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Lessons from Coca-Cola for independent school boards

What can independent schools in Australia learn from Coca-Cola? Well, maybe more than we think!

Alison Watkins, the chief executive of Coca-Cola Amatil, was recently interviewed for an article in the online edition of Business Spectator.

She outlined the company’s turnaround strategy, to rebuild after last year’s failed price hikes. As it had done for many years on the basis of brand loyalty, Coca-Cola Amatil pushed up its retail prices to cover its 2013 cost rises. But this time it was different, and Coke was hit by a big drop in demand and a consumer switch to its perennial bridesmaid, Pepsi.

Her message was that strong brand product companies cannot just keep passing on price rises, as they did in the good years, in the current environment of lower discretionary spending and ongoing demands for high wages for staff. Companies must be more creative in both their marketing and their internal management, if they want to survive.

These issues sound very close to the challenges I see confronting the boards and principals of our leading independent schools in Australia – industrial pressures on wages, higher costs, weakening enrolment demand and an inability to keep putting up school fees by 7% every year. And customers (parents) still expect the same high standards of performance.

So what are the solutions she is putting into place at Coca-Cola Amatil? And can independent school boards learn from them? Well, I took these ideas away from this article:

  • First, have quality modern production plants.

Okay, that is true for a production line business, but is perhaps less important for a school. Most forward thinking school boards have spent the last few years improving school infrastructure, thanks to solid enrolment growth, to low interest rates, and to the “school halls” funding grants from the Rudd-Gillard Building the Education Revolution scheme. So schools are generally well placed in this area.

  • The second point was most striking – focus less on the demands and tactics of your enterprise agreement negotiations, and build a direct relationship with your staff – leading them on this journey to organisational success. This is a dramatic shift for a firm that was heavily a committee to the industrial system. Coca-Cola Amatil owns SPC Ardmona, which achieved some recent notoriety for its generous industrial agreements.

The test of top managers will be whether they can take their executives and workforce with them on this new journey.

Schools still have quite heavily unionised workforces. Engaging staff in creating a great school culture and moving them away from a standardised and hierarchical industrial culture is a challenge, which requires inspiring and imaginative leadership.

It also requires good school systems, that go far beyond the ‘one-size-fits-all’ model of the Australian Institute of Teaching and School Leadership standards. Having developed one, I know how challenging the task of designing a benchmarking system for quality teaching in schools can be. But to achieve school success, it is essential. Structures enable you to embed the right culture in your school.

  • Thirdly, rethink your marketing strategies. Alison Watkins suggests that we need to look beyond our own backyards to see how this can be done, In Coke’s case, they are looking to their US parent.

Independent schools have to think laterally too. There are many other service industries that have designed innovative marketing strategies, so don’t just look at other schools.

I once ran a residential aged care business, where we introduced initiatives that we gleaned from the FMCG (fast moving consumer goods) and hotel/hospitality sectors – these improved our service offering, our customer satisfaction and our profitability.

So why shouldn’t schools look more widely for innovative ideas on marketing and building the student and family experience? Other service industries are using far more effective marketing techniques, and schools can learn from them.

I recently saw how two schools have used direct selling techniques, plucked straight from the playbook of retail salesmen, to grow their enrolments and exceed their targets.

  • The journalist’s final observation was that Alison Watkins was fundamentally changing Coca Cola Amatil’s management culture. This advice is so applicable to schools, that it is worth quoting in full…

Sideline command and control managers and those who manage via unions, and instead hire people who can motivate the workforce to work flexibly. They are hard to find because such skills were not always required in the old world when you could just put up prices. Reward them well when you find them.

So, the lessons are: changing the culture of your staff, maybe having to change your management to achieve this; and rethinking your marketing to survive in an era of lower discretionary spending. It sounds like working even harder and smarter to just survive, but it is far better than the alternative!

An excellent research paper was written by demographer John Black in late 2013 for Independent Schools Queensland, outlining the headwinds into which Australian independent schools are now sailing – underemployment, especially among women, with a resulting reduction in discretionary spending among middle-income families; and continued large increases in school fees. The emerging consequence is a downturn in the market share of independent schools, especially those with higher fee levels.

The lessons from Coca-Cola Amatil’s turnaround strategy sound very applicable to the issues that school councils and boards are facing. They offer some guidance on how to break free from the wage leapfrogging and resulting fee hikes of the boom years, and to strengthen a successful school brand and culture to market for survival in a tougher competitive climate.

How to achieve that outcome is the task of the strategic planning sessions of school councils. Has your school council or board thought strategically about your marketing, and your organisational culture?