School & District Management Opinion

Welcoming the Entrepreneurial Era?

By Rick Hess — October 30, 2006 8 min read
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To an unprecedented degree, this is an era of educational entrepreneurship. Dynamic, unconventional thinkers have waded into K-12 schooling, founded influential for-profit and nonprofit organizations, and upset established conventions. Some manage entire schools, and others offer particular services; some have developed new models for delivering instruction or recruiting teachers, while others apply old-fashioned practices with inspired fidelity.

-Steven Braden


While these enterprises face intense resistance and constitute a still-minuscule portion of schooling nationwide, they include some of the most respected and controversial names in 21st-century schooling: the KIPP Academies, K12 Inc., Teach For America, Edison Schools Inc., New Leaders for New Schools, National Heritage Academies, the Big Picture Company, Catapult Learning, and Aspire Public Schools. Such efforts have enormous potential to help answer some of our most stubborn challenges—from the achievement gap to teacher quality.

These ventures may be the hallmark of 21st-century school reform—they mark the convergence of accountability, choice, and new tools and technologies, as new providers emerge to produce measurable results in new ways. Accountability and the concomitant focus on results have made it much easier for new entrants to demonstrate their mettle. In this way, accountability systems, together with charter schooling and alternative licensure, have produced today’s dawning entrepreneurial era.

Yet these ventures are little examined and barely understood. While analysts and public officials debate the policy nuances of charter schooling, alternative certification, and supplemental services, and their effects on achievement thus far, there’s remarkably little attention paid to entrepreneurship itself, its strengths and shortcomings, or what a vibrant entrepreneurial sector really requires. That may reflect the long-standing chasm that lies between the nation’s schools of education and business schools, but it is one that a handful of scholars have worked to bridge in recent years.

Seeking to advance this effort, I gathered together, for the recently published Educational Entrepreneurship, new research by nearly a dozen leading scholars and thinkers, including Kim Smith, Henry Levin, John Chubb, and Larry Cuban. Here are a few key conclusions from that effort.

First, entrepreneurship is a famously slippery notion; there is no universal agreement on what it means. With credit to management guru Peter Drucker, it’s probably most useful to understand educational entrepreneurship as a process of purposeful innovation directed toward improving educational productivity, efficiency, and quality. By pioneering or applying new management techniques, delivery systems, processes, and tools, entrepreneurs—for-profit and nonprofit—work to improve cost-effectiveness and address new needs, and then grow those new solutions to scale.

How might policymakers expand the amount of money available to seed and grow promising new educational ventures, while exercising sensible quality control?

Second, it’s crucial to understand that entrepreneurship offers no easy formulas or silver bullets. Management scholars estimate that 60 percent of all new product-development efforts are abandoned before the products ever reach the market. The entrepreneurial presumption, however, is that the path of improvement is neither linear nor self-evident. We don’t know what works until after it has. Famously, Fred Smith, the founder of Federal Express, received a grade of C on a paper outlining that future enterprise while studying at Yale—because, as the professor noted, the idea was interesting but unworkable. From the telegraph to the silicon chip, the Internet to the iPod, the Mustang to Harry Potter, even “experts” in various fields have trouble predicting what will be successful, when it will be, or whether consumers will find it useful.

In education, entrepreneurs have the freedom and incentives to search for new solutions, make judicious use of available data, and adapt as obstacles dictate. Lacking these tools and opportunities, schools and district leaders have spent decades trying to drag one-size-fits-all, standardized, resistant organizations forward, with limited success.

Third, skeptics worry that entrepreneurial problem-solving sounds hauntingly similar to flavor-of-the-month reform and the “spinning of wheels” that permeates so much of American schooling. The difference? Whereas district officials must squeeze change through resistant bureaucracies, and while teachers and principals are forced to freelance within often-indifferent organizations, entrepreneurship permits innovators to construct new organizations focused on clearly articulated problems. The spinning-wheels phenomenon is not simply a predictable consequence of innovation per se (in most sectors, innovation is a good thing!). It results when innovations are not accompanied by intense, organizationwide fidelity to execution, or are not coupled with meaningful consequences for outcomes.

Fourth, eager to minimize risk and embrace “best practices,” politicians and donors routinely applaud entrepreneurial successes while skipping past the question of how to encourage such efforts and ensure that they stand or fall on their merits. Christopher Whittle, the founder of Edison Schools, notes that this tendency to bet on winners means that we spend more time harvesting the best of yesterday’s practices than working toward radical advances. Whittle has observed of Edison’s own efforts: “I’ve often said that Edison’s schools are the ‘best of the old world’ in schools. … We have yet to bring about … a school design that provides a highly unusual student and teacher experience and radically superior results.”

Similarly, while the Knowledge Is Power Program, or KIPP, academies have accumulated an impressive track record, the program’s founders are the first to acknowledge that their triumph is in proficiently executing a traditional model of schooling, by focusing on results and forging a culture of commitment. Theirs is indeed an entrepreneurial accomplishment, but ought to be regarded as the first glimmerings of what an entrepreneurial environment makes possible—not, as is too often the case, the culmination of that process.

Accountability proponents sometimes seem to imagine that good data will itself lead to good schools. Meanwhile, choice-based reformers seem to imagine that charter laws or voucher programs will themselves create a vibrant market of good providers. In truth, choice-based reforms can help open the door to dynamic problem-solving, but entrepreneurship will determine what’s on the other side of that door.

How might policymakers and local officials make education more hospitable to entrepreneurs? There are at least two good places to start.

Formal and informal barriers to entry inhibit vigorous new providers. Every entrepreneur has a wealth of stories about the impediments posed by skeptical politicians, recalcitrant bureaucracies, and administrative rules governing staffing and facilities. Entrepreneurs have found that while measures such as the No Child Left Behind Act’s supplemental services, states’ charter school laws, and alternative teacher licensure may formally make it easier for them to get started, they often encounter a raft of unanticipated obstacles.

How do outdated information-technology systems, unnecessarily restricted facilities, balky procurement arrangements, incoherent reporting requirements, lethargic licensure systems, and uninterested state and district officials impede new providers, public or private? How might specific problems be most readily addressed through policy, process, or practice? What bottlenecks limit access to the dollars, staff, facilities, or support that entrepreneurs need to be effective or to take full advantage of new opportunities? These are questions that researchers and journalists ought to be pursuing, and that policymakers ought to be addressing.

Eager to minimize risk and embrace 'best practices,' politicians and donors routinely applaud entrepreneurial successes while skipping past the question of how to encourage such efforts and ensure that they stand or fall on their merits.

The reality is that new ventures require money to start and to grow. In most sectors, profit-seeking dollars drive the entrepreneurial engine. The $550 billion K-12 sector, however, is dominated by government spending. Because the vast majority of this funding goes toward salaries and other routine line items, vanishingly little is available for research, development, or new ventures. To date, entrepreneurial ventures have been disproportionately funded by the limited amount of philanthropic dollars available. This is not a viable long-term strategy.

One option is to pursue policies that would encourage more private investment in improving schooling—allowing self-interested private dollars to underwrite the extensive research and development that yields breakthrough advances (a strategy that has led to such stunning success in technology and pharmaceuticals, for instance). Public spending on K-12 is likely to dwarf any private investment for years to come, however. Given that reality, how might policymakers expand the amount of money available to seed and grow promising new ventures, while exercising sensible quality control?

One potential strategy would be to emulate public-private investments in environmental protection, where a small percentage of public spending is dedicated to quasi-independent venture funds. States could dedicate a small portion of new state-level aid in future budgets—perhaps 4 percent or 7 percent—to a designated consortium or appointed board that would be charged with investing in promising educational ventures. In states like Massachusetts, Virginia, or North Carolina, that would amount to $15 million or so in the first year alone—and within just a few years would constitute a serious source of capital with which to back promising efforts and attract dynamic educational providers. Districts like New York City, Los Angeles, Houston, and Miami-Dade County, Fla., are themselves large enough to potentially support such homegrown funds. The operative question becomes how such a fund, overseen by an appointed board, might be configured to permit investment in a much more nimble and forward-thinking fashion than is possible for state or district officials.

Entrepreneurship is not about fast or certain solutions to today’s problems. In K-12 schooling, where all parties are quick to declare grandiose aims and demand immediate solutions, such a stance approaches apostasy. Nonetheless, the greater risk lies not in nurturing the nascent entrepreneurial sector, but in failing to reimagine an increasingly anachronistic status quo.

A version of this article appeared in the November 01, 2006 edition of Education Week as Welcoming the Entrepreneurial Era?


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