Education innovation and domain knowledge

There is an argument, common in the education start-up scene, that one doesn't need to have prior education experience to create a successful education company.

The reasoning goes - what's the point of knowing anything about something we are going to break apart? 

Some go even further: Prior experience in education, for them, is a handicap. It breeds bad habits, with obsolete mental models. 

And, this is not frivolous self-justification of a few founders: Investors put money on this basis. In fact, one person, a very experienced former University president struggled to raise money in Silicon Valley because he was too old for them and had done too much education already. His handicap was that he knew what he was talking about.

No wonder then that we don't actually get to hear too many successful education start-ups. Some float a while on the bubble of private valuations, which is nothing special in this day and age of interest-free money, but almost always they fail on the measures that matter: Student success, revenue and profit. 

And, besides, most successful education companies have almost always been created by people who had an education background. That many of the great successes come from those who tutored themselves should not come as a surprise. Those entrepreurs know what the students really want to pay for and what really works in education. I am absolutely fascinated by people like Stanley Kaplan, but he is only the most celebrated one. There are many million-dollar education companies quietly running their empires hidden away from attention: They are often privately funded, run by owner-operators with their own money. 

Of course, the start-up types will argue that these shops don't innovate: They make money, right, but they are not doing anything for the future. But that objection shows a deep misunderstanding about innovation in education. Innovation in education is not about another cool app that allows me to do Maths on my mobile: It's rather about showing one a better way of doing Maths, the cool tricks that great teachers do. It's easy to confuse style with substance but they are not the same.

And, those shops do innovate, even if we may not always approve of those innovations. Stanley Kaplan's great innovation was, among other things, the trick that each candidate needed to remember one question from the exam papers, effectively building question banks for his company. We may have ethical problems with that, but as a business strategy that was sound: And, Kaplan did it because he knew, as a tutor, what really mattered. It's too easy to forget that most innovations are conceived as an outcome for the customer, rather than as a technology.

Further, service may not be sexy but that's where a lot of action in private education is. It's fashionable to trace the origin of the business school to Wharton's lofty ambitions, but business education started in humble accounting and secretarial schools. In fact, today's mass-market business schools have more in common with the latter; every time they pretend to prepare strategists and leaders, their graduates end up unemployed. There is much to break in education, but the long tradition of academic entrepreneurs is not one of them.

One of the most valuable lessons in my career came in the form of a negative feedback. Once, many years ago, someone criticised me, saying that while I have a brilliant strategic mind, education is all about details. Whether or not I can run a successful education venture depends not on my understanding of the big trends, but my ability to remember individual students and their characters and aspirations. I did not like the criticism, but it made me look. Sure enough, I figured out, in time, that almost all great education entrepreneurs are like that: They love their students and they love them back. 

Of course, that's too quaint for private equity investors. They would rather have someone speak their language than understand education: After all, everything is about money in the end. But the wrong assumption here is that education isn't a specialised business. No one will trust a person without oil and gas background to run a company selling 'disruptive technology' to oil and gas; the entrepreneurs disrupting financial services must have a relevant background. However, education is seen as a mere process, without specialised expertise. That's where the investors get it wrong.

So, my conclusion: Domain knowledge is important for education innovators, as in any other specialised fields. Education already has a healthy tradition of academic entrepreneurs and it is these entrepreneurs who are best placed to create successful education businesses. Also, there is a lot of change and innovation within education, as long as one knows what they are looking for. And, yes, the sector is poised for change but the leadership of that change will come from those already engaged in it.


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