By Nona Phinn
Perhaps you remember the good ole days of college? That feeling that anything was possible.
That everything you set out to do you could do it. Opportunities felt limitless; dreams appeared endless.
We navigated the tricky admissions process, with SATs, applications, essays, acceptance letters, and that first big, scary tuition bill. We marched relentlessly, persistently forward toward the brightest of futures.
With class schedule and required course materials in hand, we took our first trip to the campus bookstore — only to pull up short. All that optimism vanished. Right when we knew we were nothing but unstoppable, the cost of textbooks paralyzed us.
Purchasing a cartload of heavy textbooks presents a sometimes insurmountable hurdle. How can the average student afford to pay for books and materials? Unfortunately, not much has changed — until now.
Cengage, the largest U.S.-based provider of college learning materials, has introduced an entirely new method for students to obtain the classroom resources they need: Cengage Unlimited. Imagine, Netflix for textbooks. Launched fall of 2018, this online subscription service offers a library of more than 22,000 college textbooks and classroom materials. Students pay a flat subscription fee to access the resources they need to support their studies — for a fraction of the cost of buying books.
“You can download them, look at them, and browse them,” Cengage CEO Michael Hansen shares. “Also, if you desire, only for the cost of shipping, we even ship you the textbook as a rental for the period of the semester.”
Hansen joined Cengage in 2012 to take on the laborious task of turning around a ship that had been cruising for years into increasingly murky waters. Cengage, formerly Thomson Learning had been losing market share for years, with fewer and fewer students purchasing the company’s products. Traditionally, it made up for those lost shares by increasing the prices of its textbooks, but of late it found that even more students then opted not to buy its products.
Hansen’s first task as CEO was to zero in on the company’s balance sheet. He guided the company through Chapter 11 bankruptcy to end the downward slide and prepare for reorganization. Cengage emerged nine months later financially stronger but still confronted with the prospect that students weren’t purchasing its textbooks, its main source of revenue.
Cengage then took a brave and bold step: it faced its optimum customer to learn directly what they needed. “Traditionally, the textbook industry had for decades completely lost sight of who their ultimate customer was,” Hansen says. “The ultimate customer, in our definition, is the student.”
Cengage spent time talking to students in focus groups and following them through their educational career to garner insights. The textbook giant took every word it heard seriously, not just listening to what was said but actively listening to student voices.
Students became the teachers.
“The industry has focused for decades on the faculty,” Hansen says. “Yes, faculty has a big decision to make, because in the United States and, frankly, around the world, they decide which materials they use to teach. However, if the student does not think that they’re getting value for their money, in my definition, the industry is not doing its job.”
The student perspective undeniably informed and directed the company’s new direction. Students felt the value of textbooks did not live up to the cost they had to pay for them. Students needed their books only for a short period, yet they were forced into a long-term commitment with their books by purchasing them. The prices they were asked to pay for materials they used for only one semester outweighed the benefit.
Cengage learned that price tipped the scale so much that many students were put between the proverbial rock and a hard place. For years, students had to choose between eating and purchasing their class materials. Or they had to skip going home for holidays because textbook purchases left no money for travel.
Which I think is just simply not tolerable,” Hansen says.
Consider that today’s college students don’t all fit the traditional image. The student pool at universities has diversified greatly. “When we think about college students, we typically think about your 18- to 22-year-old student who sits in a four-year college,” Hansen shares. “Today that is not necessarily the average student. The average student, in many cases, is a single mom with two kids and a job on the side. She takes some college courses to get a better life and a better job — to get paid a little bit more. These people are hit disproportionately by these kinds of expenditures.” The cost of textbooks and class materials forces them to make sacrifices they weren’t prepared to make.
At the other end of the textbook conundrum are the students who decide not to invest in their class materials and instead try to succeed without them. They soon find themselves failing, which often leads to dropping out of school.
After much listening and hearing students talk about the compromises they were making, Cengage decided to fix the situation. It redirected its attention back to the students and meeting their needs.
The model that we think is the winning model is essentially like Netflix,” Hansen explains.
“You don’t want to own the DVD. What you want is the movie when you want it, at any time, and to choose from an entire library. We just applied this, essentially, to the textbook model.”
He believes that the industry had become complacent and too comfortable with an old model that no longer functioned. Cengage and other publishing organizations were stuck, and the industry cried out for change but had lost sight of who they needed to change for.
By rolling out an entirely new way to distribute textbooks, Hansen believes that Cengage has created the change the industry has been craving. This disruption removes a major barrier to success by making it easier for students to obtain the materials they need to get across the finish line. That’s just what Cengage desires “We hope that this will increase success rates for students,” Hansen shares.
In the meantime, Cengage continues to talk to students who use the Cengage Unlimited subscription service to learn how the service is working for them and what can be done to improve its impact. Hansen stands behind the work this organization has done in challenging the status quo.
“This is an example where an established company — a company with a great deal of history and, frankly, a lot of results and also baggage — was able to actually pull itself together and say, ‘What can we do to cannibalize our own business?’ If there’s one thing I am very proud of, it is that this organization and the employees have fully embraced that. We are well on our way to disrupting our own business.”