Thursday, January 29, 2015

Everybody hates Pearson - Fortune


Fallon has gotten used to absorbing jeers aimed at Pearson. He emphasizes that the company's goal is to help students succeed—and that the ultimate decisions remain in the hands of educators and government officials. Moreover, the company says its research indicates that among Americans who've heard of Pearson, 83% have a positive impression of it. "It's inevitable in a field as important as education that feelings are strong," Fallon says. "We are here to serve parents, governments, teachers, and most importantly students. We're trying to take the right actions for the long term, rather than the most popular ones. And if sometimes that means we get both praise and criticism—hopefully that shows we are charting a sensible middle path." He insists, "the more people engage with Pearson, the more they tend to say, 'You're not who we thought you were.' "

Pearson's push into data-driven education has been a smart strategy. It began with Scardino, who expanded Pearson's publishing and education brands far beyond Penguin and the FT during her 16-year tenure. And it has accelerated under Fallon, who has expanded further into emerging markets and who has spent the past two years trying to wrestle a hodgepodge of businesses into a more coherent whole.

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Fallon has restructured Pearson, cutting $215 million in costs and 4,000 jobs and acquiring digital and other education businesses overseas, most recently Brazil's Grupo Multi chain of English-language school centers for $721 million. Net income has fallen some 18% since 2011, to $854 million in 2013, because of restructuring charges and the fact that the decline in the old businesses is outpacing the growth of new ones. But the company's stock has stayed relatively flat, partly because Fallon has adroitly reduced expectations, likening Pearson's reinvention to IBM's move from hardware into services. He now says that the restructuring into what he calls a focused "One Pearson" is largely complete.


It sure hasn't been easy. "John Fallon has had the most enormous baptism of fire," says Tom Singlehurst, head of European media equity research at Citigroup. With the culture of standardized testing—which has been a cash cow for Pearson—under attack, Fallon has to convince the world that the company is truly a force for learning, and not just the executor of an approach that may soon fall out of fashion.

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Fallon imbibed the world of education, if only indirectly, growing up in Manchester, England:
His father was an elementary school principal. But Fallon didn't initially go into the field. Instead he worked his way up through local government and then into Pearson's communications and international divisions. A survivor of throat cancer, he has become the earnest and forthright ambassador-proselytizer for the company and its ambitions.

Pearson's theoretician is Michael Barber, its chief education adviser. Barber, 59, may today be the single most influential educator on the face of the earth. A onetime professor at the University of London, he still has the distant, abstracted air of an academic. Barber was a key architect of England's educational reform under then-Prime Minister Tony Blair, which involved closing underperforming schools and toughening national standards. Blair later asked Barber to apply the same approach to other services. (His work earned him a knighthood.) After leaving government, Barber became the head of McKinsey's education practice, then moved to Pearson in 2011. In 2013 he published a report, "The Good News From Pakistan," examining the positive results of his education philosophy—which has the uneuphonious name "deliverology"—in that country's Punjab region.


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