Today we have made a significant announcement, which is that we have agreed to sell the Financial Times to Nikkei. This is an important moment for both Pearson and the FT, so I wanted to share more about what’s happening and why.
For fifty-eight years, Pearson has been the proud owner of the Financial Times. We’ve invested in its global expansion and digital transformation, through good times and bad; and all the time, protecting its editorial independence and championing the quality and breadth of its journalism. Both Pearson and the FT have benefited greatly from the relationship. The FT is recognised across the globe as an intelligent and authoritative commentator on world events, finance, commerce and economics.
In recent years, we’ve developed an increasing focus on our biggest, most exciting opportunity – to help people make progress in their lives through learning. As that opportunity has crystallised, it’s become clear to me and the Pearson board that the scale of the challenge requires our undivided attention.
The changing media landscape
At the same time, we are at an inflection point in global media. The pace of disruptive change in new technology – in particular, the explosive growth of mobile and social media – poses a direct challenge to how the FT produces and sells its journalism. It presents the FT with a great opportunity too – to reach more readers than ever before, in new and exciting ways.
Nikkei has a long and distinguished track record of quality, impartiality and reliability in its journalism and global viewpoint. The Board and I are confident that the FT will continue to flourish under Nikkei’s ownership.
I’ve every confidence in the FT’s ability to seize the moment, as it has done ably so far, in its digital transformation. The readership is at an all time high, with readers willing to pay more than ever for its journalism. But, after much reflection and detailed analysis of both the opportunities and challenges that lie ahead, we have concluded that the best way to ensure the FT’s continuing journalistic and commercial success is for it to be part of a global, digital news organisation that is 100% focused on these same issues.
The FT remains part of Pearson until we complete the transaction around the end of this year. I’m very pleased that we will continue to work together in areas like business education and teaching English to professionals in countries such as China.
I know many people will have questions about what this means for our Professional line of business, of which the FT is a part. Pearson VUE and our English business remain incredibly important to Pearson, and are a big part of our future.
We plan to reinvest the proceeds from today’s sale to accelerate our push into digital learning, educational services and emerging markets. We will focus our investment on products and businesses with a bigger, bolder impact on learning outcomes, underpinned by a stronger brand and high-performing culture.
This will help us progress toward a future where learning is more effective, affordable, personal and accessible for people who need it most. By doing so, we can help more people discover a love of learning and make progress in their lives.
This is the promise of learning– and the future of Pearson.
(Photo credit: Brad Doherty/AP Images for Pearson)
“I am a human being in search of the American dream.” I was a bit taken aback after reading the first line in the essay handed to me by a student at Juarez Lincoln High School in La Joya, Texas – a school that sits less than 3 miles from the Mexican border. The new American Dream was what I planned to discuss in the commencement speech at Texas Southmost College the following day, before ever having met these students. But nowhere along this 4-day road trip through Texas did I feel the importance of this theme more acutely than when I met the young students at Juarez.
Their stories all share a common thread: the drive to overcome challenges of poverty with a will to learn and as one young man very frankly put it, “be somebody.” The first student who spoke told me about leaving his parents behind at the age of 14 to come to the US. Another had ridden atop the “Death Train” from Honduras – a two-month-long journey, which, he wrote in his essay, all too many passengers did not survive. These students were among the most mature, humble and driven I have met anywhere in the world, and hearing their stories was an experience that will stay with me for the rest of my life. As the teachers and parents thanked me for coming to their school, I felt a sense of inadequacy…that I had brought little to the table through my visit (although I know Pearson has been a long-term partner of the school), but had gained so much from the experience. I had seen firsthand what it really means to need an education. For many of these students, and students like them around the world, an education can literally be the difference between surviving and thriving. My conversation with these students reinforced for me the urgency and importance of the purpose that 40,000 Pearson colleagues share with our partners and customers around the world. The last line of that student’s essay reminded me that there is so much yet to be done to help people achieve their goals. He writes, “I am a human being in search of the American Dream of becoming a Spanish teacher.” As I left the school, I realized why these students had been happy to talk to me – they took comfort in hearing someone from outside their world tell them directly that through education, they can realize their own personal ambitions.
I had the chance to address the graduates at Texas Southmost College the next day. I told them what they likely know better than anyone: education impacts not only the life of the student, but the lives of everyone close to them. In the photo above, little Makayla joined her father Mark on his big day, as he graduated with an associate’s degree in applied science. She was so excited, and understood that this was a happy time for her family. But what surely wasn’t clear to her at the age of 4 was that the moment would be a transformational one. His associate’s degree will mean an earnings difference in $400,000 over the course of Mark’s lifetime, and it will greatly increase Makayla’s chances of going to college and providing a comfortable future for her own children and generations to come.
Education is a powerful driver not just of personal and family growth, but also of community growth and economic prosperity. Before visiting Texas, I spent two days in DC, during which time I drove three miles from the Capitol to visit an adult charter school in Ward 7 in southeast Washington DC, one of the most destitute parts of the city. Pearson has supported the Community College Prep Academy since its inception with digital learning and tutoring support to help get students ready for college and the workplace. The charter school’s founder, Connie Spinner (pictured below), described Ward 7 as an “underdeveloped nation within a city”, one of the “last bastions of great poverty” in the nation’s capitol, and an area where internet infrastructure is nonexistent. It takes an exceptional leader like Connie to overcome these challenges and see the impact that a school like this can have upon the community. The students ranged in age from 20-50 and older, but they were learning the very basics of literacy and numeracy. (In fact, the 40 year-old man I met with was only just learning whole numbers.) In just the few years since she opened CC Prep’s doors, Connie has seen hundreds of students leave, armed with the qualifications they need to take the next step in life, and ready to give back to their own community and push forward the positive cycle of education in Ward 7.
These stories reinforce the desperate need for access to high quality education in our poorest communities. The students at CC Prep, Juarez Lincoln High School, and Texas Southmost College, rely every day on a combination of great teaching, inspirational leaders, and world-class tools and research to make progress in their lives. Our responsibility is to provide those world-class tools and research, and what matters to my colleagues and to me is that we’re doing right by the people who most need it.
Our CEO John Fallon could probably have delivered a commencement speech at any number of colleges or universities. But in 2015, he proved to the education world that Pearson is serious about delivering the tools for education in the places where it matters most. This year, John Fallon joined over 300 hard-working and motivated Texas Southmost College graduates at their graduation, just a mile from the Mexican border. He shared words of wisdom, encouragement, and let TSC know how proud Pearson is of their accomplishments. Congratulations to the graduating class of Texas Southmost College! "Go Scorpions, sting 'em hard!" (Click on the video below to hear what John told this great group of graduates.)
Today, I had the opportunity to address Pearson shareholders in an open forum, as we do each year at our Annual General Meeting, and to remind people about what Pearson is, and what it is that we stand for. Here is what I told them:
I am very proud of our 40,000 colleagues all over world - who together put in a competitive performance right across Pearson. This performance is true of our Education business, the FT - with total circulation growing 10% year on year to a new high of 720,000 where digital now represents 70% of FT. And I’m also proud of Penguin Random House – the world’s first truly global digital book publishing company. Three years ago, we took a hard decision to merge Penguin with Random House as we thought it was the best way to support Penguin’s enduring commercial and creative success. Now two years on, we are seeing record performance and great success, as evidenced by our publishing, in at least one major market, each of last year’s Booker Prize short list. We are well placed to sustain our strong competitive performance this year and beyond.
We announced today our first quarter trading update - where we met expectations with headline sales up 5%. More importantly, we are making record levels of investment in the next generation of new products and services. As we do so, we aim to put the idea of placing the learner first - we serve them and they are at heart of every single thing we do. But before you hear any more from me, you should listen to one of those learners. So, that’s Mohamed’s story. His success is, of course, primarily due to his own talent, commitment and hard work. It also reflects well on his teachers, family and friends. Mohamed’s video, as well as the case studies in our Annual Report, are all examples of our work to tackle the most important challenges in the world - equipping global citizens with 21st century skills needed to survive in the workplace and life.
The greater our impact in improving access to good quality education and translating that into better outcomes for more people, the more quickly we can create a faster growing, more sustainable and profitable company. Access, inputs and outcomes are hallmarks of a successful company - efficacy is a hallmark of everything we do - becoming a stronger company, bigger, better and achieving better financial returns. We’re becoming a simpler, leaner company. We’ve halved global warehouse capacity, reduced systems and invested more in digital products and services.
We’re excited about the Pearson System of Courses – products like PSoC combine new technology with great teaching to help many more student do well and go on to succeed in their lives - combining depth and breadth of learning, which is engaging and empowering for both students and teachers. Like any innovation there are always difficulties - and in a school environment not everything works perfectly first time - but these are brilliant products and we are determined to see it through. We also care about Pearson’s culture, although none would argue that it has been a bruising time for our colleagues - we’ve cut 5,000 roles - mainly in print or mature markets - whilst we’ve added new roles in tech, efficacy, education, research and fast growing markets.
Our values - to be brave, imaginative, and decent - have been tested, but ultimately they’ve been reaffirmed and strengthened – and we are working hard to reward our people. And now we’ve added a fourth value - accountability - highlighting our commitment to a simple and incredibly powerful idea – that every product we sell can be measured and judged by social impact. We are accountable for the outcomes we help people to achieve. And we will be transparent on how we report on our progress.
There are few things in life more important than education. Our commitment to accountability extends to greater willingness to engage in the public debate. We are engaging with students, teachers, parents and all those who care about education around the world. That’s why we’ve led a public debate around higher standards in the UK. It is why we are engaging directly with parents, and students – as well as teachers - in America. It drives our commitment to report publicly on our progress on efficacy. It explains the very exciting new partnership we’ve formed with Save The Children to support education in Syrian refugee camps. And it is why we are encouraging all 40,000 Pearson colleagues to volunteer in our local communities.
Not everyone will agree with us. And we’ll make some mistakes along the way. But we’ll always strive to do better – and to sustain the support and trust of those we work with every day. As we do this work - some folk may question whether a sense of social purpose and a profit motive can go hand in hand. We think that what makes Pearson an incredibly special company is that they always go hand in hand. The profit we make is the by-product of making a useful and meaningful addition to society and few things are more important than empowering far more people to progress through learning. This should make Pearson a higher returning company to shareholders and communities we serve for many years to come.
Now, I was going to end there, but I received a letter as I arrived at the AGM this morning, and I want to respond to it directly. I want to tell you about my dad. When he trained as a teacher in the late 1940s, he felt his career choice was as highly valued in society as, for example, being a doctor or accountant. When he retired, it was a cause of some sadness that he felt the status of teachers had declined not just in pay, but also in the professional respect in which they were held. He lived long enough to see that with the support of education secretaries from both the right and left - David Blunkett and Ken Baker notably - the professional standing of teachers is starting to recover - but there is still a long way to go. We need to do more still. This is something I personally feel strongly about and it’s why we sponsor the Pearson Teaching Awards every year - and why 15,000 of our employees started as a teacher themselves, and why many more like me have deep family connections in education. You can be under no doubt that everyone in this company has greatest respect for the teaching profession.
In that spirit - let’s also make a few things clear. As an exam board here in the UK and a testing organization in America, we have a responsibility to every student, and to every teacher, to ensure that the exams, and the tests they take are fair – and it is demonstrably not fair if some students have seen the questions online before they even take the exam. We do think assessments – or exams – are important, to give parents reassurance that their kids are on track to do well – and, if not, the confidence that something is being done about it. They are also really important for universities and employers. We do want fewer, smarter, better exams – or assessments – and we do think they should be just one measure of progress as part of a wider framework. We do believe in higher standards – and that teachers need to be given the time and support to adjust to those standards. Most of all, I publicly and enthusiastically support free public education for every child around the world. Yet the reality today is this: 65 million primary school-aged children don’t get to go to school, hundreds of millions of secondary school aged kids don’t get to school - and many millions more are still largely illiterate and innumerate.
If this was health or hunger, we would be talking about an urgent humanitarian crisis. In education it takes a generation for the true social cost to be borne out, so unfortunately the alarm bells don’t ring as loudly. Faced with that challenge and reality, we as a leading learning company have a responsibility to work with every part of society, government, local authorities, aid-agencies, charities, and, yes, local entrepreneurs and private companies as well - to give as many people as we can the chance of a better education and a better start in life.
How do you educate refugee children in places with a shortage of trained teachers, a lack of resources, and where school records have been lost? In the last four years, across the Middle East and North Africa, millions of young refugees have fled from their homes. And an entire generation, millions of children, are at risk of growing up without an education.
The threat of an educational void is becoming abundantly clear in places like Syria. More than 2.3 million children inside the country are not in school. Of the hundreds of thousands who have fled, nearly half are not receiving any education at all. In Lebanon, there are more school age refugees than the entire intake of the country’s public schools, and only one in five Syrian children are enrolled. Sadly, it’s a similar situation in Jordan and Iraq. Aid needs to reflect the new, longer-term reality of conflicts, and should include the means for providing access to education to those who have had to migrate and are forced to establish a new life.
Abu Mohamad, a Syrian refugee, recently told his story to CNN about small businesses in refugee camps. He started a pizza delivery service for other refugees and aid workers living in his camp. “I couldn’t sit and wait for the situation to change,” he said. “We always want more for our families.” But not everyone is an entrepreneur, particularly young children – many of whom lack access to basic education. Not everyone has the necessary tools at their disposal.
Last month, the UK pledged £100m to help support Syrian refugees with food, medical care and relief items. The UK Department for International Development has committed more than £800m – the UK’s largest ever response to any humanitarian crisis. And USAID, between 2012 and 2015, donated $570m to help Syrian refugees. This is all much-needed support. Given the reality of this crisis, we need to supplement these efforts. More governments, NGOs and companies can play a significant role in improving access to education in these settings.
Much as food aid often includes basic essentials needed for survival, education assistance needs to be rapidly deployable but without compromising on quality. Refugee camps and host communities need easily accessible materials and low- or no-cost tools for education that work in challenging settings. Some organisations are already leading the way.
UNICEF helped more than 375,000 Syrian children last year access formal and informal education through school construction and rehabilitation, teacher training and provision of school materials for teachers and students. In Jordan, staff and volunteers from Save the Children are creating specialised teacher training and support programs for those operating in conflict regions. These sessions will equip teachers with an entirely new way of approaching lesson plans, homework and grading. Save the Children has also developed a database of emergency personnel for education. These experts can be dispatched on short notice to areas affected by emergencies.
All this can be done without traditional classroom tools. Teachers work from condensed, modified curriculum, written to be delivered quickly and affordably. Mobile-delivered teaching resources can be vital when communication and normal delivery methods are limited by circumstance. And there is a need for solutions for grading tests where no national marking system exists and where students lack school records.
Education is often among the first casualties of sustained conflict, and all too often, the international focus simply moves on to the next conflict, leaving a massive skills and knowledge void in its wake. Children out of school are vulnerable to the influence of extremism, a growing threat in the region, criminal behaviour and other forms of exploitation. Many host governments are stretched to the limits in terms of their ability to absorb the influx of refugee students into schools in already-struggling education systems.
How can we make a difference? Businesses must prioritise the social impact we stand to make as major players in the global economy, and we must do so with a view to the future.
In 2015, the UN is examining where focus must go following the expiration of the Millennium Development Goals, and education will surely be among the priorities for the new Sustainable Development Goals. There is work to be done. I encourage all businesses to examine their core competencies—whether in logistics, product design, communications or whatever their area of expertise – that can be applied or offered to refugee communities to drive educational improvements at little or no cost.
The late professor C.K. Prahalad said: “The big challenge for humanity is to get everybody, not just the elite, to participate in globalisation and avail its benefits.” The shift in our thinking I’ve described around moving from a short to a long-term view of how we assist those in need through education, and what Prahalad envisioned, is about inclusion, it is about fairness and it is about allowing everyone, not just those at the top of the pyramid, to have a chance.
(Click here to read about our own partnership with Save the Children, and join the conversation on Twitter at #EveryChildLearning.)