Executive Summary and Main Points
The examination of nearly 170 shareholder activist campaigns has revealed insights into the effectiveness of strategic interventions in company performance, particularly concerning stock price. While initial campaigns frequently improve total shareholder returns (TSR), results often waver post-exit, with 40% of companies experiencing negative TSR after the activist’s departure. The crux of this volatility is attributed to the practice of activists potentially selling shares once appreciation occurs, which may not align with long-term value creation strategies. Additionally, a significant aspect to consider is the context within which an activist operates, including the undetectability of share accumulation and the varied definitions of what constitutes the “long run” in investment terms.
Potential Impact in the Education Sector
In the context of Further Education (FE) and Higher Education (HE), these findings could imply that interventions by educational activists (perhaps in the form of investors, policymakers, or influential educational entities) could catalyze short-term improvements. This may take the form of digital transformation initiatives or curriculum redevelopment. However, as seen in the corporate sector, sustaining these improvements post-intervention could be challenging. The evolution of Micro-credentials may face similar patterns, with an initial surge in value and recognition but potential challenges in maintaining relevance and credibility over time. Strategic partnerships amongst educational institutions and with tech companies could be critical to establishing long-term sustainable developments rather than short-lived enhancements.
Potential Applicability in the Education Sector
The introduction of AI and digital tools in HE could mirror the activist shareholder approach by instigating crucial enhancements and stimulating stock value—represented here by student performance and institutional reputation. The application of AI for personalized learning, data analytics for improving student retention rates, and implementation of advanced research tools are all examples of digital transformation that could yield significant initial results. Long-term applicability requires these tools to be incorporated into the fabric of educational systems worldwide, demanding continuous innovation and curriculum integration foremostly.
Criticism and Potential Shortfalls
A critique of the activist shareholder model translates into an educational perspective as the potential myopia of technology-driven interventions without foundational changes. Quick digital upgrades or the launching of trendy courses could indeed generate short-term engagement, yet without embedding these within a pedagogically sound and culturally inclusive framework, the initial positive impact might not persist. International case studies demonstrate that where educational reforms are made without thorough integration and community engagement, they often fall short of sustaining benefits.
Actionable Recommendations
To leverage technologies constructively in the global education sector, it is advisable to foster a culture of innovation that is both attuned to emerging digital trends and deeply rooted in educational excellence. Leading international education institutions should consider adopting a balanced approach that welcomes the adoption of AI and other digital tools while also investing in long-term strategic planning, faculty development, and infrastructure that supports continuous improvement. Initiatives should be pursued through transparent stakeholder consultation, aligning tech adoption with educational goals to create sustainable value for learners and institutions alike.
Source article: https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/do-shareholder-activists-create-lasting-value