managers coming out of business schools; one can easily construct a milestone driven business, which embeds the financial drivers into it. For example, 90% employability of graduates within the first 90 days after completing the course may mean 30% margin in the next operating cycle, and if these jobs offer at least a 30% premium of average graduate salary, that may mean a 50% margin. Starting with a dumb assumption that education businesses should have a 50% margin, which is exactly the kind of assumption fund managers do, is really, well, dumb, and not in line with the business realities of the sector.
While I continue to live inside the sector, and sadly, deal with owner-operators or fund managers, I shall continue to research and talk about sustainability and social responsibility. I hope some day I shall be listened to, and I shall be able to create the college with a difference. I am conscious that there is a long way to go here; but I am also not planning to retire just now.
Popular posts from this blog
A friend has recently forwarded me a quote from Lord Macaulay's speech in the British Parliament on 2nd February 1835. I reproduce the quote below: "I have traveled across the length and breadth of India and I have not seen one person who is a beggar, who is a thief. Such wealth I have seen in this country, such high moral values, people of such calibre, that I do not think we would ever conquer this country, unless we break the very backbone of this nation, which is her spiritual and cultural heritage, and, therefore, I propose that we replace her old and ancient education system, her culture, for if the Indians think that all that is foreign and English is good and greater than their own, they will lose their self-esteem, their native self-culture and they will become what we want them, a truly dominated nation." The email requested me to forward me to every indian I know. I was tempted, but there were two oddities about this quote. First, the language, which
Introduction : The Business of Gift Giving Business gift giving has always been common and contentious at the same time. Business gifts are usually seen as an ‘advertising, sales promotion and marketing communication medium’ (Cooper et al , 1991). Arunthanes et al (1994) points out that such gifting is practised usually for three reasons: (a) in appreciation for past client relationships, placing a new order, referrals to other clients, etc.; (b) in the hopes of creating a positive, first impression which might help to establish an initial business relationship; and (c) giving may be perceived as a quid Pro quo (i.e. returning a favour or expecting a favour in return for something). The practitioners of gift-giving generally argue that doing business is often an aggregation of personal interactions and relationships, and gift-giving should be seen as a natural way of maintaining and enhancing these relationships. ‘Business gifts, especially one given in the course of the festive s
In most societies today, making profits are accepted as moral, if not especially praiseworthy. This was not as obvious as it appears today – people used to be embarrassed about making a profit not so long ago. Crazy as it seems today, it is worth thinking why it was so. Profits, as economists will put it, is the reward for risk-taking, for putting a business enterprise together in the pursuit of an objective. In this definition, remember, profits are not what it is commonly understood to be – the gross middle-line towards the bottom – but a figure net of entrepreneur’s earning [wages for his labour], dividends and interests on borrowed capital, and provisions for building and other physical assets [a sort of rent, offsetting what these assets could have earned if leased out]. This pure profit – surplus – accrues to a business as a reward to its organisation, for the act of entrepreneurship itself. Economists were divided on how this surplus comes about. The conventional wisdom was,
Buzzwords have disadvantages. Right now, experiential learning is one, and that means we put the label on everything and it stops to mean anything. Also, this means reasonable conversation about experiential learning becomes difficult - at times such as this, either you preach experiential learning or you are traditional, antiquarian and hopelessly out of touch. But, overlooking the limitations of experiential learning can cause big problems. Experiential Learning does many things - putting practice at the heart of learning is an important paradigm shift - but not everything, and it is important to be aware what it does not do. Usually, we equate the terms Project-based Learning (the method) with Experiential Learning (the idea) and Learning from Experience (the ideal), treating them as one and the same and using the terms interchangeably. Any talk about distinctive meaning of these terms is usually seen as pedantic, but really represent very different ideas about education.
Today, Helen Goddard, 26, a highly popular music teacher of a City School for Girls, has been sentenced to 15 months in prison. Her crime was to carry out a year long lesbian affair with one of her pupils, who appeared in the court and admitted that the affair was consensual and it was she who pressured Helen into the affair. For Helen, a bright musician and a devout Chistian, this is an extraordinary lapse of judgement. Also, she was teaching in the £13,000 private girls only school in London. She was surely aware what the consequences of her action will be. The fact that she still could not stop herself tells us that lovers do not always act rationally, something we always knew. There is more in this affair than personal tragedies. For a start, this has all the dramatic elements: a bright, beautiful teacher more in Julia Roberts mould [as in Mona Lisa Smile], a stiff upper lip school [not unlike Wellesley] and a story like Notes On A Scandal with an added twist. Indeed, Helen
Introduction Erna Petri née Kürbs, a farmer’s daughter from Herressen in Thuringia, arrived in Ukraine with her three year old son to join her husband Horst in June 1942. Horst, an SS leader inspired by Nazi ideologue Dr Richard Walter Darré, settled in the plantation of Grzenda, just outside today’s Lviv, to become a German Gentleman-Farmer. Erna saw Horst beating and abusing the workers in the plantation within two days of arriving there, which was, as Horst explained, necessary for establishing authority. Erna joined in enthusiastically, settling into a combination of roles of ‘plantation mistress, prairie Madonna in apron-covered dress lording over slave labourers, infant-carrying, gun-wielding Hausfrau.’  However, there were clear rules in the plantation, and Erna was very much expected to play the woman’s role of being a Cake-and-Coffee hostess. When four Jews were caught in the estate while trying to escape from a transport to a death camp, Horst told Erna and her female
A week into lockdown and things are beginning to change. Mornings are late, afternoons are lazier and evenings never end; meditations are filling out the time for Yoga routines and Netflix profiles are strewn with half-finished movies. This state-mandated, state-funded period of idleness is being likened to being called up to serve, but is nothing like that: Such a comparison is really an affront to the idea of service. Instead, this is just one long streak of panic; of the centre not holding and life not going on as usual. With the usual patterns and rules in suspended animation and business talk - and business - being rendered meaningless, space is opening up for unusual questions: Is Capitalism about to end? Is this the death of globalisation? Does it get uglier from here? My grandfather's generation would have scoffed at us. They saw through wars and pandemics. But, in fairness, we haven't had a life-ending crisis of our own. Notwithstanding the experiences of th
The ‘Why’ Question? Adolf Hitler was appointed the German Chancellor by President Von Hindenburg on 30th January 1933. This was an extraordinary turn of events. Previously, President Von Hindenburg consistently refused to appoint Hitler the Chancellor, despite the impressive electoral performance of NSDAP in July 1932, Hitler’s uncompromising demand of the Chancellor’s post and a repeat election in November 1932 which failed to break the deadlock. Explaining his refusal, Hindenburg wrote in a letter on 24th November, “a presidential cabinet led by you would develop necessarily into a party dictatorship with all its consequences for an extraordinary accentuation of the conflicts in the German people.” The question ‘why’ Hitler was appointed Chancellor, despite the President being acutely aware of what might follow, is therefore a significant one. The NSDAP had election successes throughout 1932, and was already the biggest single party in the Reichstag and various Landtags acros
I wrote a note on Kolkata, the city I come from and would always belong to, in July 2010. Since then, the post attracted many visitors and comments, mostly critical, as most people, including those from Kolkata, couldn't see any future for the city. My current effort, some 18 months down the line, is also prompted by a recent article in The Economist, The City That Got Left Behind , which echo the pessimism somewhat. I, at least emotionally, disagree to all the pessimism: After all Kolkata is home and I live in the hope of an eventual return. Indeed, some change has happened since I wrote my earlier post: The geriatric Leftist government that ruled the state for more than 30 years was summarily dispatched, and was replaced by a lumpen-capitalist populist government. Kolkata looked without a future with the clueless leftists at the helm; it now looks without hope. However, apart from bad governance, there is no reason why Kolkata had to be poor and hopeless. It sits right
Meritocracy is a convenient lie, as Socrates foretold, and it is the ballast of the social system we have built. The story goes like this. Once upon a time, we had kings and queens and their families and nobles, who got the best meat and the best mate, and everyone lived happily. But then the things fell apart as luxury corrupted the nobles and feebled the spirits of their offsprings - and the peasants and the artisans came claiming their fair share. So we had the age of revolutions in Europe and North America, when we created a new, fairer social system, under a 'natural aristocracy of men', where destiny was no longer shaped by birth but by intelligence and hard work, and anyone could make it in life. And, everyone again lived happily ever after. Of course, this did not really happen. Slavery persisted, at least for a long time. The 'fair' system mostly excluded the real peasants and workers and once they have done their duty dying for various revolutions, they were s
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.