A whole new Edison Schools: the E2 project
An Edison Schools document that landed in our inbox describes a strategy by the once-high-flying school management firm to reinvent itself, heal its battered reputation and make some money. Edison, which calls the strategy E2, claims it wants to educate some children, too.
Edison — the for-profit once hailed as the future of education and then forgotten when its grand promises fizzled — calculates that it can pump up revenues by relying on child labor for a lot of tasks normally done by paid paraprofessionals, by increasing class size, and by making labor-cost-cutting "independent learning" (IL) a significant part of the school day. Younger kids could spend 90 minutes a day in minimally supervised independent learning and high-schoolers as much as half the day, proposes the undated document, labeled "Design Sketch." The Design Sketch references a report dated February 2006; the 47 pages we received give no further clue to its publication date.
Online job postings describe E2 as " a $15 million research and development initiative within Edison Schools charged with establishing the next generation of the company’s whole school design."
In contrast to Edison's former supremely self-confident public attitude, it portrays itself in the Design Sketch as struggling financially, racked by conflicts with clients, political opposition and a poor public image, plagued by low-performing students and unqualified teachers, and eclipsed by the flamboyantly successful KIPP school chain.
"...whole school management is not yet making money," the Design Sketch acknowledges, "and we have not persuaded the market and key opinion leaders that our schools are consistently and markedly superior to traditional public schools. Revenues from our charter schools and district partner schools are declining rapidly (18 percent down from last fiscal year alone), as are gross operating profits (17 percent). The order pipeline for new managed schools is sluggish ...
Historically poor execution is to blame for many of our problems. ...
"The cohort of organizations that followed us — CMOs [charter management organizations] like Aspire and school networks like KIPP — learned from our mistakes and made some smart design choices that permit them to execute with greater ease and deliver more consistent results. For instance, they have, variously, blunted political opposition by organizing as non-profits; simplified ease of execution by operating in one or a few jurisdictions; grown their schools much more slowly; embraced larger class sizes and replaced paraprofessionals with free student 'prefects.' "
What kind of marketing strategy is E2?
Edison — the for-profit once hailed as the future of education and then forgotten when its grand promises fizzled — calculates that it can pump up revenues by relying on child labor for a lot of tasks normally done by paid paraprofessionals, by increasing class size, and by making labor-cost-cutting "independent learning" (IL) a significant part of the school day. Younger kids could spend 90 minutes a day in minimally supervised independent learning and high-schoolers as much as half the day, proposes the undated document, labeled "Design Sketch." The Design Sketch references a report dated February 2006; the 47 pages we received give no further clue to its publication date.
Online job postings describe E2 as " a $15 million research and development initiative within Edison Schools charged with establishing the next generation of the company’s whole school design."
In contrast to Edison's former supremely self-confident public attitude, it portrays itself in the Design Sketch as struggling financially, racked by conflicts with clients, political opposition and a poor public image, plagued by low-performing students and unqualified teachers, and eclipsed by the flamboyantly successful KIPP school chain.
"...whole school management is not yet making money," the Design Sketch acknowledges, "and we have not persuaded the market and key opinion leaders that our schools are consistently and markedly superior to traditional public schools. Revenues from our charter schools and district partner schools are declining rapidly (18 percent down from last fiscal year alone), as are gross operating profits (17 percent). The order pipeline for new managed schools is sluggish ...
Historically poor execution is to blame for many of our problems. ...
"The cohort of organizations that followed us — CMOs [charter management organizations] like Aspire and school networks like KIPP — learned from our mistakes and made some smart design choices that permit them to execute with greater ease and deliver more consistent results. For instance, they have, variously, blunted political opposition by organizing as non-profits; simplified ease of execution by operating in one or a few jurisdictions; grown their schools much more slowly; embraced larger class sizes and replaced paraprofessionals with free student 'prefects.' "
What kind of marketing strategy is E2?
We are not considering a "new product" in the sense of entering a new line of business or a new geography, but rather a signficant reengineering of the product we offer in our existing core business of managed schools. ...And here are the E2 strategies for profitability:
The launch of a new design and strong results from our first beta site(s) will re-excite the market and Edison staff, renew and improve relationships with our existing clients (as they convert to the new design), and re-establish Edison's lead position in the market for private managers. ...
E2 has as its objective to generate after tax income from managed schools of approximately 7 percent of revenues.Looking too successful may displease the clients:
... the design [for elementary schools] leverages a combination of
- slightly larger class sizes (+4 students), except for novice teachers
- 90 minutes of daily independent learng time beginnng in grade 2
- students serving as prefects and to perform certain school tasks result in cost savings and revenue enhancements that, even when offset by new costs for dramatically higher principal compensation (+40%), higher teacher pay, and a state-of-the-art technology package, can improve net income by 8 percentage points.
There may be limits to what the market will bear in site profitability. Authorizers will see through efforts to disguise site profitability. .... Pressures to reduce our siteI'll blog more about E2 from the Design Sketch — including the effort to revive Edison's previously ridiculed child-labor idea — in further postings.
profitability could perhaps be met by charging some variable HQ costs to the school —where they arguably should be reflected anyway.
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