How Companies can Increase Competitiveness by Transforming Education

Historically, most companies have responded to education challenges with philanthropy. Though well intentioned, too little of this giving has sparked systemic change and less still has been tied to core company assets and strategy. Yet new trends in education are changing market incentives and inspiring a change among forward-thinking companies.

Updated: Mar 26, 2013 08:21:17 AM UTC

FSG is a nonprofit consulting firm specializing in strategy, evaluation, and research. The firm was founded in 2000 as Foundation Strategy Group by Harvard Business School Professor Michael E. Porter and Harvard Kennedy School Senior Fellow, Mark Kramer. Today, FSG works across sectors in every region of the world—partnering with corporations, foundations, nonprofits, and governments to develop more effective solutions to the world’s most challenging issues. FSG’s ideas are frequently published in journals such as Forbes, Harvard Business Review and Stanford Social Innovation Review.

This post originally appeared on FSG's creating shared value blog.

Ensuring that all children have access to and receive a quality education is a global challenge. 793 million adults worldwide do not have basic knowledge in reading, writing, and math. Around the world, more than 131 million children of primary or secondary school age are out of school, and those who do attend often leave without learning much at all. These education and career skills gaps threaten future economic and social welfare in developing and developed countries alike, and present a growing global crisis.

Historically, most companies have responded to these challenges with philanthropy. Though well intentioned, too little of this giving has sparked systemic change and less still has been tied to core company assets and strategy.

Yet new trends in education are changing market incentives and inspiring a change among forward-thinking companies. Innovations in technology have created opportunities for new products and services while disrupting traditional business models. School systems are shifting purchasing patterns and lines are blurring between education and consumer needs. These trends create openings for new market entrants. Around the world, a growing focus on quality and accountability means that companies that can deliver superior outcomes will improve their position in a global education market valued near $4.5 trillion.

The Shared Value Opportunity

Companies create shared value in education when they improve education and career outcomes while simultaneously enhancing competitiveness and increasing profitability. The private sector holds tremendous but unrealized potential to improve education quality. Companies can offer the scale and capital that few non-governmental entities possess. Compared to governments, companies can readily be flexible – they can drive R&D, pivot to customer needs, and respond with agility to the latest innovations.

The trends in today’s education market present tremendous opportunities to create shared value. Instead of engaging in education through outmoded business models or philanthropic investments, leading companies have recognized these trends and are moving to enhance their competitive position in developing and developed countries alike.

They are doing so in three distinct ways:

>By reconceiving products and markets: Pearson’s 1:1 Learning Framework helps school districts implement and scale mobile computing initiatives through a combination of instructional tools and content, technology infrastructure management, project planning, and professional services.

>By redefining productivity in the value chain: Coca-Cola improves its distribution capacity in rural Africa by investing in worker skills through its Micro Distribution Centers (MDC). These centers are run by local entrepreneurs in areas where regular distribution methods are not feasible due to the lack of infrastructure. Coca-Cola has set up business simulation trainings and other programs to enhance the skills of the MDC owners and employees. The new model has allowed Coca-Cola greater access to hard-to-reach areas while developing the local skill base.

>By building local clusters: Cisco has invested individually and coordinated the efforts of partners to stimulate the Information and Communications Technology (ICT) market in Palestine. Since 2008 Cisco has invested $15 million through venture funds and other channels. More importantly, Cisco has helped attract over $78 million from partners, and has worked with local leaders, development agencies, NGOs, and other private sector firms to create a strategic approach to the ICT sector’s development. The result has been a rapidly-growing ICT industry that creates quality jobs and companies in Palestine, and develops a high tech market for Cisco’s long term business.

These are but a few of a growing number of examples of how corporations are creating shared value in education. Many of these efforts cut across industries and are mutually reinforcing. For example, publishing companies can adapt existing curriculum to serve new markets and invest in R&D to increase the linkage to education outcomes while simultaneously reducing costs. Similarly, technology companies can develop new products to fill unmet education needs, such as mobile applications tailored for local conditions, and advocate for improved mobile and wireless access to enable education anywhere, anytime.

Shared value is not a magic bullet to solve all education challenges. Nor are all companies well-positioned to create shared value in education. Nevertheless, companies across industries have a real opportunity to move beyond traditional philanthropy to driving innovative solutions to the world’s educational challenges.

As companies like Pearson, Coca-Cola, and Cisco are discovering, creating shared value in education can increase market growth and revenue, enhance productivity, and improve workforce access by building lasting social change.

By Kate Tallant, FSG Senior Consultant (Kate has more than 10 years of experience working with corporations, foundations, nonprofit organizations, and school districts on strategy, program design, market analyses, and evaluation.)


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