Too big to fail. Too big: will fail?

A series of critiques, from the first seven years of High Tech High:

“Project based learning will never work with these kids.  They need more structure.”

“Well, that’s fine for 200 kids, but it will never work with a full high school.”

“OK, you have a high school, but these kids will never get into college.”

“Sure, all the students went to college, but they’re not going to succeed there.”

“OK, the students are graduating college, but you won’t be able to replicate this in a second high school.”

“Yeah, you have six schools, but they are all in one location.  It will never work in multiple locations.”

“Yes, you have nine schools, in three locations, serving 3500 students, but it will never work at scale.”

“The problem with High Tech High is that it is like Apple.  But what we need is Windows.”

This last line was a pivotal moment in my life.  It was the instant when I realized that even if we had so many High Tech Highs that 10% of the students in the world attended our schools, we still would be “just a boutique.”  It wouldn’t be “at scale.” It still wouldn’t be significant.

———–

When I learned to juggle, I first learned how to keep three things in the air.  I thought it was pretty cool.  At first, others were impressed.  Then they said, “But can you do four?”  So I worked for hundreds of hours until I could juggle four balls.  And people said, “Wow!”  Then they said, “Hey, you’re actually just juggling two balls in each hand!”  They said this like it was an accusation.  And then they said, “But can you do five?”  And I worked hundreds of hours until I could sort of keep five balls in the air for a few fleeting moments.  And then I thought, “If I ever get this, someone’s just going to ask if I can do six.”  I stopped working on juggling more items, but I still do enjoy juggling.

———–

What’s up with the obsession with scale?  Is bigger better?

In a recent study of large California urban school districts [can't find the link, sorry], it was found that the larger the district, the higher proportion of public revenue that was spent on supporting the central office.  In other words, there is a diseconomy of scale.  As the bureaucracy grows larger and larger, it eats up more and more of the resources intended for schools and kids.

I have heard for some time about a plan to merge a number of charter management organizations in Los Angeles, so that this new entity would be the size of one of the largest districts in the country. Now it sounds like at least one part of that plan is going forward. I would genuinely like to hear the argument for why this is a good idea, as it must be better than what it sounds like to me, which is, well, if we can’t grow our way to scale, let’s just merge everyone, and instant presto: scale!  [Note: I realize that ICEF is having financial problems. Merging an organization that is losing money with another *might* make sense, although it's not obvious why. I believe that the argument about merging CMOs has been one about getting to scale more quickly, not about fixing one group's financial challenges - My concern is this general argument, not the details of what is happening with ICEF and the Alliance -- I don't know enough to have an opinion about that.]

Since some of the MBAs in our midst are rumored to be pushing the idea of merging CMOs in order to get to scale more quickly, I did a quick search of academic literature on business mergers.

On the success rate of mergers:

However, approximately two out of every three Mergers and Acquisitions fail to achieve the intended goals which were the stated reasons for the business deal.(link)”

“Most important, no more than a quarter [of mergers] increase consumer welfare; another quarter increase profits at the cost of consumers; half of the mergers reduce the value of the firm. (link)”

What happens in mergers?

“Loss of key executives — nearly half within three years. . .  Loss of key staff — many long-serving high performers and informal leaders. . .  This can represent a serious ‘brain drain’ in areas of technical expertise, with replacement being costly and time consuming (link).”

“[P]eople go through a state of culture shock, including reduced job performance and resistance to change, rumor mills of possible layoffs or reassignments drain energy and productivity, and feelings of fear, betrayal, and anger prevail (link).”

Everyone agrees that we need more great schools.  How do we get there?  We educators are exhorted to act like business people and to follow the best lessons of industry.

Let’s just make sure we are learning the right lessons.

[Note: I wrote this piece back in September when it was rumored that a number of charter management organizations in Los Angeles were being encouraged to merge into one larger organization, so that they would be "one of the biggest districts in the country." Someone from one of those organizations asked me not to post this. Now that it seems like part of the plan has gone public, I decided to dust off this piece.]

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