Education as a Business

Some of the things I planned earlier are coming together, and among them is the plan to set up an educational institution in India. I am learning the ropes, discovering how the cold logic of business interacts, and shapes, the starry-eyed talk of building an education institution. To be honest, I am getting a first hand feel why a for-profit business may not be best format to run an education operation.

If that flies in the face of conventional wisdom, I can do little. Over the last few years, I have noted the essential conflict between the logic of profit maximization and the longer term needs of an education operation. It is not an one-sided story: I also know of the bureaucracy and the risk-aversion that plagues the public education providers, and how that does not help the learners in a rapidly changing world. But, on the other hand, I have seen the dark sides of managing education with the objectives of return maximization, and have seen so many scandals now that I would believe that for-profit is not the be-all and end-all solution that we believe it is.

Let me talk about the good bits first. I think education as a business really makes institutions dynamic and responsive to markets. That format pushes for continuous innovation, in terms of courses, delivery technologies and in developing market relevance, so that the students get a shorter 'pay off' period for their degrees. Which is all good, if you consider education is essentially for developing skilled individuals to help fill the jobs that exist and drive the industry forward.

But, education should do more. Looking at education as merely the way to produce workers is limiting our imagination. While such a thing must happen, education should also facilitate a balanced society, with its 'useless' supply of poets, artists, photographers and novelists, and also equip everyone with more than just the employablity skills, like respect. In short, education as we know it is about facilitating human progress, not just filling the needs of the industry of the time.

One can say that the education debate is actually between these two viewpoints. But it is not an evenly balanced debate, and education for creation of possibilities is all set to lose the contest. This is because education as a provider of skilled workers have captured the public imagination, and even the governments love it. If one considers that the governments' main job is to maintain social stability, to create jobs and to allow businesses to have growing profits, which in turn ensures GDP Growth, then education as a factory for skilled workers really is the only thing that the governments should promote. This is even better, because businesses love it. It is simple to establish a pay-off equation and produce graduates. As long as the math works, there is a good business to be had.

However, this does not work. There are a number of reasons. First, this model brings the existing industrial orientation to education at the cost of new and emerging requirements. For example, psychology and behavioural economics, relatively new sciences which have gained enormous popularity in recent times in the west, are not very popular with education institutions in India: Nor they are likely to be. Indian education system has almost accepted in principle its subsidiary role to the education institutions of the West, and concentrates on producing graduates who can do programming. It does not matter what the students' personal orientation was, nor what the future job markets, 10 years down the line, may require. At this very moment, being a programmer may have the quickest pay-off in India; hence, almost all resources of education-as-business sector is geared towards that.

In fact, there is more to it than just bringing the near term orientation of business to the education provision. Giving over education to private business means the societal imbalances become deeper and more entrenched. For example, while we may acknowledge that the bankers do not deserve the multiple times the salary they earn over teachers or nurses, the education infrastructure automatically adjusts to this market reality, and creates additional incentives for banking education and disincentives for teaching - in effect, institutionalizing the imbalances.

The current formula - private business running education with bureaucratic oversight - possibly combines the worst of both worlds. It keeps the bureaucracy in its place, impeding development and dynamism usually witnessed in other, non-regulated, industries. But the format also allows education delivery to be run by private businesses, which, in my experience, then treats the business as any other fixed capacity business and operates through the principles of capacity utilization. This is a problem, because education is not like hotels. You can't really exit education, change it and its impact goes far beyond the night of stay.

I do think Private businesses can contribute a lot in education, but their strengths primarily remain in capacity planning and innovation, which is not where they are most active in. The state will have a role to play in education in foreseeable future, but I think their strengths are really in allowing the learner greater freedom in choosing and developing their skills. This is not where the state sector is involved much. Currently, it is a proximity-based model, where state sector plans and regulates and private sector delivers the services, just because the state is too far from its people and private sector is still distrusted.

However, in the coming days, this model may change. The delinking of delivery from physical capacity may push things forward, and allow private businesses to get better. At the same time, interestingly, the online delivery and socially networked world may help reduce the distance between the education policy makers and learners. Also, we may bring back the Community Organizations - this sure sounds like going back to basics - and let them play a much greater role in designing and delivering education.


Unknown said…
Hi Sir,
I appreciate your view on private players or corporates in education and true to the reflection of ideology of what education means to society, you will also agree that parents and students alike see private institutions more as a placement agency rather than offering education. Cost of education in these institutions is staggeringly high as compared to government institutions thus fueling the sentiments further more. The purpose of education has changed from gaining knowledge, insight, learning to making corporate worthy professionals. Institutions take pride in placements, but honestly how many graduate sustain in that job worthless for institutions. If we are seeking to build an institution of Learning and Development focus should be more on Career Path of the students rather than where they are placed through the institutions.

Thanks and Regards

Pratima Joshi
Thanks for dropping by. Your points are very valid. Essentially, this is what I think: Education is a public good, because it does not just create value for the receipient but also for others, in the family, in the wider community and even for generations afterwards [on the other hand, lack of education destroys potential social value]. Economists will call it externalities, and education has a significant, mostly positive, externality.

This is why education used to be socially provided for, because the society benefitted from education most. However, the increasing privatization and commercialization of education led to an overt emphasis on a sort of a selfish understanding of education - a narrow way of defining value in terms of pay-off - which is the common approach at the bottom of all these newsbits about campus recruitment salaries and school rankings. This approach allows 'pricing' of education and establishment of a payoff, though at the same time, it strips the social value proposition of education and focuses on the production of 'clever rogues' rather than people who are equipped to benefit the community and others.

I wouldn't blame the colleges' charging higher fees or the people expecting a payoff, but the complete abdication of various governments, under the guidance of international financiers, of their responsibilities in the education sector. The point I am making is that private businesses can surely complement the effort to educate a society, by innovation in terms of curricula, learning techniques and design, but they are unable to account for, price and therefore deliver and create the necessary social payoffs from education.

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