Panel: Education Disrupted | Macquarie Group

Panel: Education Disrupted | Macquarie Group

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As we spend today exploring digital  society, education is undeniably one   of the most important aspects of that society.  From Covid turning into a virtual environment,   the changing skill needs of employers around  the world are seeking to close the gap in global   education. The world has continued to see changing  demands and disruption in the learning sector,   and technology has facilitated a step  change there. Today we have the distinct   pleasure of being joined by a panel of leading  disruptors in what's, you know, forecast to be   a $10 trillion dollar industry in the next decade. I'm Sam Shah, Global Head of Software and Services   at Macquarie Capital. And today I'm joined  by Simon Allen, CEO McGraw Hill Education;   Marnix Broer, co founder and CEO  StuDocu; Frank Britt, CEO Penn Foster;   and Alex Burke, Ceo of Education Perfect. If  you have any questions for Simon, Marnix,  

Frank or Alex, please add them to the Q and A  box at the bottom of the player. Welcome to you all. You know, as we start off, you know, Simon  obviously, an important few weeks in the   history of McGraw Hill, you know, the company  has got such a rich history with over 130 years,   uh, you know, in the making, in some respects,  and quite a few dramatic changes over that time.   Perhaps you can put the latest developments  in the context and how the dramatic change,   you know, has impacted the industry over the last  few years, and maybe specifically McGraw Hill.  Yeah, yeah, happy to Sam and thank you  for inviting me. I'm looking forward to   joining the panelists here, I would say from  McGraw Hill we're at that lovely intersection   of great content and brilliant technology and  where the two combine to make sure that we're   providing students and teachers the absolute  best materials that they can possibly receive to help them through the education journey.  Now for us, as you say, we've got a rich  

history 130 plus years and many people think  of us as a textbook publisher, which is fine.  But of course our business has significantly  transformed since those days and now, well   over half of our business, in fact, just about  three quarters of our business is now digitally   delivered. And the reason is that it's a  more elegant way. It's a more inclusive way   of improving education from both the student  perspective and their outcomes, how well they do.   But it's also very, very helpful for the teachers  because they've got far more far much more   flexibility in the way they assess the students  the way they can intervene if problems may arise.  And for us, to your question, you know, the  last few years have been very changeable,   particularly the last year, but it's actually  been a decade in the making. This transformation  

towards digital delivery of education has  really been at least a decade or more,   but it's been the last couple of years  that we've really seen it accelerate   because students and teachers are now very, very  aware of the benefits of technology as you and I   have talked about a lot recently within higher  education in the US, we're looking at over 80%,   it's about 82% of students now receive their  material digitally and they receive it often   through inclusive access, which is that it makes  it available at the lowest possible price point.  And it means it's accessible for all students. So  we're really, really bullish about how the future   will continue to grow digitally. We're  absolutely committed to providing the  

best quality content and the platforms  McGraw Hill Connect or McGraw Hill Aleks   to make sure that we give students everything they  need to give them the best chances of success.  That's great. That's great, Simon and maybe maybe  turning to to Marnix really quickly, you know,   obviously McGraw with 130 year history, you know,  you're sort of in the first decade, um you know,   since the company's inception and so being  the youngest company on this panel and on the   virtual stage today, you know, when you look at  sort of the disruptive factors and the impetus,   for founding StuDocu, you know, what were those  and what have you seen in the market in terms of,   you know, evolution through  the company's young history.  Yeah, well, for us, what we know is especially  in 2013, I was studying myself, I saw that there   was something missing where students could  easily share knowledge with each other. And   to be more precise, there was both on the end of  purely documents, like study guides, summaries,   lecture notes, these kind of things, um and  also in answering each other's questions, which   students have a lot and they actually help each  other a lot outside of the classrooms, let's say. 

That's where we actually started solving this  issue by tackling the first problem, where it was   easy to find your study resources and share those  with the others. Because in the in the days I was   preparing for my exams, it took me literally a few  days to get all the knowledge I needed before I   could really start studying for my, for my exams. That's why we we launched this platform where   students can easily go to, they share their  own documents, but they can of course also   start using the others , which have been  shared previously by other students.   Now a few years later we're also busy with  the second problem, let's say. So we're now   focusing more and more on the community part. We're not only sharing the knowledge but actually   also asking each other questions and getting the  answers to it is sort of the new features that we   offer. Aside from that if you're really in a lot  of struggle, which help, which happens a lot as  

well, you could, for example, also easily find a  tutor who can help you out and back in my days,   let's say, I mean it's not that long ago but  still I am graduated by now, but at that moment   when I needed help from a tutor, I really had  to sort of post a note somewhere in the library.  Like can somebody help me out  with some mathematics where for us   it's now much easier to connect these students  given that they're all at one platform.  Interesting. Thank you. Maybe turning to  Frank quickly, you know, as we think about  

disruption in, you know, for Penn  Foster, that's really sort of disruption,   not even in the broader context, but in, you know,   kind of the workforce context and the up-skilling  context and you know, given what Penn Foster does   in terms of its ability to to enable  students to flexibly access education, to fit in with lifestyle, to fit in with budget,  to fit in with, you know, career aspirations.  You know, we're at such an interesting inflection  point in the global economy in terms of, in terms   of upskilling what are you seeing is the growing  areas that need in the economy and, you know,   how its Penn Foster, you know, impacting that? But as you know, Sam we're among the largest   middle skilled focused job platforms in  the country. We serve about 300,000   working adults a year at the jobs that we are  focused on. We refer to them as across the color  

spectrum. Which is, there are green jobs. There are great jobs. There are pink jobs. Pink jobs being healthcare, green jobs being  environmental. And what were preoccupied with   is helping about half the US workforce. About  80 million working adults who are not aspiring   to four year degrees. Make sure that they can  sustain employment success over the years ahead.  

And so we're preoccupied with what are those jobs  of the present and the future that are emerging.  What's interesting is you think about what a  job is. If you sort of atomize it. It's really just   a collection of skills and what's interesting  about it, if you get a time lapsed photography   view is that there are jobs that are still called  the same things where the anatomy of those jobs   has changed because the skills have changed. And  in some cases there's inventions of new jobs.  And so it's, it's actually a complicated question  to figure out when is a new job a new job and   when is an old job refreshed, and what are the  requirements to help a person stay relevant   in that career path? The second observation we would  make beyond trying to help people maintain the   right kind of employment for their success is  that one of the challenges of being particularly   middle skilled workforce in contrast to higher  ed and particularly like elite MBA programs.  If you go to Harvard Business School, the signal  to noise ratio is perfect because there's like 15   jobs you'll get, you have unlimited demand.  It's almost like you're deciding what to do  

because you have a perfect line of sight to what  your options are. If you get deeper into the   workforce system, the signal and the noise changed  a lot and this gets a lot noisy with a lot less   signal. So we're trying to do is to help people  navigate that noise because the system itself   is set up in a very siloed, fragmented way. The support systems are fragmented, the data   pools are fragmented across the workforce world and alike. And we're trying to connect  

for the consumer, the learner, the full  architecture of what their needs are. So we   acquired recently the largest discovery platform  in the United States, which were now connecting to   the largest workforce development platform. And  then you don't have to be a strategist to figure   out the third leg of the stool will be connecting  that to the predictive elements of employment. 

So this idea is emerging as the primary partner  for helping people sustain and renew their career   success, which is bigger than just up skilling. It's the full continuum of the journey of career   management, we think there's a massive  unmet need in the market for that,   and consumers are hungry for those types of  solutions that connect and we have a lot of   work ahead, but that's what we're trying to do,  build that community of middle skilled workers   to give them the economic mobility that they  pursue in whatever geography and whatever   occupational area that they perceived to be the  best for their lives and for their families.  Great, fascinating you know, I think kind  of move to Alex for a second, you know,   what's interesting is obviously, you know, many  of the aspects of what, you know Simon, Marnix,   uh you know, Frank address is, is sort of the  higher education, you know, continuing education,   you know, realm education perfect obviously,  you know, had so similar types of impacts   from a technology disruption perspective, but  in, you know, in the, you know, in the K- 12 realm   and particularly in, you know, in and  in Asia, you know, as you talk about   virtual learning, the shift toward that in that  part of the world, do you see the demand dynamics,   changing there, how do you approach it? How is  education perfect? You know, been able to kind   of make such a, such a deep impact, I guess. You know, firstly the, the profile of digital  

tech within classroom has clearly  been accelerated due to covid and   schools being disrupted. I think what we've  seen is that firstly, a lot of schools actually   weren't ready when, when Covid hit. And a lot of  those schools are, the reality is some teachers   haven't even used a zoom call before and we're  trying to get used to a lot of digital tools. So   it's very clear that there early on their digital  transformation journey. And there was also   quite a, quite a mixed match for equitable access. So there was a lot of what we saw was a lot of   schools didn't have 1 to 1 devices and there  were students as well, they didn't even have   broadband at home. And I've heard stories of that  all over the world. So there was a big, big access  

difference in in terms of how we responded and how  we've worked. It's important for us that we're solving, you know, points of pain, meeting user needs within teachers in classroom.  And I think for us it's it's a change  management piece, really, it's a   a hand holding of teachers to get them used to  the digital tools and demonstrate the value of how   data can help with differentiated learning and how  through auto marking, it can save them time and   just really hand hold them through the  process of using tech within the classroom.  You know, and maybe open it up to all of you.  Um you know, clearly at this Tech Summit,   we're focused on using technology, you know, not  just even even in the developed world, but also,   as a tool or a mode for upgrading skills or opportunity sets   within the developing world in low and  middle income countries. And it's an acute,  

you know, issue or sensitivity because, you know,  with as many as half of 10 year olds, you know,   not being able to read age appropriate text. You know, if if all of you or some of you had   a view, I mean what more in your opinion can  we be doing? You know, either individually   or through our companies or collectively  to address the global education gap?  Yeah. Sam I would say that just to echo Alex's  point, you know studies we did across the US, barely 37% of students actually had daily  access to digital devices in K-12.    That's incredibly low. That's very very  sad. That creates the problem right there, 

of inequity and that's what we've got  to make sure that we shift thankfully now post   pandemic, that number is now about 73% but it  still has a long way to go to really improve.   And I think to your point when you look at 10 year  olds, it doesn't really matter what the age is. I   think part of the problem has been that we've been  quite obsessed of reading grade levels or creating   material that is aligned to a certain age or grade  level. Whereas we're more interested now and we  

should be more interested now in assessing  the student performance and understanding   regardless of their age and making sure that  we can then provide age appropriate material,   particularly in reading and math to really help  them close the gap that may be there. And as   Sam, as you know, we created something at McGraw Hill Rise, it's called, that really   helped teachers understand what is the gap, the  covid gap as it was referred to a few months ago.  And we found that it was 6 to 12 months of problematic reading regression, math regression   in how they were trying to learn. And the  biggest thing you have to do is understand

what is that gap? How at what level are they? So  the ability for us to create intervention tools to   to assess where students are. At that point,  we can go forward, create the right materials   delivered in the right way to close the gap as  quickly as possible. The age is less important,   but the level of attainment is what's key and  that's where technology gives us a huge advantage.  One of the biggest challenges, I think, is  that, you know, with the current system,   it's very hard to have a real time view really  of what's happening. And I think that's the   massive opportunity for technology in that if  you could give teachers that data first mindset   by giving them, you know, true data around how  a student's progressing, student's engagement,   then you can intervene and  help them with those pathways. 

And I think that's the sort of true power of  a sort of ended classroom environment really.   You know, the combination of then technology  helping and aiding a teacher interact with   their students and push them into the right direction to help. They're great. That's extremely helpful. And maybe, you know,  Marnix and Frank for you before we open it up  

to the audience, questions looking forward,  what technologies would you say most excite you   as you look at the future of education? Yeah, I think in our case, in our case, thank you   I think in our case we are excited about the  core innovations that are happening in education.   However, we think there's two central adjacencies  that I think we'll drive even greater alpha. We   are as you know, Sam, one of our financial  sponsors is one of the largest hedge funds in   the world. And the reason we agreed that they  would be good partners is because their history,   of course, is to use data machine learning and  the like to drive alpha in financial markets.  And we believe that there are significant  operating to apply those same principles   to human capital in the same way they've done it  for financial capital. And I think the notion that   education is going to self invent the  ability to drive outside insights on uh   consumer learners in and of themselves, I think is  an incomplete view. I think you're going to have to  

find best of breed industries that are masters of  using data to drive outside outcomes and you need   to inculcate that into the education sector. And so a) we believe that non traditional   providers like hedge funds can actually be quite  helpful to driving better student outcomes. The   second framing that we view is that the blurring  of the distinction between Edtech and job tech,   if you look in the last five years, Sam as you  know, the majority of the funding in the combining   of Edtech and job tech sectors has actually been  in job tech; it's like 90% of the total funding.   And so we think that the innovations that are  ahead have to do with predictive employment.  If you sort of put your five years from  today hat on a minute you might say,   wouldn't you want to enroll in a program that  you have a super high correlation to outcome   of employment with certainty and in order to make  that claim and then to have it play out, you need   to have a very sophisticated view on the whole  question of discovery learning and then placement.  And so we think there's a lot of innovation  in the application of data as it relates to   matching to employment, particularly again in  the middle skills where the signal to noise is   a lot noisier than if you go to Harvard business  school where it's almost perfect and we think   there's a lot of opportunities to bring new types  of technologies from within and outside the sector   to help make employment predictability  a natural complement and extension of   all the innovation that has to happen  within the core of learning itself. 

In terms of my most exciting technologies  from the last two years, I think if we have to   seek for positive notes of the whole pandemic,  I would say that it's super nice to see that   educators were actually pushed to start  using technologies because education was   far behind where when it comes to adoption of  technologies in work, let's say, any company was   way further ahead than education was. But Covid  pushed everybody to from day to day suddenly   to switch all to online services. A lot of new  technologies have been developed in the meantime.  But there were already quite  some very nice technology being produced   but simply not really used yet. Now with this  push, you can actually see finally some um yeah,  

better, better. You say that it's more  like suddenly they also start adapting to new   technologies and you can see education improved  there. Of course, there's a lot to do still.  But I mean it's also very impressive  how fast they picked it up actually and that   education could continue. Right now in terms  of the technology I'm looking forward to is   actually examination tools because right now  that's still pretty difficult to have everybody   in one classroom taking exams. Also taking exams  in general is also very old fashioned and haven't  

changed for the last 2000 years or perhaps  even more. So, let's see what happens there.  And I think that many companies are  now busy solving this issue as well and   hopefully educators can adapt to it quickly. You know what, let me just add, if I may   Marnix I think you're exactly right. And what's  interesting is, to your point, the number of  

faculty and students that have been forced online  and to learn remotely, the great thing is that   from what we can tell, they don't want to go back  once they've been forced in and they understand   the benefits and the value and they can see how  it works and get the flexibility it provides,   the desire to go back to a traditional  classroom or print out or whatever it may be,   that's gone. Once they've made the  switch, they've accustomed to it,   they've really seen the benefits, it's now  downhill from here on. It's very encouraging.  I think that's great to hear. And  so perhaps they needed to push in   a way and yes we needed that. Yeah, no, absolutely, absolutely.   Well in the, you know, a few minutes we have left,  we do have some questions from the audience, that I think are quite compelling,  and I'll open it up to all of you. The first being, obviously large cap  tech, in terms of Google, Microsoft,   etc, Salesforce moving ever so closely, you  know, into the ed sector, in their own way. 

What role do you see those players,  taking in both K-12 and   higher ed and continuing ed in the next decade? I think they can be extremely helpful in  connecting the teachers with the students.   They do an awesome job with stuff like, I  mean Zoom as well, of course the Google Meets,   but also the collaboration within documents,  the presentations, raising hands, raising   questions, doing polls, connecting students  in breakout rooms to give some extra lessons.   Perhaps some tutors who can stay online. There's many things to explore there,   but I think especially in connecting  people from different places in the room.  Yeah, I agree. I mean, I think, you  know, in the K-12 space Google Microsoft are in  dominant. So it's either a Google users. Every school uses Google or they use Microsoft. 

I think when they play to their strengths,  there's huge value, huge value to schools and   for us and businesses like  ourselves. It's important   to think about that technology ecosystem and  think about how you integrate and play really   well and create a really nice experience, a nice  seamless experience from say Google Classroom   to then to our product that's actually in in  classroom. And the businesses that can really   make that seamless experience are the ones that  are gonna and to do do really well in the future.  I think another lens on this, which is more of  a capitalist view than a student-centric view,   and I think to myself as a student first: There is an interesting arbitrage opportunity   between public and private markets. If you  look at the health care sector globally it's  

about $12 trillion, and about 60% of that  market is public. If you look at education   broadly, it's $6 trillion but it's less than  a trillion dollars public. So my point is that   in the education sector, it's an under penetrated  category relative to public market access.   And so there's an opportunity to arbitrage that if you will, unrealize public market value   and that's obviously not lost on some of the big  players like Microsoft and Google and I think they   are uniquely positioned as a logical adjacency  to come in and capture some of that market cap   that is not currently available because the  education sector being, if you will, under   penetrated in the public category itself, that's  also why you see the catalytic effects of SPACS   and things like that because you know, you look  at the multiples on some of these companies,   whether the Coursera of Jag or guys like  that, they're they're good companies,   but they also have benefited from scarcity and  the public market investors need portfolio and   they need index fund investment and they're  just literally not enough assets to invest in.  And so I think that the Googles of the  world and the Microsoft and the Linkedins   want to arbitrage part of that, and that's another  reason beyond all the student impact, social   reasons that I think you'll see them take an  even more aggressive posture relative to Edtech. 

Yes, Sam, the only thing I just add, I think they've been  great enablers, you know, Microsoft and Google   have been in the education space for many, many  years and they've been great enablers throughout   K-12, higher education, graduate school, um we have a lot  of respect for how they operate within the sector,   the choices they decide to make on what  they do from a content perspective,   how they think about delivering, how they  think about engaging with the students directly   or the institutions where they have  tended to focus in some cases, that's going to be interesting to track and to  watch, but that they've been, they've been   a very good additive to the whole process of  education because of what they've enabled.  And you all touched on it a little bit in in  the last few minutes we have here,   you know, so much of what we're talking about,  you know, in a technology context is also impact   and obviously no larger part  of society that's impactful then education as  being players in the private sector   beyond just obviously, the capital, and  Frankie touched on it a little bit,   in just impact on society, you  know, what would be the one suggestion that each   of you would have on the experience the private  sector can play in terms of making an impact?  I think one issue we haven't talked  about is actually the home situation   of the students right now. I mean, I'm not  sure of course how long it will take until   we're actually back in the classrooms physically. Uh, with back to classrooms, let's say. But in the  

meantime, students have to stay at home work  studying from there and some have a spare room   where they can have the quietness and the space to  actually focus on the studies, where some actually   live in a much smaller house, perhaps with four  other brothers and sisters not having that time to   actually concentrate on the, on the study field.  So perhaps the private sector with a lot of space,   large office is probably empty, etcetera. Can actually offer some space to work at safe   distance and help these kids study and have the  room to actually concentrate on their studies.  

I think that consumers are  frequently discerning regarding   the value systems of the enterprises they want  to partner with as learners. And I think that   we all have a very important role in terms of  diversity, equity, inclusion, and social justice.  And I think that our institution and I think  many others have to look a lot more like the   people we serve and have to have a different  kind of engagement with that population.  

There are there are millions of people who have  insufficient voice that are underrepresented   and need advocacy. And I think that this, you  know, this idea like it's everyone's on the   outside looking in is an interesting dynamic  because actually, most people feel they're on   the outside. So the majority of the outsider  rather than the majority being the insider.  And I think education institutions in particular  have a unique opportunity and role to do what they   can democratize opportunity and to uh, elevate  people who don't have the same privilege a lot   of us have had. And I think that the companies  that do best at that will A) do well for the  

world and B) I think they'll just be better  organizations, they'll attract better people,   they'll attract more progressive investors. And I think ultimately, if we all align around   that idea of diversity and equity inclusion  earnestly, I think we can have an outsized   catalytic effect on making sure that the world's a fair better and, and often more competitive place.  Yeah, I'd agree with Frank. I think, you know,  the equitable access point is definitely a gap   and it's definitely somewhere, you know, something  that the private sector can really help support.  The other thing, I think that that is changing  is that, you know, curriculums are changing   the future of work, I think there's more the  private sector could do at grassroots level.   And I saw schools change and how learning  changes, there are opportunities for the for   those sort of organizations to really add value  and help help that sort of grassroots system   improve people's  opportunities going forward. Absolutely  

Well, thank you all for the time, you know,   I would just close by saying, you know, as we look  forward and you know, as what you heard today,   each of these companies is forging the path  forward and what education will look like over   the next decade. And what's most unique about  them is that despite where they are in their   life cycles and scales that they've achieved, they're still finding ways to innovate each   and every day. And so thank you again. Simon Alex, Frank, Marnix, and appreciate your interest and appreciate the  audience interest as well. Thank you so much.  Thank you, Sam. No problem. Thanks.

2021-07-02 22:37

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