Robin Freestone is stepping down as CFO at Pearson after nine years in the role. During his time at the company, he has seen a lot of changes within the organisation and in the nature of the finance function. He shares some insights gleaned from the past decade with Jim Banks.
Education and publishing company Pearson has a long history of transformation. Founded in Yorkshire 1844 as S Pearson and Son, what began as a small building firm became one of the world's large building contractors within 40 years. Over the next century, it expanded into many industries and more recently has undergone another phase in its evolution to focus on the education sector.
Vision and willingness to change have been crucial to its success, and in its modern incarnation the finance function plays a vital part in making its bold strategy of change reality.
For nearly a decade, CFO Robin Freestone has been responsible for leading the finance team in delivering on its business strategy and, as he prepares to step down at the end of this year, he can look back on many successful contributions to the organisation's continuing transformation.
"I have been at Pearson for 11 years, and for nine of them I have been CFO," says Freestone. "Since I started, I have played a small part in an enormous amount of change. The scale of the company's portfolio has changed as it expanded in the education sector.
"For example, Pearson now has 13 university campuses in South Africa and Wall Street English-language learning centres in 24 countries. The focus on education assets has been a big change.
"Pearson also went from being a holding company to being a single operating firm and has expanded its emerging market presence from 5 to 16% of the business, with developments in Brazil, India, China, Saudi Arabia and many others. The move into the digital world has been another big change. When I joined, books accounted for 70% of the education business, but now that figure is only 38%."
Freestone, who also chaired the influential Hundred Group of Finance Directors until December of last year and sits on the CBI's economic growth board, has held many prominent management and accounting roles including stints as group financial controller of Amersham and senior financial positions with ICI, Zeneca and Henkel UK. In 2004, he joined Pearson as deputy CFO, stepping up into the top job in 2006.
"Finance directors are an integral part of the strategic agenda, so implementing strategy has been a key part of my job as CFO. It is my responsibility to allocate capital to achieve our strategic goals, such as our investments in emerging markets.
"Since I joined the company, our share price has risen from £5 to £15, so strategy implementation is supporting greater shareholder returns," Freestone notes.
A digital evolution
The development of Pearson's finance function has mirrored the company's dramatic shift in strategy as well as in organisational structure. Freestone has not only helped facilitate the evolution of the broader business, but has also brought a new structure to the finance team.
"The finance department has changed from a very decentralised structure with individual islands, to become a single finance function across the organisation with everyone in finance now reporting to me," he explains "That has come as part of a shift to becoming one operating company, which involved significant organisational change. It has happened in tandem with the company maturing and undergoing restructuring."
The company's programme of change has in no small part been driven by its focus on investing in a digital future, so Freestone has embodied the digital CFO, who facilitates technological transformation in line with the company's forward-looking strategy.
"The idea of the digital CFO is very important here, though its relevance depends a great deal on what type of company you are running," Freestone remarks. "Some businesses are not affected by the digital age beyond the implementation of e-commerce, although big data is certainly becoming a feature of most companies' operations, as they come to rely on analytics to understand customer behaviour. In our industry, the erosion of the textbook is a fundamental change as it is replaced by content delivered through tablets, or other mobile devices.
"Everyone must be part of the move to digital. Finance helps define the need and technological advances help us to facilitate and achieve change. Digital is not just another channel for us, as it is redefining how interactions with our learners happens. One day, textbooks may not exist at all, although we are still a long way from that. If you take the Financial Times as an example, it has fewer physical readers, but there are many more subscribers to FT.com."
Mobile technology is key to the future of Pearson, and Freestone sees one of the big changes in the last few years as the passing of the fixed-screen environment, as people increasingly access content on tablets, or smartphones. Another key change is the rapid rise of data analytics as companies look closely at who is accessing their data in order to build customer relationships and increase revenue.
A revolution in the classroom
Analytics will play a major role in the evolution of the digital classroom - a concept in which Pearson is at the leading edge. Not only will an increasingly digital learning environment open up new ways of delivering information, but it will also provide teachers with instant feedback to enable them to quickly gauge how well knowledge and understanding are conveyed. The digital classroom enables teachers to tailor learning to suit the needs of their students.
"It is possible to augment the student experience to test if content has been understood," stresses Freestone. "Students will increasingly take exams on tablets, rather than on paper. Technology can transform the teaching and learning experience by enabling the teacher to focus precisely on what a student is struggling with."
He gives an example from Pearson's MasteringPhysics, in which there is a chapter on Boyle's Law, which defines the relationship between pressure, volume and temperature in gases. When reading and responding to questions in digital homework tool,the software quickly determines whether the student's error is one of mathematics, or comprehension of the law's fundamental principles.
"Pearson is not simply replacing a book with a digital programme," says Freestone. "It is changing the way students are assessed, using online, real-time responses, rather than waiting for tests to be marked."
The digital classroom augments instruction with enhanced e-learning. It aims to bring a range of technology into the classroom, including interactive texts, as well as the devices required to access them. In promoting an interactive and customisable learning experience, Freestone observes that the company is trying to avoid Mark Twain's contention that "College is a place where a professor's lecture notes go straight to the students' lecture notes, without passing through the brains of either". The challenge is to persuade an education community that is justifiably conservative.
"The digital classroom will need improved outcomes to convince teachers to adopt it," he says. "We are seeing schools in the US working with a blend of online, teacher-led and group learning. The online element helps to monitor who is engaged, traditional teaching can be augmented by new technology and in groups it is powerful if a child can explain something to a peer, as both gain something from that experience.
"Digital technology can help a lot. For instance, if a professor in a lecture hall asks a question it is easy to see digitally who got it right and those students can then be paired with students who did not.
"That creates a powerful learning experience and improves understanding when the question is asked again after the discussion: the percentage answering correctly increases.
"In a purely digital classroom the teacher becomes a coach, rather than a lecturer. There can be a more personalised approach that allows the teacher to help most the people who are struggling. In that environment every child can get the support he or she needs."
Step down, move forward
When Freestone talks about the digital classroom and the change in how learning is delivered, his passion for his subject is evident. He has helped to build Pearson into a world-leading digital learning company and, when he leaves, it will be in a strong position to continue its success well into the future. He is obviously proud of what has been achieved, though he is modest about the part he has played in the firm's success.
Despite the excitement in his voice when talks about education, the next phase of his career may take him into a completely new sphere of business. Even if he moves away from the education sector, he will never abandon his passion for learning.
"Nine years as CFO is long enough for anyone to play this type of role," he contends. "Now, I may take the non-executive route, which would be the logical next step, maybe in an industry about which I know absolutely nothing. I'm always very interested in learning new things."
There will be no shortage of opportunities for Freestone as he looks to write the next chapter of his career, as his wealth of experience will be in demand. Whether it is helping a company take the next step towards a digital future, building on his previous experience in the healthcare sector to help a business deal with the many challenges that sector faces, or taking a step into a completely new field it is certain that Freestone will embrace the next challenge with zeal.