From the Silver Bullet to A Diverse Portfolio: Financial Innovation in Education

Last week I had the joy and privilege of spending a few days with Michigan Lutheran school principals, a time that led me to further reflection on the need for more financial innovation in education. The focus of our work with the principals had to do with educational innovation, so we used the first day to paint an historical picture of how we got to where we are in contemporary education followed by time considering the importance of innovating from a place of clarity about one’s mission, vision, values and goals. As I mentioned to the group, in the absence of such groundwork, it is too easy to get caught up chasing “shiny” things in education or trying to keep up with the school next door. Mission-minded innovation is about pursuing innovations that amplify the mission, remove barriers to achieving the mission, and come from clarity about an organization’s compelling why.

When it comes to the second of three items in mission-minded innovation, removing barriers, we decided to take time to surface some of those barriers. We provided each person with five sticky notes, asking them to take over the back wall of the conference room to share critical needs, challenges or issues in their organizations. Then we invited them to collectively sort these issues into emergent themes or categories. Less than half way through the activity, it was abundantly clear that the dominant perceived barrier among these educational leaders was financial. Granted, this was a room of administrators from mostly tuition-dependent private schools. At the same time, their core mission is not limited to serving only the people with enough money to pay what is sometimes a hefty sum for a year at a parochial school. As such, money is a barrier to their mission, and financial innovation could not come at a more critical time for many of these schools.

This is not limited to many parochial schools. Finances remain a prime area for innovation in higher education and P-20 education in many parts of the world. When it comes to higher education challenges, namely the rising cost and increased debt of college graduates and dropouts, some are looking to replicate a K-12 innovation from the distant past, tax-payer funded education at no cost to the student. Of course, we already see versions of that in different parts of the United States (and certainly other parts of the world). I’ve been open about my support for such a possibility, but not as the lone solution or innovation. Similarly, there is a growing interest among for-profit education organizations to come up with new ways to tackle P-20 education in developing countries.

As Raymond Feist apparently wrote, “Never accept the proposition that just because a solution satisfies a problem, that it must be the only solution.” There are affordances and limitations to every one, and weighing those becomes an important part of the innovation strategy. It is easy enough to come up with an innovative solution that ends up with unacceptable consequences, which is why multiple solutions are often the better route. Putting all our energy in a single effort like tax-payer funded tuition-free college risks minimizing other incredibly important parts of higher education. It is likely best to count the cost and come up with strategies that mitigate against the greatest limitations of each innovation.

What we need is a mass movement of innovation around financial models for all levels and forms of schooling, a thoughtful analysis of the affordances and limitations of each, and the development of a sort of financial innovation toolbox that we can use to bring in a new era of education that is far less inhibited by financial barriers. I am talking about the same breadth of innovation and experimentation that we see taking place with blended and online learning (which are both certainly part of the potential solution to financial barriers in some cases). There are countless possibilities if we allow ourselves to consider and see more of them, but this will call for walking on hallowed ground, a willingness to ask questions that will be unpopular, even ridiculed by many in the mainstream. It will take us down paths of revisiting:

  • the role of teachers;
  • teacher-student ratios;
  • the exploration of various models for funding and making use of different educational professionals;
  • the role of traditional schooling and the viability of alternatives;
  • a genuine comparison of various forms of education;
  • the tension between mass production approaches to education and personalization and individualization;
  • consideration of how developing technologies might remove or reinforce the financial barriers;
  • the role of commercial and corporate interests;
  • private and public funding;
  • questions ab0ut revising versus starting from scratch;
  • vigorous debate over the aims of education at different levels;
  • candid and transparent analysis of the benefits and limitations of current practices and those of the recent past;
  • the call for people to justify that which was taken for granted in past decades;
  • serious conversation about big data and learning analytics;
  • possibilities of work study and other models;
  • strategic but sometimes complex partnerships;
  • third source funding;
  • a substantive analysis and public conversation about lessons learned from choice and voucher innovations;
  • complete transparency on where money goes in various educational institutions; and
  • a candid consideration of what is essential, important or merely present when it comes to funding in education.

That is just the beginning of the list. This is a conversation that will challenge people on all sides of the political spectrum, not to mention the various camps of people with diverse philosophies of and convictions about education. It is form of social innovation that will be challenging because only some of the potential solutions will get the financial megaphone of investors and entrepreneurs seeking significant monetary gain, many philanthropists, or that of a large and influential corporate partner. If we are going to truly examine the full gamut of financial innovations, then it will call for that strange but critical breed of person who mixes disciplines and fields of study like they were ingredients for a massive experimental stew. It will not just be financial analysis because some of the potential innovations are deeply imbedded in various educational models, methods and frameworks.

With regard to the financial barriers in higher education, politicians will no doubt continue to push forward their plans, and they should be considered, but it is important that we don’t fall into the trap of assuming that the answer is yes or no on a national level. This was a major mistake with Common Core. There was no serious, carefully-constructed pilot in certain schools or communities, and too often the debate is framed as an “all-or-nothing” option or one fundamentally tied to high-stakes testing. Instead we opted for rhetoric (on all sides) and philosophical battles. When it comes to financial innovation, we are much wiser to leverage our many faces of education: public, independent, parochial, for-profit, and others. Our diversity of models reflect our diversity of goals and philosophies, and a financial innovation that removes some of these contributors to the education sector might cause more problems than it solves.

I’m suggesting that we set aside the silver bullet perspective and instead build a diverse portfolio of financial innovations in education. Many will seek to elevate their favorite innovation, minimizing the promise of others, but there is great benefit if we can harness a large enough group to engage in innovations and thought experiments that give us a clearer understanding of the many possibilities available to us. This is not a time to censor or limit our options. It is time to put all the ideas on the table, fire our bullets before cannonballs, and gain greater clarity abut how the many different potential solutions collectively help remove financial barriers in education.

2 thoughts on “From the Silver Bullet to A Diverse Portfolio: Financial Innovation in Education

  1. Lea Patterson

    Hi Bernard,

    Great article, please see two articles here to help with your initiative – the first one is a paper written by Maria Anguiano VC of Planning and Budget at UC Riverside http://www.pilbaragroup.com/Portals/0/Cost%20Structure%20of%20Post-Secondary%20Education%20-%20Practical%20Guide.pdf

    The second one is by Bill Massy Professor Emeritus and Former VP for Business and Finance at Stanford University http://www.pilbaragroup.com/Portals/0/Acad_Values_and_Marketplace_Massy.pdf. We are currently working with both Maria and Bill in developing a solution for UC Riverside. Our objective is to empower higher education by exploring and executing the very things you discuss in this article.

    Cheers,

    Lea Patterson
    CEO/President
    Pilbara Group

    • Bernard Bull Post author

      Thank you for the comment and sharing the articles. I hope to produce two white-papers over the upcoming months: one that provides an overview of the 15-20 existing, emerging or experimental funding models in higher education; and a second that does the same for private and independent k-12 schools.

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