Introit

What's Your Social Media Communications Strategy?

Call it chance, if you will: I encountered two well-written stories this week, both of which treat the theme of a communications strategy vis-a-vis social media.

The first appeared in the May/June edition of The Trustee's Letter. Rhonda Durham, executive director of the Independent Schools Association of the Southwest (ISAS), writes in "It's Gone Viral" about the notion of "scandal" in a school community, and the associated spread of that scandal through the various channels of a school's constituencies. She refers to gossip and rumor as "electronic missiles," which can "emerge in blogs, community chat rooms, even national media and courtrooms. Thus, perhaps now more than ever, an embarrassing event may spark an urge to manage the content and circulation of the story."

What is not treated overtly, however, is the role of social media as part of what truly makes the issue "viral." In fact, I would submit that the scandal is far more likely to be spread by means of Twitter and Facebook (and other social media in that same vein) than by blogs, email, or community chat rooms. Twitter and Facebook are akin to accelerants placed on an already-burning fire. There ought to be an entirely separate article on the true viral nature of message-spreading. Please understand that Durham's focus is NOT on what kind of media are used to spread the message, but rather on what the school's true role is in dealing with scandal. It is a very insightful piece, and you ought to read it sooner rather than later. I commend it to you.

Enter Andrew Hill, whose weekly column "On management" in the Financial Times (May 15, 2012) touches on this very theme. The opening sentence reads, "Last Thursday I was, briefly, head of communications for a large Canadian widget maker, coping with a wave of Twitter-borne rumours about the arrest of its chief executive." Happily, though, it was a simulation. What a great idea -- a virtual exercise that the PR firm put the company through in order to give it some hands-on experience in handling this kind of crisis. (Schools would benefit from such a thing...) He then highlights the irony that, while this simulation was occurring, a real event was happening between two beverage companies.  It was "amplified through Twitter, Facebook, and other online media."

To make a long story short, Hill draws attention to the nature of the "media relations crisis," showing (rather convincingly) that the tactics and the stand-off itself turned out to be rather traditional, meaning that the social media participation didn't change the actual nature of the crisis. I like his point, and there is instruction in there for schools.

What is remarkable about the beverage stand-off, from my point of view, is that a young upstart beverage company was able to disrupt (rather seriously) a well-ensconced, elder company with a global presence. What's more, that global company has a strong social media presence and savvy, on which they pride themselves quite openly. However, that strong presence was unable to handle the upstart's attempt to start a mini-campaign via social media within the space of mere days.

Social media = speed and agility, when it comes to potential communications issues for a school. There is much that is positive for schools, when it comes to social media, but the potential negatives should be planned for. And so, I return to Hill's tale of the PR simulation.

We ought to be simulating those kinds of events, then share the results of those simulations with fellow schools, so that we all acquire those needed skills.

So I ask: what is your school's social media communications strategy?

Anticipating Reality

The skill of anticipating should not go unnoticed in leadership circles. What does the anticipatory leader do? S/he gets folks to look at what's going on right now (i.e. the present) rather than prognosticate. Then, the leader asks a simple question, "Based on what we know right now, relative to what we're doing right now, what are the consequences for us, as an institution?"

It is up to the leader to pose such a question, but, when you think about it, his/her leadership team needs to be a bunch of top-notch "noticers", meaning that they need to be able to read reality with great clarity.

 

Producing Success

If you're still pondering whether to engage the online/digital learning movement as part of "how we do school" in independent schools, consider the following remark from Jeff Pfeffer and Bob Sutton in their tome, Hard Facts, Dangerous Truths & Total Nonsense:

"Being the world's most efficient and effective electric typewriter company won't produce success when the product in question is disappearing because of changes in technology and markets--a story that holds true for companies making the proverbial buggy whips or, more recently, those making electromechanical calculators, slide rules, or record players" (136).

I'm not suggesting that our product is disappearing, but the things that impact whether parents send their children to independent schools are only increasing, whether the nature of that impact stems from economics or technology. Understanding that we need to remain impactful in our respective school markets, will "how we've always done school" continue to sustain us? Will it produce success?

And, what does success mean/look like? Does it mean 'staying in business,' does it mean 'healthy enrollment' (what does THAT mean...?), does it mean 'graduates placed in competitive colleges,' or does it mean something entirely different, something that has moved outside our locus of control?

Rebuilding Confidence

Glenn Rifkin, for his article "Where have the leaders gone?" (Briefings on Talent & Leadership, Q1.2012), interviewed Warren Bennis, an organizational scholar and leadership author who has been writing on those topics for some five decades.

Bennis talks about "leadership flu," proffering that few leaders have "the touch" at this moment because "we are living in a time where things are changing more often and faster than ever before" (30).

To be sure, we have heard this message about frequent and fast change before; it permeates the media. However, Bennis gets down to brass tacks with Rifkin fairly quickly. Rebuilding confidence, for Bennis, starts "with some basic requirements, including a turn toward some clear thinking, pragmatism and truth-telling." Bennis opines, "The reality is that we are in a decline, and our leaders don't know how to manage during decline. We're not used to this. But we have to face a grim reality, and every leader has to find a way to express it in a way that people can understand" (31, emphasis mine).

Largely, schools have done tremendous work when it comes to managing this decline, I would argue. It is also accurate, I think, to say that "we're not used to this." We've never seen anything quite like it, that's for sure. It's sustained, and it won't be going away any time soon. Some schools have been forced into a corner in/from which they have to say, "OK, this is reality and we have to be incredibly pragmatic about telling our story and about getting out of it." Of course, there are those schools that continue to ignore reality and paint a different picture of their circumstances, hoping that by building that vision, it will come alive, somehow.

For many school leaders, rebuilding confidence is the challenge of a lifetime, especially when all the variables associated with that lifetime continue to change ceaselessly. That aside, however, I think that Bennis is right to assert that we ought to focus on clear thinking, pragmatism, and telling the truth. There is no utility in masking obvious issues, when it comes to school life and culture. Simple is best.

Deluded Decisions

I'm reading a great book right now: Hard Facts, Dangerous Truths and Total Nonsense: Profiting from Evidence-Based Management by Jeff Pfeffer and Bob Sutton, both professors at Stanford University.

Given my recent time in Santa Fe at their annual November leadership seminar, where Gary Gruber challenged us to always ask "why" we do certain things, that message is underscored yet more by Pfeffer and Sutton in this specific tome.

One of the things that the authors identify early in their work is the importance of making decisions based on concrete evidence. That may sound like an "obvious" assertion, but, as they point out, it is rarely observed. Instead, many directors and CEOs make decisions based on intuition alone, or on a misreading of competitors' businesses.

In other words, it is commonplace for companies (schools, in our case) to make decisions that are based on delusions. When those delusions are used to identify metrics (etc), the result can be business strategy that ends up undoing the company. Pfeffer and Sutton cite plenty of companies where that has been the case: for example, one company went from $75 million to $10 million in revenues in only five years. That's drastic, to say the least.

We tend to make highly-informed decisions when, for instance, determining the best course of health care to address a certain issue we may have personally; however, when it comes to a company (school), we tend not to be as thorough in drilling down into the data. Instead, we too often make decisions based on more superficial data, without exploring those data points in greater detail.

We Like to Think That...

As the world markets show signs of distress related to the downgrade of the US credit rating, I can't help but wonder how renewed distress in the minds of independent school families might affect enrollment in our schools. Schools that have been hanging by a thread since the events in 2008 and 2009 are holding their breath, no doubt. That thread may be due to purely financial reasons, but I'm willing to wager that almost every precarious scenario in a school is due to two factors: 1) over-leverage (unsustainably high debt:income ratio) combined with 2) lack of differentiation in the market place. That lack of differentiation may take different forms: it could be over-confidence in one's product (relative to the actual experience of graduates); it could be diminishing importance of a former mark of differentiation; it could be the unarticulated switch to an entirely new mission, with no (or little) forethought.

A book I've read recently underscored this same concept to me, as told in a short story, excerpted below. By the way, the book, Good Strategy, Bad Strategy, is perhaps the most useful tome I've read in some time. I will write a review on it in the coming weeks, as its importance to schools (and to strategic planning in particular) can be hardly understated.

"Steve Jobs is great at criticism. Arrogant and smart, he cuts to the heart of an issue with no wasted effort. [...] I and several other faculty members met with Jobs to discuss Apple's future prospects. 'I know Stanford,' he said, 'but I am not all that familiar with UCLA Anderson.' [Anderson School of Management at UCLA, home institution of the author of Good Strategy, Bad Strategy]. My department colleague [...] responded by offering the school's party line. 'We like to think that we are the entrepreneurial school.'

'That's interesting,' said Jobs. 'Which Silicon Valley entrepreneurs have come out of your program that I would recognize?'

[The colleague] grimaced, then answered truthfully, 'There aren't any.'

'Well, then, you've failed,' Jobs said with finality.

The question for schools, I think, is this: are we too prone to saying "we like to think that..."?

In other words, perhaps schools "like to think" one way, when reality is suggesting something different. I know that I have seen such cases, and I'm confident that I'm not alone.

It doesn't mean that schools aren't different or that they don't have a place in the market, but it does mean that schools haven't been paying attention to strategy, which is the point of the book...and can help to explain how schools that are over-leveraged got there in the first place: a defective understanding of strategy.

But more on that later...

Core Inflation and Tuition-Setting

Great article by Lorenzo Bini Smaghi (member of the executive board of the European Central Bank) in the June 2, 2011, edition of the Financial Times: "Ignoring the core can keep inflation at bay."

[N.b. My question to schools is at the very end of this post. However, please read through the next section, to see what I'm driving at, so that the question will have context.]

Smaghi makes a potent argument against the use of core inflation (what we in the US refer to as CPI) as an accurate measure for forecasting economic trends and making monetary policy. "For core inflation to be a good basis for forecasting headline inflation, the variations in the prices of agricultural and energy products have to be temporary, and should on average not differ from other prices. If that is not the case, core inflation is neither a good estimate of underlying inflation, nor a good forecast of future inflation."

He points out that a study of the data since 1999 shows that "the global index of energy and raw materials has more than doubled, as has that of food prices. These increases have not been short-lived at all, but have had a lasting effect."

His thesis, well-argued, is that the philosophy behind the measure of core inflation (the CPI) is predicated on short-term fluctuations in food and energy, but that these longer, secular movements to the upside render core inflation an impotent metric.

Looking ahead, he says, prices of food and energy commodities are expected to only increase, which will skew the measure of core inflation even further. "For central banks around the world, this means that core inflation is no longer a very useful indicator for monetary policy, and should probably be abandoned. It may have taken a while to realise this but, as the Romans used to say, errare humanum est, perservare diabolicum -- to err is human, to persist in erring is diabolical." (Ah, Latin!)

To come to it, then, here is the question: if core inflation (CPI) no longer has the "accuracy" it once had, should we continue to use it as a guide to setting tuition in our schools?

Thoughts?

*I've been writing about core inflation as deletrious to endowments as well. Please check out the category "Endowment" here at Introit (categories are on the right vertical bar). If Smaghi's argument is valid, then my concern is even greater than before, in terms of maintaining intergenerational equity.

Query: Where's Your Risk?

I'm working on a visual design of a risk management nexus, a document is that is meant to serve schools in assessing their risk(s). It is more or less complete (I think...), and my plan is to release it on Introit in the next month or so. Before doing so, however, I'd like to ask readers to identify what they would look at, when it comes to determining the risks a school faces in its operations. I don't want to leave out any areas that are of critical importance!

What do you feel are the most important areas for assessing a school's operational risk?

Please click on "comment" and share your thoughts.

Caveat Emptor!

Buyer beware!

From a perusal of many independent school websites, it seems clear that the financial crisis that began in Fall 2008 spurred donor interest in providing money to schools for the purpose of financial assistance for students. To be sure, such funding is a noble objective, and schools should be glad for the gifts.

Yet a number of schools should remain cautious about employing too many of those dollars. The reason? Those funds could leave just as easily as they arrived. Donors are making these gifts on an annual basis (or even on an as-needed basis), not by means of a longer-lasting vehicle, such as a planned gift.

If a school is accepting, let's say, $100,000/year from a wealthy alumnus to provide financial assistance, that represents a good chunk of change for most schools. Such schools are able to stay afloat financially--and keep enrollment at certain levels--precisely because the alumnus is giving that gift. What happens, though, when that gift goes away? How does the school absorb the $100,000 in its already-weakened operational budget?

So I say: caveat emptor!

Despite the best intentions of all donors and schools, this financial arrangement promotes a certain level of risk for the institution. The intentions are the very best, but the model is flawed. The best case scenario would be for the school, before entering into such an agreement for funds for financial assistance, to work with the donor to set up a planned gift that will continue to provide such funding in perpetuity. In other words, unless a school and its prospective donor can set up 1) an endowed financial aid fund or 2) a charitable trust (lead, remainder, or dynasty), the annual gifts for financial aid should be counterbalanced in the annual operating budget. Do not back out those amounts from the budget!

Caveat emptor!

Removing Volatility from the Balance Sheet

The Financial Times carried a fascinating article earlier this month that, among other things, addressed the volatility on many companies' balance sheets, emphasizing that the volatility needs to be removed.

That sounds highly corporate and perhaps un-school-like, but the reality is that many schools are facing an analogous situation: families who are in serious arrears on their tuition payments, or who have paid nothing at all toward the current year. Another layer might be that donor who made a substantial pledge, but who hasn't followed through with a single dime.

For independent schools reliant on tuition payments and pledge payments (isn't that just about everyone?), non-payment = volatility on our balance sheets. We might have swings of several hundred thousand dollars--or more, in certain scenarios. Like banks who are working with the "have-not" companies described in the FT article, how long can schools continue the process of what the FT author terms "extend and pretend" or "delay and pray"? In other words, how long can schools continue to extend payment schedules, pretending that the cash is actually in-hand? That formula doesn't work for very long, and the school ends up being hurt financially.

It is a cycle we cannot afford. As a restructing specialist quoted in the article says, "Eventually, gravity takes over."

Is it easy, though, in such a people-centric enterprise, to cut loose those families who haven't paid? Can schools afford it? Can schools afford not to?