Creative Destruction in Education

I don’t have time to write a post as long as the topic deserves, so let me just start a discussion by making a claim…

For the most part, organizations are incapable of innovating.  Most organizations are founded with a particular mission and method for pursuing that mission.  If circumstances require that the mission or method be changed, organizations generally can’t do it.  They’ll just keep doing what they were initially established to do until they can no longer continue operating.

Progress occurs not by turning around failing institutions, but by replacing those organizations with new ones that have a better mission and/or method.  Of the original 500 companies included in the S&P 500 in 1957 only 74 (15%) exist today as independent companies.  In the private sector, innovation primarily occurs by replacing or fundamentally re-organizing organizations and not by “reforming” them.

And while U.S. real GDP has nearly quintupled since 1970, education achievement of 17 year-olds and high school graduation rates have remained basically unchanged over the same time period.  Perhaps the reason for progress in the economy but not in education stems from our willingness to allow new organizations to replace old ones in the private sector, but not in education.

Public school systems almost never close and the creation of new ones is highly constrained.  Plenty of our public schools are failing, but we almost never admit that they have failed and allow that organization to be replaced with new ones.

Let’s stop trying to fix Detroit, LA, or Chicago public schools.  Let’s let the reality of their failure become official.  They, like most organizations, cannot innovate.  They need to be replaced with new organizations with new missions and new methods of education.  That’s how we can reform schools — by replacing them.

4 Responses to Creative Destruction in Education

  1. […] The percent of the original 500 companies listed on the S&P 500 in 1957 that still exist today as independent companies. This fact leads Jay Greene to wonder why we don’t close schools that have been persistently failing their students and replace them with completely new organizations with new missions and new educational methods. (Jay P. Greene’s Blog) […]

  2. GGW says:

    Correct generally.

    But there are so many market failures in education. Example: effective school can’t “raise its price.” Example: almost no M&A activity.

    So my question is:

    If I agree that weak schools should be shut because they cannot be fixed (except for rare outliers), but also believe that thus far the closed schools have not generally been replaced with high performers, what then?

  3. Greg Forster says:

    You want educational M&As? Talk to Darth Ladner and his Sith apprentice, Darth Leo.

  4. Thanks, GGW. Like I said, entry has to date been highly constrained but we can change that. Read my chapter in the newly published Freedom and School Choice in American Education, edited by Greg Forster and C. Bradley Thompson, Palgrave MacMillan for an idea of what we could do instead.

    For example, if we provided a voucher to every student equivalent to the cost of a basic education for that child and allowed parents to supplement with their own funds if they wished, we could develop a pretty dynamic market with competition on quality and price.

    Another idea is the Education Savings Account, like the one recently adopted in Arizona. It is just like the idea above but allows parents to carry any savings forward to pay for future educational expenses.

    Look, the problem is not that we have no models of how progress occurs by creative destruction. The problem is that we are not allowing that process to work in education.

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