Introit

Role of Equities in Endowment (2013)

Some twenty years ago, David Swensen's thinking on diversification changed how Yale invested its endowment. As John Authers points out in this weekend's (October 26-27, 2013) Financial TImes, "Mr Swensen argued that he was most likely to find value away from the public markets. [...] He moved out of bonds and cash, and into hedge funds, private equity and real assets such as forestry. Yale now holds about 6 per cent of its assets in US equities. This reaped impressive investment returns for decades, and many endowments imitated it."

Authers goes on to illustrate that Yale, like everyone else, lost money (lots of it!) during the financial crisis. Interestingly, due to how it is diversified (as noted above), it has not seen the flattering returns of the S&P 500 index, though. And that's not a bad thing...Yale's endowment returned 12.5% last year, with its diversified model of looking for value in private markets. Yet, the main thrust of his article ("This is no time to get off the equity train") is that the notion of portfolio diversification hasn't worked terribly well over the past five years, mostly because large institutional investors diversified out of stocks, sometimes by a wide margin. Consequently, not having as much at stake in equities equated to a reduced return.

He is very supportive, though, of Yale's strategy of diversification, to the point that he supports endowment managers considering the application of the Yale process when purchasing assets, while being clear that managers shouldn't strive to imitate the portfolio's holdings. Basically, "look for assets that may be inefficiently priced and would not fall with equities."

What I appreciate is that Authers is looking ahead to the time when stocks lose their momentum, as is inevitable.

I don't hear this kind of talk from many, so it's refreshing to consider it.

Context is Everything

Two articles in the current issue of Korn/Ferry Briefings on Talent & Leadership really hit home. Each delves into the value of a liberal arts education as the ideal formative background for leadership. The authors (leaders themselves) and other leaders highlighted/cited have liberal arts backgrounds to which they return constantly as they contemplate strategy, vision, and the development of talent in their organizations. For them, the liberal arts trained them to look at context. Context is everything.

Speaking of context, what resonated all the more strongly with me was the context within which these articles were placed. This issue of Briefings centers on education, with a notable focus on STEM jobs, programs, initiatives, etc.

For all the talk about STEM in this issue, these heavy-hitting articles extoled the virtues of a liberal arts background. These leaders (including a military leader and a Fortune 100 leader) were adamant about honing one's mind across disciplines, analyzing, synthesizing...tying together ideas, peoples, themes, movements. So much aligns with what we value in independent schools. 

The STEM jobs are very real, yet I was moved by these leaders' arguments in favor of a full-blown liberal arts background for those who aspire to leadership. The liberal arts allow a person to contextualize what is happening (or needs to happen) in an organization by considering similarly-structured events, whether from history or literature. There is strength to be drawn from historical or literary figures as well, strength that impacts a leader's character and helps to inform his/her decisions. Nowhere was this more evident than in some coursework I completed this summer: the group was predominantly engineers (STEM folks, to be sure), and yet we worked through a decision-making problem by considering the context of Shakespeare's Hamlet. It was, in a word, powerful.

What worries me about the preponderance of STEM initiatives (buildings, programs, etc.) in independent schools is that, without meaning to, yet by not paying close enough attention, our schools may downplay (or, even worse, dismiss and then lose) the contextual value that liberal arts provide, all in an effort to appear competitive on the STEM front.

And for what gain?

What If the Plan is Bad?

The lead article in the most recent issue of The Trustee's Letter (May/June 2013), "Many Views Lead to One Voice," identifies what any board candidate should share in common with the school: "each candidate has to be committed to the school's mission, vision, and strategic plan."

What if the strategic plan is bad?

Scarf It Down!

We're all faced with the perennial question of how we might motivate others in our schools. In a recent interview with Karen Christensen (Rotman Magazine, Spring 2013), David Rock, founder of the NeuroLeadership Institute, shares that "they key is to create an atmosphere that promotes Status, Certainty, Autonomy, Relatedness, and Fairness. We call this the SCARF model." I find the model worthwhile because so many independent schools are positioned to implement it; some already do, without knowing it.

• Status - "Within the brain, feelings of low status actually provoke the kind of cortisol elevation associated with sleep deprivation and chronic anxiety. [...] One common threat is the custom of offering feedback. The mere phrase 'Can I give you some advice?' puts people on the defensive, because they perceive the person offering advice as claiming superiority. Inside your brain, it is the cortisol equivalent of hearing footsteps in the dark." (30-31)
• Certainty - We crave it. "At work, not knowing what will happen next can be profoundly debilitating, because it requires extra neural energy, which can undermine performance and disengage people from the present. Breaking a complex project down into small steps can help to create a feeling of certainty. Although it's highly unlikely that everything will go as planned, people will function better because the project now seems less ambiguous." (31)
• Autonomy - "As long as people feel they can execute their own decisions without much oversight, stress will remain under control. [...] A perception of reduced autonomy--for example, when someone is being micromanaged--can easily generate a threat response. When an employee experiences a lack of control, his or her perception of uncertainty is aroused, further raising stress levels." (31)
• Relatedness - "In the brain, the ability to feel trust and empathy about others is shaped by whether they are perceived to be part of the same social group. [...] In terms of workplace implications, this means that teams of diverse people cannot simply be thrown together. They must be deliberately assembled in a way that minimizes the potential for threat responses to arise." (31)
• Fairness - "The perception that an even has been 'unfair' generates a strong response in the limbic system, stirring hostility and undermining trust. The cognitive need for fairness is so strong that some people are willing to [...] commit themselves to an organization they recognize as fair." (31) In terms of an example of a threat, "the 'old boys' network provides an egregious example: those who are not a part of it always perceive their organization as fundamentally unfair, no matter how many mentoring programs are put in place." (31)

The reason why I find this SCARF model so interesting is because, when people experience a rewarding SCARF system, they are considered to be deeply engaged.  Engagement is challenging to measure, but, aided by the SCARF model, I am certain that we could devise a way to measure it through a fairly straightforward survey that would provide us with some constructive/useful data points.

In this climate, not only do we want to see students who are deeply engaged, we want/need to see faculty, staff, and leaders who are deeply engaged. Success in this realm will beget success.

Are you deeply engaged?

The Hardest Innovation

I'm a fan of Andrew Hill's "On Management" weekly column in the Financial Times. This morning, I was delighted to come across his piece on "the hardest innovation."

Q: What is the hardest innovation?

A: Killing off projects.

As anyone in schools knows, it is tremendoulsy challenging to sunset projects that really ought to fade away. Hill states that the struggle involved in persuading any company [school] to stop doing certain things is downright painful. We tend to use nice terms, such as "concentrate our focus" to refer to the notion of stopping a project. His point, quite simply, is that we cannot become more strategic by focusing more on something; an increased focus in one area means cleaning up another area and moving it off the radar screen entirely. Focus demands it.

I like one paragraph immensely:

"Why is it so hard for companies to kill off projects? Many leaders think it is more courageous to advance, expand and aquire than to retreat, shrink and divest. At a recent strategy meeting I attended, executives' warm enthusiasm for new ventures was inversely proportional to the chill and doublespeak that filled the room when they were challenged to take the axe to longstanding initiatives. [...] Yet when organizations stop to scrutinize themselves, the accretion of unheeded strategy visions they find hanging around them is extraordinary." [emphasis mine]

Strategy is very much about choice, in other words.

Does your school avoid the hard work of choice?

Abductive Reasoning Regarding Online Competition

Abductive reasoning, i.e., imagining what might be, is something that most schools have never been good at, for years and years. We tend to operate in the camp of deductive and inductive reasoning. Abductive reasoning is anathema to us. And so, even as online learning continues to gain traction in the larger K-12 market place, we continue to espouse our traditional business model of ever-increasing tuition for a product ("education") that is delivered (no, I don't like that term, either...) in the same way.

As Vasant Dhar, a professor at NYU Stern School of Business, writes in the January 7 (2013) 'soapbox' column of the FInancial Times, "Top-branded universities may soon find themselves competing on price with lower-tier brands and potentially losing the battle. Their edge has been solid reputations and knowledge, honed over decades, which until now has been paid for. IT has changed that forever. Information is fluid and once separated from its source can be easily copied, modified and even improved. Top-branded universities have reason to worry over the long term." (11)

Substitute "top-branded independent schools" for 'universities,' and you can begin to see what I'm driving at.

I'm not about curtailing school as we know it. I'm not about tearing down buildings or retro-fitting them to be cyber-cafés. I tend to disagree with Prof Dhar about how easy it is to copy, modify, and improve information, primarily because I believe that how we learn is not in synch with how our society wants to test kids (standardized tests); in other words, testing/assessment is its own issue that is hurting real learning.

Having said that, I think that schools do have to worry if our instructional models continue to be command-and-control, wherein we do straightforward lectures and one-way delivery of content, expecting it to be regurgitated on exams (assessments). If we continue down that path, we will be in trouble.

We do need to consider the value of abductive reasoning, a type of thinking that allows us to say, "Hey, wait a minute. If online learning continues to be this disruptive, how might we alter our learning environments so that we cannot be replicated, so that we can increase our value proposition?"

Some schools are doing that, but too few. We need to embrace abductive reasoning that encourages us to use the phrase "how might we" as a means of imagining the next steps of our own evolution. In other words, imagining how we might transform our business models.

If we choose not to innovate (business models) when we are capable (i.e., now), what will we do when we are forced to innovate, but cannot (diminishing resources and enrollment)?

Safety: Time to be Heard

Heads Speak for Themselves (January 2013)

Every few years, my school conducts a market research survey to better understand what parents seek in their selection of a school for their children.  In each and every survey, “safety” appears near or at the top of the list.  This is understandable, given all that we read about violence in schools – from bullying and harassment to school shootings.

In the first two years of my tenure at my current school, I’ve paid a lot of attention to campus safety.  I’ve heightened the security presence at our main entrance; improved the fencing that surrounds our entire campus; installed security cameras to monitor most of the exterior areas on our campus; trained faculty about how the school should and would respond to an active shooter on campus; reviewed, enhanced and drilled our “lockdown” and “shelter in place” procedures; enlisted the help of a member of the Albuquerque Police Department to review safety and security issues on campus on a weekly basis; become more vigilant about locking all campus gates during the school day; and implemented an emergency alert system to notify parents about crises on campus.  I have more initiatives in the works, from increasing the size of our security staff to installing interior security cameras.

I didn’t become a Head of School because of my passion for safety and security matters, but I recognize that it’s among the most important aspects of my job.  The recent shootings in Newtown, CT have focused national attention, once again, on school safety, and, in particular, the problem of active shooters.  Unfortunately, our nation doesn’t have a good track record of taking legislative action following school shootings.

The horrific events at Sandy Hook Elementary School have captured the nation’s attention because of the large number of deaths and young age of the victims (26, excluding the shooter, including 20 small children).  Sadly, this tragedy is one of a long, steady string of school shootings.  In the last decade, excluding this most recent tragedy, there have been at least 28 shootings on school and college campuses in 15 different states, 23 of which resulted in the killing of 85 innocent victims.

This time, however, something feels different.  There is a heightened concern and energy that surround this recent tragedy.  The big question is where that will lead us.  In the past, gun violence has sometimes led the government to take action.  A recent article in The Washington Post  identified a number of examples.  These included the National Firearms Act of 1934, following the “Tommy gun” era of the gangsters of the 1920’s; the Gun Control Act of 1968, following the assassinations of JFK, Robert Kennedy and Martin Luther King, Jr.; and the Brady Handgun Violence Prevention Act of 1993, following the assassination attempt on President Ronald Reagan in 1981.

A lot of organizations and individuals are making suggestions about how to improve school safety.  The NRA, according to a CNN report, plans to fund a group charged with developing a plan to place armed guards in schools around the country.  Legislators in at least four states have suggested providing guns to teachers.  As someone who has spent over 25 years working in a wide range of schools – public, private, urban, rural, large and small – I cannot fathom how more guns on any school campus will make our children safer.  These suggestions alarm me, and I believe them to be misguided.

On the other hand, there are at least ten members of Congress – Republicans and Democrats – who have received high marks from the NRA and who have said, in recent days, that they are willing to take a fresh look at gun control legislation.  This suggests to me that we have a unique opportunity.

Several days ago, I was discussing the Sandy Hook incident with an acquaintance who has worked in schools for many, many years.  She asked me whether I thought that concerned parents, teachers and school leaders might not come together to address school violence in a grassroots way.  She mentioned Mothers Against Drunk Driving (MADD), an organization that was started by a few women in 1980 and that ultimately changed the way our nation thinks about drunk driving.  About the same time, I read a blog entry by Brian Rosenberg, the President of Macalester College, in which he makes a pledge never to support a political candidate who does not support a ban on assault weapons.  Rosenberg recognizes that it’s a small step, but he notes that we “need to begin somewhere.”

As school leaders, we are charged with ensuring the safety of our communities, and we know what makes sense.  This is a time to come together and be heard.

Steve Albert is Head of School at Sandia Preparatory School (NM). He can be reached at [email protected].

Going Bold

As the end of the calendar year looms in front of us, I've been reflecting on Will Richardson's inquiry regarding "bold schools" back in January on his blog (Jan. 7, 2012). Will wrote,

"We need schools that are bold in their practice right now. And by “bold” I mean schools that make sure their kids pass the test and get “college ready” because, unfortunately, that’s about the only definition of “success” that people want to talk about right now, but also schools that prepare their kids for a world that the tests and the definitions of “readiness” or “achievement” haven’t caught up to yet."

I corresponded with Will on this matter, so I feel a rather strong personal connection to it. In particular, I feel the personal connection because I believe that assessment is the issue of our time. As Will mentions, "the tests and the definitions of 'readiness' and 'achievement'" haven't caught up with what the world demands of our graduates. For example, the overwhelming majority of current assessments continue to be structured in such a way that there is only one correct answer; moreover, the kinds of problems presented in these assessments tend to be lower-level tasks. They're not about high-level cognitive tasks, the kind the world demands of our students. They're not about creative problem-solving. They tend to be assessments that can be graded via scantron (you know, bubble sheets that are read by a computer). Although that method of "grading" is efficient (if nothing else), by design it eliminates complexity and creativity in thought.

So, how might "going bold" look? Following are some thoughts:

• schools that are looking to norm their students against the world, not just against other American students. After all, our kids will be competing for jobs against an international and more transient population, not so much "the kid down the block."
• schools that are looking to own their assessment structure. In other words, schools that are willing to create assessments that reflect a measurement of what they value. In all likelihood, that means a blend of some efficiently-graded instruments (on a MUCH reduced scale) and new ways to collect and measure "soft" data such as engagement and cultural competencies.
• schools that are educating parents on the lack of meaning (or any relevance at all) in the SAT. We continue to look at SAT scores as some marker of distinction, but the truth is that they don't correlate to anything that holds true meaning insofar as learning is concerned. Visit fairtest.org and dig around...you won't have to dig deeply.
• schools that are network-minded: schools that are purposeful about creating learning networks with other schools...and not just schools, but with like-minded organizations and individuals, all of whom/which are concerned about learning.
• schools that focus relentlessly on the formation of character, with an eye to having graduates be young men and women of competence whose judgment is keen: when faced with a decision in their lives, they will make a values-based decision.

Innovator's Paradox and Schools

Scott Anthony's work in innovation interests me very much. Recently, I've been pondering the notion of "the innovator's paradox," which goes something like this: when they are in a position to innovate, most organizations don't; then, when they find themselves needing to innovate, they cannot do it.

Some schools got slammed by the financial crisis | economic downturn; others have continued to muddle along, with a slight decline in enrollment. There is a third group, as well: those schools that have either maintained their enrollment or grown it during the last few years (call it a flight to quality).

A few schools in the latter group have begun to talk about innovation, but are trying to figure out how to do it. Others in the same group are eschewing innovation altogther; why bother if we're doing just fine?

I'm wondering how many schools in this group might find themselves stuck in the innovator's paradox in the next two to four years: "We had a chance to innovate, and didn't. Now that we have to (i.e. enrollment is on the cusp of slipping), we're finding it terribly difficult to do."

I like Anthony's idea of writing a Pre-Mortem: a letter to yourself (i.e. the school), highlighting how things have unfolded over the next five years. Then, use that as a way of defining a strategy for what you might undertake within the school in order to avoid that scenario (i.e. the result of having done nothing when you could have...).

With the continued explosion of "free" educational options, how do schools NOT engage in wondering "how might we....?"

Assessment: The Issue of Our Time

There are many issues in education that attract our attention, but I'm convinced that "the" issue of our time is that of assessment. Whether it's a question of ERB scores, SAT scores, AP scores, or the like, we as a society are focused intently on the notion of assessment.

We need to take a step back and ask ourselves and our communities: "What do we value, and why?" The follow-up question becomes, "How might we measure that?" In short, we would benefit from re-assessing assessment itself.

I'm not arguing for no assessment; I'm arguing for assessment that provides us with useful data that correlate with what we value as places of learning. We will need to identify a path for correlation so that the data make sense to our boards, our leadership team, our faculty, and our parents and students.

Many schools publish SAT scores, whether in the college guidance section of the website or elsewhere. Boards are keen to see the SAT data; one can imagine (or experience) the hand-wringing and finger-pointing when SAT scores decline by, let's say, 20 points (not percentage points, but pure points, i.e., from 610 to 590 on a given section).

Yet, let's consider the "value" of the SAT. What does it actually show us? What are the correlative data points? How does the SAT correspond to the values that we embrace in our schools? The SAT falls remarkably short on providing anything correlative to student success. The College Board has had to change the name twice because of the New York State Truth in Testing statute. It has nothing to do with aptitude, and it has nothing to do with achievement. Yet the fact remains: it is an important barometer; at least, it is perceived to be so. Perception does not equal reality, however.

For some time now, Pat Bassett has been a proponent of changing the college admission process; in other words, he would like to see colleges move away from the SAT. It's not a holistic assessment.

Have we considered (at the board level and at the faculty level) how we might propose measuring what we value in schools? What might that look like?