Read new AEI white paper on edu innovation

With the federal government in the midst of an unprecedented $110 billion infusion of education funds through the 2009 American Recovery and Reinvestment Act, and with the Bill & Melinda Gates Foundation launching a substantial 2008 retooling of its strategy, the opportunity to use dollars to drive change has taken on a heightened salience. How can we help ensure that these investments deliver on the promised reforms in the years to come? And can we primarily rely on public and philanthropic dollars to drive the requisite transformation?
What will allow information and communication technologies to finally transform education the way they have revolutionized other sectors? In the enclosed working paper, Tom Vander Ark, managing partner of Revolution Learning and former executive director of education for the Bill & Melinda Gates Foundation, sketches a vision depicting some of the ways in which technology could revolutionize the traditional school environment—with static, printed texts replaced by adaptive, digital learning and virtual learning communities supplementing seat time.
He argues that any such transformation, however, is dependent upon investment and the incentives motivating public, philanthropic, and private funding. He notes that while public dollars are aimed at promoting equity and serving the neediest populations, the government has invested far too little in research and development while maintaining an “ossified bureaucracy” unable to adapt to changing needs. And, while young foundations have pressed non-profits to emulate for-profit business models, non-profits nonetheless have modest incentives to expand and often have great difficulty finding the capital necessary to do so. In short, he sees a dramatic increase in private, for-profit investment as an essential driver of real transformation.
Vander Ark emphasizes the importance of for-profit education companies that can attract venture capital and that are better equipped to sustain and grow through profits and private equity. “Private investment will not fix the problems with education,” he writes, “but education will not be fixed without it.” These companies can bring new services to education—including supplemental online tutoring, digital curricula, adaptive assessments, and school management.
Vander Ark believes that public-private partnerships can be harnessed to pursue both social impact and sustainable profits. But doing so requires reducing statutory and bureaucratic barriers while altering incentives so that such private partnerships can play more than a marginal role. I hope you find his analysis of these issues as timely and thought-provoking as I have.

Education remains one of the few sectors that information and communication technologies have not transformed. There has been virtually no productivity improvement in U.S. schools, despite a doubling of per-pupil funding over the past fifteen years. While the public delivery system is inflexible and bureaucratic and provides an inadequate impetus for performance and improvement, non-profit organizations have weak incentives and limited ability to aggregate capital for research and development or scaled impact. In contrast, for-profit enterprises may have greater ability to attract talent and capital, incentives to achieve scaled impact, and the ability to utilize multiple business strategies.
Private capital and for-profit enterprises will play a vital role in creating tools that increase learning, staffing, and facilities productivity; developing formats and services that leverage these tools; managing high quality, cost effective education networks; and leading the sector transition from batch processing—in which learning is organized around classes of students of the same age, who progress through material at the same pace—to personalized, digital, learning services.