Updated 3/27/1998 By Brad Cox

Why

Education today is a vast and often wasteful enterprise. Everyone acknowledges both the crucial importance of education to the future of our society and our spectacular failure to educate adequately our students and workers. And no one disputes the enormous power of today's networked information systems. But the former is virtually unaffected by the latter. The means to transform education exist, but they go largely unutilized.

Our main purpose is to change this tragic impasse. We view this startling juxtaposition of waste and unused capacity as a tremendous opportunity. The rewards to those who succeed in harnessing the power of the new technology to education are vast. Education is the single largest industry, a market of between $2 to $3 trillion.

Classroom education in the US alone approaches $1 trillion. The non classroom segment of the overall learning sector of the US economy is probably at least as big. Lewis Perelman points out that the latter market segment is already earning big profits for some of the world's most dynamic, competitive, innovative, and fast growing businesses.

The need is great. Superb tools to meet the need are available. So why is the educational establishment doing so poorly?

We see four reasons:

• Faculty incentives encourage focusing in narrow research disciplines, not teaching.
• Few faculty have the technological expertise to deliver the benefits of education technologies to their students.
• The educational enterprise is not structured to take advantage of technology, e.g., the teacher gets essentially zero support
• The educational system is heavily invested in tools of the past, resources they are reluctant to make obsolete.

We believe that our organization has the talent, understanding, and skills needed to overcome these barriers and exploit these huge markets.

We are a teaching company made up of teacher-technologists. We know what we're doing. We know how to organize our efforts to increase dramatically the efficiency of instruction. (See "How") We are free of commitment to yesterday's tools.

Our unique approach to the learning business is the result of an educational philosophy formed through many years of experience in and out of the classroom. Our educational philosophy is based on the following premises.

We believe that faster, better learning occurs when specific conditions are met.

• Learning is and should be fun and exciting. It is inherently interesting and rewarding to make discoveries, to experience new truth. Learning should stress the "ah ha!" experience. To experience onself growing and learning is both gratifying and self validating.

• Learning occurs best when students are actively involved. Students are not empty jugs waiting to have knowledge poured into them. Rarely should they be sitting in a classroom listening to someone talk at them.

• The learning experience is rooted in the real world. Students learn best when they know not only what they are learning but why they are learning it. They see connections between the subject matter and their life.

• The learning experience is largely communal. Reading and reflection are best done in solitude, but ideas are best shaped as if for communication. One of the best ways to master an idea is to have to explain it to someone else. We believe in the wisdom of the old professorial saw that, "If you can't explain it in plain English, you don't understand it."

• Positive reinforcement is essential. We do not mean that errors should not be identified and corrected but that mistakes are normal and natural parts of learning and should be treated as such.

• Early success is crucial. It encourages and motivates the student, makes him believe he can master this strange new unfamiliar set of ideas.

• Writing is a critical ingredient in all learning. Although its communication aspect is so powerful that it disguises it from us, the discovery component of writing is just as important. Writing is a great aid to thinking, because it allows us to discover what we know and to explain it to ourselves in our own words.

• Learning is multi-dimensional. It should involve all possible senses. Students read about a topic, hear about it, discuss it, write about it. Looking at a picture of a molecule is instructive but if you can hold a model of the molecule in your hands, touch it, feel it, rotate it in space, assemble and disassemble it, you gain a much more powerful and profound understanding.

• Repetition enhances retention. Contrary to the popular misconception that afflicts education today, there is nothing wrong with drill. Drill is essential in transferring learning from short term to long term memory. Drill is underutilized only because it is boring to the teacher. But it is not boring to the computer.

• Entertainment and education should be the same thing. The only instruction that is boring is bad instruction. There are no uninteresting topics, only uninspired teachers or uninterested students.

• All students can learn. Learning is autonomous and unavoidable: an uncontrollable reflex of the human nervous system. Given experiences to learn from, students can't help but learn. This is not to say that all human central nervous systems are identical. Some students form stimulus-response connections faster than other. Some students are more curious, creative, or motivated. Learning technology can provide instruction in such a way that each individual learns at his own optimal rate.

• The best predictor of a student's ability to master course material is a trial of his ability to master course material. See our statement on Academic Standards and Admissions Policy.

• Time on task: The single biggest learning obstacle is time management and procrastination, especially for working students. By having each student's locker track and present tasks as they come due, students are relieved of the time management burden and actively prevented from falling behind.

Academic Standards and Admissions Policy

We advance and defend rigorous intellectual standards. We are uncompromising in supporting strict standards. At the same time, we practice open admissions. These two ideas have long been viewed as antagonistic. The fact that this belief is so dominant among educators is symptomatic of the failure of the educational establishment to grasp the real nature of learning. We are convinced that the entire concept of admission standards has lost all relevance. Competitive admissions is a relic from the past, irrelevant to the current challenge.

Education was once the prerogative of a privileged elite. This situation existed because there were limited opportunities for advanced education. In a bricks and mortar school, only so many freshmen can be accommodated in each new class, so only the most able -- or politically empowered -- students are admitted. Once all available slots are filled, additional students, even if highly qualified, are not welcome.

The situation is quite the opposite in online instruction. Educational technology effectively destroys the upper limit on the number of students who can be accommodated. The economics of our approach are such that once a course has been developed for online delivery, the incremental costs of each new student approach zero. For every few hundred new students, you need merely hire one more teacher. (And a teacher today using the best available technology is a more powerful instructor, because he is freed of nearly all of the redundant drudgery of course creation.) In contrast to an elitist university, the more new students the better.

This is why we assert that the best admissions test is course enrollment. The way to find out if the student can do the work is to see if he can do the work.

A policy of open admissions would seem to put great pressure on the school and instructor. The good teacher wants all his students to succeed. The institution wants the student to continuing paying tuition. There is an apparent economic bias towards discarding rigorous standards. Would not open admissions tend to drive down academic standards?

Apparently so in a conventional university, but not necessarily in online instruction. First of all, this instruction is task based. Either the student can do the job or he cannot. Much need for subjective evaluation is stripped away. (This holds great promise for teacher-student relations as the teacher becomes less of a potential enemy, the agent who proclaims student failure.)

In addition, such instruction provides full documentation of instructional interaction. The student's performance — or lack of it — is recorded digitally, available for review by evaluators.

This gives management the opportunity to exercise much better quality control than is possible in a bricks and mortar class. Management understands that the institution cannot afford to bastardize its product — its graduates. Releasing someone to the job market who can't cut it means someone spends an entire lifetime advertising the shoddy quality of your goods.

So, if the teacher is biased towards letting unqualified students slip through, he is fighting both an objective and uncompromising world and management hostile to product degeneration.

by Mark Draper

Email from Lewis Perelman

This section is an email message from Lewis Perelman with some numbers that might prove useful. This is just a placeholder, to be revised when we turn to researching financial numbers.

'Classroom' education in the US was up to about $640 billion last year. About $70 billion was in the 'corporate training/education' segment. (These are the figures mentioned by Doug Becker of Sylvan in Fla., and they sound about right. I don't know where he got the $70B for 'corporate' but most of the sources for that kind of estimate I've seen in the past do not include the Pentagon -- which is a chunk of comparable scale by itself.) The comparable worldwide figure has been guesstimated from $2 trillion (Milken) to $3 trillion (Becker).

Outside the corporate segment, the vast majority (over 90%) of that classroom spending is controlled by government -- either by direct ownership/control or by indirect regulation, subsidy, etc. So most of that cash flow cannot be considered a 'market.' The 'corporate' segment includes internal expenditures -- chiefly for staff time and facilities -- that also are often not open to outsourcing and competition. There also is the proprietary segment of trade/technical schools and programs, and the kind of preschool and school-supplement services Sylvan and others offer for kids. I don't have solid data to work this out here, but I'll guesstimate that overall the real competitive 'market' for educational services in the US is something like $30-100 billion (I'm giving myself a lot of wiggle room).

The point is that from an entrepreneurial point of view, that's not an insignificant market, comparable to things like video games, motion pictures, advertising, etc. From a macroeconomic view, it's an insane, last residue of socialism in a world that otherwise has mostly grasped the incomparable advantages of privatization and competition. But for entrepreneurs and venture capitalists it is a huge, deadly blunder to confuse the whale of bureaucratic cash flow with the dolphin of market opportunity. Anyone seriously interested in profit had better focus for now on the segments that successful companies like Sylvan have targeted.

In a larger sense, the economic sector I once labelled 'the learning enterprise' -- including all expenditures made to acquire learning/knowledge -- is considerably larger than just 'classroom' instruction, and to my awareness has never been defined, measured, and tracked by government statisticians. In my view, it should include everything from advertising, nonfiction publishing, news, information services, consulting, counseling, and such to a large chunk (est. 30%) of the 'health care' sector and the very fuzzy but economically huge process of vocational learning called 'on-the-job training.'

With a very rough, back-of-the-envelope calculation of easily available statistics, I guesstimated several years ago that the scale of expenditure in the non-classroom segment of the overall learning sector of the US economy is probably at least equal in magnitude to the classroom segment -- ie, another $640 billion at present. And a dominant share of the non-classroom is not usually labelled 'training' or 'education', and is mostly a true 'market,' open to competition and free of government control.

BTW, re my earlier comment that Sylvan's market cap might eventually surpass Harvard's endowment, I determined last night that Sylvan's current market cap is about $1.1 billion while Harvard's endowment has grown, gratis the stock market boom, to $11 billion. It might seem that Sylvan has a long way to go, but with a recent annual growth rate of about 75% in sales and 300% in profit, it's not all that unimaginable.

So, to reinforce Peter's comment, I'd say that it's a mistake to say that the "nontraditional market is unproved" -- with my own twist. What denizens of the socialist economy of academia view as 'unproved' (ie, to them) is simply a normal market economy. The minor classroom segment that is competitive and free of government control has been "proved" to be a profitable opportunity for the companies that are already succeeding in it; and the huge nonclassroom segment includes many of the world's most dynamic, competive, innovative, and fast-growing businesses.

Nor is it "unproved" whether the people and organizations that are grounded in the socialist economy of academia can be effective players and competitors in the open, competitive, market sector of the learning/knowledge economy. In the short run, most cannot. Whether collective farms, state factories, defense contractors, or government-owned or -regulated 'utilities' such as postal, telephone, or energy services, such organizations and employees have "proven" over the last decade at least to have great difficulty adapting to the demands of a competitive economy. Whatever their technical or intellectual expertise, their deficit of "tacit knowledge" of competitive conditions and practices proves a serious handicap in the marketplace.

Author: Lewis Perelman