Andrew Rotherham is a reformer who runs a consulting business. He is on many boards, including Campbell Brown’s 74. He used to write a regular column for TIME, now he writes for US News. He typically discloses his conflicts of interest at the end of his articles.
In this article, he tries to explain why it is so difficult for public companies to succeed in the public education sector. He says that the market makes demands for performance indicators that lead to poor decisions. His example is Joel Klein’s Amplify, which Rotherham thinks was too good for the market. (Amplify is or was a client of Rotherham’s business). Other commentators attributed Amplify’s failure to the poor quality of its tablets, some of whose screens cracked and chargers melted after delivery to Guilford County, NC. Rotherham also explains the poor stock performance of K12 (another of his past or present clients) by saying that the market forced it to enroll students who were “ill-suited” to its model.
He writes:
Pressure to hit revenue and growth expectations drives companies to attract customers who are a poor fit. That’s why Edison ended up in Philadelphia. It’s also why the online learning company K12 got caught in a perverse spiral when enrollment expectations drove it to recruit students who were ill-suited to succeed in the company’s model. The more such students the company signed up, the more its academic results suffered.
All in all, his explanation of why businesses fail is a good explanation of why “reform” by test scores fails. Reformers think they can reach the projected “profits” by setting audacious goals, pressuring and intimidating educators, and closing schools. Those tactics don’t work in business, and they don’t work in education.
PS: apologies to readers for the several typos in the original. I wrote this while riding in a taxi on a bumpy highway. But no excuses. I should have read it before posting it.

In the meantime, the parents and students who are sold these low-cost or fraudulent products and services are viewed as no more than customers, who have not been harmed and who can just go to another “provider.”
Fraud, waste, and abuse go unpunished because “Let the buyer beware” summarizes a key principle for doing business in education. Another principle is that regulation kills innovation (and innovation is always a good thing.) Then there is the always reliable “Market competition always leads to better quality at lower costs.” Wrong
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“Market competition always leads to better quality at lower costs.”
Has about the same intellectual depth behind it as “santa claus is comin’ to town”
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His explanation of business realities is cogent enough. But the glib association between “public companies” and “public schools” seems like catapulting the propaganda.
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How dare those children get in the way of Rupert Murdoch’s profits!
Why, the next thing you know, his reporters will be hacking the cell phones of murdered children in order to sell newspapers!
Oh, wait, he already did that…
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“Pressure to hit revenue and growth expectations drives companies to attract customers who are a poor fit.”
Yeah, I really hate poorly fitting children. I complain to my tailor all the time, but he just can’t seem to make them fit better.
But seriously, does he even realize how ironic it is for the charter buffs to be complaining about “poor fit”? When public schools have to take all kids and make them fit (or, better yet, fit themselves to each kid)?
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There is a huge disconnect between “market fit” and educational objectives. Markets should not be part of the daily instruction of students who are better off in the hands of authentic teachers in public schools where the goal is to meet the needs of diverse students. Markets are driven by profits and the ever lower bottom line. Education is about elevation of the human condition and opportunity. While change is part of education, it should be reasoned change, based on research and what is best for learners, not what is best for portfolios of millionaires.
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retired teacher: so many good comments on this thread, but if you will pardon me riffing off of your excellent observations…
I occasionally but regularly describe corporate education reform as a “business plan that masquerades as an education model.” And that business plan emphases worst business practices like stack ranking teachers & students and mismanagement by the numbers, creating burn-and-churn environments where inevitably and predictably there are few winners and many many losers.
One aspect of this: the shills and trolls of the self-styled “education reform” movement that haunt this blog very rarely get into pedagogical matters. That’s because genuine learning and teaching (think Lakeside School & Bill Gates and his children) is not the focus of the bidness-minded heavyweights of rheephorm and their chief enablers and enforcers. The bottom line isn’t every thing, it’s the only thing, and they leave it to the “experts” to take care of the petty details of actually making good on the educational miracles they claim their gimmicks can provide. And since their “eyes are on the prize” of $tudent $ucce$$ they simply don’t notice or care to acknowledge that when it comes to genuine learning and teaching—
Rheephorm is a constant doubling down on boring mediocrity and colossal failure.
The most striking and monstrously hypocritical exception: the proven failure that is rheephorm is only to be shoved down the throats of OTHER PEOPLE’S CHILDREN. For THEIR OWN CHILDREN there are Lakeside School (Bill Gates), U of Chicago Lab Schools (Rahm Emanuel), Delbarton School (Chris Christie), Harpeth Hall (Michelle Rhee), Sidwell Friends (Barack Obama) and the like.
Hence on their foundation’s website Bill & Melinda Gates can claim that they “see equal value in all lives” but, like the characters in ANIMAL FARM, in a practical and explicit and routine sense a few lives have much much more value than those of the vast majority.
One last point. The many self-wounding and even clumsy claims of rheephormsters are evidence, yes, of intellectual dishonesty and worse, but it’s inevitable since they mistake sales hype and product placement and self-aggrandizing claims of cure-alls to substitute for good sense and decency.
Do I exaggerate? Just read Arne Duncan’s monument to word salad and cognitive dissonance, his speech to the 2013 AERA meeting where the Testocrat-in-Chief skewers many of his chief critics—they’re in the audience!—for too much testing!
Don’t doubt for a moment that he was sincere—and sincerely disconnected from reality.
Thank you for your comments.
😎
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” It’s also why the online learning company K12 got caught in a perverse spiral when enrollment expectations drove it to recruit students who were ill-suited to succeed in the company’s model. ”
Well, that, or maybe plunking middle and low income children in front of a screen for a cut-rate education that leaves a thick layer of profit to skim is just an absolutely terrible idea that never should have been promoted by ethical or responsible politicians. Or that.
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Rotherham also explains the poor stock performance of K12 (another of his past or present clients) by saying that the market forced it to enroll students who were “ill-suited” to its model.
What? Isn’t that the same as saying that his business model failed?
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Occam’s Razor serves us well here. There are very, very few students who are well or even adequately served by the business models in question, and that is why they do so very poorly. They have, as we well know, less than no understanding of the how and why of education and therefore built an education model based entirely on wrongheaded ideas. In so doing, they have saturated a micro niche market. From day one. The square peg of reform meets the cinder block of educational reality: the two have nothing in common.
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A product’s failure, because it was too good for the market. That’s hilarious.
Rotherham was joking, right?
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Did you ever ponder the vast reasons homeschooling parents choose that route? Either their are religious, independently well off (not wealthy–the wealthy send their kids to private academies) or they have enough cash to get by and don’t need a second income, or they have a job whereby they don’t have to be at the office, for instance, own a chain of laundry mats or something like that. It comes down, in the end, to ideology or finances, no?
As to online classes, for instance Rutgers, NJ offers some of its classes online, and they cost exactly the same as in-class lessons — it is just that they are easier to attend by, for instance, a full-time worker who is extremely self-motivated, or just doesn’t have the ability to commute to campus when the classes are actually happening.
These k-12 education companies banking on parents sitting with their children in front of a computer, or older students sitting their by themselves – when their model is dolling it out to the poor and working poor, etc., without human interaction…recipe for disaster.
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pardon my typos – got lost in a thought tornado
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Like that “thought tornado”. Gonna have to use it!
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Tis article was full of preposterous assertions. Here’s one of the quotes that jumped out at me:
“Performance indicators and signals are heavily politicized and unreliable, too.”
I agree with Mr. Rotherham that performance indicators are heavily politicized and unreliable… and Mr. Rotherham must know this as well since the politics behind the institution of standardized testing and misbegotten ideas like VAM is driven by the very people he lionizes in this article. If tests did not exist, the “reformers” would have no way to identify “failing” schools and “failing” teachers and for-profit corporations would have no means of taking over the schools on behalf of the politicians who don’t want to address the underlying problems of public education: poverty and inequality of opportunity.
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So glad to have this blog to discuss these things. But how can parents take it a step further in terms of bad federal education policy? What can parents do about bad federal policy?
I am connected on the state level and there are plenty of avenues for concerned parents to reach out and try to impact state policy. Where do parents fit into the federal situation? Do they? Can they? What can involved moms do? I feel frustrated.
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Involved Mom,
Please join the Network for Public Education. Join United Opt Out. Join groups in your state who are demanding a better education, not a profitable investment for outsiders. You have many allies.
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What is the chain of command from receiving federal “incentives” to implementing them, and for the states who did not apply for RttT, what level of control does the DOE have over their schools (just Title One, IDEA and the ESEA that applies to all states?)
I guess I don’t understand what’s next in terms of federal influence on our schools. And to what extent should state level Democrats talk about and discuss the impact the party and the administration has had on our schools? What can they do at the state level? All I hear about at the state level for NC is money. But I feel that our schools have suffered far more at the hands of RttT than austerity (although austerity doesn’t help. . .but we could sure handle austerity better if we didn’t have RttT stuff to deal with). And if RttT is expired now, can states just say, “OK. . .nevermind. Back to how it was in 2009.”?
I think I have discovered that I’m far more interested in the federal level. That’s the level that is driving me nutty.
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Involved Mom,
The states that did not win Race to Top funding had to change their laws to be eligible. They had to agree to adopt “college and career ready” standards, to increase charters, to evaluate teachers by test scores, etc. Dozens of states did what Arne wanted and didn’t win a dollar
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Profits are certainly possible, and not just in conventional transactions.
On October 9, 2015, Goldman’s Urban Investment Group announced that its first Social Impact Bond, for a Utah preschool program had a payout for investors.
Social Impact Bonds (SIBs), also called pay-for success contracts, are a relatively new financial product intended to demonstrate that profit-seeking investors and “the discipline of the market” are superior to government programs in addressing many social issues.
The Utah Preschool Program, established in 2013 by the United Way of Salt Lake City, was designed to reduce the need for special education assignments in the selected districts by providing a “high-quality” pre-kindergarten program for “at risk” children, ages 3 and 4 from low-income homes.
Utah is among 10 states that provide no state funding for preschool. One purpose of the SIB was to show taxpayers that investments in pre-school for children, especially those “at risk for later special education,” would save money in the long run.
The Utah project was launched by Janis Dubno, then director of early education policy for Voices for Utah Children, with United Way of Salt Lake convening partners in the project and investors. The State legislature helped the project along by passing the “Utah School Readiness Initiative,” setting up an appointed “School Readiness Board” authorized to enter into a contract with United Way of Salt Lake, Goldman Sachs, and the Chicago-based J.B. Pritzker Foundation to fund the pre-school project.
From the get go, the SIB method of funding preschool was a “bet” that the programs would work as intended and the State would repay the $4.6 million of upfront loans from investors, plus interest, if the program worked.
The first cohort of 595 four-year-olds attended the SIB-financed “high-quality” preschool in 2013-14. Of these, 110 children were identified as “likely to use special education” in grade school. Of those 110 students identified as “at-risk,” only one was actually assigned to special education in kindergarten. All of the 110 students will continue to be monitored through sixth grade for entry into (or exit from) special education. Each year, investors receive payouts for the number of students who are not assigned to special education. Investors call those students “payout children.”
How much did the investors make? For 2013, Utah had a one-size-fits-all “special education“ add-on of $2,607 per child. The SIB contract called for investors to paid equal to 95% of these savings for each child (about $2477), which may vary each year for a single cohort. Goldman Sachs is expecting to be repaid over seven years, with interest at 5%, for a maximum return at about $5.5 million.
This first payout, on an initial investment of $1 million, is now considered “proof of concept,” and also the first phase of a $20 million “Early Childhood Innovation Accelerator Fund,” offered by J.B. Pritzker, Goldman Sachs and other private investors. Investors hope a similar program in Chicago will also pay off.
The next challenge for marketers of these financial products is a system for estimating the risks and odds of success in SIBs dealing with K-12 education—betting on programs for our kids—(e.g., These SIBS are rated AA, A, B, and so on..,.to junk). Even in the absence of any rating system The Goldman Sachs Urban Investment Group has invested $45 billion in various “social impact” projects.
I have no details on the preschool program being offered, but “high uality” usually means certified preschool teachers in a key role. In order to identify “at risk” children, scores on the Peabody Picture Test, lower 1/3 of the norm, are sometimes treated as predictive of success in school. it seems likely that students with severe disabilities have not been included in the calculus for payouts. Source of information: http://www.bondbuyer.com/news/regionalnews/goldman-sachs-social-impact-bond-pays-… 10/19/2015
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