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Despite the recession, there are some companies that are doing very well thanks to innovative strategies and cutting-edge software. One of those is Dean Morgan Co Ltd, which operates a chain of English and French conversation schools in Tokyo and Osaka. The company has three brands – Dean Morgan (one-to-one lessons in English and French for the high-end segment), SALA (an Osaka chain with both group and one-to-one English lessons) and Hummingbird (a patented English pronunciation program) with three locations.
Heading up the operation is Dean Rogers, who founded the company with a partner in 2004, and is now the sole majority owner. Born in Santa Barbara, Rogers majored in Japanese at UCLA before coming to Japan with a software company in 2001. After 18 months, he did some freelance software consulting before deciding to launch Dean Morgan.
Japan Today editor Chris Betros visits Rogers at the Dean Morgan school in Shinjuku to hear more.
Was it hard getting started?
Brutal, to be honest. We started out with a lot of confidence and got slapped down pretty hard over those first two years. In the beginning, I started out with an idea and tossed it around for about a year and a half to corporate partners and Japanese investors, which did not go all that well. I got pretty good at making presentations. Then I went back to California and sought individual investors. Once the snowball started rolling, we raised close to $1 million in the U.S., Europe and Japan. I sold a bit over a third of the business to investors.
How many schools do you have now?
We have three separate brands in our business. One is Dean Morgan which is our man-to-man, very high-end segment in Tokyo. We have two Dean Morgan schools in Shinjuku, one of which is shared with our Hummingbird Tokyo facility.
Then we have SALA which has four locations in the Osaka area. I acquired SALA about 2 ½ years ago from another foreigner and have grown the business to over 1,200 students from 400 at the time of acquisition. James Conway, the original founder, did a great job of building a great core business that we were then able to add onto with our technology and business methodology. SALA offers both group lessons, as well as man to man, with much more approachable prices, to a broader market segment.
Our third brand is Hummingbird, an existing pronunciation school business that we acquired last year after it failed under the previous ownership. We revised the cost structure and pricing points, implemented the DMA technology and it is now one of the most profitable parts of our group business.
What sets Dean Morgan apart from other language schools?
The quality of our people, and our software, which we developed ourselves. All lessons, which are one-to-one, are digitally audio-recorded and automatically uploaded to our servers. Like an audio CD, our software encodes it into MP3 format. Students can listen to their lessons at home on their PC or on iPods/MP3 players, and review all the things they can’t necessarily remember. Some 90% of schools outlaw any recordings of lessons, but the audio component is a fundamental part of our program, and a fundamental part of learning to speak English. Students can log in and can see announcements for them, their next scheduled lessons, appointments list, profile, see what classes are currently available, which teachers are available and which ones are certified for TOEIC and TOEFL, and book the appropriate class.
It also helps us with quality control. If there are complaints from teachers or students, we can listen to the lesson and address any issues that might have come up.
How long are the courses and what do they cost?
A course may be from six to 18 months, or up to two years, ranging from beginner to advanced levels, for adults. Lessons, which are 40-50 minutes, range in price from about 1,500 yen for group lessons in our Osaka schools to 3,200 yen to about 5,000 yen per lesson for man-to-man lessons in either Dean Morgan or SALA. Hummingbird pronunciation course lessons are between 4,000–5,000 yen per lesson for 50-minute lessons. Payments can be monthly, by package with split payments or fully prepaid packages. We offer a wide variety of payment options for our customers who have a wide variety of needs. For man-to-man lessons, our prices are much cheaper than some of our competitors. In addition, we have corporate clients, but otherwise all lessons are here in the schools.
Do you use your own texts?
No, we use proven texts. Many schools make their own texts so they can charge what we consider excessively high prices for the quality of the texts offered. I am yet to see a homegrown textbook that beats the best books by Longmans (business) or Thomson for general English. It is a major part of some schools' profit margins, which is the likely reason why most schools build their own curriculum. Some schools charge around 20,000 yen for paperback homegrown texts. If students cancel their contract, you have to refund most of the money but with textbooks, once the seal is broken, there is no refunding, so I understand the logic from the business side, but choose not to walk down that path for our company. In our case, we charge the going rate for textbooks at around 2,500 yen.
Where do you go from here in terms of software upgrades?
What we are doing now is just the tip of the iceberg. We are way beyond anything our competitors are doing and pushing that envelope. Video is one area we are looking at. Another is digitalizing Hummingbird’s DVD sets to make them into a streaming video system which will enable us to cut prices nearly in half so that more students can afford it, while decreasing our DVD inventory carrying costs.
What is the age range of your students?
Well, with over 2,000 students, it is a pretty wide-ranging group. The youngest students are older teenagers and the oldest is 89. We have quite a lot of retirees. About 90% of our students study English; the other 10% are learning French.
How do you market the schools?
About 50% come through our staff handing out flyers, while a third of our customers come from referrals. We have a search engine optimization program that improves our rankings. We have a lot of career people coming in during the day. Two million people pass through Shinjuku each day, and 100,000 to 200,000 cross our intersection here in front, according to Shinjuku-ku, giving us lots of opportunity to reach out and contact people who work and live in our areas. Most of our schools are located in similarly heavily trafficked areas.
How’s business?
They say there are two businesses that tend to do well in a major recession – education and adult-related businesses. In our case with education, we’ve been seeing record sales, growing about 3-8% a month in our language school business annualized over the last five years well over 100% annual growth. It is very gratifying because it was tough at first and we came awfully close to failing.
Starting and building a business teaches you a lot of humility. After the first six months, I went without a salary for the following three years and taught over 5,000 lessons for free. DMA teachers and staff sacrificed some of their salaries in order to give us stability in those early days. I owe a lot to the sacrifice and effort that they have put into the development of this business and the success we are now enjoying. After the first six months, we just had 18 students. Now, the number is a little over 2,000.
Tell us about your teachers.
We have about 20 Japanese staff and 65 instructors. We have a very high retention rate. Most are excellent Japanese speakers. We hired six new teachers recently out of 850 applicants, so literally they are in the top 1% and I am very proud of the people who work in our schools as we really have some amazing talent. Talent attracts talent. Teachers must have a university degree or equivalent experience. Humility, integrity and a hard work ethic are the most important qualities along side experience. The hardest thing for me is losing high quality teachers because eventually they are going to go home.
What is your company philosophy?
Our company slogan is “Customer Second” -- a term I borrowed from Hal Rosenbluth, the author of the book “Customer Second.” It’s in our brochures, it’s on posters on the walls, and in our company DNA. I built our business model differently with a focus on making this the best company to work for, for our foreign teachers knowing this would lead to great success. Many companies tell their staff customer first and then treat the staff with disrespect and disregard especially in this industry. We are foreign owned and operated, and I know that teaching can be a truly rewarding or hell if you work for the wrong company.
Rule No. 1 in our corporate philosophy is that everyone from the CEO down (all native-speaking management) are required to teach at least one day a week. I believe in the philosophy very deeply. I taught a bit over 800 lessons last year, our Osaka area manager even a bit more. We have a new COO starting in December and on his job outline at the top, it clearly says you must teach a minimum of one day a week no excuses.
We are a teaching organization and we need to constantly improve at that from the CEO down, and stay in touch with the pulse and needs of the business. Most of the innovation comes from giving a lesson, meeting students and working together with other teachers -- or what Japanese call "genba shugi."
The thing that damages the reputation of the industry the most is that too many schools look at teachers as a disposable resource. If there is a student complaint, the teacher gets fired. I always tell our teachers that this is one place where you can really feel secure since every lesson is recorded. We have refunded students in the past who made inappropriate complaints and canceled their contracts for them, backing our staff. We have a very high standard of conduct here that is mainly driven by our teachers. They are the most passionate about giving the best quality service, which we get back from students via digital data which is tracked and analyzed for improvement opportunities. We got 20,000 feedback comments over the last couple of years. It helps us see which of our teachers need more training, and which deserve further reward and opportunities.
Do shady operators in the English school business tar everyone with the same brush?
I would say that archaic business models that don’t function well in this industry have forced some schools to be more aggressive in ways that are inappropriate for an education-oriented company. When Nova launched, it was in the early bubble days of easy financing. All the contracts were signed with loan companies and the cash was prepaid to the company. So in a situation like that, you have a lot of cash coming in the door, but you have increasing liabilities for lessons that haven’t been taken. Now for two or three years, the student slowly works it off. If they don’t work it off, the contract expires and the money is yours. But what happens is you have no consistent cash flow like rent when you own an apartment or building.
Having prepaid classes really drives cash flow. It’s like an insurance company float getting premiums in advance which they invest. What’s happened in the industry is that Nova and all these other companies had 100% float and really huge floats to be honest. This brought in vast amounts of cash which they over used to expand. With Nova, all it took was a little bit of a downturn and it wiped them out completely because they had 46.7 billion yen worth of debt to their customers which they should have refunded but were unable to. It ends up looking like an overextended multilevel marketing business in some ways with the fly wheel spinning faster and faster until it eventually collapses.
What is your business model?
We have about half our students on a monthly payment system. It’s like rent, nice and steady every month. We have larger packages and allow for split payments over 24 months. Then about 20% of students pay full cash. We have no affiliation with any loan companies, so the prepaid cash gives us a little bit of a float, while the monthly and other split payments cover all of our operations. It creates a low-pressure, stable environment for both our teachers and students so we can focus on quality and on solid healthy growth generating real profits.
How do you pay teachers?
Primarily on salary, or on a per lesson or fixed lesson basis. Teachers who rank highest from feedback combined with management review have the opportunity to become senior teachers and are allocated more slots and responsibility over time. Our teachers earn a very decent living.
What is a typical day for you?
I get up around 6:30 and work online at home until about noon. I usually do a short hard workout sometime in there as well which helps clear my head. I have a large computer system with a 30-inch monitor and two 24-inch monitors somewhat similar to a stock trading system, so I can work through weekly reports, mail, stream news and keep up on things in the businesses. I get CC’d into hundreds of emails a day, so there is a lot of reading. I come to the schools in the afternoon and am usually there until early evening or sometimes as late as 11 p.m. We teach seven days a week in most schools. I always teach on Saturdays and Sundays all day, as this is when the need is heaviest.
What are you working on for the future?
We are growing our technology in the area of franchise management to create opportunities for foreigners, with a proven track record, to own schools. We will look to find successful independent teachers with existing student bases who are using systems like www.senseisagasu.com or www.myclass.es to find our franchisees under our SALA brand. Eventually they might go back home (outside of Japan) and Dean Morgan will in most cases be happy to buy back those schools, which represents a real win-win partnership for them and us. Most of my focus will go toward mentoring and helping franchisees succeed in the coming years as that part of our business grows.
I have also been working on a book for about two years. It is about developing businesses and leadership. Next year, I will take some extended time off and go overseas so I can finish it.
You don’t mind leaving the business for a while?
I have a great executive and management team, and with nearly 100 employees, the operation is very well run. One of my mentors in business, Alan Dabbiere, the founder of Manhattan Associates, once told me: Don’t hire a dog and then bark for it, or to quote Warren Buffett, you don’t hire Mark McGuire to join your baseball team and then try to show him how to hold the bat. I hired up and found people who are incredibly talented and that is why our business is succeeding extraordinarily well in such a recessionary market.
For further info on Dean Morgan, visit www.mydma.com, www.sa-la.jp, www.humbird.co.jp
© Japan Today
31 Comments
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Leopalace
Somewhat vague about teacher's working conditions/health benifits.....etc
sydenham
I remember before getting a job at GEOS a long time ago thinking wow, the perks are sooooo attractive. I was mistaken. Still, compared to these days, I guess it really was heaven on earth, lol.
Mark_McCracken
That's an enormous amount of sweat equity. At 3000 yen a lesson, it's 15 million yen.
cadmium
I think those teachers would be nervous starting out, knowing that their lessons are being recorded. But I wonder if it defends them from trivial or untruthful complaints.
I note that nowhere does it say the teachers have teaching qualifications, and it seems this is typical of the English conversation field.
Finally I'm surprised they are teaching French. I would have thought Chinese was more popular.
smartacus
I like the comment that education and adult entertainment are popular businesses in a recession. So it's up to a smart entrepreneur to offer both at the same time.
wowjpgaij
Interesting article. Building a business from the ground up for a foreigner in Japan has got to have so many more hurdles than back home. Hard to imagine, but I bet there are more than a few good stories about dealings with Japanese companies and contracts etc. Pretty straight forward and honest interview though. I like the fact that all the execs still teach and that is part of the business rules. Would love to see more schools enforcing rules like that. Most of the schools I have taught at need a bit of "Genba Shugi".. haha
wowjpgaij
Just did a quick google search. Found out his brother won a gold medal in the Beijing Olympics. Pretty cool. Hoping that Tokyo gets the Olympics in 2016! Would be fun to watch the games locally, and a heck of a lot more affordable then traveling abroad for it. http://www.toddjrogers.com/ Volleyball Player
tokyochris
As a teacher at DMA in Shinkuku, I can honestly say it's a cracking place to be - there is little/no stress at all and the system makes teaching VERY easy!
Someone asked about benefits...I've been here a year and a half now, earning about 60% more money than I did at nova (ugh!) before, yet enjoying it a lot more!
Altria
He needs to scrap the man-to-man lessons for man-on-man lessons at the 2-chome school!
DeepAir65
The sub text there tells me they are qualified teachers...
cwhite
Not quite free if you own a business and have equity in it. Plenty of CEO's have $1 salaries simply because the salary is miniscule compared to any other compensation, bonuses, commissions, stock, etc...
LoveUSA
I would like a lesson man to woman in French. Is possible?
Evalena
His name is Dean Rogers, and he goes by Dean Morgan. Does this guy have dreams of taking over the banking systems, or what? Nice dimples...and it sounds like he's off to a good start.
space_monkey
Just another spin on "I will teach talk to you for cash." I think hostess bars and soap lands could learn from this. Digital record every hostess conversation or film every soap land session and give it to the customer to review later at home. Staff can also then study how to improve their performance with management. Sweet.
Pukey2
Man-to-man? Are we teaching English or Engrish?
USAkuma
Yet another Eikaiwa. The country is full of them, and they all sing roughly the same tune of "We're better than they are..." they sing it together so well, you would think the whole Eikaiwa industry is just one big conglomerate.
Its nice to see the details, but I bet you would get the same set of answers from the founders of Gaba, Berlitz, etc.
It's interesting that just because this guy has a western face, the usual crowd of Eikaiwa haters have kept quiet. I guess they all forgot that Nova was co-founded/run with a certain Westerner that fled the country before the company officially imploded.
Still, I wish the guy as much luck in business as I wish for any company's president, including my own. After all, if not for some guy starting a company, employees like myself wouldn't get paychecks.
LoveUSA
I think advertising an English school in an English magazine where the readers are mostly from the English speaking world is not a good idea. I think they should have advertized their French lessons more, somebody here could have taken some classes though I do not believe the posters here could pay for them.
supermark80
i heard from a friend of mine who worked there they get no days holiday a year and maximum of 5000 yen for travel
maybe thats why they making profit
Mark_McCracken
It's not just the western face. Most teachers who have been at ESL a while have encountered managers who have never taught, who mandate a certain teaching method, without measuring its relative effectiveness. I've never worked for Dean Morgan, but it seems that managers who teach one day each week would be more willing to look at alternative approaches and appreciate suggestions for improving lessons.
Nice too, to see they stick up for their teachers in the face of trivial complaints from students. Having the lessons recorded gives everyone the ability to weigh complaints objectively based on specific facts (the recorded lesson) rather than the student's and teacher's interpretation of what happened.
Elbuda Mexicano
How long will it take for the English teachers union to go and harass this school too and drive into bankruptcy like they did with Nova?
usaexpat
Believe it or not the Eika wa racket is still going strong. I teach a few private lessons on the side and have actually added 5 new students in the past 6 months. Parents especially are still focused on education. My advice to potential stidents is to avoid chain schools as the fees and contracts are usually a rip off.
GW
The J-cops cud learn a few things from this school, ie record their interegations ha ha
USAkuma
I must be missing something here, and need some updating... As far as I understood things, the foreigner "teaches" the class, and the manager crunches the numbers. Unless the manager is teaching accounting, most of the managers I have ever worked with are not that good at English, thus need to take lessons rather than teach them.
I fail to see how 1 lesson a week is going to do much. so the Mgr sits in a classroom with the student of their choice... they get to choose who they teach after all. How is that supposed to make the manager any better at number crunching and convincing student/customers to buy another year of lessons?
As far as who mandates what is taught, that would likely be the Headquarters/Mr. Dean Morgan and whatever inner council he works with, not the manager who barely making enough to get by on.
But, whatever. It's his shtick/his advertising slogan. More power to him in trying to scrape out crumbs left over from all the rest that are seen in ads on the trains.
From what I have seen, most of those entering the Eikaiwa job market come over for travel, booze and bed partners (not necessarily in that order). I doubt that any of them would care one way or another about whether the manager teaches 1 lesson or not.
Mark_McCracken
That isn't necessarily so. Number crunching could be outsourced to Japanese accountants or bookkeepers.
According to the article, all the managers are native English speakers.
According to the article, managers teach one day per week, not one lesson per week.
According to the article, managers don't just sit in a classroom, managers teach the class.
It wouldn't make them better number crunchers, but could help them better understand student needs and have a better appreciation for teacher suggestions for improving the lessons.
THjunior
Thank you for your right-on explanations Mark McCracken! USAkuma, for your information, all managers at Dean Morgan are native instructors of English (or French) and all are ex regular full-time senior instructors with a knack for coaching co-workers and running teams. They understand student needs because they teach too and other teachers' hardships. Evalena, the CEO is Dean Rogers but his former co-founding partner was Morgan. Thus the company name, Dean Morgan!
Dean Rogers
Thank you everyone who had constructive commentary on this article about our school. I figured a one time response from the horses mouth might give the commentators and readers a glimpse of who we are.
In answer to cwhite: I do not take any bonuses, commissions, or additional stock options for myself and do not intend to. As you stated the success of the business as the largest shareholder are pretty self evident.
Evalena: I do not go by Dean Morgan, I had a former partner named Morgan and yes we were quite conscious of the fact that there were well established similar names that we might be able to ride their "reputation coattails" so to speak. As a small start up you need every perceived advantage you can get. By using our own names it was meant to put a kind of personal guarantee. If the business has a bad reputation = I have a bad reputation which means I need to work hard always on all front as it carries my name. A little indirect incentive to stay humble and focus on integrity and hard work to get results.
To USakuma: Thanks for the good luck wishes. The quality of a service and an organization are what we choose to make of it.
to LOVEUSA: It is not an advertisement. I was approached by Japan Today to do this interview. To be honest I am proud of the company we have built to this point and of the people who have made it possible. This article was a way to talk to that and recognize indirectly those achievements, as well as talk about the hardships and rewards of building a new business venture which is usually pretty interesting. There are usually lots of interesting hidden stories of the early days and we are no exception.
to Supermarket80: As with many rumors there are half truths in what you are saying. The majority of teachers are on fixed contracts not freelance. Fixed teachers do have paid holidays. Full time people start out with 10 days per anum as per Japanese law of paid leave. Part timers start out at 5000 yen for transportation yes this is true. The location a person chooses to live is something we have little control over to be honest. We make adjustments to this over time if warranted mostly based on results and need. Full time employees fall into a different category. We do our best to accommodate the individuals situation when the situation warrants it. Again we are a small organization and adjust and adapt as needed but are definitely not perfect.
To Elbudamexicana: I think our teachers would chase away the Union with a crowbar. There are not that many teacher oriented companies out there like ours. People have to WANT to join the Union to make it work and feel that they are not treated right. It might be interesting to watch though ^ - ^.
USAkuma: Just a fact correction. The minimum is one full day a week, not 1 single lesson. This is about 40 or 50 lessons a month for our average manager or roughly 500-600 lessons a year. Why is it important? It keeps the managers in touch with the REAL situation. We are a teaching organization and we all MUST continue to innovate and improve and that comes from being in the classroom. To be honest it is the best part of our job anyways. Being in accounting meetings all the time is mind numbing, but nice when you are profitable. I understand your skepticism as we are in the Japanese language school industry with a VERY bad management history especially in regards to foreign employees. It is up to us to prove ourselves and our business methodology and our integrity to the teachers and the industry and that simple just takes time. We will endeavor to continue to do so.
MARK: We do have a Japanese accounting firm who does our accounting as well as an in house book keeper. All managers at this particular time ARE native speakers. And yes our managers do teach and are qualified and damn good to be honest. Your last comment hits it right on the button and is why teaching is a requirement. I talk to our team quite often about why so it is kept in the proper perspective.
In closing. We are without doubt a very imperfect organization. We don't yet have all of the benefits of some larger organizations, and still have a lot of areas we need to improve in. We do have a consistent record of increasing salaries, successful growth and of creating opportunities for foreigners and Japanese alike.
Hope that sheds some light on things. Thanks for all of the constructive comments, and you are all welcome to drop by out schools and meet me or our employees. Sorry if I did not respond to everyone. Figured this was too long already.
Dean Rogers
For those of you who want to read about the current sales, employment data and customer numbers for the Language School industry: From MITI http://www.meti.go.jp/statistics/tyo/tokusabido/result/result_1/xls/hv15603j.xls
USAkuma
Thanks for the updating.
If the worsening global economy should one day cause the company I work for to go under... and if I should ever decide to work for another Eikaiwa company, I will check to see if these schools are around in my area, and if they offer me a good salary. I have a family to feed and what may be a "decent living" for a young single man or woman just won't cut it for a family with expenses.
But again, good luck to these guys. May the Eikaiwa force be with them...
If they can become truly successful enough to eliminate more brutal Eikaiwa schools that use the any semi-conscious-lifeform-as-Engrish-teacher strategies, maybe the whole Eikaiwa market will have to improve itself to keep up... and then Eikaiwas will be seen as a respectable job by one and all. And J-People might even start being able to use English... Or is that just pie in the sky?
SmokinMan
Hey Dean, What a damn good suprise to see the biz is working as planned. All the negativity about teaching , teacher bashers, eikaiwa bashers etc.. down in the fox hole they created and never see the light at the end of the hole. Dean was and is outside the eikiawa world and saw a growing need and moved in. I was there from the start, and saw it grow one by one. This is not inventing the wheel again, it is inventing the spirit, drive, and relationship building that should exist in any company that is often lacking in all eikaiwa companies. Satsified emoployees bring satisdactory services to customers which creates succcess. That is what Dean brought into eikaiwa that was never there. Live long and prosper !
geronimo2006
Apart from recording lessons, there is not a lot of real detail. I would be interested to know whether the government, as part of a quality assurance process, requires language schools such as this one to be registered and approved, have inspections or other external checks as part of an accreditation process. Are they required to employ qualified and experienced staff and managers, have their courses monitored and approved, and have proper facilities amd resources for students and teachers? But seriously, I get the impression the language learning industry in Japan is a market led popularity contest run by business people for profit. Teach Japan A Lesson. Yes indeed, I'm sure it will. But this country does seem very slow to learn.
pathat
Hummingbird was a small school chain with its main school in Shibuya for several years til about 2008. The selling point for the students was a textbook using the IPA(International Phonetic Alphabet) and some DVD materials based on the idea that repetition of sounds utilizing "correct" mouth and tongue positions will help the Japanese speak English with better pronunciation and improve their confidence using the language.
My honest opinion after working for them for a couple of years is that most of what they do can be done at home by students using study materials available at any decent-sized bookstore. The Japanese teachers I worked with did their best, but it's not a system that really promotes improvement in the overall English ability of its customers.
The person who patented the material had a school in LA which didn't do much of anything for the foreign students there, as I recall. The ESP company that you can see from the platform of Takadanobaba Station had control of it in Japan, but it didn't do well at all financially for them, and expansion in Shinjuku, as well as regional schools in places like Osaka, Fukuoka, and Sapporo created more financial woes.
I wish the people still working for them the best of luck, but, unless some dramatic improvements have been made in materials and methodology, it isn't worth the time and money they say it is.