John Fahey on “brand controls” & the Cengage deal

From the in-house blog of John Fahey, CEO & Chairman of the National Geographic Society:

NG School Publishing

By John Fahey
Published: July 5, 2011

This blog entry is a little longer than usual. I hope you have the patience to give it a read and feel free to ask me any questions.

Two weeks ago we celebrated exploration and introduced a new class of Emerging Explorers. It was quite an exciting week at the Geographic. I plan to talk more about how we can build on the inspiration we felt during the Explorers Symposium in my next blog post.

That week was also important for NGS in another way. Many of you have read about our agreement to partner the National Geographic School Publishing business with a company called Cengage Learning. I want to provide a bit more context as to why we entered this arrangement.

National Geographic has been providing teachers with classroom materials for quite some time. About a decade ago we decided to consolidate our “education sales” and create a unit whose sole purpose was to help teachers accomplish what they need to do in the classroom. Beyond bringing together all of our disparate education activities, this was the first time we created classroom materials that were not derivative of our consumer media content.  

We immediately had great success in the content literacy category (providing reading skills using science, social studies and geography as the content.) Several years later, we decided to expand our presence in the classroom through the acquisition of Hampton Brown, the leading publisher in the “English as a Second Language” category. We thought it was important that all children have the best possible learning opportunity regardless of one’s primary language at home. We also wanted a larger school publishing base so NGS could have a bigger impact.

Subsequent to our acquisition of Hampton Brown we developed new products imbued with a National Geographic approach to school textbooks. As an example, we recently launched an elementary level Science program highlighting the work of field scientists (many of our own) to convey the required science curriculum. We were taking on the big textbook publishers – and more often than not we were winning!

Recently we decided that we didn’t have all we would need to succeed over the long run – most notably a worldwide sales capability, the efficiencies that come with scale and the deep pockets required to invest in new programs and to manage the transition as classroom education moves from print to digital approaches.

Using our channel joint venture as an example, we set out to partner NGS’s school activities to build strength through scale. Thus we entered a new partnership with a company we’re already very familiar with – Cengage Learning. Cengage has been an excellent partner of ours in the English Language Teaching program we’ve developed together over the last few years. 

Although we are the minority owner of the new school venture, we have a series of strong brand controls built into our agreement and Cengage intends to continue the successful approach we’ve been employing to develop new product.  {emphasis added}

I think you’ll be seeing a much larger and more impactful NGS presence in classrooms for many years to come.

I wish to thank our NGSP colleagues and remind all of you that although the ownership structure has changed, they will continue to work closely with us and will need our support just as in the past.

I’m open now for any questions!

_____

Dear John,

Thanks for this background on the Cengage deal. We confess we’re puzzled every time you sell off part of our Society, but your blog post does illuminate how you think — and where you’re taking NGS.

Before we ask our question, we respectfully offer a correction. You write that “about a decade ago” was “the first time we created classroom materials that were not derivative of our consumer media content.” Actually, that’s not true. National Geographic’s former Educational Media Division — which was directed by the late, great George Peterson — produced all sorts of original, award-winning curriculum materials for grades K-12 long before you arrived at NGS from Time/Life in the mid-1990s.

Educational Media’s product line included filmstrips (remember those?) …  interactive video (i.e., GTV, a co-production with Apple & Lucasfilm Ltd.) … CD-ROMs … and innovative online science units (NG’s Kids Network) — long before anyone had heard of the internet. A separate NG Educational Films division also produced a library of films that were keyed to school curricula. And the National Geographic School Bulletin was published from 1919 until 1975, long before anyone used terms like “consumer media content.”

In other words: Our Society has a long, uninterrupted history of producing original, quality educational materials for K-12 students. Or we did until you brokered this deal with Cengage Learning, one small part of Apax Partners (a private equity fund).

Re: Cengage — here’s our question:

Why do you believe “strong brand controls
that are “built into our [Cengage] agreement
will protect our Society?

And why use “our channel joint venture as an example”? News Corp’s ownership of the National Geographic Channel is a case study in how we’ve lost control of our brand, despite whatever controls you included in the original contract. It also conjures up some embarrassing images. For example, why didn’t “brand controls” kick into action on this show?   

In which a man gets intimate with a sex doll.

Or what “brand controls” regulate our NG Channel “partners” in India? They’re using our good name to recruit soldiers for India’s army & navy:

If you don’t have the authority to stop this from happening in India, then how will you stop the NG Channel in, say, Russia — or perhaps one day in China — when Channel executives there want to produce similar recruiting shows? When did the militarization of other countries become part of the mission of the National Geographic Society?

Or how about this show? It’s an hour-long advertisement for beer. We’re tempted to say: You can’t buy publicity like this. But evidently you can.

 (This is just one of many installments in NG’s Ultimate Factories TV series.)

So, the question again is:

Why do you believe “strong brand controls
that are “built into our [Cengage] agreement
will protect our Society?

Looking forward to hearing from you.

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  • anon

    Back in early 2006, NGS acquired a textbook company in order to expand its school publishing division. The thought was that this would expose the brand to younger readers who would then grow up to support the Society as magazine subscribers and replace the currently aging demographic. There was also the thought that this for-profit school publishing division would generate money for the Society.Regarding the first thought, I never saw a reason to think that students bond in a positive way with the publisher of their mandadory school reading material enough to want to support that brand voluntarily in adulthood. In fact, I’m inclined to think that it’s just as likely that the use of this captive classroom audience strategy will result in negative brand association. The results of this strategy remains to be seen.What doesn’t remain to be seen is that it was not particularly visionary for NGS to have doubled down on old media by making its largest historical acquisition a textbook company at the dawn of the digital publishing revolution. Even after the initial price tag, the textbook company required from NGS the heavy up-front investment that textbook programs typically require and never generated enough money in return. In addition, this newly acquired company, like the Society, is run by print publishers who don’t appear to like new technology and consequently do it grudgingly and poorly. The NGM ipad app is one of the most negatively reviewed, and their use of Web 2.0 is decidedly 1.0 with its one-way broadcasting through facebook and twitter. It shouldn’t be surprising that NGS had to unload its largest acquisition (apparently along with components of the original school publishing division) a mere five years later to an educational technology company. If NGS continues to show no interest in the future, it will have to continue to sell itself off to organizations that do. I guess selling is easier than changing they way we do things.My general impression is that senior management is a little too self-satisfied and comfortable in their positions, as though NGS were their own personal retirement community. I remember a staff meeting a few years back when someone asked Fahey if there would be additional layoffs to the then most recent round. To the entire organization, Fahey jokingly replied that he only knew his own job was secure. I guess such a visionary CEO can be that confident.

    • Thanks for that backstory, much of which I didn’t know. In fact, I wss under the impression that Hampton-Brown was a big money maker for NGS for many years. 

      You write: “If NGS continues to show no interest in the future, it will have to continue to sell itself off to organizations that do.” I think John Fahey does care about the future, but he’s looking for ways to maximize brand exposure while minimizing his costs & risks. So he asks: Why build up internal capacity to run a school publishing division when world-class school publishing companies already exist? And since, in John’s estimation, what Cengage will produce is no worse than what NGS might produce, why bother doing it in-house? 

      Although we have no clear idea of how John envisions NGS in 10 years (since he doesn’t talk to us or anyone else), here’s my guess: A much smaller staff but a much bigger brand footprint. The Yellow Rectangle will be everywhere, but the Society itself will be much, much smaller. 

      It’s not a bad idea in the short term. But long term? I think it’s a disaster. It’s a strategy that’s built largely on the legacy John inherited, rather than a foundation which he could potentially be building. 

      Imagine a company like Apple pursuing a similar expansion strategy. Apple-brand air fresheners… Apple bedroom furniture… Apple coffee beans. Or a strategy where Apple licenses its good name to other companies to develop new consumer electronics products. It would work for about a year, until everyone figured out they were just buying a logo instead of buying beautifully designed digital products that just work. Then again, Steve Jobs gets up on stage regularly, and shares his big vision for his company. Meanwhile, John Fahey says virtually nothing. His silence is deafening. 

      As for that line from John that “only his job was secure” — did he really say that? 

      • anon

        While neither of us would expect another Jobs in Fahey, your apple comparison is thought provoking. Apple values its legacy but continuously innovates. NGS’s love of its own legacy, its “why mess with perfection” attitude, stifles innovation and keeps it constantly behind the curve and in the past. Apple works to strengthen its brand; NGS, believe its work is done, thinks all that’s left to do is to milk it by putting the yellow rectangle on other companies’ products. John Fahey is a nice guy and no doubt cares and the Society, but I never detected any real depth of caring any time I’ve spoken with him or heard him speak publicly. He seems like a fairly superficial guy who cares about himself and his self-image a lot. His words sound more like positive spin PR to me than an honest voice of the Society able to take stock of itself. According to him, everything NGS does is a great success; it’s always winning! It’s ironic that the last speech I heard at NGS that had some vision to it was years ago when the old CEO of Hampton-Brown spoke about why she sold to NGS rather than one of the big textbook companies. I think her kind of mission-driven depth is what you’re looking for in Fahey and not finding. I wonder what she thought of the Cengage sale. Good luck with your blog.

        • Good points, esp “NGS believes its [brand] work is done.” 

          Are you familiar with “red ocean” and “blue ocean” companies?  “Red ocean” companies do battle to grab a share of existing markets, turning the water bloody red in the fight. Whereas “blue ocean” companies create entirely new markets, new niches; they swim in waters where there is no competition, and build something new there. 

          Apple is a blue ocean company. The Mac… the iPhone… the iPad … the App Store — all category changers, or category creators. 

          Whereas National Geographic has become a red ocean company, going after TV audiences, magazine readers, iPad owners, bedroom furniture purchasers, etc. Which is why the water at NGS will become a deeper shade of red. 

          This blog, this project is really about the blue ocean. That is, building a Society that’s member focused, including (but not limited to) the ability for 4 million members to buy digital gear in Groupon-like style. http://societymatters.org/2010/12/02/opportunity-awaits/

          This category, this business model, the publishing relationship doesn’t yet exist.

          But it could.

          • anon

            The Groupon-like community idea’s actually a pretty brilliant one. I bet Discovery could pull something like that off; they’re pretty savvy when it comes to building online communities with Web 2.0. Just look at DEN. Discovery also had the foresight to develop digital learning content and techbooks rather than buying a textbook publisher. It’s hard for me to imagine NGS getting it.

            I admire they way you haven’t given up on the Society. For me, they don’t seem to be able to cut it in the for-profit world, and their nonprofit side isn’t as focused and meaningful as many organizations out there I can get behind.

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