The Fast-Growing, Cash-Generative Business of Education

I don’t pay much attention to the day-to-day business headlines, especially since reporting in that area is just as bad or possibly worse than what passes for public affairs reporting these days.

But when Pearson, the UK-based educational publishing conglomerate that pretty much runs the Virginia DOE, is the subject, things get a little more interesting.

Evidentially, the company didn’t have a good first half of the year and plans to cut about 4000 jobs. However, it’s this statement from the CEO that really caught my eye.

Pearson is positioning itself as “a global learning services company,” Fallon said in a statement today. “This will drive a leaner, more cash-generative, faster-growing business from 2015.”

And where does all that cash being generated come from? At least half is from public schools, of course.

Pearson is the largest company in the fast-growing business of standardized testing, both writing and scoring the exams. Plus study materials to help teachers prepare kids for the tests. And textbooks “aligned” to Common Core or state standards (alignment being a euphemism for test prep).

Even worse, Pearson sees a great deal of potential in “emerging markets”, other countries to which they are exporting American-style standardized testing.

In the end, their bottom line will likely improve in the next fiscal year, even if the quality of learning provided by their customers (aka schools) doesn’t.

Disrupting Ourselves

Did you know your school and students are a potential cash cow? There are lots of edtech entrepreneurs, and the venture capitalists who finance them, who think they can make big profits in the “education sector”. A good deal of this activity is focused on the college level but a not insubstantial amount of money is also flowing into startups trying to create “disruptive innovations” for us in K12.

I stumbled across a recent post about Why VCs Usually Get Ed Tech Wrong, addressing, of course, the business side of things, which linked to another entry on the blog of one of those venture capital firms, Rethink Education, who offer this focus statement on their website:

Our education system is one of the last places to be remade by technology.  That’s about to change.  We are investing in the people, ideas and companies that are rethinking the way we learn and teach.  Today.

Rethink Education seeks to invest in progressive growth-stage companies that are at the forefront of the education technology industry and have the capacity to make positive impacts on our communities.

Very nice. Except what if the system doesn’t want to be remade? What about the large number of educational institutions, probably the majority, that are very comfortable with their traditional processes and are most interested in technology for cost, management, and administrative savings?

Even one of the VCs they quote, someone who has “named education as one of his key targets”, understands those questions.

I wouldn’t want to back a business that’s selling to public schools or characterized by public financing, unions, or government-run institutions. Those institutions are incredibly hostile to change. [my emphasis]

So, if the people with big bucks to invest in the education business sees hostility to change in public schools, why are they putting large amounts of money in this “sector”? The answer is that they aren’t really investing in public schools.

Those edtech entrepreneurs are developing products – electronic textbooks, automated teaching systems, data collection/management systems, and more – for charters, private schools, for-profit colleges, and a variety of other education structures that will be subsidized in large part from public funds. And they’re counting on that area to grow quickly over the next decade or so.

Their customers are not the people working directly with kids. They are selling to administrators, politicians, and chain school owners who think the process of educating children is very complex (which it is) and who are looking for ways to reduce that complexity, homogenize the results and spend less doing it. Those tech companies and their investors who are looking to “disrupt education” are gearing up to sell them the “solutions” to make it happen.

And it is going to happen. Unless those of us who believe in public schools get to the disrupting first. We need to change ourselves, our institutions, before it’s done to us. We need to take a long look at every part of our traditional approach to educating kids and remake it to fit the fast changing, chaotic world in which they (really all of us) will live.

We need to start the hard work of disrupting ourselves.

Doing What’s Right, Not Necessarily Profitable

From Tim Cook, CEO of Apple, in response to questions raised at a recent shareholder meeting about the company’s investment in sustainable energy and the it’s impact on profits.

“When we work on making our devices accessible by the blind,” he said, “I don’t consider the bloody ROI.”1 He said that the same thing about environmental issues, worker safety, and other areas where Apple is a leader.

He didn’t stop there, however, as he looked directly at the NCPPR representative and said, “If you want me to do things only for ROI reasons, you should get out of this stock.”

Argue all you want about the merits of their products, iPhone vs. Android, Mac vs. PC, this is an attitude and corporate policy we should see from more CEOs.


  1. ROI=Return on Investment

Charter Schools Are a Great Idea

In the original concept of charter schools, a few innovative educators would be enabled to organize their own school and experiment with new ideas for reforming the old model and improving student learning, all under the auspices of, and using funds from, the surrounding public system. The ideas that worked could be incorporated into “regular” schools. The ones that didn’t would also provide a learning experience.

That’s the theory, anyway. The reality has been far different.

Two different articles that landed near each other in my Instapaper queue over winter break offer plenty of evidence showing that charter schools in the US, with few exceptions, provide lousy instruction and worse results, and are undermining public education.

Possibly the biggest problem is that nearly half of charter students are enrolled in schools being run by corporations,1 often supported by grants from large, well-funded philanthropic organizations with a political agenda like the Walton Foundation. And their schools are rarely held to the same accountability standards (instructional or financial) as public schools.

Beyond serious questions about who are running these schools (more business people, fewer educators), is the fact that study after study shows they produce “mixed results” at best.

A 2009 national study of charter school performance by CREDO, a research unit at Stanford University that supports charter “reform,” found that only about one in five charter schools had better test scores than comparable public schools and more than twice as many had lower ones. Earlier this year, CREDO released an updated study that looked at charters in 27 states, and little had changed. As the National Education Policy Center explained, “The bottom line appears to be that, once again, it has been found that, in aggregate, charter schools are basically indistinguishable from traditional public schools in terms of their impact on academic test performance.”

However, there is an equally fundamental problem with the way the charter concept has been applied that goes back to the original idea: very few charters are not doing anything innovative.

Most are structured around the traditional teacher information delivery model, with students required to learn the same material, in the same order, often using the same resources as has been standard in public schools for decades (if not centuries). And then demonstrate their learning on programmed standardized tests.

Some charters make a big deal out of requiring longer days, Saturday school, and more regimentation (KIPP), others substitute computer-delivered instruction for human teachers (Rocketship). Certainly these changes may work for some students under some circumstances, but as test cases that might be more broadly applied, they are generally worthless. For many public schools, these ideas could be classified as “been there, done that”.

Even with all these problems, what I’ve covered here only scratches the surface of why the charter school movement (pushed by many high profile education “reformers”) are doing nothing to improve American public education and are probably detrimental.

Spend some time and read the two articles, along with some of the many supporting citations they link to, for a much fuller picture of why the theory of the charter concept is a great idea, while the reality of charter schools in this country is a crappy mess.


  1. “such as K12 Inc., National Heritage Academies, Charter Schools USA and KIPP”

Nothing New

More than a few people I follow on Twitter posted this morning about a “special report” on the Forbes magazine website profiling thirty people under the age of 30 who are “disrupting” education. A few also linked to this post by a teacher ranting about the list being completely void of either classroom teachers and students.

Why is anyone shocked and/or surprised at this kind of story?

First, the list comes from Forbes, a publication that bills itself as “The Capitalist Tool”. They focus on people who are working to make a lot of money, in this case in the education industry. Not on those trying to improve the actual process of student learning. The two parts are tenuously connected at best.

Second, reports like this reflect the usual pattern in the overall public picture of education reform. People held up as leaders in the effort to “fix” our “failing” American schools are wealthy philanthropists, corporate executives, politicians, consultants, and pretty much anyone who is not directly connected to working with kids in those schools.

Of course we’re not going to include teachers or students.