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Following For-Profit Providers (II): The Big Picture

After almost four years of publishing School Improvement Industry’s information services, I feel confident asserting that readers who want to follow the school improvement industry on their own face a significant investment of time. Still, it’s not impossible, and here are some suggestions, starting with the big picture.

In any field of study, researchers, analysts and policy makers seek a view of the forest. Without it, it’s very hard to make sense of any tree. Products, services, programs and their providers are as they are because of the forces exerted by other providers, school districts, etc, etc. Information about school improvement providers as a class is simply fundamental to the appreciation of any provider and its offerings.

In almost every other area of school improvement the informed citizen can depend on both more or less disinterested information from government, typically the Department of Education - but also nonprofits funded by philanthropy, and data and analysis supplied by partisans in the many education policy conflicts. The base data and the debate over facts help any questioning observer form their own opinions.

Following for-profit providers is an entirely different matter. Government does not collect data on the supply side of school improvement. I remember when I served briefly as the President of the National Charter School Alliance attending a 2003 meeting at the U.S. Department of Education to provide input on federal charter school programs. I pushed for a national charter school database. Then and now the only such data is collected by Center for Education Reform, a group with a small staff and a pro-voucher mission. Their work is a service to all, but I’d rather rely on data collected by the National Center for Education Statistics. The Department official didn’t want to touch the question. Perhaps it was a matter of federalism, although that was not on the tip of his tongue.

Nonprofits may collect data on charter schools, but there is no equivalent for the school improvement industry as a whole. One cannot find a study of industry size and scope, a division of firms by product type or revenue level, growth statistics etc., etc. by traditional education policy research organizations, think tanks or advocacy groups. Given that most are financed by philanthropy, I conclude that foundations just aren’t interested in the role of private providers in public education. That strikes me as a pretty big blind spot. Three recent partial exceptions come to mind. One is the annual review of Education Management Organizations collected by the “anti-privatization” Education Policy Research Unit at the Arizona State University. The second is the large scale study of SES providers performed by the Chicago Public Schools. The third is the work on testing firms by Education Sector. They are partial in that they cover one aspect of one segment of the school improvement industry. They aren’t entirely free of bias or methodological shortcomings. But as they say, something beats nothing.

In my estimate, school improvement industry trade groups have the greatest incentive to provide this kind of information to the public. Members of the Education Industry Association, Software and Information Industry Association Education Division, National Council of Education Providers, Knowledge Alliance, and Council for Comprehensive School Improvement serve close to every school in the country, employ tens of thousands of people in the kind of high-paying knowledge intensive jobs this country needs, are located in every Congressional district, pay million of dollars in payroll and other taxes, range from very large companies to very small, are growing fast and have great potential to grow more. One big problem is that nobody knows this to be the case! And the only way to solve that problem is to get the research done, brief it and make the information available. Why the trade groups don't do this, and why their leaders don't see it as necessary, is simply beyond me. (For more on trade groups listen here.)

Industry-wide data is available for a very high price. In the mid-1990s, the Parthenon Group did extensive pro-bono market research on and around the emerging Comprehensive School Reform Market for New American Schools. I estimated that the staff time donated was in the region of $100,000 and as Chief Operating Officer I recall that we set aside an additional $25,000 for expenses. In my view, those several annual studies are an important reason why all but one of the original NAS Design Teams are still in business as fee-based for and nonprofit service providers - they shaped the context of collective and individual decisions on business strategy. Still, $125,000 per year, puts the best market esearch beyond the range of all but the multinational publishers.

Although it is no longer advertised, Eduventures has has a subscription research program available to k-12 providers for several tens of thousands of dollars per year. It’s a point to remember when Eduventures' staff are quoted in various news media. This is not to say the research itself is suspect, only that it is rarely released for public review in whole, and is generally disclosed in the context of a reporter’s story on a firm or market segment the covered by Eduventures. Because the firm is not an entirely disinterested third party, and readers need to apply a “spin discount.”

Perhaps the best source of top-level information is the investment firms. Berkery Noyes presents weekly and semi-annual information on transactions in the education industry. Robert W. Baird publishes the monthly Class Notes. Signal Hill publishes the monthly Education Signals.

Readers need to remember that investment firms "sell" mergers and acquisitions, and have an incentive to be upbeat about the industry and the firms they represent. A more significant shortcoming of these sources is that investment bankers' take on the big picture is too big for those focused on school improvement. Their reports tend to combine pre-k, higher education and corporate training, as well as k-12 (which itself covers far more than school improvement) into one "education industry" category. In fact, each of these sectors has very different dynamics and players. Still, with time and the use of other sources important information can be teased out of these reports.

In short, edbizbuzz readers are not the only ones navigating the school improvement industry without good maps, most providers are in the same boat.

Next: Following school improvement industry segments and individual firms.

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