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Pearson highlights digital strategy amid “transformation”

Chairman of Pearson, Sidney Taurel, said the education supplies and ELT testing firm is “in the midst of a transformation” in the company’s annual report. However, a growth in sales and operating profit appears on the horizon, he wrote. The key to this transformation will be the embracing of digital trends, the report adds.

The front cover of Pearson's yearly report shows the firm's direction for 2018. Photo: Pearson

The virtual schools program allows HEIs to place course material online

Taurel highlights the sales of Wall Street English and GEDU, as well as relinquishing shares in global publishing giant Penguin Random House, and growth in the digital offerings as the reasons for hope.

We are making a record level of investment in our business each year – over £700m annually”

These mean Taurel is confident enough to declare that “2018 is a pivotal year… when Pearson is expected to return to underlying profit growth”. The declaration comes a year after Pearson posted a huge loss of £2.6bn. As a result, the shareholder dividend was cut from 52p per share, to just 17p.

This was not a decision the Board took lightly and it reflects a continued focus on maintaining a strong balance sheet and investing in Pearson’s digital transformation whilst establishing a sustainable and progressive dividend,” said Tom Steiner, Pearson’s director of media. 

However, as chief financial officer Coram Williams writes, the firm’s sales dropped by £39m, and the operating profit dropped by £59m. Part of this at least can be put down to what Taurel describes as a “challenging” US courseware market. This market is 25% of Pearson’s total sales 2017.

“US higher education courseware continues to be our largest single business and it continues to face challenges to performance in the near term, particularly around print products, but we are excited about the future of the business as it moves beyond those challenges to a more digital, direct and subscription-based future,” Steiner told The PIE News

“We are broadly happy with our current portfolio and feel we have the right mix of businesses to create long term value for shareholders,” he continued.

But chief executive, John Fallon, made clear in his strategic overview that embracing the digitalisation of the market will be the key goal for Pearson moving forward. “Put simply,” he wrote, “we need to give flexibility to students, arming them with the opportunities to learn in modern, innovative ways.”

“We are building a Global Learning Platform, which… allows us to innovate faster”

The tenets of such an approach will be the focus on flexible, personalised learning, delivered through mobile devices at the time and place that the learner dictates, with access to “Real-time feedback” in both directions. Fallon explained that would mean that “teachers and faculty can see where they might need to adjust their lessons, and learners can focus where they need to”.

Asked to explain this innovation and investment further, director of media Tom Steiner explained the size of the drive each year, and how that was used to build products and tools in collaboration with other firms, such as IBM and Microsoft.

We are making a record level of investment in our business each year – over £700m annually… Some recent examples include… partnering with IBM Watson to embed tutoring dialogue into our courseware products to help students when they need it most; and partnering with Microsoft Research Asia to integrate AI capabilities into English language learning curriculum in China.”

“You can expect to see more on these in 2018,” he said.  

This focus on digital extends to Pearson’s internal investment plans, which Fallon explained meant the virtual schools program and the online program management, which allows HEIs to place course material online for distance learners.

“We are building a Global Learning Platform, which is a single, cloud-based platform that’s highly scalable and more reliable, and allows us to innovate faster and support a lifelong learning ecosystem for hundreds of millions of learners,” Steiner added.

The Platform is expected to launch in the next year.

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