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What's wrong with public education today? New book says, IT'S THE MANAGEMENT, STUPID

May 1, 2005

For more information, contact: Benjamin Haimowitz,

Business scholar's prescription, stressing power to the principals,  makes Prof. Ouchi's book a hot item in dozens of school districts

Lessons from the business world begin to change education debate, including the money issue

Every year the business world is bombarded with scores of new books by management gurus on the subject of leadership. Whatever differences the authors bring to the topic, they are united on one point: dynamic executive leadership is essential to the success of business enterprises of every stripe.

Thus, it has been something of an oddity that, when it comes to perhaps the biggest social enterprise of all, dynamic executive leadership has not only been lacking but, as matters stand today, is a virtual impossibility.

That enterprise is public education.

"Although education is a field notorious for its disagreements," says Prof. William G. Ouchi, a management professor at UCLA's graduate school of business, "there is virtually universal agreement that the most important figure in determining a school's quality is the principal. Yet, in the overwhelming majority of schools, at least in the U.S., principals lack the power to truly lead in the way business executives do.

"As matters stand today, principals are more likely to be bureaucrats than entrepreneurs. In the business world, bureaucratic leadership is a contradiction in terms. That needs to be the case in public education as well."

These simple truths, elaborated in his book Making Schools Work, published in late 2003 by Simon & Schuster, has made both the book and Prof. Ouchi hot items in dozens of school districts - from New York to Oakland, from Boston to San Francisco, from Colorado to Hawaii. Tom Peters called it "the most important book on education in a half century."

And, while K-12 public education is hardly a priority subject in business schools, the professor's success has now caught the attention of the Academy of Management, whose more than 15,000 members consist overwhelmingly of business-school faculty. At its annual meeting, scheduled for August 7-10 in Honolulu, the academy has scheduled a special forum (Mon., Aug. 8, 8:30-10:20 a.m.) that will focus on the potential for implementing Prof. Ouchi's ideas widely.

Participants in the forum will include, in addition to Prof. Ouchi, the governor of Hawaii, Linda Lingle, and Richard Riordan, a former two-term mayor of Los Angeles, and, until recently, secretary of education for the State of California.

By incorporating lessons from the corporate world, Prof. Ouchi suggests an increased role for business ideas in public education. In addition, his approach could significantly change the national debate in the U.S. about education, including the fiercely contested question of what it should cost.

The professor's new role as a public-education reformer marks the latest unusual turn in a career that began a quarter-century ago with the publication of a hugely best-selling business book that is widely recognized today as a classic on corporate management. Theory Z: How American Management Can Meet the Japanese Challenge (1981) burst onto the scene at a time when many people were beginning to believe Japan was destined to be the world's predominant economic power. Making the case against that gathering sense of inevitability, Theory Z was published in 14 foreign editions, and is the seventh most widely held book among the 12 million titles in U.S. public libraries.

Having reached the top rank of management gurus, Prof. Ouchi made an unusual career move, when he left his faculty position to become a senior aide and then chief of staff to his friend Richard Riordan, following Riordan's election as mayor of Los Angeles in 1993.

Equally surprising, after Ouchi returned to academe several years later, he chose to focus on a subject largely avoided by management scholars -- public education, which had first stirred his interest when he worked as a volunteer during his children's school years.

"Most organizational scholars seem either to ignore schools or to throw their hands up and say that our organizational theories don't apply in schools," Ouchi said in a recent interview in the Academy of Management Executive. "I thought -- no, we are simply not doing this work correctly."

Research supports decentralization

The result was a $1 million research project that compared schools in nine urban school districts: 1) three decentralized districts (Houston, Seattle, and Edmonton) that give the predominant say over schools' budgets and management to their principals; 2) the three largest U.S. school districts (New York, Chicago, and Los Angeles), all largely centralized systems, in which principals have relatively little executive power: and 3) the Catholic school systems in those three largest U.S. cities, which, in contrast to the local public-school systems, are highly decentralized.

Overall, Ouchi's team visited 223 schools, in each case interviewing the principal in depth, gathering information on student performance and how the school was managed, and touring classrooms. They also paid several visits to the headquarters of each school district, where they interviewed the chancellor or superintendent and other top officials.

The researchers concluded that, "although the comparisons between centralized and decentralized districts on student achievement are fragmentary and the number of districts is small, the pattern is consistent. The body of evidence lends support to the view that the decentralized districts have consistently outperformed the centralized districts both in overall student performance and in reducing the achievement gap between racial groups."

The most telling comparisons, the researchers concluded, were between Houston and Los Angeles, which both used the same achievement test during the period studied. In addition, both are among the 10 largest districts in the country; both are about 90 percent minority in their enrollment; and about 80 percent of the students in both are from low-income neighborhoods.

The research team reported that Houston, which embarked on school decentralization in 1994, outpaced highly centralized Los Angeles significantly in 2001 on perhaps the two most important indicators of student performance -- reading and math scores. Thus, the system-wide results for Houston public-school students placed them in the 42nd percentile in reading, compared to the 33rd percentile for LA, and in the 49th percentile in math, compared to the 42nd percentile for LA.

Houston also showed a significantly lower math-performance gap in 2001 between whites and Asians on one side and blacks and Hispanics on the other -- a gap of 29 percentile points in Houston, compared to 36 points in LA. In both cities the gap was about the same in reading (35 points in LA, 36 in Houston), but the trend was more encouraging in Houston, where the gap dropped from 40 percentile points from 1999 to 2001, while it remained at 35 percentile points in LA.

Houston principal: "We have enough money to run a small country here"

While Ouchi considers these results to be highly suggestive, he concedes that more research is needed. He also acknowledges that empowering principals isn't by itself a formula for educational success. In Making Schools Work, he spells out seven elements critical to quality education, including accountability and school choice, both favorite themes of reformers across the country.

But while important, these and other reforms are destined to fall short, Ouchi believes, without a fundamental empowering of school principals.

"Yes, there needs to be accountability in our schools, but how can we hold principals accountable unless we give them the power, including control over their budgets, to get the job done? And what is the point of having school choice if the key executive in each school -- namely, the principal -- lacks the power to make that school distinctive in ways that make school choice meaningful?"

As these points suggest, Ouchi could potentially have a profound effect on the national debate about education, including what may be the most passionate dispute of all - about money. A fascinating finding of Ouchi's team is that decentralization seems to reduce the urgency of money as an issue.

Recalls Ouchi: "One principal in Houston told us, 'I feel we have enough money to run a small country here!' In other words, no principal will voluntarily spend money on things her school does not need (though the central office often does just that), and the school then has lots of money for the things that it does need."

One clue to the apparent absence of a money shortage in schools in a decentralized district: Los Angeles, a highly centralized district, spends $9,638 per pupil of which about 29% goes for teacher pay; decentralized Houston spends only $5,558 per pupil, but about 49% goes for teacher pay.

Ouchi's research may also strengthen the relationship between schools and the business community. Says Ouchi: "Until now the business community has been highly supportive of public education, but it was assumed, among business leaders and management scholars alike, that the lessons of business management had little relevance to public education. Our research has called that belief into question."

As he puts it in a recent paper, "The reason that [school systems] defy normal organizational analysis is that failed school systems, unlike failed businesses, do not disappear and that most scholars who study school systems are observing dysfunctional, non-competitive organizations that, unlike the woolly mammoth, still exist! In other words, perhaps it is not, after all, that school systems do not fit our theories of organization because they are different, but that they do not fit our theories because they are in a state of failure.

Because public schools are government monopolies, they exist though they fail. We have no theory to cover that possibility, no theory of organizations as zombies."

"If the management lessons of the business world apply to public education," Ouchi adds, "it vastly strengthens the case for power to the principals. After all, we have only recently begun to study decentralization in schools. In the business world we have studied it exhaustively, and the evidence is overwhelming that it works."

The Academy of Management, founded in 1936, is the largest organization in the world devoted to management research and teaching. It has more than 15,000 members in 90 countries, including some 10,000 in the United States. The academy's 2005 annual meeting will draw some 6,000 scholars and practitioners to Honolulu for more than 1,000 sessions on a host of issues relating to corporate organization, the workplace, technology development, and other management-related subjects.

Media Coverage:
Associated Press. August 9, 2005. Lingle says school reform would be 2nd-term goal. (Tuesday, August 09, 2005). Feeling the Elephant, Counting the Blows. (Sunday, October 30, 2005).
The Washington Post. Two Studies, One on Fairfax, Explore Why Districts Succeed. (Thursday, December 01, 2005). "The Best School System in America". (Tuesday, November 08, 2005).

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