To Be Successful in Today’s Education Market, Learn from the Past

In the past 30 years we have seen major shifts in the U.S. K–12 landscape. Religious schools dominated the private school market in the early ‘90s, with Catholic schools serving more than 50% of students, other religious schools serving 30%, and nonsectarian schools serving less than 15% of that population. Today, those numbers have shifted. According to the latest data from the National Center for Education Statistics for the 2015–2016 school year, Catholic schools today serve only 36% of the private school population, nonsectarian schools serve nearly 24%, and other religiously affiliated schools serve 39% (including 13.5% who attend conservative Christian schools). For-profit private schools also are attracting the attention of a new generation of parents, further segmenting the private school market.

Changing parental wants and needs have driven some of these shifts, but we also can point to the arrival of the first public charter school in 1992 as a driver of significant change on the landscape. When you look at more recent history, the number of charter schools in the U.S. has grown by 17.5% since 2012, while the number of public schools has declined by 0.5%, Catholic schools by 4.1%, and other private schools by 3.1%. Home schooling and online schools also have disrupted the marketplace, but exact numbers are not available for their effect on traditional public and private schools.

As disruption continues to accelerate in the K–12 market, how do we ensure that independent schools thrive? There are some valuable lessons to be learned from those who have closed their doors. In a provocatively named article, “What Dead Schools Can Teach Us,” Jim McManus, former executive director of the California Association of Independent Schools, explored the life cycle of private schools using Porter Sargent’s 1927 A Handbook of Private Schools for American Boys and Girls as a guide. He demonstrated that, region by region, more schools had closed their doors than had survived between then and now. He outlined four contributing factors:
  • Mission fatigue: The school’s mission is no longer sought after in the marketplace.
  • Leadership transition: awkward transitions, most notably when a founding head retires and passes the torch to the next generation
  • Financial problems: money woes driven by many causes, from demographic changes to mismanagement
  • Poor planning: lack of strategic planning or an orientation that favors short-term, small-picture thinking instead of long-term planning
Likewise, in his 2009 book How the Mighty Fall and Why Some Companies Never Give In, Jim Collins studied why so many long-standing, successful companies have failed. He sought to provide insights into how organizations can detect early warning signs and take immediate steps to halt decline. Collins identified a five-step framework to understand the progression of decline:
  1. Hubris born of success: Success is seen as an entitlement. Organizations that fall prey to this think, “We’re successful because we do specific things,” instead of “We’re successful because we understand why we do these specific things and under what conditions they would no longer work.”
  2. Undisciplined pursuit of more: Building on their hubris, organizations grow faster than their capacity allows or take undisciplined leaps.
  3. Denial of risk or peril: External results may be strong enough that leaders fail to see or heed warning signs. They also blame external circumstances for challenges, instead of taking responsibility for those challenges.
  4. Grasping for salvation: An organization may find itself in sharp decline. Leaders are prone to look for the quick fix—the proverbial silver bullet—instead of taking a disciplined approach that could bring them out of decline.
  5. Capitulation to irrelevance or death: Accumulated setbacks catch up with the organization and leaders often abandon the possibility of building a future where they could thrive.
Rereading Collin’s book over the summer, I found much of what he had to say resonated deeply, as I have seen independent schools go through these five stages. For example, let’s go back to the ‘90s again, when there was double-digit growth in the student population and most independent schools had long waiting lists. Many believed that this growth would continue, and it has for some schools. Others have struggled, particularly since 2008, never returning to pre-recession numbers. Collins suggests that this is one of the markers of stage one—people believe that success will continue no matter what they do.

The late ‘90s and early 2000s also brought expansive growth in employees and buildings, driving up costs (and tuitions) for independent schools. Programs also expanded, while rarely was anything cut. Many schools moved squarely into stage two, in which “success creates pressure for more growth, setting up a vicious cycle of expectations, straining systems, people, and culture to the breaking point.”

Moving into stage three, many school leaders saw the warning signs, but it was hard to roll back the expansions, and many assumed the volatility in the market would correct itself. If ever there was a time to face the brutal facts this was it. Many schools quickly moved into stage four, or what I call “the silver bullet stage.” What followed was a potpourri of quick fixes aimed at halting market decline—more and/or different marketing, more buildings, even more programs, etc. Unfortunately, what usually happens with silver bullets is that they drain resources putting the school into an even worse position. Collins suggests, “The signature of mediocrity is not an unwillingness to change. The signature of mediocrity is chronic inconsistency.” During this period, many schools lost their core—that signature differentiator that made them uniquely who they are. By trying to be all things to all people, many schools fell into even deeper decline.

Some may see their schools in one or more of these five stages, and some may not. The important takeaway is that we need to be aware of the signs and take appropriate action when needed. If a school finds itself in stage four, Collins suggests taking a disciplined approach to get back into recovery:
  • Base strategic changes on empirical evidence and extensive quantitative analysis, rather than making bold, untested leaps. For schools this means collecting hard data on the market, identifying their own capacities and unique differentiators, and naming external threats and how those threats may affect the school today and in the future.
  • Understand that combining two struggling companies does not make one great company; only consider acquisition/merger that would amplify proven strengths. There is a huge opportunity for schools to collaborate or network themselves with similar schools that would all be stronger and more efficient because of the partnership. The NAIS Toolkit: Mergers, Acquisitions, and Other Affiliations offers some guidance.
  • Get facts—think, then act. Never take actions that could imperil the company long-term. Boards need to consider this imperative. Taking on large building projects can drain resources and make schools more vulnerable over the long-term.
  • Gain clarity about what is core and should be held firm and what needs to change, building upon proven strengths. Staying true to a school’s core mission is key. Focus and alignment are the hallmarks of a successful school. The challenge is to find the right intersection between continuity and change.
  • Focus on performance, letting tangible results provide the strongest case for a new direction.
  • Create momentum with a series of good decisions, supremely well executed, that build one upon another. NAIS’s Strategy Lab program provides frameworks and tools to help schools identify their performance levers and create their unique “flywheel” so that they can gain momentum over time.
  • Search for a disciplined executive, with a bias for selecting a proven performer from the inside. As McManus pointed out, one of the reasons that schools fail is poor leadership transitions. It is time for independent schools to focus on growing their own leaders to ensure that schools will thrive into the future.
School leaders must keep one foot firmly in today and the other just as firmly in tomorrow. How is that even possible? And how can we make it more doable? I believe it comes down to making incremental progress—taking small steps—in a few key areas. Based on research in other industries, I am confident that the schools that will be able to weather the changes ahead will have three characteristics in common: strong leadership, a laser-sharp focus on their mission, and the ability to continuously innovate.
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Donna Orem

Donna Orem is a former president of NAIS.