Education Business Strategy Report

Principles for Success in Education
Markets
What Education Can Learn From Business

2011
Authored by: Alan K Rudi

Principles for Success in Education Markets
What Education Can Learn From Business

The US economy is now in the Knowledge Age. Long term economic prosperity, therefore, is based upon the
effective development of knowledge and the ability to use that knowledge to create valued goods and services.
Approximately 85% of the labor force is a Knowledge or Service Worker today. Yet at the same time, 84% of
employers say schools are not doing a good job of preparing students for the workplace. 1 The US needs a
workforce with highly developed critical thinking and innovation skills. As a result, Education is a changing
marketplace strongly impacted by major demographic, economic, technology and competitive forces.

High school
enrollment
growth rates to
decline by half .
Adult
participation rates
growing.

For profits 45 states and DC
entered non-
traditional
Education are in budget
stress, causing
markets, now Markets reductions in
targeting key

Principles for Success in Education Markets | 2/26/2011
traditional Changing funding and/or
increase in fees.
markets

Internet,
Information
Services creating
new learning and
business models

1
Results That Matter, March 2006, Partnership for 21st Century Skills

Alan K Rudi 714-743-8344 1

Educators and business leaders both imagine a world in which people develop their full God-given potential. Like
any good business, schools must develop winning organizational (business) designs as part of how they develop
students and their people for the world. It is important to note, however, that there are still great strengths to be
found in the US education markets. And these strengths should be the basis for an education institutions strategic
change. The university system remains the envy of the world and is rapidly being exported to global markets.
“Popular western universities are acting more like businesses – moving closer to their customers by establishing
satellite campuses in Asia and the Middle East, and teaming up with overseas universities that offer scholarly and
marketing advantages to both sides.”2 And the conclusion of crisis in the K12 system should be challenged,
though, like any market, there are issues:

“If American education has been at risk for more than 25 years – some say 40 years – and continues to
deteriorate…how can we explain the fact that America continues to be competitive?...American
education has not been in crisis-at least not in the way reformers have suggested…Although not perfect,
the US is perhaps one of the few countries in the world where individuals are valued…American
education has traditionally created a culture that respects individual differences, endorses individual
interests, and supports a broad range of interests…Our Asian counterparts have taken a very different,
in fact opposite, approach in their education reform efforts. While the US is moving toward more
standardization and centralization, the Asian countries are working hard to allow more flexibility and
autonomy at the local level (like the traditional US education system).”3

Therefore, the following five principles4 are proposed to produce a winning strategy in any education
organization.

High academic Innovation is what Well designed
quality is a must, students need to market strategy
built on strengths of learn and schools drives growth and

an existing school need to develop in protects against

(or system) themselves economic change

In the end, it's
Build financial about culture and
strength to further people who can
invest create strategic
change

2
The Great Brain Race – How Global Universities are Reshaping the World, Ben Wildavsky, 2010, Princeton University Press
3
Catching Up or Leading the Way: American Education in the Age of Globalization, Yong Zhao, 2009, ACSD
4
Specific strategies will differ by organization based on history, current core capabilities, etc.

Alan K Rudi 714-743-8344 2

ACADEMIC QUALITY
Jack Welch said "An organization's ability to learn, and translate that learning into action rapidly, is the ultimate
competitive advantage."

The ability to learn and provide quality in any business is simply a must in today’s economy. Whether it is a
consumer good or an education, there are significantly more choices for people to consider when buying. More
importantly, high academic quality develops a student’s ability to learn and thus a business’s ability to compete.
Too little academic quality means the student enters the workforce potentially at a disadvantage. Based on a
survey of “what do employers want in employees?” the following characteristics suggest a starting point for
thinking about high education quality:

1. For people to be creative, imaginative and (yes) think
outside the box
2. Humility and confidence
3. Excellent communication and presentation skills
4. Knowledgeable of a specific academic discipline, plus the
employer’s product or service
5. High energy, an upbeat attitude and the willingness to take
the initiative when needed
6. Problem solvers capable of seeing the big picture and
identifying alternatives
7. A team player who can share the credit with the rest of the
team
8. Ability to grow and develop personal skills
9. Have the ability to positively affect an employer and its change
10. Understands the world we live in, plus technology

Businesses want people with the ability to learn and think. Certainly this result is occurring in education today.
Business leaders are saying, however, that an even higher level of academic quality is needed in order for them to
compete. How does any organization go about improving the quality of a product or service?

1. Measure, measure, measure what you do
2. Learn, learn, learn
3. Continually improve everything
4. Set high standards
5. Allocate people’s time to explore and develop new ideas

Education is a unique business as a high quality product is very dependent on human variables and variation –
e.g., how a person is feeling that day, to multiple styles of learning, and to complex information to
communicate. These methods for quality improvement, however, can also be applied to education.

Question: Can information technology be used to create a more personalized education with
high quality (similar to business models like Dell)?

Alan K Rudi 714-743-8344 3

INNOVATION
"Innovation distinguishes between a leader and a follower. Innovation has nothing to do
with how many R&D dollars you have...It's about the people you have, how they're
led, and how much you get it." Steve Jobs

Increasingly, innovation is an organizational skill needed for any business and school to
compete successfully in its market. Without innovation, education organizations will
not be able to fully meet the needs of students or compete as effectively against the new
for-profit companies that have the ability to generate higher levels of cash flow and
capital. Some organizations are very innovative, unfortunately many are not.

What stimulates innovation? Peter Drucker says it is “how we think” by analyzing potential sources of innovation:

1. Unexpected outcome – simply discover what
you can learn from failure
2. Incongruities – examine the differences
between your assumptions and reality
3. Process needs – apply an existing process
solution in another area to a different type of
problem
4. Industry and market changes – industries
shift in how they conduct themselves, be on
the look-out for new, emerging trends.
5. Demographic changes – a highly reliable
predictor, but one that is often overlooked.

Study long term trends.

6. Changes in perception – is the glass half full
or half empty? Discover new understanding
by looking at things from multiple
perspectives.
7. New knowledge – the typical view of the
sources of innovation, but usually take a very
long time to develop.

What is a key innovation and growing trend in education today?
“Online learning is transforming teaching, providing new instructional delivery
models, and expanding access to education. Effective online instructional practices
are increasingly supported by a growing evidence base that shows how various
programs, courses, and instructional models can improve learning, increase student
engagement, and catalyze innovation in education.” 5

5
Journal of Online Education, Volume 4 Issue 3, February/March 2008.

Alan K Rudi 714-743-8344 4

The US Department of Education, however, has concluded that “The difference between student outcomes for
online and face-to-face classes was larger in those studies contrasting conditions that blended elements of online
and face-to-face instruction with conditions taught entirely face-to-face. Analysts noted that these blended
conditions often included additional learning time and instructional elements not received by students in control
conditions.”6 Combining teachers working directly with students and the capabilities of technology is innovation,
building on the strengths of the current school system (as Drucker described above).

“Effective (learning) technology integration is achieved when its use supports curricular goals. It must support
four key components of learning: active engagement, participation in groups, frequent interaction and feedback,
and connection to real-world experts.”7 Below is a summary of the rapidly improving technology tools that are
enhancing learning.

Content Management Systems (CMS)

Classroom Online Courses, Pre-
Application Tools HW/ SW packaged Content,
"Smart Classroom" Open Ed Resources
Internet, off-the-shelf Projectors, PC Workstation with
software and custom 80% of colleges offer online
Internet, Sound systems, programs. 10% of students
content providers for VCR/DVD, Document cameras,
specific learning objectives have taken 1+ classes online.
Wireless mice, Student
within a course, e.g., wikis, Response Systems, Interactive 12% of colleges offer High
simulations, games, You School online programs.
Whiteboards, external
Tube, Teacher Tube, Audio/video links, Integration 42 States have "significant
podcasts, digital maps and into digital file. supplemental online learning
libraries programs" in K-12. 2% of public
enrollment is taking such
courses (growing 50% per year).

Successful innovation, however, is just as much about managing people as it is about the technology developed.

Question: What leadership styles create a culture of innovation?

6
Evaluation of Evidence Based Practices in Online Learning: A Meta-Analysis and Review of Online Learning Studies, Office of
Planning, Evaluation, and Policy Development, September 2010.
7
Edutopia, The George Lucas Educational Foundation.

Alan K Rudi 714-743-8344 5

MARKET STRATEGY

“Customers don't always know what they want. Most of the coffee people
bought was stale and they weren't enjoying it. Once they tasted ours and
experienced a gathering place between home and work where they were
treated with respect, they found we were filling a need they didn't know they
had.” Howard Schultz, CEO, Starbucks

The Starbucks brand is well recognized around the world. Brand building is also essential for education to
identify, communicate and deliver on its core promises and values by defining…

1. The essence of the organization (Starbucks is both unique coffee and a “gathering place”)
2. The simple, believable, unassailable truths about the organization
3. That are adhered to in the face of adversity
4. And are principles people are passionate about.

The best example of branding, however, is the USA with core values of life, liberty and the
pursuit of happiness that have stood the test of time – 235 years. Branding works.

Successful businesses are then continually developing their marketing strategies for profitable revenue growth,
which for education, provides a critical source of cash for reinvestment into the organization. Effectiveness of
marketing strategies gradually deteriorates over time as student populations’ change, competitors improve their
methods, and new techniques to reach a target audience are developed. In education, it is necessary to deliver
the message directly to the Net Generation. New methods utilized in business and increasingly in education
include:
a. Database Marketing: more targeted segmentation and messaging by developing customer and

prospect marketing databases through Direct mail, email campaigns, and SEO/SEM.
b. Virtual Events: webinars are increasingly a more standard part of marketing. Most organizations,
however, have not really committed to virtual events that integrate a variety of rich media formats. It is
naturally difficult for all prospective students to visit a campus. Therefore, more use of rich media can
provide low-cost visibility to “visit a campus” and learn about its programs.
c. Social Media for B2C Marketing: The use of social media has become a more prevalent part of B2 C
marketing strategies. Social media builds the relationships between schools and parents while making an
organization more searchable.
d. Content Marketing to Differentiate: 21st century marketing is more and more about content
publishing. Create content that prospective students identify as valuable (e.g., “how to adjust and fit in at
college”). And then, syndicate that content to support thought leadership, brand awareness, and inquiry
generation via blogging (updated to keep SEO high).

Question: Does messaging clearly communicate the core values for what a school will do for
students? Does marketing reach the Net Generation student where they are?

Alan K Rudi 714-743-8344 6

FINANCIAL RESULTS AND STRENGTH
A healthy business is efficient in its use of financial resources. Warren Buffett makes three key points:

1. “Every day, in countless ways, the competitive position of each
of our businesses grows either weaker or stronger. If we are
delighting customers, eliminating unnecessary costs and
improving our products and services, we gain strength.” In
other words, a sound financial vision begins with knowing
customers, and then designing and implementing a strong
business strategy.
2. Buffett manages the balance sheet as much if not more than the
income statement. How? By weighing every decision for its
impact on the balance sheet. Adding assets and liabilities by
nature increases business risk. An effective use of assets drives
fiscal viability. The key question is - can a business or an
organization repay debt if cash flows decrease below average?
3. There are fundamental questions used to evaluate any
business, for which, the answers indicate the health today and
the prospects for tomorrow. They are:

o Is the business in an industry with good economics (not competing on price)?
o Does the business have a brand name that commands loyalty?
o Are revenues (and cash flows) increasing with healthy, consistent margins?
o Is the debt-to-net assets ratio low or high?
o Does the business have a high and consistent Return on Capital?
o Does the business have a track record of retaining its Change in Net Assets (or profit) for investment
in good opportunities?

o Does the business have high maintenance cost of operations? High capital expenditure?
o Is the organization able to adjust prices for inflation?

Financial security occurs when a profit is earned and the organization can absorb small demand changes without
significant risk. Profit is far more than a return to stockholders or unspent money. Profit is an incentive that
disciplines an organization to grow and effectively use its resources. Otherwise, it cannot invest to create its
future.

Question: Can a not-profit or a for-profit school be financially managed like a business while
preserving what makes them unique?

Alan K Rudi 714-743-8344 7

CULTURE
The dictionary defines culture as the “predominate attitudes and behavior
that characterize the functioning of a group or organization. It is the
intellectual and behavioral activity, and the works produced by it, created
from the collective experience, training or education of people belonging
to the group.” The culture of an organization is the major determinant of
success or failure because the bottom-line is really about people.

If an organization is profitable and has a reputation for high quality
products, it is the result of how effective the leadership has been at
designing a positive organizational environment, at attracting talented
people dedicated to accomplishing the mission, and doing so in a
coordinated process. A positive culture, however, can be destroyed by
arrogance, selfishness, closed mindedness, or top-down management.
Listen to what Lou Gerstner, who turned around IBM from the brink of bankruptcy, has to say about culture:

“I have spent more than twenty-five years as a senior executive of three different corporations. Until I
came to IBM, I probably would have told you that culture was just one among several important
elements in any organization – along with vision, strategy, marketing, financials and the like…I came to
see, in my time at IBM, that culture isn’t just one aspect of the game – it is the game. In the end, an
organization is nothing more than the collective capacity of its people to create value.” (Excerpt taken
from Gerstner’s book titled “Who Says Elephants Can’t Dance?”)

Google’s cultural design provides an example to learn and consider in education. After all, it appears to work
well. To build a successful culture requires that organizations decide what relationship they will have with
customers and employees, and the work environment they will provide. They say…

“Google is not a conventional company, and we don't intend to become one. True, we
share attributes with the world's most successful organizations – a focus on innovation and
smart business practices comes to mind – but even as we continue to grow, we're
committed to retaining a small-company feel. At Google, we know that every employee
has something important to say, and that every employee is integral to our success.
Google has offices around the globe, but regardless of where we are, we nurture an
invigorating, positive environment by hiring talented, local people who share our
commitment to creating search perfection and want to have a great time doing it. Googlers
thrive in small, focused teams and high-energy environments, believe in the ability of
technology to change the world, and are as passionate about their lives as they are about
their work.”
Sounds like some schools.

Alan K Rudi 714-743-8344 8

Leadership Styles and Organizational Culture

To create a positive, innovative culture leaders can model the following behaviors:

1. The innovation process is confusing, difficult and inefficient. Motivate people by making it safe to fail.
The goal is to experiment, fail early, and learn throughout the process. Innovation occurs when people
come together to solve a problem. Obtain ideas from many people throughout internal and external
organizations. Do not suppress people’s identity in the process. Don’t have favorite people in the
organization (all are valuable).
2. Create an “emotionally intelligent” organization – self-awareness, self-management, social awareness,
and the ability to manage relationships.
3. Have a bias for action. Remove barriers, bureaucracy and obstacles. Set aggressive targets and do good
work.
4. Thanks and appreciation will continue to engage and motivate people. Ask questions about peoples work
and provide sincere recognition. Provide people instant access to the leader demonstrating you take their
work seriously.
5. Develop employees’ expertise – technical, business and intellectual knowledge. Allocate time and
resources for people to develop their skills (then they will know that what they do matters to the
strategic direction of the organization).
6. Ask the toughest customers (students) about your organization’s services and how to make them better.
Then communicate customers’ needs/wants to everyone. Expand the reach of employees as much as
possible to participate with customers.
7. Start with the innovators – in every organization, 15% of the people are willing and able to develop
technological change, they are just looking for an opportunity.

Question: Can leaders change their beliefs and behaviors to meet the needs of students and
changing markets, and to develop their organization?


Alan K Rudi 714-743-8344 9

About the Author

Mr. Alan K Rudi is a results‐oriented, technology‐savvy global business executive with a
history of driving double‐digit growth and turning around underperforming information
services and higher education organizations. His broad leadership experience includes roles
as a Chief Marketing Officer, a Chief Financial Officer, and a Chief Operating Officer. He
thrives on the challenge of building successful businesses where he can bring to bear
operational leadership abilities and strategic business development expertise.

In senior line management positions over the last fifteen years, Alan has brought his industry expertise, strategic
skills and talent for defining and executing growth plans to organizations that provide sophisticated database,
online, analytical, and knowledge-based services. Alan is currently developing a new school blending classroom
and online learning providing unique learning behavior measures by student.

Alan graduated with a Bachelor of Science degree in Finance and Accounting from Northern Arizona University;
an MBA in Strategy and Marketing from Oregon State University; and a Master’s of Science in Technology
Management from Pepperdine University.

Contact Information:
Alan K Rudi
208 S Leandro
Anaheim, CA 92807
USA
Mobile: +1 714-743-8344
Email: alanrudi@sbcglobal.net

Note: You are welcome to copy and distribute this report as often as you wish; I only request that you please

include the author’s information page when doing so. Thank you.


Alan K Rudi 714-743-8344 10

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