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My last article, entitled FE Colleges Face Extinction, was published in April.    An incredible 174 people have shared that article on LinkedIn alone, so I guess it struck a chord.

Then in May another publication ran the headline, “Colleges need to become more commercial, leaders believe”. It was in response to a document published by the Gazelle Colleges Group based on recent research conducted by Wickland Westcott.

I should be pleased that this research document broadly supports my own article.  But sadly it fills me with despair.  It made me think about “trivial colleges”, and I’ll explain that term later.

 

Commercialisation seen as an imperative

According to the Gazelle report 90% of managers seem to agree that commercialisation is an imperative.   But only 20% of managers are reported as believing that every college can transform its operating model to a truly commercial one.

From reading the report it seems that some colleges are simply trying to survive or are seeking opportunities offered by devolution. For others the focus is on establishing a clear 16-18 strategy with more apprenticeships and higher skills provision.

Yet others see opportunities in engaging with more learners taking Maths and English resits.

These findings are unfortunately in line with my own research. To me it seems too little, too late and misses the whole point of being more commercial.  If these routes are focused on, in the mistaken belief that this is a commercial approach, then FE college extinction is certain.

 

A trivial approach

Sadly I have to agree that most colleges have little hope of becoming commercial.  But it is because they are basing their approach around trivia like Maths and English resits, apprenticeships that are going to be funded by an as yet unclear levy and a higher skills provision where few understand what employers need.

Don’t get me wrong, Maths and English are far from trivial per se.  Likewise apprenticeships and higher level skills.  They are vital to the future of FE and to the UK economy. But to think they are the panacea to the present FE situation is naïve to say the least.

There are also indications from colleges that they believe that mergers brought about by Area Reviews and colleges focusing on specialisms are the answer. 

Sadly, I believe this is also untrue.  Being big brings certain economies of scale.  But BHS and a host of retailers had economies of scale and we all know it did them no good whatsoever.  Economies of scale only work if you understand your market, your customers and their needs. For too many years FE has failed to understand the market and their prospective customers and has focused on a government agenda that relied on central funding for courses THEY believe should be funded. Some of these courses were needed but many were not and to put all your income eggs in one basket is not a sensible thing for any college or business to do. FE has been dragged along by a funding model designed by politicians and civil servants that understand even less about the needs of the diverse customer base that makes up the FE sector than colleges understand.

To truly understand the “commercial market” (and I include the 16-19 and community sector in this definition) FE needs to undertake economic modelling on a grand scale.  Offering apprenticeships and higher level skills based on the subjective knowledge of staff or reports from a handful of employers just doesn’t work. To do so is to take the trivial approach. A more strategic approach is needed.

As for specialisation, or putting all your eggs in one basket, I have concerns.  Any provider specialising in just one industry or specialism within an industry should take a lesson from Kodak.  Kodak used to dominate photography when film was king.  Then came digital; but Kodak were specialists at manufacturing film and soon discovered that ignoring digital was a mistake. Kodak are still with us but in “reduced circumstances”.  Similar stories can be told about Blockbuster and a host of other specialist businesses.

That isn’t to say that specialising doesn’t work. Candlemaker William Procter, and soapmaker James Gamble, knew that specialising was dangerous and formed Proctor and Gamble.  Now specialising in a host of personal care and cleaning products, previously they were also in food and beverages with brands like Pringles and Kellogs.  Their strategy is to bring many specialist products and brands under one management.  Kellogs manufactured cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and vegetarian foods; a whole series of specialist products.

In a sense P&G are like a GFE, but with a wider offer.  They have plenty of strings to their multiple bows and survive due to their width of offer rather than a narrow specialist approach. The role of truly commercial businesses is to run multiple education and skills strands; not to put all their eggs in one basket.  It needs a special type of management team to do this and is perhaps why only so few FE managers think the sector is equipped to become commercial.

It also needs managers and a board able to think beyond the trivial.  But more of that later.

There is another argument against specialisation.  If the local college specialises then who will teach all the community and other courses they used to teach.  Do we need to run two colleges locally, one to specialise and one to take all the other courses? It smacks of all the negative aspects of setting up toxic banks to take all the loss making courses the specialist college doesn’t want.

Of course we could focus on the specialist college and bus all the students that want to be plumbers or hairdressers 75 miles up the motorway to a non-specialist college!  Where does the community argument go then?

It is possible to offer courses to all and still specialise in those areas the LEP has highlighted as priority.  It doesn’t need separate colleges.  P&G adopt this sort of commercial approach and it works. I accept there are differences between cleaning and personal care products and education, but the basic commercial principles apply.

Historically we have meddled with specialisms before.  Remember COVEs?  In some colleges they worked well.  But not well enough that those colleges are working extensively with businesses. COVEs were forgotten in most colleges when the next initiative came along.

 

Exam resits and apprenticeships

English and Maths courses are vital.  But to think that resits are anything other than a minor opportunity is fundamentally flawed. Certainly all colleges should be undertaking this work but it will have only a minor impact of college finances.  Even with superb results the income derived will barely pay the interest on the borrowings of those colleges that have received a notice of financial concern.  By all means undertake this work for the moral reasons that we must but do not rely upon it for growth or to pull yourselves out of financial concern.

Of course undertaking the exam resit agenda depends on finding teaching staff that can undertake the work.  Recent AOC/TES research indicates that the majority of colleges are experiencing problems recruiting staff to teach these subjects. Apparently 86% have problems recruiting Maths teachers with English recruitment problems around 66%.  

As for apprenticeships. Again this is vital work.  But once again to put too much reliance on it just because the government has a three million target is ludicrous in the present climate.  There is so much uncertainty about the levy that to plan a recovery based on what might or might not happen is dangerous to say the least.  That isn’t to say apprenticeships shouldn’t be part of a college’s future strategy; just don’t load it to heavily.  In fact don’t rely on anything the government has a hand in as their strategy is to keep cutting budgets and many of us think that, in their thinking, colleges are dispensable.  Remember a protected budget doesn’t grow with inflation, it loses buying power every year.

As for the evidence that uncertainty pervades apprenticeships consider the recent calls for an extra year in which to implement the levy and the disarray at the Institute for Apprenticeships. The IfA still lacks a CEO designate after the previous appointee resigned two months after being appointed, there is no chair or board and the government are extremely vague about the future composition of this board. I believe in apprenticeships but this leaves me with so much certainty of “living in interesting times” that I wouldn’t want to base the future of any college on apprenticeships without a plan B.  

 

Merger will solve all problems

As for mergers, it is a step towards a solution for some.  But it is only a first step and not an answer.  If budgets keep being cut then merger will not save colleges. What happens when merged colleges start running out of cash?  Truly commercial colleges will plan for the total cessation of government funding (I pray this never happens) and use the funding that economies of scale might realise to bridge the gap to commercialisation.  Most mergers seem to realise far fewer savings than expected.  In most cases I believe that a better route would be a shared services approach with good strong local management of local colleges.  But sadly far too few see shared services for what it can deliver in a commercial world.

 

Where will commercial incomes come from?

Some people believe that devolution, local authorities and local enterprise partnerships are the answer. They may be a stepping stone but I doubt they are the answer longer term.

Commercial incomes will come from making commercial decisions.

That means focusing on the right things to make decisions about.

Let history explain this.  Back in the early 1900s the US War Dept gave Samuel Langley a contract to develop a heavier than air flying machine.  He also had support from the Smithsonian Institution. Success was assured.

But whilst he focused on building more and more powerful engines to ensure a heavy machine flew the Wright bros took a different approach.  They focused on building a plane that was balanced in the air, one that could glide.  Once they achieved this they added an engine with much less power than Langley proposed.  

The Wright Brothers understood the problem and focused on what mattered most.  The took to the air.

I’m not convinced that FE colleges actually understand which problems to focus on.  They take the 16-18 curriculum approach, the merger or specialisation approach or the Maths and English route.  None of these problems will solve the real issues.  The real issues are complex but involve adequate incomes, sweating their assets, offering the right skills and education courses in the right place at the right time and at the right price.

This requires commercial acumen, expertise in planning and leadership more than an understanding of the current curriculum and finding models.

This is where trivia comes in.

 

The Law of Triviality

It was C. Northcote Parkinson, he of work expands to fill the time, that in 1957 came up with Parkinson’s Law of Triviality.

Parkinson noted that when groups of people came together to make decisions they spent long periods on trivial issues and gave disproportionate weight to the trivial issues.  He cites the atomic power station versus bike shed case.   

A reactor is so incredibly complex and expensive that most people on a committee don’t understand it, but they assume that those who work on it do understand it. So they say little or nothing about any agenda item on it.  But to show their worth when the question of staff bike sheds come up they get very involved.  As so few people understand reactors the main focus of the meeting is on bike sheds. Hence the term “bike shedding”.

My experience of working in education around the world indicates that bike shedding is prevalent in the sector.  The Gazelle report cites “A shortage of planning, business engagement and change management skills within leaders and financial and risk management skills among senior and finance teams”, which indicates I might not be alone in thinking this.  You see when people have no experience of complex and (perhaps) expensive things like commerce, they tend to either not put them on the agenda or they bike shed the agenda items they understand.

This is, I believe, why so many are focusing on the 16-18 curriculum, resits and mergers.  They understand them.  But they don’t understand commerce and being commercial.

I recall many years ago, when working as a consultant, being called into a SMT meeting to help a group of highly paid managers decide how much coffee should cost in the college refectory. This was one item of many on the agenda that day but took over 30 minutes of a two-hour agenda. The more important budget deficit agenda item was dealt with in under 10 minutes!

Bike Shedding rules. The Law of Triviality is alive and well in FE colleges.

 

Which colleges will become extinct?

The same type of college that has already gone extinct. If you’ve been in FE for any length of time you’ll recall there used to be far more colleges than exist today. Of the three I worked in when I entered the sector two no longer exist; they’ve been merged out of existence.  If I look at the colleges that are no longer with us, from those I knew well, it is clear that those that practiced bike shedding have disappeared.

If your agenda focuses on bike sheds and not essentials then, whatever size you are, whatever reputation you have, however good you are, you are likely to be about to become extinct.

 

Who is to blame?

Reading the above you might think I find FE College managers inadequate.  You might think I blame them for the malaise we find in FE.

Not true.

We have had good leadership in many colleges for many years. They have done a great job, against a background of constant political change, in a world they understood.  But the world is changing.

Now we need leaders that are commercial.

That is not to say the old curriculum skills are no longer needed. They will be. But in a world where they blend with a commercial aptitude and outlook.

Sadly, the existing skills aren’t enough.  Like London taxi drivers facing Uber the need for change is obvious as no amount of protesting will change the fact that the new world is upon us.

 

Who can help us become commercial?

There are a few people already in FE that can help.  Look for staff that have a recent commercial background outside of FE.  In many cases they may well be recent recruits to teaching vocational skills.

Listen to them.

The problem with these people in many case sis that they have only run SMEs and haven’t had to think big.  But it is a starting point.

Then there are the senior team members that have a commercial background.  Some of the land based college staff are very commercial.  In some cases they have run farms and estates outside of education.  In many cases they are running commercial farms and horticultural units within their colleges.  Accepted that in GFE there are also commercial units; restaurants and salons, but these are usually smaller scale than the very large farms some land based colleges run.

The shortcoming of the college farm route is that even here the level of commercialisation has been muted by education considerations.  But in the main these people are far ahead of the rest of FE when it comes to being commercial.

Finally there are consultants that have both recent experience of running large businesses that also understand FE.  Although as rare as hens’ teeth those consultants that are fluent in the need for change, and understand how it must be implemented, are worth their weight in gold.

 

But we’ve started to merge …. Or are undergoing Area Reviews

Merger or Area Review will not change the need to become commercial.  It is not enough to undertake the merger first and then think about becoming commercial.

It is not enough to go through Area Review and then think about being commercial.  Being commercial must become an implicit part of your Area Review Strategy.

In most cases that means you will need to undertake two major pieces of work at once.  Doing this sequentially is not an option.  They need undertaking in tandem.  As commercially focused managers this is your future world and one you must learn to live in.

Organisations that leave everything to the last moment always do things in a rush and have no wriggle room.

Don’t be the organisation that always waits until something is a screaming emergency, because it doesn't think it has a moment to spare to do it now.

Today is the day you need to become commercial.

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