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Bookshelf How to Fix Education Many people believe that America's institutions of higher learning are in trouble, and William F. Massy states the situation plainly in Honoring the Trust: "The public trust in colleges and universities has eroded significantly in recent years and will con- tinue to do so unless con- siderable reforms are taken....Improve ments in quality and cost containment are required not only for the well being of individual institutions, but more importantly, to honor the trust placed in academe by the broader society." You'd expect any book that opens so bluntly to be equally out- spoken about the problems and the potential solutions facing today's schools, and you'd be right. Massy goes on to explore the various crises facing colleges and universities: the broader student base that attends school today, though its needs aren't always being served; the ten- sion between research and teaching; the increasingly market-driven nature of education; the technologi- cal advances that have changed the way education is delivered and the way schools compete. Massy doesn't stop with pointing out the prob- lems. He also offers his thoughts about what "academic leaders and board members can do to rebuild their institution's core competency in education." In between, Massy takes a sharp, methods might be used for both. Meticu lously detailed and thought- fully presented, his book is an eye- opener for anyone wondering what might be wrong with education today. Anker Publishing Company, $39.95) excellence and market responsiveness; and delves into the contro- versial topic of cross- subsidies designed to keep less profitable programs afloat and pay for unfunded research. Through it all, he exam- ines how money is raised and how money is used—and what better only small purchases, or ties up the salesperson's time without buying anything, or pays off her credit card right away, or makes frequent returns. A profitable customer, on the other hand, spends a great deal, buys high-margin items, pays top commissions, and is loyal for a considerable length of time. Selden and Colvin quote the old Customer-Based Business "Customers are where the money comes from." Larry Selden and Geoffrey Colvin, authors of Angel Customers & Demon Customers, can't repeat that line too often. Executives who don't understand that basic axiom usually fail to understand their prof- it centers, their P/E ratios, and their market potential. Instead of organizing themselves around customers, they organize themselves around prod- ucts, without realizing that unprof- itable customers can sink a company. Selden and Colvin admit that focused look at how American schools operate today. He discusses the differences between schools that are prestige-based, prestige-seeking, and reputation-based; examines the conflicting imperatives of academic 58 BizEd JULY/AUGUST 2003 20-80 rule—20 percent of your cus- tomers account for 80 percent of your sales—but they've refined the concept. According to them, "150 percent of your economic profit comes from 20 percent of your cus- tomers. At the same time, the bot- tom 20 percent may actually lose money equal to 150 percent of prof- it, with the middle 60 percent of customers making up the difference, often yielding anemic levels of over- all economic profit." Selden and Colvin admit that managers find it hard to believe that any cus- tomers might be unprof- itable, but they provide sophisticated mathemati- cal examples that show how a paying customer can actually cost a company money —and ultimately, destroy it. managers find it hard to believe that any customers might be unprof- itable, but they provide sophisticated mathematical examples that show how a paying customer can actually cost a company money—and ulti- mately, destroy it. An unprofitable customer might be one who makes to figure out how to identify those profitable customers, and how to either cut themselves loose from the unprofitable ones or convert them. The authors start with the Customer Segment Value Creation Scorecard to help managers break their cus- The trick, then, is for managers