McGraw-Hill CEO on the future of education

Simon Allen, McGraw-Hill CEO, joined The Final Round to discuss the impact COVID-19 has had on education and how the company is helping students adjust to virtual learning.

Video Transcript

SEANA SMITH: And so I want to bring in our next guest, Simon Allen, CEO of McGraw-Hill. And Simon, it's great to have you on the show today. There's lots to get into. But I first want to start with what we're seeing play out across the country. And that's the protests and the riots.

Many companies we're just talking about in the last block are taking a stand with the executives calling for changes. I'm just curious about what your thoughts are on this, and what's unfolded over the past week. And what is your role in all this as CEO of McGraw-Hill.

SIMON ALLEN: Well, thank you for having me. And it's such a tragic scene-- scenario that we're looking at right now around the country. And for us, frankly, as an education company, it really touches us deeply, because we see as our core mission to make sure that we help educate society. And really, one of our great mantras, of course, is Nelson Mandela who once said that education is the most powerful weapon with which to change the world.

And, frankly, at days like today, that couldn't be better said because we really have an obligation. And we take it very seriously at McGraw-Hill to help educate all of our students at any age, be they in the K12 sector in grade school right the way through university and into graduate school just about how society behaves and how we can all live in a far more robust, collective, consensual society never has that been more important I think than now.

SEANA SMITH: Yeah, and going off of that, you saying that it's your core mission to help educate society. Have you heard from your employees just in terms of concrete actions that McGraw-Hill can take just in order to address some of the unrest and some of the anger and angst that's being felt across the country-- and a lot of that being younger students-- students between the ages of K through 12 that are faced with this on a daily basis?

SIMON ALLEN: Yeah, and, of course, this is happened to be centered exactly the same time as the lockdown. There's lots of issues going on with individuals around how they protect themselves with the virus. So there is so much to think through with this. And I think for us as a company, we've been reaching out to schools-- to school districts.

We've been offering help in any way we can to shift a lot of their courses online so they can engage the students back into what would be helpful more positive elements. And that, of course, is their own education and their own learning. So a lot of our-- we have 4,000 staff around the world-- over 3,000 in the US.

Many of them right now are literally reaching out to teachers, to instructors, to schools, and saying, what can we do to help bring those students back to where they can concentrate and focus on something that's just more positive?

MYLES UDLAND: And Simon, as you mentioned, of course, the current unrest coming on the backdrop of a pandemic which upended your industry significantly. Can you just kind of walk us through what the last three months have been like for you guys trying to-- I would assume-- broaden your offerings, get it into the hands of new clients you've never worked with before and the school systems. What has that process been like?

SIMON ALLEN: Well, that's a great question, Myles. We've actually had a fascinating three months. For us, the first lesson was how well we transformed to working remotely. All of our stuff operating seamlessly. And therefore, we've helped a lot of teachers and instructors across the country shift their courses online.

We literally shifted from being a-- if you like-- a group where our reps and our sales staff and our managers would go out to schools to where we would be in contact directly with them, helping them online, working through our McGraw-Hill Connect platform or out ConnectEd platform for K-12 so they could understand how to shift their course. I'm glad to say that we have, as you suggest, picked up a lot of new customers to McGraw-Hill.

But also, we had a very large number that were with us as traditional textbook buyers that we've shifted so they can now utilize our platforms as well as our core content. Therefore, the combination of really great content plus platform ability to deliver courseware and assess correctly through it has been a great combination for us. So I think we're helping, and I certainly hope we continue to do that.

MYLES UDLAND: And along those lines, I mean, you mentioned that hybrid approach that some school systems are taking. Do you guys have a sense of what it seems like the average school system will do when the fall comes around? You know, my mother works in the school system. And they don't really have any idea, honestly, on what they're going to do come August or September. What's your sense of where education stands in America, let's say, three months from now?

SIMON ALLEN: That's the big question, Myles. And I think the answer is going to be very mixed. I think some parts of the country where the virus-- the incidences of the virus and the pandemic may be slightly less intense-- I think you'll find some of those schools go back sooner. And I think that includes certainly the university and the community college system as well.

I think you'll find very quickly that the hybrid way of educating will continue and actually enhance even more where the seamless transition from providing material face to face in the classroom will shift online, as students probably go home at certain stages. As the virus picks up, possibly when we get a second wave towards the middle of the fall semester, that's when we need to respond and make sure that we're giving all of the teaching community and instructors the ability to continue their process of teaching as simply as they possibly can.

BRIAN CHEUNG: Simon, it's Brian Cheung here. I wanted to draw a little bit deeper into Myles's first question from an operational standpoint. You're still running a company, right? And a lot of companies-- large ones, like yourself, are facing, you know, hits to the top-line revenue. And I'm wondering, though, at this time, you also want to probably make investments into accelerating that technology so that teachers, as you mentioned, can get access to these types of materials from home.

So how do you balance those two things when you have a crunch on the revenue side? But also, needing to make these expenses, how do you weigh what's worth investing in right now and maybe what's worth keeping your powder dry maybe for the future?

SIMON ALLEN: That's a great question, Brian. We actually haven't had too much a problem on the top line. Thankfully, we had a very strong quarter ending March, particularly with an 18% growth in our digital revenue. So that part of the business is going well. But the key part of your question, I think, is what are we doing from an investment perspective, particularly without digital material?

We have a couple of very, very successful platforms with McGraw-Hill Connect for the higher education sector and ConnectEd for K-12. And McGraw-Hill ALEKS works for maths and chemistry students across both sectors. And we continually invest well over $200 million a year on maintaining and improving these platforms with aspects like additional proctering information to make sure that when you are taking an exam and a test online, you are indeed who you say you are so we can give assurances to faculty that the students are the correct students taking the exam.

We've created a product virtual labs, which are wonderful for our biology and science microbiology students that allow them to do lab work as if they were in the lab itself. We're creating a lot more writing style material and grading material. All of that is done online to help students work through even engineering material, which is traditionally quite difficult to evolve online.

We're shifting all of those materials. So we really are opening up the education process for the K-12 sector and higher education to enhance the possibility to get completely used to operating either face to face or online with a seamless approach to both.

SEANA SMITH: And, Simon, going off that, you mentioned 18% growth in digital revenue and your future investments into the digital platform that you've already invested over the last couple of years. But from McGraw-Hill's standpoint-- from your company's standpoint-- you have so many of your employees have been working from home.

It seems like it's been pretty seamless over the last several weeks and couple of months. So do you envision a future for your company that you will have more of your full-time employees working from home? Is that something that will be a reality?

SIMON ALLEN: That's a very topical question. And yes, I think it will be. We've got properties all over the world that we've probably in a traditional way. We've got these lovely open plan offices, brilliant open space with collaborative areas around the kitchens-- very elegant and just great places to work.

But quite honestly, we found the transition for remote working so straightforward. And we're very careful to look up ways to give them extra days, make sure that they're able to work whichever hours they can because there's so much issues-- so many issues with child care, looking after sometimes elderly relatives. So we have to be flexible as a company with our staff.

They respond in kind by working tremendously hard. We've had the highest level of our NPS scores as we measure how we're serving our customers. We've had the best performances we've ever seen. And it's because I think we're giving our staff the opportunity to work in the way that they're comfortable. Many of them will not be comfortable going back to an office for many months, possibly forever.

So we need to respond to that. We're looking at our real estate footprint now. And I would say it's absolutely for sure that as we look at our different offices around the world, we will be changing our view on how we occupy those spaces, where our employees are best positioned, and how we can get together as teams when we need to. But how efficient we can be when we're working remotely, as we've seen right now.

SEANA SMITH: All right, Simon Allen, CEO of McGraw-Hill. We really appreciate you taking the time to join the show today. Thanks so much.

SIMON ALLEN: Pleasure, thank you.