By Curtis Riep
Several years after U.K.-based Pearson plc began restructuring its business operations to become a globally integrated education company, the largest edu-business in the world is now in a state of decline. “It’s a difficult time for Pearson” said John Fallon the Chief Operating Officer of Pearson, after warning that the company expects an “unprecedented” decline in business. Diminishing textbook sales and a downturn in the higher education market in North America prompted an unscheduled update by Pearson ahead of its full-year results in March that profit forecasts in 2017 and 2018 would be much lower than expected. Following the announcement in mid-January, share prices for Pearson dropped drastically and although its stocks have begun to slowly climb up, the company is still trading near historic lows. With falling stock prices, investors are giving up on recapturing lost gains by selling off shares in Pearson. This, after Pearson’s stock already declined by 40% in 2015.
In 2012, Pearson announced in its Annual Report that: “We think education will turn out to be the great growth industry of the 21st century.” Although this claim may still hold water, a decline in business for Pearson suggests that profitable growth is not assured for the company. A number of contradictions and shortcomings in the global education industry can affect the growth of edu-businesses like Pearson. For example, individuals accumulate huge amounts of debt paying for credentials, degrees, and training from educational providers and yet, may still end up un(der)employed or feeling like the services they paid for were not really “worth it.” The increasing role of new technologies and products managed by firms for the purpose of educational administration are giving private corporations unprecedented access to student data and personal information, but for whose benefit? And “high-stakes testing” mass-produced and sold by firms like Pearson, that shape the design and meaning of education, can oftentimes be in conflict with opposing views of what constitutes “quality” learning. As a result, protests against Pearson and many of its products, including standardised examinations and data management products and practices, particularly in the United States, have increased in the form of boycotts, demonstrations and student walkouts.
Pearson: the “efficacy company”
In response, Pearson is strategically setting out to become known as the “efficacy company” in education. As John Fallon claims: “We want to be able to demonstrate that everything we do as a company delivers an improved learning outcome.” Pearson has developed its Efficacy Framework in order to calculate the “measurable impact” that educational products and services sold by the company have “on improving people’s lives through learning.” Inspired by the pharmaceutical industry where demonstrating the efficacy of medical interventions is imperative, Pearson’s efficacy programme and tools are meant to demonstrate the efficacy of educational products and services—and in doing so, construct a corporate brand and reputation around effectiveness, efficiency, performance, and hence, efficacy. As the company claims in its 2014 Annual Report: “We know what’s really important – commercially, strategically, ethically – is that every product we make and sell can be measured and judged by the outcomes it helps to achieve.” By 2018, Pearson intends to publicly release “efficacy reports” for the company’s entire global product portfolio, and purportedly with the same rigor and consistency as its financial reporting. Yet, financial accounting is a much different (and less complicated task) than calculating and verifying the casual effect that an educational product has on the life outcomes of a learner.
With company sales totaling more than £4.4 billion in 2015, Pearson intends to ensure customers, shareholders, policymakers, state managers and other parties that its educational commodities actually improve, or impact, the lives of learners in some positive way, in order to justify the company’s commercial activities and profit-making in education. As Michael Barber, Pearson’s Chief Education Advisor, and Amar Kumar, Pearson’s Senior Vice President, have both indicated: “…long-term financial success is a direct result of delivering social outcomes. So for us, efficacy makes perfect business sense. If our products deliver what our customers and learners need, we will be commercially successful.” To this end, however, Pearson seems to be failing both its learners and shareholders.
A longer version of the paper “Fixing contradictions of education commercialisation: Pearson plc and the construction of its efficacy brand” can be found here: link