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.