‘Entrepreneurial Spirit’ Is the Key To Reviving Schools, Book Argues

By Lynn Olson — February 19, 1992 6 min read
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Parents would use such information to choose their schools. And states and school beards would solve any problems that arose by changing the rules and incentives, not by meddling in administration.

Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector maintains that confidence in government has fallen to record lows because top-down, centralized bureaucracies--including those that characterize public education--cannot meet the demands of a rapidly changing information society.

“They accomplished great things in their time,” the authors David Osborne and Ted Gaebler write, “but somewhere along the line they got away from us. They became bloated, wasteful, ineffective.”

The solution, they argue, is to make fundamental changes in the way government provides services--ranging from schooling to health care--based on a new set of principles, which they dub “entrepreneurial government.”

Such governments are “lean, decentralized, and innovative,” the authors write.

“They are flexible, adaptable, quick to learn new ways when conditions change,” Mr. Osborne and Mr. Gaebler argue; they turn their employees free to pursue goals with the most effective methods they can find.

And they rely on market forces-such as competition and customer choice--to get what needs to be done as inexpensively and creatively as possible, the authors contend.

10 Principles

Most of the education examples in the book will be familiar to educators. They range from the public school choice programs in Minnesota and East Harlem in New York City to the local school councils in Chicago.

Less familiar are some of the other public-sector experiments that could also apply to education.

In Visalia, Calif., for example, the elimination of line items within departmental budgets freed managers to shift resources as needed. Departments there can also keep what they do not spend from one year to the next. And employees can keep 30 percent of any savings or earnings that result from their ideas.

What ties such experiments together, the authors suggest, are 10 principles that, taken together, can solve the “major problems we experience with bureaucratic government.”

According to Mr. Osborne and Mr. Gaebler, entrepreneurial governments promote competition between service providers; empower citizens by pushing control out of the bureaucracy and into the community; measure the performance of agencies by outcomes, not inputs; and are driven by their missions, not by rules and regulations.

In addition, they redefine their clients as customers and offer them choices; prevent problems before they emerge; put energy into earning money, not just spending it; decentralize authority and embrace participatory management; prefer market mechanisms to bureaucratic mechanisms; and focus riot just on providing services, but on catalyzing all sectors--public, private, and voluntary--into action to solve a community’s problems.

The Motivation of Competition

The authors’ ideas are already taking hold in the policy community.

Mr. Osborne, a journalist who introduced readers to some of his ideas about entrepreneurial government in an earlier book, Laboratories of Democracy, is an adviser to the governors of Massachusetts and Florida and to the Presidential campaign of Gov. Bill Clinton of Arkansas. He also helped draft the comprehensive school-reform legislation put together by Massachusetts Democrats that calls for creating “charter” schools.

Mr. Gaebler, a former city manager of Visalia, is the president of a public-sector management-consulting firm.

Although the authors advocate that public agencies adopt all 10 principles to increase productivity and effectiveness, they assert that the key lever for strengthening education is competition.

"[O]nly competition can motivate all schools to improve,” they write, “because only competition for customers creates real consequences and real pressure for change when schools fail.”

They propose allowing parents to choose among public schools; making it easier for parents, teachers, and others to create new schools on a contract or voucher basis with a school district; and closing schools that do not attract students.

‘Hammer’ Needed

“You can push for all the good management reforms in the world,” Mr. Osborne said in an interview last week, “but if you don’t have a hammer that makes it absolutely necessary that principals and teachers embrace these management reforms, it’s not going to go anywhere.”

“Competition, it seems to me,” he added, “is that hammer.”

Most existing choice programs have not gone far enough, he said, because inferior schools still get filled up “with kids whose parents aren’t paying attention,” rather than being closed down.

In addition, he said, barriers that prevent new schools from emerging rapidly and easily stunt true competition.

“No market is really competitive if there isn’t open entry,” Mr. Osborne said.

‘Contract’ Schools

For that reason, the authors support the creation of new kinds of public schools, including charter schools.

But they reject turning all education over to the private marketplace in the form of vouchers, because of the risk that it would lead to “extreme segregation” by income.

Parents who could afford the added cost would increase the value of the vouchers, Mr. Osborne predicted, while those who were poorer would not.

“It’s just like the auto market,” he noted. “If you can afford it, you buy a Volvo. If you can’t, you don’t.”

If their principles were applied in their purest form, Mr. Osborne and Mr. Gaebler suggest, boards of education would get out of the business of operating schools.

Instead, they said, many different organizations, including teachers, colleges, or businesses, would run public schools--on something like a contract or voucher basis.

Schools would have to compete to attract students. But they would be relatively free to define and pursue their own missions, within minimum state and local regulations.

Teachers would work for the school, not the school district, under the vision offered by Mr. Osborne and Mr. Gaebler. And each school would be free to set its own budget, keep any funds it did not spend, decide whom to hire and fire, how much to pay them, and whether to use performance bonuses. Tenure would be eliminated.

A Call for Restructuring

The result would be to separate what the authors call “steering"--or policy direction “rowing"--or the actual provision of services. "[G]overnments preoccupied with service delivery often abdicate this steering function,” they note. “School boards get so busy negotiating contracts and avoiding layoffs that they forget about the quality of their schools.”

Under their hypothetical scenario, state governments and school boards would set minimum standards, measure performance, enforce such goals as racial integration and social equity, and establish the financing mechanisms to ensure that their standards were met.

States would also measure and publicize a much broader array of results than they do now.

In addition to test scores, such measures might include evaluations of student work; satisfaction surveys of parents, students, and teachers; dropout and college-placement rates; academic and nonacademic honors won by students; and evaluations by neutral panels of expert observers.

Parents would use such information to choose their schools. And states and school beards would solve any problems that arose by changing the rules and incentives, not by meddling in administration.

According to Mr. Osborne, public education is already further along than other public sectors in implementing some of the principles he and Mr. Gaebler advocate, including participatory management and community empowerment.

“We’ve gotten through the ‘more, longer, harder’ model,” he said. “We’ve gotten through the traditional medicine--throwing money at the problem. And the debate is about how you restructure.”

A version of this article appeared in the February 19, 1992 edition of Education Week as ‘Entrepreneurial Spirit’ Is the Key To Reviving Schools, Book Argues


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