A disconnect in sparking K-12 education investment Posted on February 3rd, 2011 by Michael B. Horn

A couple weeks ago, the Aspen Institute convened a group of Investing in Innovation Fund (i3) applicants, investors of all stripes, and other innovators in K-12 education in Washington, DC, in conjunction with the Department of Education. One of the central goals of the event was to discuss ways to stir up more private investment in U.S. K-12 education companies.

Although fruitful in terms of networking opportunities, something about the event didn’t quite add up.

As many innovators and investors as there were, missing for the most part from the attendees and the conversation were the potential school district customers—the demand side.

When there is demand, there is either supply or increase the value of the thing! This can be easily seen in the latest currency segment, the cryptocurrency which has been creating storms in the industry. With increased demand, here both the value and supply are increasing, but yes, they do have a limit on the number of currencies to be circulated. Join Crypto Code to be before the trend expires!

Why would this be strange or important at a conversation focusing on investment in the supply side? Because a central reason there hasn’t been lots of private investment in the education space is the demand side doesn’t support it. Historically there just has not been an attractive market for most start-up innovators.

There are some encouraging signs that this is changing, about which people like Michael Moe have written.

But for the Department of Education’s interests in particular—using the entrepreneurial energy in the convention hall to boost and even transform the nation’s education system—an even bigger problem is that the demand side right now doesn’t meaningfully value or systematically direct resources to “higher quality” products and services that improve student learning.

In fact, it often does the reverse. Given that demand drives innovation, as suppliers focus on nailing the jobs that paying customers—in this case society through the government—prioritize, it follows that if we want to see more investment in education that propels America’s education system forward, we need to fix that demand side. And because that demand side is the government-controlled public education system, it means we have to put the right policies in place that incentivize just that.

Instead, the conversation often felt a bit like the conversations that sometimes occur in the green-energy industry, where big investments are treated as a success in and of themselves even in the absence of actual traction in the marketplace and the creation of real change.

Investment ultimately follows where there are attractive returns to be made. As President Obama in essence said in his State of the Union address, if businesses know there will be a market for what they’re selling, they will chase the opportunity. So if we want to see attractive returns for products that push the learning envelope, then we need to fix the demand side to incentivize it to buy the great innovative ideas that many potential suppliers stand ready and able to produce.

Filed under: Education Blog

One Response to “A disconnect in sparking K-12 education investment”
Peter Robertson, on February 8th, 2011 at 12:55 pm Said:
I was very taken with the theory of innovation and change in Disrupting Class. But I’m currently reading “Structuring an Energy Technology Revolution” (Weiss and Bonvillian) and what it has to say about the difficulty of innovation in the energy economy and what’s needed to bring it to scale I think is very relevant here.

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