Clayton Christensen |

One would expect a book by the CEO of a for-profit university to mount a vigorous defense of the much-maligned for-profit higher education sector. But what one might not expect is that the same book would do so in a thoughtful, well-researched manner that discusses not just the place of for-profit universities in education, but also offers a compelling narrative on the state of American higher education across the board—from its elite institutions to its community colleges—and addresses the far larger challenges the country’s colleges and universities must tackle for America to maintain—or even regain—its competitive edge.

Yet that’s exactly what Andy Rosen, CEO of Kaplan, Inc., accomplishes in “Change.edu: Rebooting for the new talent economy,” which whirls through the history of higher education in the United States and into its uncertain future in a refreshingly enjoyable and brief but comprehensive 200 pages.

Framed against the backdrop of America’s need to educate more of its citizens far better, Change.edu is divided into four broad themes. The first is a discussion of “Harvard Envy” and “Club College,” which explains why colleges strive to become bigger and better along dimensions that often don’t line up with improving student learning and causes greater investment in the “educational haves” as opposed to the “educational have nots.” Next, Rosen explores how community colleges are meant to help the educational have nots but have a broken funding model that limits their reach. Rosen then examines the complementary role the for-profit colleges play and concludes with a discussion of how learning should guide government policy for colleges and universities of all stripes in the future.

At times Rosen is intensely critical of many colleges’ and universities’ excesses and limitations. To illustrate the points, he documents everything from a sadly amusing competition to house the tallest climbing wall in Texas to the fact that as state budgets are tightening and unemployment is rising, many institutions are unable to serve more students—as evidenced by California pairing back its public college enrollment by 165,000 in the 2009-10 school year even as the for-profit sector added capacity.

Despite these critiques, his empathy for the different circumstances and missions of all colleges emerges throughout the volume. His love for colleges—not just those that are for-profit—is evident, which makes the book all the more credible. Of course Rosen isn’t an unbiased observer, but he also isn’t criticizing the existence of climbing walls and opulent dorms in and of themselves, but more so the government’s financing of them at the expense of serving more students.

As he writes, “universities receive huge funding and subsidies from U.S. and state taxpayers… via government grants… [and] via government subsidized financial aid or the tax deductions offered to colleges by their nonprofit status and the charitable donations they receive. These subsidies and grants amount to some $15,540 per student at four-year public institutions. Colleges tend to sequester some forms of spending so alumni donors pay 100 percent of the bill, particularly if the expenditure involves a new football stadium. But money is fungible, and allocation of funds to one project frees up money for another. And the tax system is still subsidizing the donors writing the checks and the universities that are cashing them. The $1 million donation from a generous alum in the highest tax bracket is costing the federal government as much as $350,000 in foregone federal income tax revenue—money the government could have spent on something else or returned to taxpayers (or that might have been donated to another cause).”

It’s not that Rosen argues against government support for higher education—there’s a clear economic case for it, he writes. But it’s considerably less clear that taxpayer funds are well spent on a French restaurant because it happens to be inside a college’s student union or on “Michigan’s quest to defeat Ohio State’s football team.”

Indeed, his argument points to a need to recalibrate the funding mechanisms at work in higher education to reward institutions that give students and taxpayers the best return for their money. Rosen makes the case that for-profit schools are in prime position to deliver on this mission—as well as to innovate in the fields of online learning, for example, but here his absolute statements miss the mark.

Although Rosen is correct that, on average, non-profit colleges have convoluted business models that create lots of perverse incentives—and the business model of many for-profits is far simpler (leading to his correct conclusion that it’s not that the “for-profit way of doing education is not so much better or worse than the non-profit way; it is just a different approach”), it doesn’t have to be this way. There are non-profit institutions that have similar and simple business models that operate for far less money than their peers—like Western Governor’s University, for example.

But broadly speaking, Rosen’s larger point on the role of government is on target.

I have recommended creating a “QV Index” to guide the federal government’s spending to accomplish Rosen’s aim, whereby institutions that performed better on measures of student satisfaction and quality—defined as helping students get to where they want to go and improving their earnings—relative to cost and relative to other institutions, would have access to more government financing than would others.

Rosen argues for the government to do this based on four areas: learning outcomes, access, low costs and innovation. I worry, however, about the government rewarding institutions based on tightly prescriptive ways, such as how students do on learning assessments, given that students attend college for a wide variety of reasons—from the culinary to the academic. My hunch is that the QV Index would go a long way toward incorporating implicitly all four of Rosen’s suggested measures without the heavy intrusion of the government that might accidentally suppress innovation—the very thing Rosen wants to encourage and so poignantly writes about throughout.

But this is for policymakers to debate in the years ahead. What Rosen’s book does in the short term is reset the conversation on higher education. He provides needed perspective and ends on a note of optimism and hope that suggests there’s a bright path ahead, as change comes to education.

With the arrival on February 1, 2012 of the first-ever national Digital Learning Day, the disruptive innovation of K-12 online learning—from in blended-learning environments to remote ones—seems to be taking yet another step toward the mainstream.

For over a couple decades, supporters of technology in education have talked of its potential benefits in transforming education. But beyond a set of enthusiastic early adopters, the use of technology in formal education remained largely stalled. Its talked-about benefits remained unrealized at best, as the cramming of computers produced few notable results that scaled.

With the rise of online learning, that began to change. Its growth is rapid and undeniable. Increasingly we’re seeing online learning stretch beyond areas of nonconsumption—where the alternative is nothing at all and where disruptive innovations first take root.

The shift from print to digital, as Tom Vander Ark so succinctly puts it, is upon us. Singapore for some time has had an e-learning week.

Now we have our first Digital Learning Day.

As we approach this day, and as district schools, charter schools, and states around the country participate, we must make sure that this doesn’t become a day that is all about technology for technology’s sake.

The critical thing is to fashion a student-centric system powered by digital learning that allows each child to realize his or her fullest human potential. Technology in this vision becomes the backbone that helps us to customize an education for each child’s unique learning needs, not the gadget that’s just there because it’s cool or because we simply think learning through or with technology is the way we should do it now.

To do this right, it’s important to bear in mind the definition of digital learning from Digital Learning Now’s Roadmap for Reform: “Digital learning is learning facilitated by technology that gives students some element of control over time, place, path, and/or pace.” The document defines each of these elements and offers the following line: “Digital learning is more than just providing students with a laptop.”

As our formal education systems move into the digital age, we should do so with the student and his or her learning at the center, not technology.

As online learning gains share and transforms our education system, for some time I have argued that foundations and philanthropists would be wise to spend their dollars in moving public policy, creating proof points, and the like to create smarter demand and not invest on the supply side in the technology products and solutions themselves.

The market is plenty motivated to create disruptive products and services to serve the public education system, but today’s policies and regulations don’t incentivize and reward those products and services that best serve students. As a result, philanthropic dollars are critical to help create the correct conditions such that those products that are efficacious and serve a higher end—student learning—are the ones that gain share.

As we’ve argued, public policy should reward those providers that best deliver student outcomes—and punish those providers that do not serve the public good.

There is one area, however, where I think philanthropic dollars should probably fund products and services, which is in the category of assessments. If we’re going to have a system that pays providers on how students do on outcome measures, we need robust assessments that are authentic and that people trust. The political incentives—for a variety of reasons—to create high-quality assessments aren’t particularly strong, so having philanthropists invest dollars to create these assessments and continue to push innovation is critical.

This is why yesterday’s announcement that The William and Flora Hewlett Foundation will award a $100,000 prize to the designers of software that can reliably automate essay grading for state tests to drive testing of deeper learning is so important. Open Education Solutions and The Common Pool designed and will be managing the competition.

The Hewlett Foundation’s leadership in creating better assessments to measure critical reasoning and writing is a big step forward—and its use of Kaggle, a platform for predictive modeling competitions, to host the competition is clever.

According to the press release, “The automated scoring competition intends to solve the longstanding problem of high cost and low turnaround of current testing deeper learning such as student essays. The goal is to shift testing away from standardized bubble tests to tests that evaluate critical thinking, problem solving and other 21st century skills.”

In addition, the competition is being conducted with the support of the two state testing consortia that are currently designing the next-generation assessments for the Common Core. Having this buy-in and collaboration gives the competition serious validity and the potential to have real impact.

The Fordham Institute continued its critical series exploring how to create sound policy for digital learning in November with two new papers, “Teachers in the Age of Digital Instruction” by Bryan C. Hassel and Emily Hassel, and “School Finance in the Digital-Learning Era” by Paul T. Hill. And more are on the way soon, including important ones exploring local control in the digital era and the true—and hotly debated—costs of online learning.

Hill’s paper tackles the other side of the coin of the costs of online learning, as he works through the ideal funding system that would promote innovation but strike the right balance with the need for accountability for public funds. The key tenets of his proposed ideal system are that it funds education, not institutions; moves money as students move; pays for unconventional forms of instruction; and withholds funding for ineffective programs without chilling innovation.

His fundamental idea to accomplish this won’t surprise anyone familiar with the school finance debates, but he states it in a simple and eloquent way that is worth quoting:

Every student would have an account that showed what funding from all sources was available for her education, and to what schools and vendors it had been disbursed. Each student’s account would, in a sense, constitute a “backpack” of funding that the student would carry with her to any eligible school or instructional programs in which she enrolls. … If a family decided to rely on one school or instructional provider for all of a child’s education, all of the money would go to that school or provider. However, students might also enroll in courses provided by different organizations, in which case the funds would be divided. Students and families would then be free to shop for the best combination of courses and experiences their backpack funds could cover. Providers would face competition, both on the quality and effectiveness of their services and on cost.

It’s a good idea, too. But Hill’s changes are unlikely to be so simple to deliver. The reason why lies in his up-front analysis, when he writes about why today’s education system is so flawed: “Our system doesn’t fund schools, and certainly doesn’t fund students. It funds district-wide programs, staff positions, and so forth.”

He continues, “Nobody deliberately engineered the system of mutually reinforcing structures. It arose over time starting in the 1950s as courts decided civil rights suits. … Outsiders, observing that U.S. schools have remained about the same despite revolutions in technology and economic life, conclude that education stasis is due to the lack of new ideas. But that is patently false. Individual teachers, principals, and technology innovators are coming up with them all the time—and often put them into small-scale practice. This the system will allow, but it does not allow widespread use of ideas that challenge its core.”

Hill is absolutely correct, and this is certainly problematic for encouraging innovation. But what’s interesting is that this description is not a condition at all unique to education. Nearly every system confronts this same problem over time as its business model matures and solidifies.

The resource-allocation process at work in nearly all of the world’s most-innovative corporations systematically prioritizes only those things that fit their established business model. Any innovative idea that doesn’t fit the needs of the business model is either rejected or reshaped—some might say watered down such that it’s not all that innovative anymore—to fit the company’s established business model. The classic reaction of leaders and managers searching for more innovative ideas is to yell back at the beginning of the “funnel” and ask for more creative ideas—only that’s not where the problem lies.

Sounds like Hill’s description, no?

So how does one solve this problem once it’s entrenched? Imposing a new funding model on top of the existing business typically doesn’t work. Instead management needs to create an autonomous organization that can craft its new business model from scratch as the innovation demands–serious business model innovation.

Given this, I’d be surprised if districts could simply shift to the new funding model Hill describes—and even if that didn’t matter, because this funding is opposed to how they operate today, they will predictably gear up to fight the sort of wholesale change for which Hill advocates.

It’s one of the reasons that I think a more fruitful way forward, at least for now, is to create these new funding models for the online learning entities that are growing—just as Florida did with the Florida Virtual School, for example—and build on the change from there as these disruptive innovations gain share.

Hill’s piece, however, treats the reader to a tour of what the ideal system should be—not how you would move to it per se. This is important of course, but given that, it’s surprising that he is willing to concede so readily that venture capital maybe won’t play an important part in the evolution of the system because of people’s suspicions about profit-seeking enterprises in education. To me, this is a stunning concession for the supposed ideal system designed to scale innovation in education. Hill’s backing of New York City’s iZone or ARPA-ED as the engine to fund this innovation doesn’t make up for it—and ignores completely the start-ups and educational entrepreneurial energy already percolating in places like Silicon Valley.

Finally, Hill discusses the pros and cons of six different ways of crafting a system that strikes the right balance between innovation and accountability. It’s a thoughtful concluding section, although it seems he is least bullish about the pay-for-performance option. His piece would be helped here—as would a couple pieces now in the Fordham series—by some more grounding in the current pay-for-performance funding models developing in the online-learning world in Utah and Florida, which haven’t seemed to be nearly as onerous as he implies they would be.

With all that said, Hill’s piece is a worthwhile and quick read—and should spark more conversation on the ideal funding system to jumpstart a student-centric education system powered by digital learning.

It’s an embarrassment that California, the state that led the technology revolution in America, is, according to Digital Learning Now, last in the nation in using technology to transform its education system from its current factory-model roots into a student-centric one.

California policy has done its best to create a byzantine—some might say bizarre—set of regulations to frustrate the power of online learning to do just that. From geographic barriers that limit the ability of students in certain locales to access online learning to restricting blended learning in some unfortunate ways, California has created a maze to frustrate would-be innovators.

There have been some attempts by legislators over the last couple of years to begin to rectify some of these problems, but they have only stalled. Although some charter school operators, such as Rocketship Education and KIPP Empower, as well as some school districts, like Riverside School District, have created stellar blended-learning models, the most advanced school districts in California in online and blended learning have seen their efforts frustrated and curtailed. Even the exciting emerging blended-learning models appearing throughout California in response to tight budgets are limited in how innovative they could be by California’s regulatory landscape.

Against this backdrop, a group called Education Forward has introduced “The California Student Bill of Rights Act”—a proposed ballot initiative that would unlock some of the most onerous barriers to online and blended learning in California. But it would do so in an indirect way.

The initiative is actually not about online or blended learning per se; instead it’s designed to solve one of the most pressing problems facing California students today.

That problem is this: a stunning 1 million high school students in California—roughly 50 percent of the state’s high school student population—attend schools that do not offer the full slate of courses required for admission to the state’s university systems. This means that in many of California’s public high schools, students can graduate, but they won’t be able to get into a UC or CSU college even if they have a good GPA and good test scores.

The initiative solves this problem by creating a mechanism to move beyond simple seat-time funding and instead offer fractional funding to the course level, so students can take courses from an outside institution if their home school doesn’t offer a certain course. The initiative also stipulates that a school or district cannot deny students access to the courses needed for admission to the University of California and California State University systems, including college prep and Advanced Placement courses—a statement of a student’s basic educational rights.

If the initiative gathers the requisite number of signatures to be on the ballot, with a single vote this November, California’s voters could eliminate one of the most egregious examples of inequity in its educational system—and it won’t cost taxpayers any additional funds to do it. This fact alone should allow people from all sides to come together and get behind this.

The initiative certainly isn’t perfect—no initiative or bill is. It leaves a lot of discretion up to several entities, from the departments of education and finance to potentially the legislature—to create the mechanisms to make this all work well. If it passes, the “real” work would likely begin afterward. Some of the organizers behind Education Forward have some clever ideas about how to fund the online courses a student might take, for example—by offering 50 percent of funding to the provider up-front for enrollment, 25 percent for the student passing the course, and the last 25 percent upon successful passage of the state final exam—but this idea, which moves the focus to student outcomes, isn’t codified explicitly in the initiative (although the notion of competency-based learning is, which might lead to such an outcomes-based funding system).

But what successful passage of the measure would do is assert the voice of the people of California as a means to pressure the stalled legislature to do the right thing. And in so doing, it could do more than just solve the problem of equity to high-quality educational opportunities in the state, it also creates a mechanism for competency-based learning, establishes a strong grounding for what online learning and blended learning are, and eliminates the outmoded geographic barriers that prevent students from being able to access high-quality learning opportunities no matter where they originate in the state.

As such, it’s a much-needed breath of fresh air for a state that has been stuck for years now when it comes to education policy—and it could lead the way to bigger and better things ahead.

An increasing number of advocates for online learning have come out in favor of mandating that states require students take at least one college- or career-prep course online to earn a high school diploma. Digital Learning Now!, a national campaign chaired by former Governors Jeb Bush and Bob Wise to advance policies to create a high quality digital learning environment for each student–and where I serve as a “Digital Luminary,” is on board as well.

States are taking notice. Michigan jumped in first with an online-learning requirement for graduation 5 years ago, and Alabama quickly followed suit. In the last year, Florida and Idaho have jumped on board as well, and districts, such as Tennessee’s Putnam County schools, have adopted an online-learning graduation requirement, too.

But is an online-learning requirement a good idea? For someone who advocates for a transformed student-centric education system powered by digital learning, you might think my quick answer would be an emphatic yes, but I’m not so sure.

I’ve never been bullish on mandates. As a general rule, they tend to distort markets and sectors, have unintended consequences down the line at best and immediately at worst, and lock in ways of doing things at the expense of innovation.

My overriding concern has been to see a student-centric system emerge that can flexibly and affordably respond to different student needs so that students can realize their fullest human potential. Digital learning, I argue, provides the platform to do this at scale, but in many cases, students may learn better offline, and a system powered by digital learning should be able to accommodate that. The purpose should never be technology for technology’s sake.

As Katherine Mackey and I have written, the focus from a policy perspective should ultimately be on student outcomes, not the inputs to get there. Focusing on inputs has the effect of locking a system into a set way of doing things and inhibiting innovation; focusing on outcomes, on the other hand, encourages continuous improvement against a set of overall goals and can unlock a path toward the creation of a high-quality student-centric system.

One argument though in favor of an online-learning graduation requirement is actually from an outcomes perspective that has some merit. The outcome from taking an online course—gaining the skills to succeed in a digital environment and perhaps become more self-driven—is valuable in a world in which postsecondary education and work-force training are increasingly done online and lifelong learning is critical to people’s lifetime success.

A question to ask perhaps is if this is the right way to seek those outcomes? Can we require that students develop these skills but leave open the possibility that there may be other ways to acquire these? I’m on the fence.

In many ways, an online learning mandate appears to be yet another input-based requirement in a system already overburdened with mandates—and in conflict with the very spirit of digital learning. If the purpose of this mandate is simply to bolster online learning for its own sake out of a belief that this is the only way to break the current factory-model system, I think that’s a mistake.

As Fordham’s Education Gadfly recently wrote, “Supporters of such mandates often claim that learning how to take an online course is itself a critical skill to build. But if the courses are well-designed (like, say, your iPhone), mastering the experience should be a no-brainer.” To this I might add that given Digital Learning Now!’s recommendation that dollars follow students to the online course of their choice and not the district’s, if the experience is so important or compelling, won’t students naturally flock to online learning?

Tom Vander Ark has seen many sides of the U.S. education system—as a district superintendent, the executive director of education for the Gates Foundation, an education entrepreneur, an investor in education companies, and an evangelist for transforming today’s education system into a student-centric one fit for the 21^st century. He’s seen his share of successes, failures, and frustrations in all of these arenas, which is what makes his debut as a book author with his volume Getting Smart so intriguing.

In a whirlwind tour of 200 very readable pages, Vander Ark paints an audacious and bold vision for what education could—and he predicts will—be like in the next 10 years. For those familiar with Vander Ark’s daily blog, little in the book will be new, save for how he organizes the sheer volume of his thoughts and on what he chooses to focus and highlight. But for those who don’t follow his writings, Vander Ark’s predictions, which are sprinkled throughout the book every few pages in an entertaining fashion, will likely come as quite a shock—from his prediction that in five years “low-cost blended-learning private schools will serve close to 200 million students in India, China, and Africa” to his declaration that in 10 years, “second-generation recommendation engines will drive tutoring applications that are more effective than one-on-one sessions with a live tutor.”

Other fun—and even more audacious ones perhaps—are his predictions that in five years “science will confirm the obvious about how most boys learn and active learning models will be developed in response using expeditions, playlists, and projects” and “fifty of the largest one hundred districts will, on a regular basis, close struggling schools and replace them with blended charter or contract schools, expand access to online courses, and embrace school networks.”

Bold indeed. Others might call it brash, but it’s certainly direct and in keeping with Vander Ark’s personal style. I suspect many will struggle with this directness, as Vander Ark does not peel back the thinking behind many of his predictions and give some transparency or broader theories as to why he thinks things will unfold in the way that he predicts, as he prefers instead to assert and overwhelm with a lot of stories and data points to lead the reader directionally toward his vision—which is a compelling one (and that shared vision is a critical reason why I work with him to transform our education system regularly).

Readers turned off by this style of forward assertions and tempted to dismiss the book, however, would be wise to press on lest they miss several subtleties and precious insights along the way in the book.

Vander Ark’s observations on the most radical disruptive innovations in education starting from outside the system—and indeed often in developing countries—is in line with the theory that disruptive innovations get their start by targeting areas of nonconsumption, where the alternative is nothing at all.

His distilling of an argument in Rethinking Education in the Age of Technology in a simple chart of the shift from Agricultural to Industrial to Idea Economy Education seems to be a prescient one, as it reflects the larger shifts in an economy once dominated by solution-shop businesses to one dominated by value-adding process businesses to today’s economy that is increasingly being driven by facilitated network businesses. Education seems to have always reflected these broader societal shifts and organizational patterns, even if the transition took some time and vestiges of the old remained. This sets up one of his broader arguments that schools should ultimately refashion themselves into “school-as-a-service” models, a point with which I agree.

And Vander Ark sprinkles in some important rebuttals to so-called technophobes, as well as some critical points on the necessity of understanding motivation—what he calls the “holy grail of education.” As he says, “In the nascent field of cognitive sciences, hypotheses about learning styles have drawn a good deal of attention from researchers and educators, leaving more fundamental questions of motivation underexplored.” This distinction seems spot on—and a critical blind spot in today’s research from cognitive and neuroscientists, who say they can tell what the ideal way to learn is and expose myths about learning, but fail to answer whether students will actually succeed in these so-called ideal paths by applying themselves to work hard, “persist through discomfort and distraction,” and ultimately learn and progress.

And of course, Vander Ark’s knowledge of the policy landscape and the insights he sprinkles throughout are worth paying attention to, including my favorite one of Vander Ark’s thought experiments—that with “sixty days’ notice, it would be logistically possible for a half dozen organizations (private companies and nonprofit groups) to make available to every student in the United States quality online high school math and science courses supported by effective instructions; they could also throw in twenty foreign languages—no problem,” and yet that the only thing standing in the way of that is—simply put, ourselves and today’s policies.

Quite a possibility, and quite a frustrating impediment, too, all of which makes Getting Smart worth the read on the road to Vander Ark’s ultimate passion: making students and our society just a heckuva lot smarter.

Bror Saxberg, the chief learning officer of Kaplan, Inc., is a man for whom I have great respect. Whenever I have a question about the science behind learning, he is the first person I turn to. He verses himself in the latest in cognitive and neuroscience research and applies his multiple degrees to great use.

When he forwarded me his recent blog titled “What to learn from a learning grant process,” I dove in with some excitement as he talked about his work helping review science and math grant applications for the Institute of Education Sciences within the Department of Education and posed some bigger questions and comparisons with health care. It’s worth the read.

Given that he knows so much more than I do about these topics—this is not my area of expertise even though I read about and am fascinated by the science behind learning—it is with some trepidation that I therefore am wading in to respond to his blog. I’m not sure he’ll disagree with anything I say here, but I figure that I should tread carefully.

What struck me first is that among the five different types of projects that IES funds, none specifically focuses on the anomalies to “what works.” There are exploration grants, development grants, efficacy grants (think randomized control trials), scale-up grants, and assessment grants (all important as we need more data!). But there are no grants per se that focus on the anomalies within randomized-control trials or scale-up grants (although Bror tells me there is some scope within the IES grants to explore such moderating and mediating factors). That is, when we conduct a research trial and the “active ingredient” works here but not there, it would be useful to explore what was it that was different about the circumstances between those two places that caused the results to be different. Or if the active ingredient on average produces, say, 70 percent better results than the control, could we run an enriched trial focusing on those individuals for whom it didn’t work to learn what was different (and, ideally, move beyond simple attributes of correlation to understanding actual causation)? Although one active ingredient might be the most efficient way to learn something, perhaps certain students aren’t motivated to pursue it and therefore do not do it, but there is a less efficient pathway to learn something that those students will actually commit to and therefore proves to be more efficacious on the ground.

This is how breakthroughs in theory in general—not just learning theory—occur. Anomalies aren’t something to be explained away through statistics or claims of lack of fidelity in the implementation, but instead are to be welcomed, as, over time, they allow us to create circumstance-based theory—so we know what actions will lead to what outcomes in different circumstances and progress beyond the flawed notion of “best practices.”

The lack of this in education research worries me when it comes to things like digital learning and the What Works Clearinghouse. Why? Although the notion behind the What Works Clearinghouse is important and a step forward, because the methodology is focused on gold-standard randomized control trials, I worry that it masks the customized promise of digital learning. Just because a given intervention doesn’t work better on average than the control, doesn’t mean that it isn’t working significantly better for a given subset of a population or under a particular circumstance—and vice versa for the control as well.* Randomized-control trials are important (and an improvement over where we have been), but they are not enough and if seen as such, can sometimes lead us astray in education—or in health care for that matter as we move away from empirical medicine toward personalized medicine.

Which brings me to Bror’s next series of questions around the fact that there is actually a lot of good research on the science of learning out there already, but why aren’t there organizations dedicated to doing larger and vastly more complicated trials to scale this up into something meaningful? To answer this, he turns to the world of health care, where such organizations do exist. He points out that they exist because there is a vast market that is desperate to pay for the successful products that emerge from such research trials—so it allows the research to be profitable—whereas this does not exist in education.

People who have read my writing before know that I broadly agree with this assertion, although there is one subtlety that’s worth pointing to. The health care industry today profits from sickness, not from health, as my colleagues Clayton Christensen and Jason Hwang wrote in The Innovator’s Prescription. Therefore, as Bror points out, there is a huge market for blockbuster drugs, which has historically financed the large-scale research trials to which he refers. But there is a considerably smaller market for those profiting from wellness, which is where many think we need to head to improve our health-care system and make it more affordable. The system as it is constructed today doesn’t reward this. What’s interesting is that integrated health providers, those that integrate the payer and provider function, seem to have created a system where there incentives in fact align around benefiting from people being healthy, as Dr. Hwang recently wrote. Here these players aggressively do things that prioritize preventative medicine and the like, as it keeps costs down and improves outcomes. What this suggests is incentives do matter—and if we can get them right in education, we might see a sea change.

Instead, consider the system of public education today where there is no real mechanism to concern the industry with outcomes and productivity and therefore encourage it to demand things that will help it improve. We have written about moving the system from a focus on inputs to outputs and lastly to outcomes so as to fix this demand side. But we must admit that even as there have been changes over the past couple decades and people have become more concerned with outcomes, as Tom Vander Ark writes in his new book Getting Smart, all we really have done is layered these new outcome expectations on top of a system laden with prescriptive commands on how to do things on the ground. And this prevents those things from the research that seem to work from receiving their due notice on the ground.

Education providers don’t really benefit from being better, and they haven’t largely gone out of business for being worse. Bror suggests—without our language and without evidence perhaps, so I’m using my words here—at the end of his blog that Kaplan has now amassed such an integrated system whereby it will benefit from applying evidence-based principles to improve outcomes and drive down costs. I’m not sure if the incentives are truly aligned properly for this to happen, but it’s worth staying tuned to see if—and hope that—he is right.

*To take it a step further, I worry even more about researchers who suggest we need to do more research on blanket things like “online learning,” which ignores the reality that there is an incredible diversity in online learning and the causal mechanism in most circumstances is not whether the learning is online or not, so for starters, (1) the question is virtually meaningless, (2) we know that it serves just fine for some students already, as they have graduated and are doing well in life, and (3) that through paying based in part on outcomes, we can provide proper opportunities based on different needs.

An investigation of Colorado’s full-time virtual schools has revealed some dubious results and practices, which led the state’s Senate President to call for an emergency audit of all of Colorado’s virtual schools.

But the state shouldn’t be shocked by the report. As the truism goes, you get what you pay for.

Colorado’s policy environment incentivizes exactly what it’s getting from its full-time virtual schools—and arguably not just its virtual schools, but all of its schools statewide.

The biggest problem is this: It pays a school all of its funds on a “count day” on October 1 based on the number of students enrolled on that day. If students leave afterward, the original school keeps the funds. If students enroll elsewhere, the new school receives no funds.

This incentivizes providers to enroll students, but there are few incentives in place to focus on what happens after that. As a result, a significant number of online providers seem to have followed these incentives and done exactly what Colorado paid them to do. The end result isn’t pretty for students, as a great number of them allegedly leave soon after the count day and enroll back in district schools if they enroll elsewhere at all.

Some are using this to bash all online learning, as well as for-profit providers that are seizing this revenue-making opportunity (as many such providers did in higher education), but in so doing, these critics are missing the point.

As I’ve written numerous times, studying whether online learning is more or less effective than traditional learning is invariably asking the wrong question. Online and blended learning have the potential to dramatically transform our education system by being able to individualize for each student’s distinct learning needs (just look at the results from Carpe Diem, KIPP Empower, or Rocketship Education), but whether it does so will have a lot to do with policy—whether we change the incentives and focus not on merely serving students and micro-managing the inputs, but instead focusing on the student outcomes and leaving behind an antiquated factory-model system for a student-centric one. Ultimately we want a system that can deliver the right learning experience for each individual student when he or she needs it—whether that be an online or offline activity.

And just because many studies show that on average online and blended learning work better than does face-to-face learning, this does not mean that just because a program is online that it will be good. There will be both good and bad online programs, just as there will be good and bad face-to-face ones. Good programs, however, that do customize for these different learning needs and lead to increased student engagement and time on task, should be easier to scale in a digital world as opposed to an analog one.

Similarly, an oft-leveled charge at for-profits in education is that they only care about their shareholders, not about their customers. This is absurd. The way companies create shareholder value is by serving their customers. The problem here is that what the customer—the state of Colorado—is incentivizing is blatantly misaligned with what its students need.

As I wrote in a paper for the American Enterprise Institute titled “Beyond Good and Evil: Understanding the Role of For-Profits in Education Through the Theories of Disruptive Innovation,” for-profit companies are not inherently good or evil. Rather, successful companies do what their customers offer incentives to do—not much more or less. To say that for-profits are evil or poor quality misses the point because quality is defined by what a customer will pay someone to do. Blaming for-profits for doing what we have asked and paid them to do from the outset makes little sense.

What’s interesting in this particular case, however, is that a successful for-profit, K12, Inc., does apparently defy its incentives to some extent. According to Jeff Kwitowski, K12’s VP of Public Affairs, “K12 invoices the school for student-related expenses based on the number of students who are enrolled each month, not based on the October 1st enrollment count” despite the policy in place.

That’s good and smart of K12 to observe the spirit of the law, not just the letter. But policymakers must do better and create a system that does not rely on heroes and anomalies.

Given that, as I also wrote in the AEI piece, for-profits scale faster on average than do non-profits, they tend to be aggressive in seizing these policy opportunities, so policymakers need to fix bad policies quickly before an industry coalesces around a faulty value proposition and stands in the way of changing those policies with lots of money to back it up (as has happened with the players—mostly non-profit and government-run—that make up the country’s current factory-model education system).

There is a second problem with Colorado’s policy environment as well, which creates problems for truly judging how online learning programs are performing and could create incentives to avoid serving the hardest-to-serve and most vulnerable students. This one lies in the way our education system—across the nation—calculates graduation rates.

Although I’m still working out my thoughts on this, here’s the dilemma. The common graduation rate formula that has just recently been adopted across the country calculates a state’s graduation rate based, in essence, on the percentage of an entering freshman class that finishes high school with a regular diploma four years later. This may make sense as a way to judge a state (although there may be legitimate questions if it makes sense when moving to a competency-based learning system and away from one based on time), but it creates some problems for judging schools to where students are transferring in the midst of their high school experience.

The reason is this: Picture a school—like many of the online schools in Colorado—that enrolls a student in the fall who is classified as, say, a junior, based on his age. The graduation rate calculation says he should graduate in two springs from now; if he doesn’t, the school’s graduation rate falls. But say that student is many credits behind—let’s pretend for simplicity’s sake a year behind—and not on track to graduate “on time.” If the school manages to accelerate the student and the student graduates only a few months late—the summer after and not an entire year behind—shouldn’t that school get credit for accelerating the student? With today’s measurement systems, it is penalized.

The reverse scenario also exists today, as we give credit to schools that may have merely enrolled advanced students.

This doesn’t make sense. When a student transfers schools, he ought to be recognized based on the credits he brings and where he truly is academically, not based on his age—and the success of the school calculated accordingly.

This points to a desperate need to move toward a competency-based learning system that measures and rewards individual student growth, as well as an underlying shared learning infrastructure that allows the country to identify each unique student in a consistent way—so that when he or she moves geographies, the student’s record does as well—and to keep track of what that student knows and can do in a consistent way across geographies. Even moving past the question of calculating accurate graduation rates, unless this occurs, it remains challenging to figure out whether a school is helping a child academically with just a snapshot view.

Until we fix these problems, we shouldn’t be surprised at stories like the one unfolding in Colorado.

The biggest shame in all of this? By focusing on the wrong part of the story, it may set back our opportunity to leverage the rise of digital learning to transform our system into the student-centric one that each student deserves.

In response to our recent article in the Harvard Magazine titled Colleges in Crisis and my coauthor Clayton Christensen’s recent book, The Innovative University, a curious counter-narrative has emerged: Our analysis is flawed because what we don’t understand is that non-profits do not have business models; they have missions.

What are we to make of this claim?

Of course non-profits have missions (and mission statements to declare those missions to the world and focus themselves). And we agree that the missions of most colleges and universities are important—to their faculty, their students, their alumni, and often society. Preserving these missions—even more to the point, the actual services that fulfill these missions—is a noble cause.

So does one of our central arguments—that the business models of most colleges and universities are fundamentally broken mean that we are guilty of cognitive dissonance? On the one hand we think that what they do is important but on the other hand by asserting that the business models are broken we disagree with that very statement and thereby fundamentally miss the boat because these entities simply do not have business models?

Quite the opposite.

To support and deliver upon their missions, colleges and universities, like all non-profits and for-profits, have business models. These two things are not opposed to each other or mutually exclusive.

A business model is made up of four components. The first part is a value proposition—what it offers customers, be they individuals or society. To deliver upon that value proposition, organizations assemble resources—people, technology, facilities, and so forth—which is the second component of a business model. As these resources work together to address recurrent tasks, processes—the third element—emerge. Processes include everything from budgeting and planning to, in the case of colleges and universities, scheduling, researching, teaching, and so forth. And over time, to support these resources and processes to deliver upon the value proposition, the fourth component, a profit or revenue model, emerges—the money that the organization needs to bring in to support these inputs.

When understood in that light, it’s obvious that colleges and universities have business models to support their missions. It’s why—depending on their structure—they charge tuition, fundraise, and collect funds from federal and state governments so that they can support their professors, buildings, research, teaching, and so forth.

That the traditional business model employed by most colleges and universities is broken and increasingly unsustainable imperils those missions. Our central argument then is that to continue to deliver upon those missions, we need to fix those business models; in the absence of doing that, a significant chunk of the nation’s university system could collapse.

Although there are certainly some thorny questions about how to best fix these business models—as well as some interesting questions about whether our nation’s colleges and universities are even realizing their missions and how we ought to think about these missions—to suggest that colleges and universities only have missions, not business models, disengages from some interesting criticisms, and its sad simplicity doesn’t achieve anyone’s mission.