Description
The most intriguing reforms in K–12 education today are entrepreneurial ventures like the New Teacher Project, the KIPP Academies, and New Leaders for New Schools.
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1150 Seventeenth Street, N.W., Washington, D.C. 20036 202.862.5800 www.aei.org
The history of school reform is a tale of clashing
recipes and absolutes. For conventional reformers, it
is a question of professional development, instruc-
tional leadership, curricula, and “best practices.”
While championing these remedies, advocates have
overlooked the enormous difficulties inherent in
trying to turn around established organizations. For
those skeptical of district-based reform, the proffered
remedy is typically parental choice or market com-
petition. Advocates of this approach have given
short shrift to the challenges of deregulation and
the institutions and resources needed to foster a
vibrant educational sector. These opposing camps
suffer from a shared shortcoming—a failure to rec-
ognize that transformation will require consciously
refashioning the world of schooling into a world
that encourages and supports change.
Established Organizations Are Hard
to Change
Experience offers scant reason to believe that tra-
ditional districts are poised to deliver break-
through improvements. After all, it is hard to
point to any field in which systematic measures
have produced substantial gains across thousands
of entities. More typically, radical and disruptive
improvement is the province of new entrants
creating a coherent organization that faithfully
delivers a particular innovation at scale. Rather
than expecting new practices or routines to be
injected successfully into thousands of districts or
tens of thousands of schools, it may be more plau-
sible that successful ventures will require a fresh
start and a clean slate.
Particularly telling on this count are school
“turnarounds.” Unlike most reform efforts, which
focus on incremental improvement of familiar
institutions, turnarounds seek to take schools from
bad to great within a short period of time. While
enthusiasts regard turnarounds as a ready answer
to the challenges posed by No Child Left Behind
(NCLB), overhauling established organizations is
far tougher than many suggest. Indeed, the hope
that we can systematically turn around most trou-
bled schools is at odds with what we know about
turnaround efforts in the corporate world. Arthur D.
Little and McKinsey & Company, two leading
consulting firms, have studied “Total Quality
Management” at hundreds of companies and con-
cluded that only about one-third achieved their
hoped-for results.
1
Scholars of corporate reengi-
neering report a success rate for Fortune 1000
companies as low as 20 percent.
2
As MIT’s Peter
The Future of Educational Entrepreneurship
By Frederick M. Hess
Themost intriguingreforms in K–12 education today areentrepreneurial ventures liketheNew Teacher
Project, theKIPP Academies, and New Leaders for New Schools, which command noticefor their
efforts to reimagineschooling. In The Future of Educational Entrepreneurship: Possibilities for
School Reform, I collaboratewith a teamof analysts and reformers to examinewhat it will taketo cre-
ateconditions in which new problem-solvers can help transformK–12 education.
Frederick M. Hess ([email protected]) is a resident scholar
and the director of education policy studies at AEI.
His most recent book is TheFutureof Educational
Entrepreneurship: Possibilities for School Reform(Har-
vard Education Press, September 2008). A version of
this Outlookappeared in the November 2008 issue of
Phi Delta Kappan.
No. 7 • November 2008
Senge has noted, “Failure to sustain significant change
recurs again and again despite substantial resources com-
mitted to the change effort . . . [and] talented and com-
mitted people ‘driving the change.’”
3
School Choice Is No Miracle Cure
Skeptics of internal reforms and those dubious of more
aggressive tactics to turn around schools naturally look
outside conventional districts for solutions. Typically,
this camp argues for choice-based reforms—like school
vouchers or charter schooling—that will allow families
to seek better schools, facilitate the emergence of more
effective alternatives, and cause competition to press
districts to improve.
If turnaround advocates place too much faith in
upending sluggish institutions, choice-based reformers
place too much faith in the presumption that simply
allowing families to choose their child’s school will foster
a dynamic sector. School choice is no elixir. Most pro-
posals to promote choice have paid little attention to
ensuring that systems are underpinned by efficient sup-
port services, effective quality control, and a stable
political and regulatory environment. More optimistic
accounts overlook the fact that the entrepreneurial edu-
cation sector lacks the wealth of human capital, venture
capital, internal quality control, and accompanying
infrastructure that characterize other dynamic sectors.
Those counting on new schools to deliver quality consis-
tently, on average schools to improve on their own, or
on lousy schools to shut down have found the process
much less automatic than they had hoped.
The MissingDimension: The Supply Side
Against this backdrop, an armful of upstart organizations
are pioneering some of the most intriguing initiatives
and successes in education today. Teach For America,
Achievement First, the Mind Trust, TeachU, High Tech
High, SchoolNet, Green Dot Public Schools, Aspire,
and others are commanding laurels, even as the uneven
track record of charter schooling and the failures of
many new ventures highlight the hit-and-miss promise
of entrepreneurial reform.
What will it take to maximize the chances for entre-
preneurial problem-solvers to deliver real and lasting
benefits in K–12 education? While the honor rolls men-
tioned above give the impression of a robust supply of
dynamic organizations, existing innovative activity pales
beside the larger K–12 enterprise. The sixty-odd KIPP
schools, the 4,800 teachers recruited each year by the
New Teacher Project, and the 150 principals trained
annually by New Leaders for New Schools are dwarfed
by the nation’s 15,000 school districts, 90,000 schools,
and 3 million teachers.
In sector after sector, solving new problems—or more
effectively addressing stubborn ones—has been the
province of new entrants. Thus, the challenge is not
simply promoting best practices or loosening regulations
but encouraging new ventures that can solve problems
more effectively. Just as school improvement does not
simply or miraculously happen without attention to
instruction, curriculum, and leadership, so a risk-averse,
bureaucratic sector will not casually become a fount of
dynamic problem-solving. As successful entrepreneurs
seek to avoid the humbling fate that has befallen many
initially promising reforms, they must offer more than
passion and philanthropy. Helping this generation will
require a supply-side strategy.
Nurturinga More Dynamic Sector
Supply-side reform recognizes that vibrant markets pos-
sess talented employees, investors willing to identify and
nurture promising ventures, a stable and hospitable pol-
icy environment, and incentives that recognize and fos-
ter quality. Such an atmosphere increases the odds that
ventures succeed and ensures a growing base of useful
knowledge, rather than producing a series of one-hit
wonders. While supply-side reform requires attention to
policies that govern everything from teacher licensure to
charter schooling, it is more useful here to address less
frequently discussed challenges and opportunities.
The Need for Talent. Making education a magnet for
talent requires rethinking assumptions about hiring and
tapping into previously unconsidered sectors. While ven-
tures like Teach For America, the Broad Residency in
Urban Education, and the Academy for Urban School
Leadership have made strides in attracting nontradi-
tional candidates to education, more emphasis must be
placed on exploiting networks that enable entrepreneurs
to recruit talent, collaborate with mentors, and discover
business opportunities.
Capitalizing on the dynamics of today’s workforce
requires taking advantage of the intrinsic appeal of K–12
education. As Christopher Gergen and Gregg Vanourek,
founding partners of New Mountain Ventures, have
- 2-
noted, “Education organizations begin with an inherent
advantage: the mission of education is closely aligned
with the values of rising generations . . . eager to engage
in meaningful work and make a difference. In that sense,
talent recruitment teams in education are beginning on
the ‘fifty-yard line.’”
4
School reformers need to take bet-
ter advantage of that opportunity and revisit assumptions
about recruiting midcareer professionals, creating part-
time positions, and finding ways to leverage expertise.
Citizen Schools and the Big Picture Company, which
both have devised systematic school-based programs for
engaging local professionals, provide intriguing examples
on this front.
Of crucial importance are the networks and relation-
ships that enable enterprising individuals to collaborate,
find capital, discover opportunities, seek mentoring, and
share knowledge. Research on startups shows that about
80 percent of successful firms are launched by individuals
with experience in or adjacent to a relevant industry.
5
There is a reason that KIPP and Teach For America
have played a crucial role in seeding the education sec-
tor with individuals poised to launch new ventures—
they recruit dynamic educators, provide them with a
supportive and engaging culture, and forge strong links
between members and alumni. The limited number of
such opportunities and networks, however, has kinked
the pipeline. The challenge is to nurture these networks
and work to expand and diversify them, especially in
particular locations and with specific kinds of talent.
Similarly, varied opportunities exist in vibrant sectors,
but there is a lack of prospects for young educators to
develop managerial skills, exploit new instructional
tools, and gain insight into questions of school system
design. One response would be to create hybrid positions
that allow teachers to remain in the classroom while
building skills and gaining experience supervising
adults, leading teams, designing curricula, or developing
accountability systems. This would reduce the incentive
for energetic, capable, young teachers to decide by their
midtwenties whether to pursue school leadership or
leave the sector. It would also enable educators to gain
seasoning, connect with like-minded peers and mentors,
and get a taste for alternate K–12 career paths—all
standard-issue opportunities in other thriving sectors.
The Role of Financial Capital. Education has been mas-
sively outstripped by other sectors in efforts to attract
private investment and generate investor enthusiasm.
On average, venture capitalists funnel just $64 million
annually into pre-K–12 businesses, paling in comparison
to the $7.2 billion poured into entrepreneurial health
care organizations. The result is an inhospitable environ-
ment for nascent ventures seeking seed funding or sup-
port for expansion. Addressing this shortcoming requires
looking for new sources of capital and structuring invest-
ments in ways that maximize social returns.
One way to encourage capital investment is to create
incentives that reward outsized results. It is difficult, to
say the least, to determine how to support disruptive
innovations, but a modest first step would be to identify
the demands that might inspire entrepreneurs to create
a supply. An education X Prize—which offers large
rewards for game-changing accomplishments—would be
a promising approach to whetting the entrepreneurial
appetite and spurring public interest. This model has
leveraged enormous private investment in other sectors,
and former X Prize Foundation president Tom Vander Ark
has estimated that a $10 million education X Prize
would stimulate twenty or thirty times that amount in
private investment.
Another tactic for jump-starting investment in the
sector entails the targeted use of public funding. Joseph
Keeney of School Choice Investments and Daniel
Pianko of Knowledge Investment Partners have sug-
gested that the Department of Education, or a consor-
tium of states and districts, attempt to mimic In-Q-Tel,
the federally sponsored firm that invests alongside pri-
vate venture capital firms to enhance national security.
In-Q-Tel—which identifies promising companies that
have the potential to provide the CIA with intelligence
technology—invests through debt, equity, and pay-for-
development of specific initiatives and then provides
targeted firms with the strategic expertise they need to
expand. There are various modifications that would help
make the In-Q-Tel model fit education. One would fos-
ter investment funds targeted at particular services such
- 3-
School choice is no elixir. Most proposals
to promote choice have paid little attention
to ensuring that systems are underpinned
by efficient support services, effective
quality control, and a stable political
and regulatory environment.
as high-need areas or enabling technologies (e.g., cur-
ricula and software). Another would create a network of
large school districts to fast-track purchases of resulting
advances, thereby achieving bulk savings and providing
a critical mass for effective products.
RemovingBarriers to Entry. A variety of formal and
informal barriers stifle entrepreneurial ventures in K–12
education. These obstacles, which include regulatory pol-
icy as well as cultural and organizational factors, must be
reformed to make the educational landscape more con-
ducive to the creation and survival of promising start-
ups. Barriers deserving particular attention are those that
impede new providers or impose constraints on how they
can operate. Some of them—like caps on charter pro-
grams or elaborate facilities requirements—have drawn
notice. Other cultural obstacles have been less salient.
Significant among these is the tendency to define
staff and salaries as sunk costs. Rather than asking
whether a tutoring provider could reduce the number of
paraprofessionals or whether more sophisticated diagnos-
tic tools could enable a teacher to work more efficiently,
administrators often believe that technology and service
providers should supplement but not supplant personnel.
Reversing this mindset would require metrics that make
the costs and benefits of various staff-service combina-
tions more transparent and coaching district officials to
appropriately evaluate alternatives. It would also demand
revising statutes and policies, finding ways to reward effi-
ciencies, reducing the emphasis on compliance, and
retooling funding formulas that are determined by num-
ber of employees rather than performance.
In addition, most big-ticket items in education are
purchased through competitive bidding in which the
product needs to be finished before the contract is
awarded (for example, for a textbook to be adopted, it
first must be written). As a consequence, large firms with
lots of cash—like major textbook publishers—have an
enormous advantage. In more R&D-friendly sectors, pro-
curement works quite differently. When NASA wants a
new spacecraft, it does not expect Boeing to build one at
its own expense. Instead, it invites competing proposals
and may even fund the early development of competing
designs before selecting a partner.
State and district procurement systems are designed
to buy products like books, computers, and training
workshops—items that can be easily counted and moni-
tored. They have much more trouble purchasing services.
The most promising solutions, however, are complex
combinations of products and services that require edu-
cators to have more discretion to make purchasing deci-
sions and procure products and services in a manner that
meets their needs. The New York City Department of
Education has been a pioneer on this front, devolving
substantial funding and authority to “empowerment
schools” and allowing principals to purchase services
from district collectives or authorized external organiza-
tions. A small “market maker” office within the depart-
ment offers support, collects outcome and customer
satisfaction data, and provides quality control by vetting
would-be vendors.
Quality Control in a Vibrant Sector. While policy-
makers and practitioners have embraced student
achievement and graduation rates as reliable gauges of
performance, an unfortunate blind eye has been turned
to their limits. Standardized assessments are a valuable
measure of student learning and offer a crucial basis for
comparing competing providers; however, little attention
has been paid to other metrics that might be more appro-
priate, to the applicability of test scores for judging the
performance of varied providers, or to whether the
responsibility of monitoring should belong to independ-
ent providers or the state.
Accountability efforts—and particularly the eight-
hundred-pound gorilla of NCLB-style testing—have cre-
ated an appetite for programs and schools that can help
struggling students reach proficiency in reading and math.
Yet, these particular achievement measures are largely
irrelevant to motivating and managing many important
school employees. It does not make sense, for instance, to
hold a payroll processor responsible for student achieve-
ment rather than the speed and accuracy of his work. In
short, quality control metrics need to focus on outcomes
rather than inputs, but the understanding of outcomes
needs to be much more nuanced than has been the norm.
To take one example: Consumer Reportsoften suggests
“best buys” in several price ranges; whether the $1,500
- 4-
On average, venture capitalists funnel
just $64 million annually into pre-K–12
businesses, paling in comparison to the
$7.2 billion poured into entrepreneurial
health care organizations.
or the $4,000 flat-screen television is the best buy for a
given family depends on its budget and preferences.
Such information is irrelevant to a parent trying to
choose among district or charter schools (as their out-of-
pocket cost will be zero in every case), but it is highly
relevant to superintendents choosing alternative cur-
ricula or Title I tutoring firms. The bottom line is that
some quality control strategies work for some goods and
services in some contexts for some users more than for
others—yet, in the past decade, we have focused on gen-
erating one set of metrics while paying little attention to
many others.
What Comes Next?
A supply-side strategy calls for thinking beyond what
today passes for cutting-edge approaches and emancipat-
ing ourselves from once-reasonable but now confining
assumptions that govern the shape of K–12 education.
ConsideringFunction, Not Location. Historically,
schools and districts have been organized by local geog-
raphy, serving children in a particular location. This
approach made sense given the constraints of transporta-
tion, communication, and the provision of support serv-
ices. But as these limitations have eroded over time, the
need for school systems or service providers to confine
themselves to a particular area has diminished. Today’s
arrangements require each district to reinvent the wheel
when it comes to serving a particular segment of students.
Instead of expecting a single school district to meet the
entire array of needs in its community, a variety of spe-
cialized providers operating nationally would more readily
provide targeted services to any given community.
For example, the SEED School, a public charter
school in Washington, D.C., provides a boarding school
experience for more than three hundred low-income
children in grades seven through twelve whose parents
believe they will benefit from its intensive environment.
SEED does not try to serve students desiring a conven-
tional high school education, and the D.C. Public
Schools would have a difficult time staffing, operating, or
managing SEED alongside its other schools. Instead, a
specialized provider is fulfilling a valuable role and com-
plementing other available services. Some have described
various schools coexisting in a community as a “portfolio”
approach; it may be more useful to think of a “jigsaw”
approach—with an array of schools and providers collec-
tively covering the spectrum of student needs.
ValuingSpecialization. One advantage of the jigsaw
metaphor is a shift from the assumption that successful
providers should duplicate the services of a school or dis-
trict to a system in which providers may focus on serving
discrete needs for particular clients. In each case, the pur-
pose of the innovation is not to replace an entire school
or school system but to provide a particular service that
benefits students, schools, or school systems. The hunt
should not be for the elusive 100 percent solution, but
for one hundred different 1 percent solutions. The roles
played by the New Teacher Project in supporting human
resources, by Wireless Generation in supporting literacy
instruction, or by Presidium Learning in providing back-
office support are examples of how this can work.
The main benefit of this approach is that it allows
providers to become good at one function and then slowly
expand their reach. Michael Dell was able to start small
by selling only hand-assembled personal computers.
Amazon.com started by selling just books. Microsoft pro-
vided software and never sought to provide the hardware
that existing competitors provided. If Amazon.com had
only been taken seriously if it could displace all the serv-
ices provided by Barnes & Noble, or if Microsoft had been
expected to sell computers and software, neither would
have gotten off the ground. Yet, there is a clear bias in
education toward “whole-school” replacement—an expec-
tation that entrepreneurs should open whole new schools
instead of just delivering a single, important advance. This
makes it more difficult for specialized providers to attract
funding and distracts them from developing, refining, and
delivering a particular service or product.
FundingServices Rather Than Seat Time. Even the
most novel plans for rethinking education spending have
limited their innovation to the idea that dollars should
follow students to the school they choose—rather than
merely flowing into school district coffers. Charter
schooling and voucher plans, for example, involve redi-
recting a percentage of the public contribution to a par-
ent’s chosen school, and weighted student funding plans
entail allocating dollars based on school enrollment.
A more robust model might build on the intuition
embedded in charter school funding by allowing families
to direct dollars to services as they see fit. Rather than
directing funding to the school that a family chooses,
a state or district could deposit each child’s per-pupil
expenditure into an “educational spending account”
that parents could appropriate to approved providers for
tutoring, specialized instruction, or similar services. A
- 5-
parent might send a child to a given school and then,
with any remaining funds, pay for additional reading or
music instruction. This would reward schools for being
cost-conscious and could encourage them, in turn, to
more aggressively seek out efficient niche providers.
Another intriguing approach would refashion funding
systems to pay providers based on results rather than
inputs. For instance, if a school district paid a provider
$20,000 per year for every at-risk high school student
that it got on course to graduate on time, the district
would encourage a burst of activity among teachers,
community activists, and for-profit providers to devise
approaches geared to help particular students. One such
model, conceived by MATCH charter school founder
Michael Goldstein, involved the formation of teacher
co-ops that established “classes” of seven students, met
in coffee shops, contracted with specialized providers for
support services, and paid teachers up to $100,000 a year
if students met the benchmarks.
Keepingthe Garage Doors Open
Paul Allen and Bill Gates famously launched Microsoft
in the Gates’s family garage, but an investor in the 1970s
looking for the smart bet in American technology would
not have invested in these two kids. Such an investor
likely would have backed IBM, the firm that dismissed
the potential of Microsoft’s new software and chose to
lease rather than buy it.
Vibrant sectors enable creative problem-solvers to
plug into ecosystems marked by talent, expertise, capital,
and networks. The lesson of Microsoft is not that the
government should have funded every aspiring techie,
much less that experts should have surveyed the land
and determined that resources should be showered on
two kids from suburban Washington. Rather, it is to
demonstrate the importance of keeping doors open for
entrepreneurs to test out new ideas, attract support, and
reap rewards for devising a successful innovation and
delivering it at scale.
At one time, TWA and Sears, Roebuck and Com-
pany were feared and respected behemoths. The new
entrants that challenged and ultimately displaced
them—including Southwest Airlines and Wal-Mart—
were initially regarded as regional curiosities. The
challenge in a sector like education, in which the gov-
ernment funds and operates dominant systems, is to
ensure that it is possible for such ventures to emerge
from under the weight of the status quo.
Supplying effective new providers of various stripes is
essential for choice-based reform and for retooling trou-
bled schools. In reality, of course, these two approaches
operate in tandem. In Chicago and New York City, for
example, charter management organizations are running
dozens of schools, New Leaders for New Schools is train-
ing principals, and the New Teacher Project is hiring
hundreds of first-time teachers. Meanwhile, the districts
have taken steps to provide some principals with char-
ter-like authority and to recruit teachers more aggres-
sively. In fact, it is hard to say with precision the degree
to which these new developments are occurring inside or
outside of districts. The most promising initiatives skirt
those boundaries, drawing on district infrastructure and
political leadership while relying on the fruits of new
personnel, tools, schools, and rules.
There should be no unrealistic expectation that
entrepreneurial ventures will deliver happy results. They
promise nothing more than opportunity, coupled with
substantial doses of failure and frustration. Although we
would like to determine the future through research and
best practices and get there with as few diversions as pos-
sible, that is not the way of the world. We are feeling
our way toward a new and hopefully more fruitful era of
teaching and learning. Our choice is ultimately between
trusting the authorities to fix aged and troubled bureauc-
racies in deliberate and incremental steps or trusting in
the ability of a rising generation to seize new opportuni-
ties and tap human ingenuity to answer new challenges
in unforeseen ways. If history teaches us anything, it is
that this is really no choice at all.
Notes
1. TheEconomist, April 18, 1992, quoted in Peter Senge et al.,
TheDanceof Change: TheChallengesof SustainingMomentumin
LearningOrganizations(New York: Doubleday, 1999), 5–6.
2. Paul Strebel, “Why Do Employees Resist Change?” Har-
vard Business Review(May/June 1996): 86.
3. Peter Senge et al., TheDanceof Change: TheChallenges of
SustainingMomentumin LearningOrganizations, 6.
4. Christopher Gergen and Gregg Vanourek, “Talent Devel-
opment: Looking Outside the Education Sector,” in TheFuture
of Educational Entrepreneurship, ed. Frederick M. Hess (Cam-
bridge, MA: Harvard Education Press, 2008).
5. WilliamD. Bygrave, “The Entrepreneurial Process,” in
ThePortableMBA in Entrepreneurship, ed. WilliamD. Bygrave
and Andrew Zacharakis, 3rd ed. (Hoboken, NJ: John Wiley and
Sons, 2004), 1–27.
- 6-
#23617
doc_371190395.pdf
The most intriguing reforms in K–12 education today are entrepreneurial ventures like the New Teacher Project, the KIPP Academies, and New Leaders for New Schools.
E
d
u
c
a
t
i
o
n
O
u
t
l
o
o
k
1150 Seventeenth Street, N.W., Washington, D.C. 20036 202.862.5800 www.aei.org
The history of school reform is a tale of clashing
recipes and absolutes. For conventional reformers, it
is a question of professional development, instruc-
tional leadership, curricula, and “best practices.”
While championing these remedies, advocates have
overlooked the enormous difficulties inherent in
trying to turn around established organizations. For
those skeptical of district-based reform, the proffered
remedy is typically parental choice or market com-
petition. Advocates of this approach have given
short shrift to the challenges of deregulation and
the institutions and resources needed to foster a
vibrant educational sector. These opposing camps
suffer from a shared shortcoming—a failure to rec-
ognize that transformation will require consciously
refashioning the world of schooling into a world
that encourages and supports change.
Established Organizations Are Hard
to Change
Experience offers scant reason to believe that tra-
ditional districts are poised to deliver break-
through improvements. After all, it is hard to
point to any field in which systematic measures
have produced substantial gains across thousands
of entities. More typically, radical and disruptive
improvement is the province of new entrants
creating a coherent organization that faithfully
delivers a particular innovation at scale. Rather
than expecting new practices or routines to be
injected successfully into thousands of districts or
tens of thousands of schools, it may be more plau-
sible that successful ventures will require a fresh
start and a clean slate.
Particularly telling on this count are school
“turnarounds.” Unlike most reform efforts, which
focus on incremental improvement of familiar
institutions, turnarounds seek to take schools from
bad to great within a short period of time. While
enthusiasts regard turnarounds as a ready answer
to the challenges posed by No Child Left Behind
(NCLB), overhauling established organizations is
far tougher than many suggest. Indeed, the hope
that we can systematically turn around most trou-
bled schools is at odds with what we know about
turnaround efforts in the corporate world. Arthur D.
Little and McKinsey & Company, two leading
consulting firms, have studied “Total Quality
Management” at hundreds of companies and con-
cluded that only about one-third achieved their
hoped-for results.
1
Scholars of corporate reengi-
neering report a success rate for Fortune 1000
companies as low as 20 percent.
2
As MIT’s Peter
The Future of Educational Entrepreneurship
By Frederick M. Hess
Themost intriguingreforms in K–12 education today areentrepreneurial ventures liketheNew Teacher
Project, theKIPP Academies, and New Leaders for New Schools, which command noticefor their
efforts to reimagineschooling. In The Future of Educational Entrepreneurship: Possibilities for
School Reform, I collaboratewith a teamof analysts and reformers to examinewhat it will taketo cre-
ateconditions in which new problem-solvers can help transformK–12 education.
Frederick M. Hess ([email protected]) is a resident scholar
and the director of education policy studies at AEI.
His most recent book is TheFutureof Educational
Entrepreneurship: Possibilities for School Reform(Har-
vard Education Press, September 2008). A version of
this Outlookappeared in the November 2008 issue of
Phi Delta Kappan.
No. 7 • November 2008
Senge has noted, “Failure to sustain significant change
recurs again and again despite substantial resources com-
mitted to the change effort . . . [and] talented and com-
mitted people ‘driving the change.’”
3
School Choice Is No Miracle Cure
Skeptics of internal reforms and those dubious of more
aggressive tactics to turn around schools naturally look
outside conventional districts for solutions. Typically,
this camp argues for choice-based reforms—like school
vouchers or charter schooling—that will allow families
to seek better schools, facilitate the emergence of more
effective alternatives, and cause competition to press
districts to improve.
If turnaround advocates place too much faith in
upending sluggish institutions, choice-based reformers
place too much faith in the presumption that simply
allowing families to choose their child’s school will foster
a dynamic sector. School choice is no elixir. Most pro-
posals to promote choice have paid little attention to
ensuring that systems are underpinned by efficient sup-
port services, effective quality control, and a stable
political and regulatory environment. More optimistic
accounts overlook the fact that the entrepreneurial edu-
cation sector lacks the wealth of human capital, venture
capital, internal quality control, and accompanying
infrastructure that characterize other dynamic sectors.
Those counting on new schools to deliver quality consis-
tently, on average schools to improve on their own, or
on lousy schools to shut down have found the process
much less automatic than they had hoped.
The MissingDimension: The Supply Side
Against this backdrop, an armful of upstart organizations
are pioneering some of the most intriguing initiatives
and successes in education today. Teach For America,
Achievement First, the Mind Trust, TeachU, High Tech
High, SchoolNet, Green Dot Public Schools, Aspire,
and others are commanding laurels, even as the uneven
track record of charter schooling and the failures of
many new ventures highlight the hit-and-miss promise
of entrepreneurial reform.
What will it take to maximize the chances for entre-
preneurial problem-solvers to deliver real and lasting
benefits in K–12 education? While the honor rolls men-
tioned above give the impression of a robust supply of
dynamic organizations, existing innovative activity pales
beside the larger K–12 enterprise. The sixty-odd KIPP
schools, the 4,800 teachers recruited each year by the
New Teacher Project, and the 150 principals trained
annually by New Leaders for New Schools are dwarfed
by the nation’s 15,000 school districts, 90,000 schools,
and 3 million teachers.
In sector after sector, solving new problems—or more
effectively addressing stubborn ones—has been the
province of new entrants. Thus, the challenge is not
simply promoting best practices or loosening regulations
but encouraging new ventures that can solve problems
more effectively. Just as school improvement does not
simply or miraculously happen without attention to
instruction, curriculum, and leadership, so a risk-averse,
bureaucratic sector will not casually become a fount of
dynamic problem-solving. As successful entrepreneurs
seek to avoid the humbling fate that has befallen many
initially promising reforms, they must offer more than
passion and philanthropy. Helping this generation will
require a supply-side strategy.
Nurturinga More Dynamic Sector
Supply-side reform recognizes that vibrant markets pos-
sess talented employees, investors willing to identify and
nurture promising ventures, a stable and hospitable pol-
icy environment, and incentives that recognize and fos-
ter quality. Such an atmosphere increases the odds that
ventures succeed and ensures a growing base of useful
knowledge, rather than producing a series of one-hit
wonders. While supply-side reform requires attention to
policies that govern everything from teacher licensure to
charter schooling, it is more useful here to address less
frequently discussed challenges and opportunities.
The Need for Talent. Making education a magnet for
talent requires rethinking assumptions about hiring and
tapping into previously unconsidered sectors. While ven-
tures like Teach For America, the Broad Residency in
Urban Education, and the Academy for Urban School
Leadership have made strides in attracting nontradi-
tional candidates to education, more emphasis must be
placed on exploiting networks that enable entrepreneurs
to recruit talent, collaborate with mentors, and discover
business opportunities.
Capitalizing on the dynamics of today’s workforce
requires taking advantage of the intrinsic appeal of K–12
education. As Christopher Gergen and Gregg Vanourek,
founding partners of New Mountain Ventures, have
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noted, “Education organizations begin with an inherent
advantage: the mission of education is closely aligned
with the values of rising generations . . . eager to engage
in meaningful work and make a difference. In that sense,
talent recruitment teams in education are beginning on
the ‘fifty-yard line.’”
4
School reformers need to take bet-
ter advantage of that opportunity and revisit assumptions
about recruiting midcareer professionals, creating part-
time positions, and finding ways to leverage expertise.
Citizen Schools and the Big Picture Company, which
both have devised systematic school-based programs for
engaging local professionals, provide intriguing examples
on this front.
Of crucial importance are the networks and relation-
ships that enable enterprising individuals to collaborate,
find capital, discover opportunities, seek mentoring, and
share knowledge. Research on startups shows that about
80 percent of successful firms are launched by individuals
with experience in or adjacent to a relevant industry.
5
There is a reason that KIPP and Teach For America
have played a crucial role in seeding the education sec-
tor with individuals poised to launch new ventures—
they recruit dynamic educators, provide them with a
supportive and engaging culture, and forge strong links
between members and alumni. The limited number of
such opportunities and networks, however, has kinked
the pipeline. The challenge is to nurture these networks
and work to expand and diversify them, especially in
particular locations and with specific kinds of talent.
Similarly, varied opportunities exist in vibrant sectors,
but there is a lack of prospects for young educators to
develop managerial skills, exploit new instructional
tools, and gain insight into questions of school system
design. One response would be to create hybrid positions
that allow teachers to remain in the classroom while
building skills and gaining experience supervising
adults, leading teams, designing curricula, or developing
accountability systems. This would reduce the incentive
for energetic, capable, young teachers to decide by their
midtwenties whether to pursue school leadership or
leave the sector. It would also enable educators to gain
seasoning, connect with like-minded peers and mentors,
and get a taste for alternate K–12 career paths—all
standard-issue opportunities in other thriving sectors.
The Role of Financial Capital. Education has been mas-
sively outstripped by other sectors in efforts to attract
private investment and generate investor enthusiasm.
On average, venture capitalists funnel just $64 million
annually into pre-K–12 businesses, paling in comparison
to the $7.2 billion poured into entrepreneurial health
care organizations. The result is an inhospitable environ-
ment for nascent ventures seeking seed funding or sup-
port for expansion. Addressing this shortcoming requires
looking for new sources of capital and structuring invest-
ments in ways that maximize social returns.
One way to encourage capital investment is to create
incentives that reward outsized results. It is difficult, to
say the least, to determine how to support disruptive
innovations, but a modest first step would be to identify
the demands that might inspire entrepreneurs to create
a supply. An education X Prize—which offers large
rewards for game-changing accomplishments—would be
a promising approach to whetting the entrepreneurial
appetite and spurring public interest. This model has
leveraged enormous private investment in other sectors,
and former X Prize Foundation president Tom Vander Ark
has estimated that a $10 million education X Prize
would stimulate twenty or thirty times that amount in
private investment.
Another tactic for jump-starting investment in the
sector entails the targeted use of public funding. Joseph
Keeney of School Choice Investments and Daniel
Pianko of Knowledge Investment Partners have sug-
gested that the Department of Education, or a consor-
tium of states and districts, attempt to mimic In-Q-Tel,
the federally sponsored firm that invests alongside pri-
vate venture capital firms to enhance national security.
In-Q-Tel—which identifies promising companies that
have the potential to provide the CIA with intelligence
technology—invests through debt, equity, and pay-for-
development of specific initiatives and then provides
targeted firms with the strategic expertise they need to
expand. There are various modifications that would help
make the In-Q-Tel model fit education. One would fos-
ter investment funds targeted at particular services such
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School choice is no elixir. Most proposals
to promote choice have paid little attention
to ensuring that systems are underpinned
by efficient support services, effective
quality control, and a stable political
and regulatory environment.
as high-need areas or enabling technologies (e.g., cur-
ricula and software). Another would create a network of
large school districts to fast-track purchases of resulting
advances, thereby achieving bulk savings and providing
a critical mass for effective products.
RemovingBarriers to Entry. A variety of formal and
informal barriers stifle entrepreneurial ventures in K–12
education. These obstacles, which include regulatory pol-
icy as well as cultural and organizational factors, must be
reformed to make the educational landscape more con-
ducive to the creation and survival of promising start-
ups. Barriers deserving particular attention are those that
impede new providers or impose constraints on how they
can operate. Some of them—like caps on charter pro-
grams or elaborate facilities requirements—have drawn
notice. Other cultural obstacles have been less salient.
Significant among these is the tendency to define
staff and salaries as sunk costs. Rather than asking
whether a tutoring provider could reduce the number of
paraprofessionals or whether more sophisticated diagnos-
tic tools could enable a teacher to work more efficiently,
administrators often believe that technology and service
providers should supplement but not supplant personnel.
Reversing this mindset would require metrics that make
the costs and benefits of various staff-service combina-
tions more transparent and coaching district officials to
appropriately evaluate alternatives. It would also demand
revising statutes and policies, finding ways to reward effi-
ciencies, reducing the emphasis on compliance, and
retooling funding formulas that are determined by num-
ber of employees rather than performance.
In addition, most big-ticket items in education are
purchased through competitive bidding in which the
product needs to be finished before the contract is
awarded (for example, for a textbook to be adopted, it
first must be written). As a consequence, large firms with
lots of cash—like major textbook publishers—have an
enormous advantage. In more R&D-friendly sectors, pro-
curement works quite differently. When NASA wants a
new spacecraft, it does not expect Boeing to build one at
its own expense. Instead, it invites competing proposals
and may even fund the early development of competing
designs before selecting a partner.
State and district procurement systems are designed
to buy products like books, computers, and training
workshops—items that can be easily counted and moni-
tored. They have much more trouble purchasing services.
The most promising solutions, however, are complex
combinations of products and services that require edu-
cators to have more discretion to make purchasing deci-
sions and procure products and services in a manner that
meets their needs. The New York City Department of
Education has been a pioneer on this front, devolving
substantial funding and authority to “empowerment
schools” and allowing principals to purchase services
from district collectives or authorized external organiza-
tions. A small “market maker” office within the depart-
ment offers support, collects outcome and customer
satisfaction data, and provides quality control by vetting
would-be vendors.
Quality Control in a Vibrant Sector. While policy-
makers and practitioners have embraced student
achievement and graduation rates as reliable gauges of
performance, an unfortunate blind eye has been turned
to their limits. Standardized assessments are a valuable
measure of student learning and offer a crucial basis for
comparing competing providers; however, little attention
has been paid to other metrics that might be more appro-
priate, to the applicability of test scores for judging the
performance of varied providers, or to whether the
responsibility of monitoring should belong to independ-
ent providers or the state.
Accountability efforts—and particularly the eight-
hundred-pound gorilla of NCLB-style testing—have cre-
ated an appetite for programs and schools that can help
struggling students reach proficiency in reading and math.
Yet, these particular achievement measures are largely
irrelevant to motivating and managing many important
school employees. It does not make sense, for instance, to
hold a payroll processor responsible for student achieve-
ment rather than the speed and accuracy of his work. In
short, quality control metrics need to focus on outcomes
rather than inputs, but the understanding of outcomes
needs to be much more nuanced than has been the norm.
To take one example: Consumer Reportsoften suggests
“best buys” in several price ranges; whether the $1,500
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On average, venture capitalists funnel
just $64 million annually into pre-K–12
businesses, paling in comparison to the
$7.2 billion poured into entrepreneurial
health care organizations.
or the $4,000 flat-screen television is the best buy for a
given family depends on its budget and preferences.
Such information is irrelevant to a parent trying to
choose among district or charter schools (as their out-of-
pocket cost will be zero in every case), but it is highly
relevant to superintendents choosing alternative cur-
ricula or Title I tutoring firms. The bottom line is that
some quality control strategies work for some goods and
services in some contexts for some users more than for
others—yet, in the past decade, we have focused on gen-
erating one set of metrics while paying little attention to
many others.
What Comes Next?
A supply-side strategy calls for thinking beyond what
today passes for cutting-edge approaches and emancipat-
ing ourselves from once-reasonable but now confining
assumptions that govern the shape of K–12 education.
ConsideringFunction, Not Location. Historically,
schools and districts have been organized by local geog-
raphy, serving children in a particular location. This
approach made sense given the constraints of transporta-
tion, communication, and the provision of support serv-
ices. But as these limitations have eroded over time, the
need for school systems or service providers to confine
themselves to a particular area has diminished. Today’s
arrangements require each district to reinvent the wheel
when it comes to serving a particular segment of students.
Instead of expecting a single school district to meet the
entire array of needs in its community, a variety of spe-
cialized providers operating nationally would more readily
provide targeted services to any given community.
For example, the SEED School, a public charter
school in Washington, D.C., provides a boarding school
experience for more than three hundred low-income
children in grades seven through twelve whose parents
believe they will benefit from its intensive environment.
SEED does not try to serve students desiring a conven-
tional high school education, and the D.C. Public
Schools would have a difficult time staffing, operating, or
managing SEED alongside its other schools. Instead, a
specialized provider is fulfilling a valuable role and com-
plementing other available services. Some have described
various schools coexisting in a community as a “portfolio”
approach; it may be more useful to think of a “jigsaw”
approach—with an array of schools and providers collec-
tively covering the spectrum of student needs.
ValuingSpecialization. One advantage of the jigsaw
metaphor is a shift from the assumption that successful
providers should duplicate the services of a school or dis-
trict to a system in which providers may focus on serving
discrete needs for particular clients. In each case, the pur-
pose of the innovation is not to replace an entire school
or school system but to provide a particular service that
benefits students, schools, or school systems. The hunt
should not be for the elusive 100 percent solution, but
for one hundred different 1 percent solutions. The roles
played by the New Teacher Project in supporting human
resources, by Wireless Generation in supporting literacy
instruction, or by Presidium Learning in providing back-
office support are examples of how this can work.
The main benefit of this approach is that it allows
providers to become good at one function and then slowly
expand their reach. Michael Dell was able to start small
by selling only hand-assembled personal computers.
Amazon.com started by selling just books. Microsoft pro-
vided software and never sought to provide the hardware
that existing competitors provided. If Amazon.com had
only been taken seriously if it could displace all the serv-
ices provided by Barnes & Noble, or if Microsoft had been
expected to sell computers and software, neither would
have gotten off the ground. Yet, there is a clear bias in
education toward “whole-school” replacement—an expec-
tation that entrepreneurs should open whole new schools
instead of just delivering a single, important advance. This
makes it more difficult for specialized providers to attract
funding and distracts them from developing, refining, and
delivering a particular service or product.
FundingServices Rather Than Seat Time. Even the
most novel plans for rethinking education spending have
limited their innovation to the idea that dollars should
follow students to the school they choose—rather than
merely flowing into school district coffers. Charter
schooling and voucher plans, for example, involve redi-
recting a percentage of the public contribution to a par-
ent’s chosen school, and weighted student funding plans
entail allocating dollars based on school enrollment.
A more robust model might build on the intuition
embedded in charter school funding by allowing families
to direct dollars to services as they see fit. Rather than
directing funding to the school that a family chooses,
a state or district could deposit each child’s per-pupil
expenditure into an “educational spending account”
that parents could appropriate to approved providers for
tutoring, specialized instruction, or similar services. A
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parent might send a child to a given school and then,
with any remaining funds, pay for additional reading or
music instruction. This would reward schools for being
cost-conscious and could encourage them, in turn, to
more aggressively seek out efficient niche providers.
Another intriguing approach would refashion funding
systems to pay providers based on results rather than
inputs. For instance, if a school district paid a provider
$20,000 per year for every at-risk high school student
that it got on course to graduate on time, the district
would encourage a burst of activity among teachers,
community activists, and for-profit providers to devise
approaches geared to help particular students. One such
model, conceived by MATCH charter school founder
Michael Goldstein, involved the formation of teacher
co-ops that established “classes” of seven students, met
in coffee shops, contracted with specialized providers for
support services, and paid teachers up to $100,000 a year
if students met the benchmarks.
Keepingthe Garage Doors Open
Paul Allen and Bill Gates famously launched Microsoft
in the Gates’s family garage, but an investor in the 1970s
looking for the smart bet in American technology would
not have invested in these two kids. Such an investor
likely would have backed IBM, the firm that dismissed
the potential of Microsoft’s new software and chose to
lease rather than buy it.
Vibrant sectors enable creative problem-solvers to
plug into ecosystems marked by talent, expertise, capital,
and networks. The lesson of Microsoft is not that the
government should have funded every aspiring techie,
much less that experts should have surveyed the land
and determined that resources should be showered on
two kids from suburban Washington. Rather, it is to
demonstrate the importance of keeping doors open for
entrepreneurs to test out new ideas, attract support, and
reap rewards for devising a successful innovation and
delivering it at scale.
At one time, TWA and Sears, Roebuck and Com-
pany were feared and respected behemoths. The new
entrants that challenged and ultimately displaced
them—including Southwest Airlines and Wal-Mart—
were initially regarded as regional curiosities. The
challenge in a sector like education, in which the gov-
ernment funds and operates dominant systems, is to
ensure that it is possible for such ventures to emerge
from under the weight of the status quo.
Supplying effective new providers of various stripes is
essential for choice-based reform and for retooling trou-
bled schools. In reality, of course, these two approaches
operate in tandem. In Chicago and New York City, for
example, charter management organizations are running
dozens of schools, New Leaders for New Schools is train-
ing principals, and the New Teacher Project is hiring
hundreds of first-time teachers. Meanwhile, the districts
have taken steps to provide some principals with char-
ter-like authority and to recruit teachers more aggres-
sively. In fact, it is hard to say with precision the degree
to which these new developments are occurring inside or
outside of districts. The most promising initiatives skirt
those boundaries, drawing on district infrastructure and
political leadership while relying on the fruits of new
personnel, tools, schools, and rules.
There should be no unrealistic expectation that
entrepreneurial ventures will deliver happy results. They
promise nothing more than opportunity, coupled with
substantial doses of failure and frustration. Although we
would like to determine the future through research and
best practices and get there with as few diversions as pos-
sible, that is not the way of the world. We are feeling
our way toward a new and hopefully more fruitful era of
teaching and learning. Our choice is ultimately between
trusting the authorities to fix aged and troubled bureauc-
racies in deliberate and incremental steps or trusting in
the ability of a rising generation to seize new opportuni-
ties and tap human ingenuity to answer new challenges
in unforeseen ways. If history teaches us anything, it is
that this is really no choice at all.
Notes
1. TheEconomist, April 18, 1992, quoted in Peter Senge et al.,
TheDanceof Change: TheChallengesof SustainingMomentumin
LearningOrganizations(New York: Doubleday, 1999), 5–6.
2. Paul Strebel, “Why Do Employees Resist Change?” Har-
vard Business Review(May/June 1996): 86.
3. Peter Senge et al., TheDanceof Change: TheChallenges of
SustainingMomentumin LearningOrganizations, 6.
4. Christopher Gergen and Gregg Vanourek, “Talent Devel-
opment: Looking Outside the Education Sector,” in TheFuture
of Educational Entrepreneurship, ed. Frederick M. Hess (Cam-
bridge, MA: Harvard Education Press, 2008).
5. WilliamD. Bygrave, “The Entrepreneurial Process,” in
ThePortableMBA in Entrepreneurship, ed. WilliamD. Bygrave
and Andrew Zacharakis, 3rd ed. (Hoboken, NJ: John Wiley and
Sons, 2004), 1–27.
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