Introit

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].

External Risks to Schools and Doomsday Scenario

Risk management has been on my mind all week, irrespective of whether I wanted it to be! Apart from the drama with Greece and the larger questions being posed vis-a-vis the global financial system (the potential fallout from which we should be considering), the FInancial Times ran a fascinating story on Wednesday (June 13, 2012) regarding the recent disclosure by JPMorgan that it had a trading loss of some $2 billion in April.

The article would be useful reading for school leaders and trustees, in terms of seeing through the lens of risk management. I have heard the assertions that being "mission-focused" and "on message" all the time is the best form of risk management. Vital though those pieces are, external risk events--the ones that we simply cannot control through our mission-focused discourse--are things we need to consider, and this article provides us with a no-nonsense approach (financial modeling).

"In March, Gregory Baer, deputy general counsel, presented a plan to policy makers and bankers illustrating the results of a hypothetical $50bn loss. It showed the bank would fail, shareholders would be wiped out and Jamie Dimon, chief executive, would be fired" (16, emphasis mine).

Tom Braithwaite, the author of the article, goes on to say that "the presentation, given at a Harvard Law School event, is also an unusually frank acknowledgement that there are limits to the capital buffers of even healthy banks. In the doomsday scenario [...], a $50bn loss would trigger 'a run on the bank,' with $375bn of funding, including bank deposits draining away. The government would then step in and mark down the bank's assets, leading to an additional $150bn loss. Shareholders would be wiped out but senior creditors would be transferred to a new bridge company that allows 'critical activities to continue to operate smoothly.' Their debt would be restructured into equity."

Let's consider how such a scenario might look in terms relevant to independent schools:

1. A significant event occurs, and a large percentage of parents immediately stop paying their tuition payments; what's more, pledge payments from major donors cease, and the remainder must be written off. The endowment corpus shrinks substantially, more than 25%, and perhaps as great as 50% to 75%.
2. The school undertakes yeoman efforts to collect tuitions due, stating that the funds are needed to continue to operate the school through the remainder of the school year.
3. Other parents panic, thinking that the school will be unable to keep its doors open, and they begin to contact other schools for immediate transfer; or, if they're generous, they look for admission elsewhere for the next fall. This is the equivalent of the 'run on the bank.'
4. A strong percentage of parents accept offers of admission to other institutions, whether mid-year or for the following year, and the school can no longer count on those tuition dollars.
5. The trustees step in, and, based on reduced enrollment projections, outline faculty and staff cuts. Unless the Head has been doing something egregious, it is unlikely that the board will fire the Head, as s/he will need to implement the massive reduction plan.
6. Any debt that the school has been carrying will now be revisited by the lending authority. It is likely that this scenario is causing debt covenants to be breached, and the lending authority may alter its terms altogether, if the school is unable to meet debt service, up to and/or including seizing the school's facilities as collateral assets, to meet the debt.
7. During all this turmoil, what happens to the school, as a corporation, let alone to all the students, families, faculty, and staff?

In the JPMorgan illustration, or as we saw during the 2008 crisis, the government stepped in and loaned money to recapitalize the banks, restore confidence, etc. However, in the case of independent schools, what happens? Do you have donors who would step in, capitalize the running of the school for the remainder of the year, pay off all debts, and fund a major marketing campaign for the next 2-3 years?

My point with this post is not to scare anyone; rather, it is meant to serve two larger purposes:

1. to illustrate bluntly what is indeed possible, should a major risk event occur
2. to suggest strongly that schools should be engaged in risk management--modeling for external risks in particular

Managing Uncontrollable Risks in Schools

Robert S. Kaplan, the co-creator of the Balanced Scorecard management system and a professor at Harvard Business School, and Anette Mikes, assistant professor at Harvard Business School, have published some research on how companies might reconsider how they manage threats. There is much here for schools to learn from, and, I would argue, to adapt to school environments. I say that because I believe that we haven't learned as much from the financial crisis as we should have.

Yes, we responded (well, adequately, or poorly), but my question is this: have schools learned to put into place some form of risk management system that draws on the strength and talents of all groups across the school (boards, school leadership, faculty, and staff)?

In their HBR article, "Managing Risks: A New Framework," Kaplan and Mikes provide a helpful chart on the Three Categories of Risk: preventable risks, strategy risks, and external risks. Preventable risks, arising from within a school (I'm going to use "school" instead of "organization" or "company"), are monitored and controlled through mission statemetns, values, rules and boundaries. Strategy risks and external risks, to the contrary, "require distinct processes that encourage [school leaders] to openly discuss risks and find ways to reduce the likelihood of risk events or mitigate their consequences" (55).

For purposes of this post, I'd like to focus on the third category, external risks, or what we might term "uncontrollable risks." These risks "lie outside the [school's] control; [schools] should focus on identifying them, assessing their potential impact, and figuring out how to best mitigate their effects should they occur" (56).

Most of these risks require approaches that we're not used to dealing with, "either because their probability of occurrence is very low or because [school administrative leaders] find it difficult to envision them during their normal strategy processes." Kaplan and Mikes identify several sources of uncontrollable risks:

(1) Natural and economic disasters with immediate impact. "These risks are predicatable in a general way, although their timing is usually not (i.e., a large earthquake will hit someday in California, but there is no telling exactly where or when). [...] Examples include natural disasters such as the 2010 Icelandic volcano eruption that closed European airspace for a week and economic disasters such as the bursting of a major asset price bubble. When these risks occur, their effects are typically drastic and immediate [...]."

(2) Geopolitical and environmental changes with long-term impact. "These include political shifts such as major policy changes [...]; long-term environmental changes such as global warming; and depletion of critical natural resources such as fresh water."

(3) Competitive risks with medium-term impact. "These include the emergence of disruptive technologies (such as the internet, smartphones, and bar codes) and radical strategic moves by industry players (such as the entry of Amazon into book retailing and Apple into the mobile phone and consumer electronics industries)."

You may be thinking that these sources don't really apply to schools, but they do impact us because they tend to impact our tuition-paying families--specifically, they may impact whether our families will be able to (or want to) continue paying tuition. Knowing that we are reliant on tuition dollars to run our schools, shouldn't we be concerned about uncontrollable risks and give some thought to how we might react, should such a risk event occur?

It might be easy for most readers to say, "Well, that's really the purview of the board, not the administration." On the one hand, yes, I do agree that it is the board's business, but I submit that it's equally the business of school leadership (HOS + senior administrative team). What's more, I would consider involving key faculty linchpins (probably not the full faculty) in some form of risk management framework, as their "weight" is important in the faculty world. Often, these linchpins can be better conduits to full faculties than can administrators; at least, they may have excellent ideas on how to communicate certain information, etc. What's more, they tend to have long tenure at a given school, meaning that they bring the additional benefit of institutional memory; such memory can be applied to a risk management scenario. This perspective is especially helpful if an administrative team (and/or Head) has a comparatively shorter tenure at the school.

As you can see, risk management is a somewhat complex issue in independent schools. This concept also represents one of those "uncomfortable intersections" of "are we a school or are we a business?" In this case, the answer is clearly "both." As a term, "risk management" sounds exclusively corporate, but, in reality, educators deal in risk management all the time--we just don't label it as such. We have elaborate systems of progress reports, interim reports, grade-level meetings, and so forth. Why? To mitigate the risk of student failure. One could argue, I think, that schools are in the business of risk mitigation.

I would welcome comments from readers regarding the major external risks you see for independent schools. They may correspond to the three points mentioned above, or they may be different altogether. Additionally, how might schools better mitigate such risks?

I will publish all comments, so please check back to see what has been written!

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.