Staff-Development Providers Eye New Opportunities

People on the lookout for business opportunities have not often seen the glint of gold in helping teachers improve their craft. But the glint is brightening.

A potent combination of new federal money, a consensus around the importance of teacher effectiveness, and digital innovations has supercharged professional-development providers. Veterans are being joined as never before by new or expanded businesses.

In the late 1990s, venture capitalists and fund managers examined the education industry, with some even glancing in the direction of teacher professional development. But enthusiasm among advance-guard investors waned as businesses that managed K-12 schools struggled and as computerized lessons failed to narrow achievement gaps. The disappointments underscored that most of precollegiate education remains labor-intensive and change-averse—conditions that don’t promise much growth potential.

Still, engineers and entrepreneurs continued to pull digital wonders from their hats, and to a degree, the school market responded with demand. Then came the No Child Left Behind Act, meting out consequences to schools and districts that failed to raise student achievement.

With some 5,000 schools identified as wanting, the Obama administration has allocated nearly $17 billion for fixes. The NCLB law also requires that districts in trouble with its accountability provisions use 10 percent of their federal anti-poverty Title I money for professional development. On top of that, two federal programs that spotlight teachers, the Teacher Incentive Fund and the Race to the Top program, raised the ante on teacher effectiveness by billions more.

Profits Possible?

As a result, the lure is there, but are the profits?

Responding to the recession, some school districts have been keeping more of their professional development in-house, an approach that helps save jobs by creating positions for coaches and professional developers. Plus, many districts are used to getting their professional development locally or regionally, often from former employees, universities, and smaller outfits whose people they know.

Rough estimates made three years ago by officials at the industry giant Pearson showed that about half of professional development then was provided internally or by regional education service agencies, a quarter by nonprofits such as universities, 15 percent by individuals from outside the district, and just 10 percent by for-profit organizations.

“So much of the PD market is local,” observed Stephanie Hirsh, the executive director of Learning Forward (formerly the National Staff Development Council), the membership organization for educators concerned with professional development. “It’s about hiring the [retired] principal or teacher who had expertise in the area.”

Jim McVety, a Bucks County, Pa.-based consultant to K-12 businesses, points out that state or district rules often make teachers put in “seat time” to get credits toward recertification or pay increases, and that such rules get in the way of online learning—one route to valuable economies of scale.

Multimedia: Teacher Voices

These mini-profiles—including video interviews—are meant to provide insight, but not to serve as representative examples of the districts in which they teach or programs in question. Their diverse experiences highlight the challenges districts face in providing high-quality training matched to each teacher’s needs.

View Teacher Profiles >>>

Schools are also leery about working with for-profit firms, several business executives said. “Unnecessarily phobic,” offered Scott C. Noon, the vice president for marketing of Teachscape, which focuses on high-tech professional development. That’s unfortunate, he continued, because nonprofits “typically don’t have the kinds of capitalization that for-profits do to invest in new technology.“

Whether the sector will offer significant new opportunity or just a tidy living for existing players is hard to say, according to Mr. McVety. At present, he concluded, “I’d retain a healthy degree of skepticism.”

Textbook Giants

Some education industry leaders are betting on opportunity. The big three of U.S. textbook publishing—Houghton Mifflin Harcourt, McGraw-Hill, and Pearson—have all “aggressively pursued” the professional-development market, according to a 2006 report from Simba Information, which tracks publishing and media businesses.

That pursuit has entailed both new partnerships and acquisitions. In a bold move this fall, for instance, Pearson bought the America’s Choice comprehensive-school-improvement program. It will operate alongside Pearson’s K12 Solutions business, the company’s existing effort to capture the market of schools that must make drastic changes under the NCLB law.

In 2005, Pearson bought the model the company now uses for its Learning Teams operation. Two of the three California researchers who developed the program, in which teachers are grouped for collaboration around meeting student learning needs, came to the company as well. The model is Pearson’s take on the wildly popular “professional learning community” approach to providing professional development and raising student achievement. Learning Teams aims itself at schools that are “in need of improvement” rather than those obligated under the federal law to make wholesale changes.

Beth Wray, the president of Pearson Learning Teams, said that programs for improving teaching and turning around schools were a “perfect complement to Pearson’s capacity in assessment and curriculum.”

Pearson trains district employees in the detailed model and gradually reduces its presence.

That flow can work as a business model, Ms. Wray explained, because currently “we’re only scratching the surface of schools failing to make AYP,” or adequate yearly progress, the bar states set for schools under the NCLB law.

Pearson’s global education sales in 2009 amounted to $8.8 billion, according to Susan Aspey, a company spokeswoman.

Like publishers that had years ago expanded into digital communications, companies that sell Web-based innovations for schools—online learning, for example, or software for staff management—can see a relatively short step into professional development. Truenorthlogic, a Sandy, Utah-based provider of digital systems for tracking teacher licensing and professional development, formed a partnership this year with New York City-based Knowledge Delivery Systems, which creates online training programs. As a result, Truenorthlogic now offers its clients “anytime, anywhere” video lectures from gurus like Charlotte Danielson, the creator of a nationally known framework for evaluating teaching.

Venture Capital

For entrepreneurs jazzed by new learning technologies, the NewSchools Venture Fund has been the place to go. Founded in 1998 by L. John Doerr, a leading Silicon Valley entrepreneur, and others, the nonprofit fund helps new education companies.

So far, most money has gone to charter school networks, but that is starting to change, said Julie Mikuta, the San Francisco-based fund’s partner for human capital. Still, in early rounds of investing, only one teacher-professional-development company—Teachscape—received substantial money from the philanthropy.

Teachscape, also based in San Francisco, is pioneering the use of “immersion” video from a panoramic camera to capture what’s going on in classrooms. It is also pairing the video with Web-based tools that “frame” the action for measurement of the quality of teachers’ practice. The paired product, which allows teacher assessment in addition to teacher coaching, is expected out in January. The work is to be underwritten by the Bill & Melinda Gates Foundation, which will use the new technology in a study of teacher effectiveness.

The company’s annual revenue is about $30 million, according to Mr. Noon of Teachscape. He said the company believes it will hit profitability this year.

Two-Day Workshops

Not every professional-development company has tried to power its success with technological innovation, although that remains the most-talked-about path to growing impact and profits.

Some businesses have specialized in the seminars and conferences where educators have traditionally heard about new ideas. Similar to their more technologically driven counterparts, those companies have branched out into school- or district-tailored programs, some of them abroad. They have had to adapt to other market conditions, too, such as the demand for “sustained” professional development. Sometimes, a twinge of conscience might be involved.

For example, Douglas B. Reeves, who founded the Leadership and Learning Center in Denver 15 years ago, no longer accepts offers to give one-shot “inspirational” speeches. “There’s no evidence,” the author of more than 20 books on teaching and school leadership observed dryly, “that inspiration improves student achievement.”

Mr. Reeves, whose company brings in $14 million annually, said he gives such speeches when they are part of the center’s ongoing work in a district.

Solution Tree, another “traditional” contender with a track record going back 25 years, started under another name with the goal of providing one-stop professional development: publishing, live events such as conferences, and workshops and institutes around the country. In the past 10 years, though, the Bloomington, Ind.-based company has revamped its business model to focus on its authors and experts.

The reasoning was that the right authors, both well known and emerging, would help thebusiness “have the best shot at helping schools and growing our business,” said Paul Kuhne, Solution Tree’s chief marketing officer.

The company’s stable of professional developers includes Robert J. Marzano and Richard DuFour. With that strategy in place, the company is now working to get more of its professional development online. Company officials declined to provide revenue figures.

In addition, like the Leadership and Learning Center and many other professional-development organizations, Solution Tree has dropped almost all its one-day seminars in favor of those that last two days. The NCLB law defines acceptable professional development as activities that are “not one-day or short-term workshops or conferences.”

Mr. Kuhne wouldn’t say that the near-demise of one-day workshops was related to the federal law, but in an e-mail, he acknowledged that Solution Tree pays attention to funding mandates. “We … work with schools and districts to identify funding streams as needed,” Mr. Kuhne wrote, “so that they can benefit from our products and services.”