Learning on the Job

Public-school management companies—both for-profit and nonprofit—have been at the center of intense controversy since their emergence in the early 1990s. "Learning on the Job," a new book by Steven Wilson, is a welcome addition to the debate—not because it adds more fuel to the ideological fire, but because it examines the actual experiences of school-management organizations.

Wilson knows the field well. He helped write the original Massachusetts charter schools law in 1993 and then founded and served as CEO of for-profit Advantage Schools, Inc., one of the nation's first education management organizations. He led Advantage during its rapid rise from two schools in 1997 to a company serving over 10,000 students in fall 2000. But he also presided over the financial problems that led to his losing both his job and the company. He now works as a consultant to the largest education management organization (EMO)—Edison Schools, Inc.

Those hoping to find an insider's tale of the rapid growth, struggles, and eventual sale of Advantage Schools will be disappointed. The terms of Wilson's separation from the company preclude him from writing a tell-all. Instead, Wilson writes a more academic—and important—analysis of the successes and challenges of the school-management industry. To do so, he profiles seven management companies: six for-profit EMOs including Advantage, Edison Schools, and SABIS, and Knowledge is Power Program (KIPP), a nonprofit organization. While Wilson does not hide his disdain for traditional "district" schools, he is frank about the numerous mistakes made by private managers. Even educators strongly opposed to charters and for-profit education will find value in his work.

The book is organized into nine chapters, each focusing on a specific dimension of school management. The chapters on "Execution" and "School Leaders" in particular should be required reading for both for-profit and nonprofit education entrepreneurs. This is where Wilson is at his best, describing the real world challenges school operators faced as they attempted to meet their lofty goals of both financial and academic success. Operators promised their investors large financial returns, thus requiring rapid growth. Yet, such growth required management organizations to induce large numbers of local districts and charter school boards into contracts—setting unreasonable expectations in the process. In turn, rapid growth required enormous amounts of investment capital to meet the high initial costs of launching new schools, making the companies vulnerable to the whims of investors. 

Wilson reveals the flaws in the original, seemingly simple premise that spawned the management industry—that the elementary and secondary education market was so large (about $300 billion in the early 1990s; $500 billion today) that the companies would have no trouble growing rapidly. Wilson uses specific examples to show the execution challenges and enormous financial capital requirements that many initial education investors failed to anticipate.

Wilson's chapter on school leadership is particularly compelling. He details the central role of the principal in each school model, then chronicles each organization's specific strategy for this role: How much autonomy? What types of persons to recruit? How to scale across multiple schools? He cites a number of different strategies, from SABIS's preference for noneducators to Advantage's admiration of independent school leaders. Among the various strategies, Wilson cites KIPP as the organization that places the most emphasis on school leaders, building each school first around an entrepreneurial leader and providing those leaders with an intensive leadership training program. The study of these different approaches to common problems is applicable to all school managers—whether they function in public, private, or nonprofit management organizations.

The book is less powerful when it moves away from a discussion of the companies' business and educational strategies and tactics to the philosophical debate over the performance of traditional public schools and the private management of publicly funded schools. Despite his generally factual approach, Wilson at times relinquishes his role as an industry analyst and engages in the debate himself. He spends 10 pages telling the morality tale of the San Francisco school board's battle against Edison's charter school in the city. Right or wrong, strong opposition to for-profit school management exists and school operators must adapt to this environment. Wilson is much more salient in observing how one EMO, National Heritage Academies, succeeded by aligning its conservative, values-based approach and slow-growth strategy to geographic areas where the company would face relatively little opposition.

Wilson returns to his more pragmatic approach in a chapter on academic performance, where he analyzes both the companies' claims and those of outside researchers about student achievement in the privately operated public schools. He finds flaws in both the schools' and outside researchers' studies, with differences in research design, method, and intent clouding an already murky issue. As in other parts of the book, well-designed charts and graphs would have greatly improved the quality of the presentation and helped the reader see the data that Wilson describes only in prose. And, while not necessarily Wilson's intent, this confusing discussion of the various research studies illustrates the need for rigorous, objective research not tainted by advocates' claims. One such study, of Edison Schools, by the RAND Corporation, appeared after Wilson's book went to press. Though funded by Edison, the 5-year, $1.4-million report doesn't endorse Edison's often-extensive claims for its schools. But it also silences critics of the company who charge that Edison and other management companies aren't capable of contributing to public school reform. The Edison design works, the report concludes, but it's not a guarantee of success.

While acknowledging the many miscalculations and problems faced by education management organizations, Wilson concludes his study on a positive note. He describes the increasing emphasis on standards and potential for school re-structuring as two changes in the regulatory environment that could benefit strong EMOs. In addition, EMOs have learned from almost 10 years of operation, building their capacity to overcome early mistakes. Finally, he notes that two companies, Mosaica Education, Inc., and National Heritage Academies, are reportedly profitable.

Ironically, Wilson's story manages to at least partially vindicate the traditional school district-operated public schools that Wilson disparages in his book. Education is an extremely difficult business, especially if growth, scale, and quick returns (either academic or financial) are demanded. Any potential for-profit education investor should read Wilson's chapter on execution at least twice before succumbing to the charms of a snappy PowerPoint presentation and utopian promises.

Bill Tucker is Education Sector's chief operating officer.