Case Analysis KIPP Houston Public Schools

RUNNING HEAD: KIPP HOUSTON PUBLIC SCHOOLS

Case #1 Analysis: KIPP Houston Public Schools

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A. INTRODUCTION Knowledge is Power Program (KIPP) Houston Public Schools is a network of charter schools located in the Houston metro area. The taxpayer funded, public schools, operate independently of traditional school districts but they are open to all students. There are 125 schools nationally that use the KIPP name and 21 of the schools operate in the Houston area, 8 elementary schools, 10 middle schools, and 3 high schools. In the 2012-2013 school year, KIPP Houston employed 968 people and served about 8,500 students (Roberts, 2013). According to Roberts (2013), all KIPP schools share the charter of the foundation in San Francisco, California. Schools are required to pay a licensing fee; in return the Foundation provides a yearlong leadership-training program that all schools principals must attend before founding a new KIPP school. KIPP schools share a set of common operating principles known as the Five Pillars: High Expectations, Choice & Commitment, More Time, Power to Lead, and Focus on Results. The schools in the Houston metro area that have adopted this program have been very successful adhering to these pillars. KIPP Houston’s mission is to “develop in underserved students the academic skills, intellectual habits, and qualities of character necessary to succeed at all levels of pre-kindergarten through twelfth grade” (Roberts, 2013). KIPP Houston also takes college attendance very seriously; a mantra of the organization is getting all of its students “to and through college.” To achieve their goals, KIPP Houston provides full time employees to prepare and support students with their college application process (Roberts, 2013). B. STEEP ANALYSIS Social KIPP Houston seeks to serve students in high-minority, low-income communities and schools leaders actively recruit students from low rent neighborhoods. Eighty-five percent of the 8,500 students are considered low income, 36 percent are African-American and 62 percent are Latino. Additionally, 30 percent of the students are classified as having limited English proficiency (Roberts, 2013). Many of the students come from single and working parent households with limited education, making it difficult to help their children with homework or prepare for college. Crime is higher in the lower income neighborhoods and some children have to deal with exposure to violence and gang activity. From 2010-2012, Houston experienced a 29 percent increase in gang presence and gangs actively recruit members from low-income neighborhoods (Roberts, 2013). Middle school age children are primarily the targets, however, some gangs recruit as early as elementary school. Gangs may offer the camaraderie and protection for some children that school cannot provide. Technology Sehba Ali believes KIPP’s focus should remain on recruiting and developing excellent teachers, she says “I come from the Bay Area, where word on the street is that we will put a lot of computers in classrooms and that will solve all of our problems. But technology is only good in the hands of great teachers” (Roberts, 2013). Ali and Matt Bradford, Director of Knowledge

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Management, also see potential for IT advancements to enhance teacher effectiveness and the potential to use IT resources to track student learning. KIPP Courage, a newly founded school, has had great results using more technology in instruction and there are plans for an older exemplary-rated school to adopt some of their practices (Roberts, 2013). The issues surrounding these IT initiatives are standardization and support. Schools may not agree on platforms or systems and without consistency from school to school, such programs would be difficult to support. Economic KIPP Houston faces fiscal pressures from the way public funds are disbursed to schools. Charter schools do not have the same taxing authority as other public schools and are not entitled to both types of funding used to fund other schools. John Murphy, KIPP Houston CFO, says the lack of funding for facilities is the biggest financial challenge the district faces. In the 2009-2010 school year, KIPP Houston received $966 les per pupil than Houston’s Independent School District (Roberts, 2013). In the past, KIPP Houston has been able to cover the deficit through grants, fundraising, and philanthropy. They will continue to face challenges as costs rise and government grants are replaced by philanthropic sources of income. In 2012, KIPP Houston’s total liability for bonds and notes payable was over $125 million (Roberts, 2013). Environmental/Geographical The success of KIPP schools has encouraged other schools to break free from the constraints of operating in a school district of bureaucracy, giving the KIPP foundation free rein to start schools anywhere in the United States. The KIPP Foundation operates on a regional model; KIPP schools in the same city or regional area are grouped together in regional networks. There are currently 183 KIPP schools and 31 regional organizations in 20 states and the District of Columbia (Roberts, 2013). Political/Legal State laws dictate which areas the charter schools have flexibility and areas in which they must meet the same requirements as other public schools. For example, charter schools are nor required to hire certified teachers but they are required to teach the learning standards set out in Texas law (Roberts, 2013). This flexibility comes at a price. The ability for KIPP schools to maintain a creative spirit and provide different educational opportunities for students means the school is not provided the same state revenues for operational expenses as other public schools. Overall Assessment (Summary) There are currently 21 KIPP schools in the Houston area and each year applications exceed admittances. To meet the increasing demand the KIPP Turbo initiative was established as an ambitious growth plan to have 42 KIPP schools in Houston by 2017. According to Roberts (2013), economic crises in the past have cut education spending and forced the KIPP Turbo program to scale back; the revised plan now seeks to have 50 schools in Houston by 2033. The programs goals are realistic, however, economic conditions, fiscal pressures, or shift in the main

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demographic could force the program to scale back again. At this point it is too difficult to predict the external factors over such a long period of time. C. FIVE FORCES ANALYSIS Assessing the impact that industry forces have on the potential for success will enable KIPP Houston to better position itself in the market and to formulate more effective strategies to match or exceed organizational goals. Threat of Entry When considering threat of entry into the educational market, KIPP Houston’s organizational leaders are aware of the other charter schools and programs provided by the public school district. Since its inception, KIPP Houston has satisfied a niche in the Houston market that has not been imitated by competitors. KIPP Houston has maintained differentiation through its intense focus of getting all students “to and through college.” KIPP Houston’s competitors offer a different education experience, however, if KIPP is unable to find a sustainable model of financing, its competitors may continue to grow and take over the market space, find new ways to change the learning environment, or sources of competitive advantage. Bargaining Power of Suppliers According to the case, KIPP Houston is having a problem finding teachers and leaders in the labor supply available to them. Based on growth projections, KIPP Houston will need to hire about 1,300 teachers over the next five school years (Roberts, 2013). Teachers are available in the Houston market, but for KIPP it is a matter of finding the best talent available that is up for the demanding role of being a KIPP teacher. Historically, KIPP has an established pipeline with Teach for America (TFA), 32 percent of KIPP teachers are alumni, and KIPP Houston depends heavily on TFA members (Roberts, 2013). Because of KIPP’s heavy reliance on TFA it is crucial for KIPP to maintain the mutually beneficial relationship. Bargaining Power of Buyers The target consumer in this case is low-income student. Although application rates for KIPP Houston exceeds admittance, school leaders continue to actively recruit students from Houston’s low-rent apartment complexes and neighborhoods. According to Roberts (2013), while tracking students, KIPP found that 33 percent of alumni had graduated from a four-year college, which is higher than the national average (30.4 percent) and close to four times the rate of student’s from low-income families. Roberts (2013) states that KIPP’s goal is to increase college completion rates to about 75 percent, to meet that goal they must acquire top quality teachers, continue to invest in human capital, and organization programs and initiatives are aligned with college aspirations for their students.

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Threat of Substitute Products The threat of substitute products does not seem to play a significant role in the KIPP Houston Public Schools case. Rivalry Although there is some rivalry among existing schools in the Houston metro area, there seems to be some cooperation as well. KIPP Houston is able meet enrollment goals and maintains a waitlist for admittance. Sehba Ali seems to be less concerned about competitors and more concerned about fiscal pressures, recruiting top quality teachers, and finding ways for KIPP Houston to be more effective at achieving the organizations goals. She feels that other charter schools and the HISD fill different niches in the education landscape. The one exception may be Harmony Public schools, due to the Exemplary ratings, highly defined management system, and lean operational model; Harmony could become a threat to KIPP Houston’s competitive advantage. Overall Assessment (Summary): The market forces described above have the potential to impact KIPP Houston’s organizational goals, novel education techniques, and their honorable mission to serve underprivileged students in the Houston area. For KIPP Houston, the industry is still attractive. By focusing on the Five Pillars, the KIPP Turbo program, and the organization’s brand, KIPP Houston can continue to be successful in the education market. Sehba Ali has proven with her experience, training, and history of successful results, she will be able to maintain KIPP’s innovative mind-set and keep KIPP Houston at the forefront of educational excellence. D. COMPETITOR ANALYSIS KIPP Houston, as well as other charter schools in the Houston area, has received high ratings in the Texas Education Agency measure of school performance. For this reason, the Houston metro area has new entrants into the market. Based on the 2010-2011 annual state achievement tests, used to give accountability ratings to schools, KIPP Houston’s competitive edge may be threatened. Immediate Competition Although KIPP Houston was once considered a trailblazer in the low-income student model for public schooling, competitors are starting to emerge. YES Prep, another Houston area charter school network, received consistent “Exemplary” ratings for the 2010-2011 school year (the last year rating were available) (Roberts, 2013). Sehba Ali thinks that KIPP Houston and YES Prep fill different niches in the market and there are people better suited for each school. Another competitor is the Houston Independent School District (HISD). In response to the success of area charter schools, the district has attempted to replicate some of their most effective methods, including a longer school day, a college bound culture, and one-on-one tutoring, for some of the

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districts underprivileged schools (Roberts, 2013). After the first year of the program, HISD reported gains similar to those seen in charter schools, however the program is still dependent on philanthropic gifts for funding. Impending Competition Harmony Public Schools is a newer entrant in Houston’s education system. Harmony was founded in 2001 and already has 38 schools in Texas, to include 12 schools in the Houston area (Roberts, 2013). The schools have received Exemplary or Recognized ratings in 23 of its campuses. They operate with highly defined management systems, predefined curriculum, and they were able to expand during economic recession by employing a lean operation model. Invisible Competition Not applicable Overall Assessment (Summary) Sehba Ali and the organization are aware of KIPP Houston’s competitors and their strategies. If Ali can continue to capitalize on KIPP Houston’s core competencies and competitive advantage she can sustain KIPP’s culture and brand. If Sehba Ali can keep new initiatives and strategies in line with the Five Pillars that made the organization successful she should be able to minimize threats from competitors and maintain the organization’s reputation for innovation, creativity, and autonomy.

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Roberts, D. (2013) KIPP Houston Public Schools [management case study]. Strategic management: Competitiveness & Globalization (11th ed.). Stamford, CT: Cengage Learning.