Joe Fuller: If college textbook publishers of the 1950s or 1960s obsessed over job skills and career readiness, there’s little evidence of it. Fast forward to today, and the surviving firms are far more focused on the economic relevance of their content. And they’re beginning to address the needs of the vast majority of learners, who live and work outside the ivory tower. What do developments in the ed-tech industry tell us about how well educators and training providers are serving the workforce and meeting the needs of employers?

Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Harvard Business School professor and nonresident senior fellow at the American Enterprise Institute, Joe Fuller. My guest today is Michael Hansen, CEO of ed-tech firm Cengage Group, whose businesses span K–12, college, and worker training markets. We’ll talk about the changes shaping the education technology landscape, from generative AI to “new-collar” jobs and skills-based hiring. We’ll also look at the public policy context and the expanding role of employers. And we’ll consider the social and economic importance of expanding the availability of quality instruction. Michael, welcome to the Managing the Future of Work podcast.

Michael Hansen: Thank you for having me.

Fuller: Michael, you lead a widely known company in the education and skills space in Cengage. Tell me a little bit about how you find yourself there and the status of the company.

Hansen: Yeah, happy to do that, Joe. I think it’s important to understand that we span learners, literally, from kindergarten through retirement. There are two things that we do. One is, we’re supplying learning materials that benefit the educator and the learner—formerly known as “textbooks,” but now increasingly “learning platforms.” The other thing we do is on our online skills business, we actually provide the entire learning experience. In other words, we hire the educators, we supply not only the content, but we also supply the entire experience. Broadly speaking, this is what we do at Cengage Group.

Fuller: Well, there are clearly, Michael, all sorts of emerging technologies in learning that people are excited about, whether it’s remote learning, it’s VR, AR, it’s AI-supported learning. When you look across the unique breadth of Cengage’s businesses, all the way from little children to experienced workers, what are the two or three most important trends that you see and that you’re accounting for in your work with clients and in your strategy?

Hansen: I’ve been around the education industry long enough to know that, every year, people are terribly excited about one particular phenomenon. Then, funnily enough, the system has a way to often reject or ignore or slow down the progress. Then the excitement turns into frustration. I do think that the advent of new technologies, particularly right now, generative AI, has finally—and I’m saying finally—given us an opportunity to scale something that has been elusive, which is personalized education. Every learner learns differently. Some are more visual learners, some are more verbal learners. Some better in a group, some learn better individually. I think we have an ability right now to customize what people need to learn in a way that they have a constant companion—a tutor, as it were. The second trend I would point to is that we are moving away from the black-and-white version of education, which says when you have a degree, you have a better life; when you don’t have a degree, too bad. We are now finding that there is actually a lot of, between having a degree and not having a degree, there’s a lot of other opportunities, which we now label the ”new-collar” workforce. It’s where you need certain skills, but you don’t necessarily need a degree. You don’t necessarily need to sit in a classroom for four years. I think both those trends—online skills training on the one hand and generative AI as an enabler of personalized education—I think are both trends that we will have to reckon with in the future.

Fuller: You said there have been many flashes in the pan, a lot of excitement about things, then they taper off. Is that a function of the fact that they just weren’t robust, weren’t substantial, or that there were a lot of institutional barriers in education to implementing change? If it’s the latter, how will generative AI circumvent those same barriers that led to all these false dawns prior?

Hansen: Yeah. I think, Joe, it’s a combination of the two. In other words, I think often technology solutions were hyped as the answer to everything, without the understanding that any technology needs to be embedded in the workflow of the educator and needs to be embedded in the workflow of the student, and make it tangibly better. It is technology for technology’s sake. The second phenomenon that you are pointing to, however, is true as well. The system has enormous staying power and resistance to change. By “system,” I mean not just faculty, but it is also administrators. It is the people that are presiding over these institutions—and society at large, I would argue. It’s convenient to stay in the current system. Everybody knows: They go to college, they either spend two years or four years, they get a degree. That’s fine. But 75 percent of the population that don’t have the opportunity or can’t take the opportunity, we can’t just leave behind. I think there is a clarion call for overcoming both of those hurdles.

Fuller: Well, Michael, we’re quite keen to understand how companies that have their histories rooted in formal education programs are going to play in and take advantage of and contribute to addressing this problem that you’ve just raised—that we have a workforce now that’s confronting a rate of change in enabling technologies that’s unprecedented, that companies in research find it harder and harder to find educators who can keep up with that pace of change and are sufficiently dedicated to training workers to ensure them a supply of that talent. How do you see that opportunity? How do see a company like Cengage helping bridge that gap for those people that don’t have degrees, but need to consistently acquire new skills—and who the labor force has not been entirely receptive to in the past?

Hansen: I believe that it’s very clear by now that we have a skills gap in the nation. Let’s talk about the United States, but I think it’s true also globally for the workforce. We have 600,000 cybersecurity jobs that are currently unfilled because employers don’t find the right skill set in workers. The skill set is, by and large, not a degree skill set; it is a very specific cybersecurity skill set. Pharmacy technicians in healthcare are in very high demand. CVS, Aetna is hiring them by the tens of thousands and can’t find them. We are seeing this play out in the data in very specific job categories. Elder care is another one. I do believe we now have the opportunity to close that skills gap by giving people bite-sized education. In other words, I’ll give you a course—that course costs $3,000 to $3,500—and within six months, you have the skills that are required, and you have an almost 100 percent guarantee to get a job at that point. That is what we at Cengage Group have embarked on. While the bulk of our history has been in the degree-conferring segment of the education system, we wanted to break into this, scale those solutions, and offer students an alternative that they, until that point, didn’t have. And by the way, last point I would make, the skills gap leads to a wealth gap. And the wealth gap leads to societal tension in our country that we see play out, particularly in an election year, but I think we’ve seen it play out over the last 10 years. I think we have a societal obligation to close that skills gap.

Fuller: Michael, how do you see the role of the education sector more broadly than just Cengage, in addressing that? Is it really configured to meet that challenge? Because so often, when we engage educators in our research, there is a disconnect between the role they believe they should be playing in society and the needs of employers. Educators don’t view themselves as suppliers to employers. They view themselves as people that impart learning and knowledge and experiences on people, on students, who then use those as they may to make their path in the world.

Hansen: I think it’s a great question. I think it’s very important that we bifurcate what works and what doesn’t work. Clearly, what works is what I would call a “presidential level” of education. The top-tier Ivy League schools, et cetera, it works fabulously. We’re producing some of the most distinguished and capable students that go out and do amazing things in the world. That part works. I would argue, also, that a good part of the four-year system does work. We have over 7,000 schools. But by and large, the system works. People—yes, tuitions have gone up—but they typically get a return for their investment in the sense that they get a better job, have a better life. I think it’s important that we focus on the parts of the system where we can actually make a change and where there is an impetus for change. Let me use one concrete example. Community colleges are the go-to institution for anybody who seeks a path to the middle class, who doesn’t have a degree already, and wants to get a certain skill set. Many employers, because education is local, in the local community are looking for these community colleges to deliver them work-ready students. As you rightly point out, that is not what the community college sees as their mission. But now, with the ability to actually scale online courses and configure them in the way that the local employer—whether that’s a manufacturing employer or whether it’s a healthcare employer—actually wants the students to be trained. I think we have an opportunity to close the gap. That is where Cengage Group, where we are focusing on. We’re developing courses, not only for community colleges, but also for community colleges. We can make it very tangible and connect it to employers in the region.

Fuller: Certainly, our research, specifically about community colleges, has indicated that, over time, what’s happened to them is, they’re facing more and more competition to be that skills provider. Therefore, they’re viewed as an asset for employers, a potential source of talent. But now, between online hiring capabilities, online teaching curriculum, for-profit providers of skills training directly to learners, they’ve lost relative market share. Is that the way you see it? Do you find them to be attuned to making the changes that are going to let them realize this ambition you just articulated?

Hansen: Do community colleges experience more competition? Absolutely, yes. But I would argue they’ve been doing this for the last 15, 20 years. I think it is important that we are really focusing on the question of does an institution, for-profit or not-for-profit, add value to the ultimate customer? If they do, they will thrive.

Fuller: Certainly, there are a number of exemplary schools that have terrific records. But let’s turn that on its head. When we think about employers as businesses, what should their role be in the future, in terms of supporting the education sector and in allying with the education sector to ensure that there’s a supply of workers? Just as educators don’t view themselves as being in the business of creating ready-made employees for employers, employers don’t view themselves as being in the business of being spirit guides and investors in local educational institutions, which they assume should be in a position to create people capable of work without their intervention.

Hansen: I think you characterization is fair, Joe. But I would say both the employer as well as the educational institution need to challenge themselves. I think employers have observed, over decades, that they did not get the right skill in sufficient numbers and therefore they felt that they were falling behind competitively, globally, with other companies, et cetera. The innovative ones, the smart ones, have taken action. If you look at companies like Amazon, if you look at companies like Microsoft, they are saying, “Okay, we can’t just rely on the system to deliver the right skill set, so we are now taking proactive action to reskill and upskill.” Walmart is another example. They give their employee base an opportunity to reskill, and all of a sudden, a cashier can turn into a pharm tech and work still at Walmart, and increase significantly their earnings power by this additional skill set. I think we’re seeing the lines between employer and education institution blurring a little bit. I think that is good. And we’re seeing new alliances, where employers go to local community colleges and say, “Help us align your curriculum more with what we need, in terms of the skill set.” The question is, can we scale it so that it really matters to the nation? That is where we see our role at Cengage Group. We can be this entity that helps scale this.

Fuller: Well, I think in multiple sectors we can see now that we have fallen behind, sectorally—and certainly some leading employers have. We can also see that employers have not, in any way, visibly applied the painful learnings that were achieved about supply chain management by U.S. industry in the ’80s, ’90s, and 2000s to this question of “how do I supply talent?” It’s viewed as a completely different task. We don’t do everything—from the quality control and exchange of data, to the forecasting future needs, and engaging vendors, in this case educators. What are the things that you’re hoping to see or you’re trying to encourage that would make you feel more optimistic that that new paradigm is becoming more discussable and comfortable and that this re-imagination is actually yielding action, as opposed to further visions of a great future that we’re not taking tangible steps to achieve.

Hansen: We do see employers—whether that is CVS, Aetna, whether that is an Amazon, whether it’s Microsoft, whether that’s a Google—take a more proactive role in both collaborating with education institutions, particularly community colleges, or standing up their own courses. Now—and this is where technology can play a really, really good role—now actually you can bring that education to the student, as opposed to ask the student to be on a college campus for two years, four years. I’m actually hugely optimistic about the employer side, because the pain is very tangible, and they can see it immediately. They can see it in their quarterly earnings, they can see it in their yearly performance. I think what’s more challenging is the educational institution side, where, as you rightly pointed out, many of them don’t see themselves in the business of supplying skilled labor. If you say that to college presidents, most of them would throw you out of the room. They’d say, “No, that’s not the business that I’m in.” And the fact of the matter is, that’s not the only business that you’re in, but that is part of the business that you’re in. Yes, your other part of the business is to create conscious, civil society participants, and you should absolutely do that as well. But you can chew gum and walk at the same time. That just requires you to get out of the comfort zone that, right now, your system is set up to produce degrees. Is that really what the objective should be? Or should you be measured by what, ultimately, the students do with their degree? What I mean by that is, what is the income that they have? What is the first job that they have? How quickly do they get the first job? I think the old adage still holds true: “What gets measured, gets done.” We start to measure those things, we got to start to put them out in the open.

Fuller: Well, if we talk about employers being motivated to change because of a shortage of workers, increasingly I think we see educators being motivated to change because of an enrollment crisis and a decline in the number of available students. Of course, how an educational degree, and all the costs, and time spent against it is measured is in the eyes of the learner and the funder, who is often parents and families. The skepticism about the worth of what’s paid for of a lot of higher ed is going to force some reconsideration. Let’s go back to what you were saying about online education. What do you think the state of play is in online education and training today? Is that model proving in? What are the existence proofs for that, if you think that is the case? What should we be expecting going forward, given how technology is unfolding?

Hansen: Yeah. I’m going to borrow a phrase in answering that, that a friend of mine and an esteemed scholar, Bob Johansen, from the Institute for the Future coined. He wrote a book about this. It’s like we’ve really got to apply “full-spectrum thinking” here. We’ve got to get out of this, “Oh, this is online education, versus on-campus education.” Education is education. It will come in different formats and different modalities. For us, as the orchestrators and the participants in the system, I think it is important that we continue to focus on what is the right modality, what is the right tool set, for the student at that particular time. The question is what is better accomplished in a face-to-face interaction, versus an individual experience? I think the second thing I would say, the technology and the data underlying the technology is evolving. If you think about language learning—let’s use that as an example—we’re seeing, gradually, completion rates improving. Why? Because the content has become more engaging. They have learned how to keep the student engaged throughout the process and create milestones in the content. It’s a lot about how the content has evolved together with the technology. I do think that we are not far away where that distinction, this is online, versus on-campus, is totally going to go away.

Fuller: I’m interested in this discussion through a different lens, which is the lens of the development of social skills. In our research, what we saw, for example, was that when employers removed the requirement for applicants to have a college degree, that removal was accompanied in a job description by a significant expansion of a description of the social skills being sought of candidates—everything from their spontaneous written and oral communication skills to their ability to interact successfully with strangers, go into unfamiliar settings, and demonstrate a capacity to work with other human beings, as opposed to merely knowing a technical subject. How do you think online education can tackle that challenge? How do you see it being complemented by more in-person, even if it’s hybrid in-person, Zooms, not getting together physically?

Hansen: This is such an important and perceptive question, so let me use a very specific example. This is around students in the United States’ K–12 system that do not have parents that are native English speakers, they have been immigrants, and that are thrown into the K–12 system without the necessary English language skills. We have developed, under our National Geographic brand, an English language teaching curriculum that these students can use. Because what happens otherwise, to your point about social skills? What has happened, time and again, for hundreds of thousands of students in the United States is these students sat in the back of the classroom, did not feel that they could engage with other students on any topic, or particularly not the learning topics, and had a very high degree of absenteeism, and ultimately were at risk of dropping out, even of the K–12 system. We said what online education can do is give them the confidence that they can actually start learning the language. They start to learn English through our content with National Geographic, and, importantly, they’re learning that in the context of their culture—whether they come from Ecuador, or whether they come from Mexico. They can now translate what they hear from their parents into the English language. That has proven to be very powerful to the students now returning to the classroom, and doing what’s really important in second, third, and fourth grade, which is interact with other students, have a meaningful conversation, and learn how to resolve conflicts, learn how to speak up in an environment that’s unfamiliar, all the stuff that you said.

Fuller: I think that is a powerful example. I do think that it’s indicative of a broader challenge, which is that social skills have to be featured more deliberately in lesson planning and in course development, really at all levels of education.

Hansen: I agree with you, Joe. We got to make it more explicit. Then, we got to create the room to actually have those experiences. My youngest is in university at Madison, Wisconsin. He learns the curriculum, and he’s thankfully quite good and quite interested in it. But he also learns how to build a stage for a fundraiser and how to get people to learn wood-building skills to actually volunteer for doing that. That’s a social skill that can only be taught in a group of people, like-minded people, and a group of diverse students.

Fuller: Let’s come to the realm of public policy, if we may. When you think about public policy levers, what are those that you think have the most import, that are most credible? That, if you could realize not just your ambitions for Cengage competitively, but realize the ambition of a much more effective and efficient and just education system, which ones would you be grasping and why?

Hansen: Yeah, I come back, Joe, to the discussion we had earlier. You mentioned, I think rightly, that education institutions are often slow to respond to opportunities that technology provides, or challenges that society or employers provide. I would say the same is true in spades for regulators—and for the federal government, particularly. I do think the courageous and decisive way that the federal government decided to put up ESSA [Every Student Succeeds Act] funding during the pandemic to avoid that there was massive amount of learning loss and equip schools with the right budgets, I think, was a really good thing. That doesn’t mean it has avoided all kinds of learning loss, but it could have gotten a lot worse without the funding of the federal government. But at the same time, I would say regulators, and particularly the Congress and the respective parties within Congress, I think the biggest favor that they can do all of us is to get rid of this arbitrary distinction between online and on-campus. It is about learning. Don’t make Pell Grants not eligible for online learning. Hold Pell Grant recipients—the people that actually getting the money, ultimately, not the students but the institutions—hold them accountable for results. Lastly, I would say there are some very good examples, now the infamous WIOA [Workforce Innovation and Opportunity Act] and Pell Grant expansion, I think the government is catching up—not as a leading force, but as a follower. I think there are some hopeful signs.

Fuller: Well, I agree with you there, there are some hopeful signs. Certainly, in my visit to the legislators and congressional staff, I’m seeing more of a convergence across the aisle, if you will, across the divide between the Republicans and the Democrats. It’s a classic purple issue. No one’s against better education and better employment outcomes for citizens—although, it’s obviously more complicated than that, particularly given the fact that the so-called Title IV of the Higher Education Act that governs the use of federal funds in loans and grants is still, essentially, exclusively designed around four-year residential college experiences. Everything other than that is an exception and very grudgingly granted. How do you think AI plays into all of this, in terms of customizing education and enabling even further possibilities that might bring about the type of reconsideration by the major players about the roles they need play in the future?

Hansen: Yeah. I think, as we said before, AI is one of those technologies that potentially has a really decisive impact, and as I said earlier, opens the potential of truly personalized education that we’ve been chasing for a decade or so. I do think that it is a force that educational institutions and faculty will have a very hard time just resisting. We’re seeing it, even in the early stages. People will say, “Let’s ban generative AI from campus.” I thought that some of the early adopters that were, in my mind, quite brilliant, said, “No, no, no. Use generative AI, use ChatGPT to write the essay, but show me how you made the essay better, how you got rid of inaccuracy, et cetera. I’m going to grade you on the improvement over the generative AI output, rather than on trying to figure out whether you used ChatGPT.” I think banning technology, in essence, is not the right approach. But the right approach is embracing it, incorporating it. I think the early hopeful signs is, we survey faculty, as we do on a regular basis. Forty percent say that they’re familiar with generative AI, which is a good thing, it’s an early thing in terms of how to use it. Fifty-two percent of the faculty are saying, “It will actually help me to be more efficient in the way that work can do.”

Fuller: Well, I’m pleased that you characterize the advanced thinking as being one that encourages utilization, because that’s the solution we arrived at here at Harvard and Harvard Business School. But we’re just in the very early stages of understanding how to re-adjust curriculum and study plans and evaluation to AI. Certainly, I’ve been keeping a close eye on Khan Academy and Sal Khan’s Khanmigo offer, where they seem to be arcing toward exactly the type of capability you talked about, where the AI is in a dialogue with a student and also on guard for a sudden appearance of 2,500 really good words that appear eight minutes after the program is opened. The opportunity, also, for teachers to learn through their students’ application of AI that what is it that the students consistently asked about in AI that they ought to have learned already in your course, or your shortcomings in their analysis, or their writing skills, or whatever else. Let’s extend this conversation into this whole category of work you described earlier as “new-collar” work. Say more about that and how you envision AI changing our ability to help people qualify for those jobs and keep those jobs and grow in those jobs. What can we expect from Cengage, in terms of incorporating that technology in achieving those ends?

Hansen: Yeah. These are workers that have jobs that do not require a degree, a classic degree, but require advanced skills—whether that’s in manufacturing and healthcare or in cybersecurity. There are job openings by the hundreds of thousands, as we said. We cited a few of them. This is squarely in our focus in our online skills training business, which we call “Cengage Work.” We have already started to train over 100,000 students in that skill and offered them a path to the middle class. In terms of generative AI, what they are looking for is more, really, ability to take that output, make it better, number one. Number two, how do you communicate it to other co-workers? How do you communicate it to suppliers? How do you communicate to customers? We are in the process of experimenting with tutors for online courses that can help students understand the materials quicker and then focus on the right additional skill set that is going to be required to apply all that knowledge that they have gained and make it really productive.

Fuller: That strikes me as a really balanced approach. We can’t let employers or learners become dependent on AI. We know already that, actually, the more educated one is, the more likely one is to defer to technology and, therefore, get confounded by its hallucinations or assume that the data provided is curated and correct. But that we need to bring along the different constituencies on a, more or less, even front. How we keep pace between the needs of skills, not exclusively generative AI, but as embodied in the phenomena of AI, in the workforce with employers, I think, is quite important for our economic future—that we don’t go through another wave of dislocating workers because, once again, we couldn’t keep up. Let me just wrap up by asking how does all this inform where your leader Cengage? What can we expect to see from Cengage going forward? What are the opportunities you’re most excited about? What are some of the hurdles you have to overcome to achieve those goals?

Hansen: Yeah. Joe, thank you. Thank you again for having me in this conversation. I would say, coming back to the beginning of this conversation, we at Cengage are focused on education markets where we can show a tangible outcome in terms of education for employment—whether that’s in English language teaching, whether that is in online skills training, or even in K–12, where we’re having career and technical education courses that allow students to get a view of what other alternatives might exist outside of a college degree. This is not the only thing that we’re engaged in. We have a broad portfolio. We’re a $1.5 billion company. We serve hundreds of millions of learners across the world. But if I want to pick some key themes, it’s education for employment, and it is particularly online skills training business that we believe has a lot of future potential and that we’re paying particular attention to.

Fuller: Well, Michael Hansen, CEO of Cengage Group, one of the leaders in educational resources for both companies and educators, thanks so much for joining us on the Managing the Future of Work podcast.

Hansen: Thank you, Joe. Thanks for having me.

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