Is COVID-19 an Existential Threat for the Independent School Sector?

Is the end of private, independent education at hand? Will the COVID-19 pandemic bring us to the proverbial tipping point where large numbers of parents look at their invoice for another year of tuition and say, “no more?” Robert Farrington, writing in Forbes, thinks so and builds a case by arguing that tuitions are already higher than most average families can afford, remote learning is likely to continue in some form for months if not years, and parents whose children are already in independent schools will leave while those thinking of enrolling will stay away, especially in the younger grades.

To be sure, we have heard before that the end of independent schools is imminent, and heads and board members have fretted for years about the uncontainable rise in tuition. What makes the threat seem especially proximate this time around is the uniqueness of the pandemic and the almost total uncertainty about what comes next. Parents may well find alternatives to making a major purchase amid such uncertainty.

A picture of how COVID may play out in forcing schools out of business comes from a perusal of the Cato Institute’s tracking of such closures. As of July 4, Cato reports 75 permanent closures, with all but 14 coming from Roman Catholic schools. But, as recently as May 29, the tracker listed only one school as “independent.” Today there are seven.

Other than the large share of Catholic schools on the list, little can be concluded from an eyeball analysis of the other descriptive data. Some are more than 100 years old and one school dates to 1743. Most are small—very small in some cases—but others had 300+ students at the end. We can safely conclude that COVID-19 caused each to run out of enough runway to get back into the air as a going concern.

We believe the pandemic will have a long tail aftermath, even if a vaccine is found soon or if an effective treatment emerges from the ongoing research. A head asked us last week whether COVID would be the final nail in the coffin for some schools already on the ropes. The longer the current situation goes on, the more likely it is to be, in Cato’s words, “a huge nail driven by a jackhammer.”

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What Might Come this Fall?

Two articles this week from the Chronicle of Higher Education are especially chilling for anyone in the education industry. Both articles connect to the long tail effect that the COVID-19 pandemic is having and will have on schools, and we suggest there is a direct parallel to what may happen in the private, independent K-12 sector in the USA and international schools around the world.

The first article, with an apocalyptic headline, predicts a raft of traumas for schools, including layoffs, declarations of financial exigency (allowing the school to set aside tenure agreements), and outright closures. As usual, small schools and, this time around, those with the greatest dependency on “auxiliary revenue” (room and board in college parlance) are in the most danger if on-campus education does not resume in full.

The second, about the Trump Administration’s plan to force international students whose schools do not restart in-person classes to leave the country, describes the vulnerability of high-profile universities such as NYU, USC, Northeastern, and Columbia. These schools are from 31 to 54% dependent on international student enrollment.

Not good news any way you slice it.

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The Positive Economic Impact of Requiring Masks

Are you looking for hard data to support requiring face coverings in your school? Maybe something other than epidemiological probabilities? While Triangle Associates is frankly shocked that anyone questions the wisdom of this amid a global pandemic, we suggest sharing the Goldman Sachs study showing the economic impact that mask-wearing has in the real world. The video is worth your time.

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Why Strategize Now?

It must have been in Year 2 that ancient humans realized the uncertainty—unpredictability—of the future. The weeks and months have never been linear extensions of the ones before, and there have always been events that seemed to come out of the blue. This fact has not stopped us from trying to predict the future, even though no one ever has nor ever will. The best it gets is that we make good guesses, some of which turn out to be right.

So, with this in mind, along with the epic degree of uncertainty of the current moment, why plan at all? If things are inherently uncertain and unpredictable anyway, and if the COVID-19 pandemic just makes them even more so, what value is there in an extensive and time-consuming planning exercise when events may overtake even the best-made plans? And, especially now, when uncertainty abounds in every direction, what use is there in strategizing for the future?

These are good questions and the challenge they pose to conventional models of strategic planning is formidable. But, remembering American General (and later President) Dwight D Eisenhower’s statement that “plans are worthless, but planning is everything,” we believe there is tremendous value in boards and management teams discussing strategy, maybe now more than ever. There is much less value in formulating detailed, step-by-step plans, but the importance of having strategic intent has never been greater.

The trick is to recognize that one is not talking about just one possible future; indeed, the current pandemic and consequent economic forces could play out in a whole range of ways. With that backdrop, what becomes most important are the scenarios we think through and the strategies that we anticipate, because in the heat of the moment is not the right time to have such conversations.

The exercise of scenario building and strategic planning makes us more agile and better able to adapt as the situation changes around us. Simply hunkering down to ride out the storm is almost certain to render our schools weaker in the end. The strategic imperative of the moment is to figure out how to emerge from the COVID-19 crisis stronger as an institution, and it is toward this end that strategy-making is more vital, not less.

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What Does It Take To Emerge A Stronger School?

What would emerging stronger from the COVID-19 pandemic look like for your school? Many, maybe most, school leaders we speak with answer in terms of size; e.g., emerge with the same number of students as before COVID, or at worst lose only a small number. We call this a hunkering down strategy–get through the pandemic with as little damage as possible. Almost no one seems to be pursuing a growth strategy these days, unless they are eyeing a weakened competitor whose students may be ripe for capture.

The thinking behind hunkering down seems to be just getting through until some semblance of normalcy circa January 2020 returns. In this light, tactics include increasing financial aid, usually via higher discount rates as the aid does not have a funding stream attached, and aggressive efforts to stay in close contact with families. All done in the name of riding out the crisis.

But, what if it is a very long time before anything seems normal again? More importantly, what if hunkering down, especially if it goes on and on, actual results in a weaker, diminished school? Might another strategy allow you to emerge stronger?

No, we don’t mean a growth strategy. Growth was already a non-starter before COVID in many markets due to increasingly adverse demographics. We are thinking of an emerge stronger strategy, where, to borrow Google’s turn of phrase, agility is the new growth. Strength may well sit in being a smaller school, especially if the students that remain better match your mission and financial capacity. A smaller school with less discounting is likely stronger than one twice as big with more net revenue per student.

Strength may also result from shedding programs or initiatives that are neither mission-critical nor highly valued by students and their families. Embedded in the crisis may be an opportunity to trim things that would otherwise be treated as sacred, so prioritize ruthlessly and often during the months to come.

Strength could also come from a tighter focus on positioning: who you are as a school, who your target market is, and how you serve it better.  This may seem counter-intuitive, and it is totally toxic if the goal is to be as big a school as possible; after all, why would you send a message that your school is not for everyone? Because only a tiny number of schools are vast enough to succeed with such an approach. Combining a smaller school, more smartly enrolled, with focused positioning yields strength.

Finally, strength can come from a shift in strategy  from a typical “peanut butter” approach–slathering resources across every area of the school–to one with a smaller number of programs or disciplines become where you go deep. Maybe the elementary grades are not worth a bigger investment; likewise the equestrian program. A go-deep strategic style fits the theme of emerging stronger better than one where every division, program and discipline gets something from the strategic plan.

The critical factor for leaders is to shift out of a hang on by your teeth mindset amid COVID into one that embraces emerging stronger. With this in mind, what would emerging stronger from the COVID-19 pandemic look like for your school? Now is the moment to answer this question.

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Educational Hubris

Daniel Quinn’s Ishmael won the Turner Tomorrow Fellowship Award in 1991, a prize designed to encourage writing by authors throughout the world and in all languages that creates positive solutions to global problems. The point of Quinn’s narrative about a conversation between a person and a gorilla is to raise the question of why humans assume that we are the evolutionary endpoint; in other words, to ask why we think evolution stops with us? Maybe, just maybe, there is more to come a bit farther along the evolutionary pathway.

Richard Utz, a professor and chair in the School of Literature, Media, and Communication at Georgia Tech in Atlanta, has a provocative piece in the Chronicle of Higher Education entitled, “Against Adminspeak.” Utz takes on the currency of terms like “agility” and “nimbleness” as being an invasion of corporate jargon into the scared academic space. Utz’s sense that academic is above (or beyond) such concepts reminds me of the hubris Quinn finds in the human assumption that we are it. Maybe, just maybe, there are other ways to do education, if only we look.

 

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