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Houghton Mifflin Harcourt Chief Discusses Plans, Market

The CEO of the nation's largest K-12 publisher, Houghton Mifflin Harcourt, stopped by our office last week to talk about his company's agenda, the evolving education marketplace, and shifts in the education policy landscape.

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The visit by Barry O'Callaghan (and Senior VP for Corporate Affairs Josef Blumenfeld) came at the end of a busy week for Houghton Mifflin Harcourt. The company announced a $100 million "innovation fund" intended to support ideas for new products to "promote and enhance student achievement, individualized learning, and effective technology integration in the classroom," according to a press release. (Check out my colleague Ian Quillen's blog post on it here.)

The company also announced an initiative, in collaboration with A&E Television Networks, focused on teaching social studies and history in schools. The effort will draw on content from HISTORY (formerly known as the History Channel), a division of A&E. The two companies will deliver both traditional and digital education materials and tools to "create dynamic learning environments for students that weave compelling historical stories with innovative, experience-based assets and content," the announcement said.

And the company announced that the Milwaukee public school system will institute a districtwide literacy initiative using Houghton Mifflin Harcourt's reading/language arts curriculum.

The company had the highest revenue of any K-12 publisher in 2009, according to Simba Information, the publisher of the newsletter Educational Marketer, estimated at $1.75 billion.

Here are some excerpts from what O'Callaghan had to say during his visit.

• On the 'branding issue':
"We, and we're not alone, I think the big publishers have a kind of a branding issue. People don't actually understand what we do. They assume that all we do is largely print very large books. ... But in conjunction with the books, we provide an awful lot of resources, an awful lot of ancillary materials, and most important of all, we provide professional development to make sure it's implemented properly."

• On online supplements to textbooks:
As part of recent textbook adoptions in Texas and Florida, he said, in addition to the textbook, "we separately gave them online portals that work in tandem with their textbook, so everything they're doing in their textbook they can do online, but then they get the benefits of certain online features that a physical book can't give you. And I mean, the proof of that is we have now got 12 million online users, sitting in school; we have 12 million, a mixture of teachers and students coming to our various online resources on a daily basis. ... The online resources are designed to be more prescriptive, so designed to be very much aligned to the individual learner."

... "So we've got an online portal, for example, called Learning Village, which is effectively a teacher portal where you can go and you can basically get the lesson plans you need, you can click into, if I'm teaching X, you know, here's five suggested lesson plans, and it's automated, and you look at an online tutorial to actually see a best-in-class teacher teaching this particular class."

• On customization of textbooks:
"It's a different publishing process today ... because everything is electronic. ... So all of your content is effectively in a repository or a massive jukebox, and then you basically serve that up aligned to ... the standard. ... And that's why, increasingly what's happening is we're talking to the customer, letting the customer tell us what they want, and then serving that up, as a customized edition for them."

• On the company's new Innovation Fund:
"You always want to be thinking about what's the next great idea, product, solution, etc. ... So we've allocated $100 million into a fund. ... If you're an aspiring entrepreneur, whether you're a ... parent, ... a teacher, an administrator, or a student. If you're anybody out there with a great education idea, come to us."

..."Obviously, the idea is it's something that needs to be scalable; it'll be put through the standard business-plan process: Is it viable? Is it scalable? Can it be profitable in terms of delivering the appropriate return on capital? Is it reputationally safe in the context of what we're about as a company? ... And so, the specifics of what those criteria look like we'll be answering over the next three or four weeks. ... But we don't expect it to be two ideas for $50 million each. We do expect it to be $2 [million] to $5 million investments in 20 to 50 ideas."

"We're willing to look at anything and everything, whether it's educational games for the consumer, whether it's whole-classroom instructional materials, whether it's platforms, hardware ideas where we could bundle our content, mobile and social networking."

• On the overall direction of Houghton Mifflin Harcourt:
"All of these [recent HMH initiatives] are basically variations on the same underlying theme, which is we're actually innovating around technology and around new business models and new products and kind of new thematic trends that are emerging in education, far more aggressively than people think."

• On the 'tipping point' for education reform:
He argued that education has reached a "tipping point" in the United States. "I think this is different. ... It is systemic. ... But I think it's the point of no return." (Among the reasons he cites are the financial crisis and its impact on education budgets, persistent low test scores and related political and public pressure for change, innovations in technology, and improved infrastructure.)

... "I think there is a genuine, not only political, commitment to actually modernize and transform the public education system. I also think, frankly, at an implementation level, I think it's no longer getting ... resisted at the school building level. So, put simply, in my personal opinion, I think administrators, teachers, principals, they know that ... on an outcome basis, it's not working. So the status quo doesn't work; the status quo keeps us where we are today. ... I think what you've got going on here is something that is systemic, and I think it's actionable, more importantly. I think it's real." (As an early example, he points to the widespread adoption by states of common-core standards in English/language arts and mathematics.)

• On the federal Race to the Top program:
"At a high level, the four pillars of Race to the Top, ... it really is kind of a transformation in telling the marketplace where things will be headed. ... The four pillars are data, student outcomes, teacher efficacy, and the services of turning around schools. Those are the businesses we all need to be in, whether you're a publishing company coming at it, an IT company coming at it. So I think the road map of what the marketplace will allocate its time and money to is becoming ever clearer."

Photo by Charles Borst/Education Week

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