In Defense of Education (but not the same education)

“Now is the winter of our discontent.” Tax cuts, two off budget wars, bank malfeasance resulting in the housing collapse, and the subsequent failure and rescue of banks, insurance companies, and auto makers have left the states and the federal government drowning in a sea of red ink and millions unemployed or underemployed.

The bailouts and other actions by the Fed and Treasury have had varying degrees of success. The economic free fall has stopped. There are signs that a sustained recovery is underway. Corporate profits are at pre-recession levels and those of the banks, whose financial geniuses created the instruments of financial Armageddon, are at record setting levels.

We are now facing the wreckage done to government budgets at every level.

Everyone knows that very painful choices will need to be made and the longer they are put off the more painful the eventual choice will become. We know that spending must be drastically cut but with only 19% of the federal budget available to work with this will not come close to closing the deficit (discretionary spending is about 38% of the total budget with defense and security taking up over half of that amount).

We must also grow revenues by creating well paying jobs. To do this we need an education system that is up to the challenge. What we currently have is decidedly NOT up to the challenge and our deficit crisis will make this worse unless we rethink our priorities.

Education is the largest expense for states and its budgets have been the piggy bank that gets raided time after time. We have for years balanced our budgets on the backs of our very own children. Not some generation down the road. Our very own kids, here and now! We are selling their future as well as our own to pay for broken systems and poor decision making.

With calls from every corner about how we must innovate and compete, the very next thing we do is put education on the chopping block. If we hope to be anything other than a backwater on the world stage we need to invest in the only thing that will allow us to recover and lead once again.

We have already given up much ground. The Trends in International Mathematics and Science Study 2007 International Mathematics Report shows the US in 10th place for the percent of eighth graders reaching the International Benchmarks of Mathematics Achievement behind Taiwan, South Korea, Singapore, Hong Kong, Japan,, Hungary, England, Russia, and Lithuania. (Report available at http://timssandpirls.bc.edu/TIMSS2007/mathreport.html ).

Similarly, the 2009 Program for International Student Assessment (PISA) measuring 15 year-olds’ proficiency in reading, math, and science puts the US in 7th place in reading behind Korea, Finland, Canada, New Zealand, Japan, and Australia, 18th place in math behind Korea, Finland, Switzerland, Japan, Canada, the Netherlands, New Zealand, Belgium, Australia, Germany, Estonia, Iceland, Denmark, Slovenia, Norway, France, and the Slovak Republic and 13th place in science behind Finland, Japan, Korea, New Zealand, Canada, Estonia, Australia, the Netherlands, Germany, Switzerland, the United Kingdom, and Slovenia.

More money is not necessarily the answer but less money is certainly not the right direction. Our education system is still geared to the need of an economy that existed half a century ago. Our teaching methods and tools must be re-examined and our notion of grades and the knowledge expected at each level needs to be rethought.

We need unwavering commitment to end social promotion and we must assure that teachers and administrators focus is on what is best for the STUDENT, not union members and the union coffers. We must reward teachers for performance and return teaching to a profession that is sought after and attracts the best talent.

With the call to emphasize math and science we must assure a balance with the arts and literature. Being an engineer, I did not always hold this view but with the tools available today the line between art and science is becoming indiscernible. The geeks may keep the server farms running that render Avatar but it is the writers who create the story and the artists that make new worlds come to life.

World class education for everyone, not just the better off, is the only way we will regain the initiative. Cutting education is like cutting off the oxygen that keeps us alive. We may breathe OK for a while but we will suffocate in the not too distant future having committed suicide in the name of smaller government.

Machine wins Jeopardy. Time for humanity to throw in the towel?

I just happened to be watching “The Matrix” not long after IBM’s Watson had beaten two Jeopardy champions. I really hadn’t thought too much about it as custom machines can do amazing things. But then I heard a line that brought several things I had read lately into startling context.

The scene is where Morpheus is being held by Agent Smith who is trying to break into Morpheus’s mind. Smith is describing man’s development of AI (artificial intelligence) and gets to a point where machines started thinking for man “...as soon as we started thinking for you it really became our civilization...”

Watson doesn’t really think but it has achieved a significant milestone in understanding context and being able to draw conclusions. This is an important component of “thinking”.

Recently there have been other articles about printing food, http://bbc.in/hnUYJj, printing a violin (that plays very well) http://econ.st/hruMiX, etc. This is remarkable in itself but now consider the combination thinking machines and the capability to make things.

What is the role of man in such an environment? To dig raw materials? No, machines can do that. To load printers or perform repairs? No, machines can do that. To think of the new I-pad application? No, why would machines need an I-pad?

What are the implications when thinking machines have disagreements? Do they just send hate mail, post tweets, and editorialize on their Facebook page or do they send the machines that can create and control to “reprogram” the offending machine and disrupt its supply network. What does “winning” look like?

Oh, and this still didn’t answer the question of what use is man?

Just something to think about, if a machine hasn’t already done so.

Education: The Cure for the Diseases that Ails Us

Education: The Cure for the Diseases that Ails Us

Let’s start with an assertion that 90% of government spending on social programs at all levels is wasteful and unnecessary. The amount of spending is inversely related to our competitive position in the world and our national security. The ever increasing amount spent on social programs is resulting in a rapidly accelerating downward spiral from which, like a black hole, there is eventually little chance of escape.

Think about how much government spending and related costs born by taxpayers and private industry is related to social dysfunction. What do we spend on:
• Welfare
• Food stamps
• Medicaid
• Courts
• Prisons
• Social workers & associated bureaucracy
• Low income housing
• Emergency room healthcare for the uninsured
• Medical expenses due to poor lifestyles
o Malnutrition
o Obesity
o Smoking
o Drug and alcohol abuse and treatment
• Child abuse
• Women’s shelters
• Teen pregnancy
o No prenatal care and low birth weight babies
• Gang strike forces (police squads)
• …

For all our spending on programs and indirect costs one would think that expenditures would decrease as people are helped and have the ability to become self reliant. Yet this is not happening. Why?

Increasing numbers of people are net consumers of resources rather than contributors of resources. The blight of poverty in the United States is drowning us in debt and despair. All around us we see huge numbers of people out of work. Many of these people’s jobs will never return as their jobs are replaced by automation or outsourced to places with cheaper labor. Those lucky enough to still have jobs with stagnant wages are seeing increasing amounts of their paychecks going to pay for taxes and health insurance. As our national debt mounts and demographics change more government services will be cut and taxes increased in order for our country to not default on its debt.

Why does poverty exist and why do able bodied people not seek or no longer have jobs? Although this is a devilishly complicated question, it has a simple answer. Lack of education.

Our system of welfare and social programs has created a permanent underclass where, in too many cases, arcane rules force them to remain on welfare rather than pursue education or finding any job in the first place. People have found that they can survive indefinitely on welfare, generation after (increasingly large) generation. In many of our inner city schools, it is a goal, an achievement, for girls to have a child while in high school.

What can be done to reverse the situation where people sometimes through no fault of their own, sometimes by deliberate choice suck up the dwindling resources of those who work?

Is it because our government has gotten too big? Is it because our bureaucracy is amazingly inefficient (what % of money for any given program actually make it to those for which it was intended)?

It is because we have not held to account a government which does not deliver the services we are paying for. The FDA allows tainted food into our system both from domestic and foreign sources. Those charged with mining and oil drilling safety are literally in bed with the companies they are supposed to regulate. Our elected officials are under the thumb of lobbyists and special interests. But most of all, most damaging, and most inexcusable, is that our schools are failing.

The greatest products of our K-12 education system are dropouts and students unable to perform at grade level. Even among those who “graduate”, social promotion produces many kids that are unable to function productively in the world and foists upon our state colleges students who need significant remedial education to begin even the most elementary college level classes, wasting precious money, space, and professor’s time.

The threats posed by this single failure are devastating and frightening. Economic polarization and social unrest will continue to increase fueled by people who have given up hope of a better life and who have never been taught how to think critically, to rationally challenge assertions, to weigh options, to balance short term and long term costs and opportunities, and to make carefully thought out choices.

It is frightening to hear the responses that Jay Leno gets when he walks outside his studio and asks well dressed, presumably reasonably well educated and employed, people questions such as “In what year did the war of 1812 begin?” or “In what country is the Panama canal located?”

The impacts and implications of a poorly educated population in a globally competitive world are enormous and growing every day. The level of our education and skills directly determine our economic and our national security. Other smaller developed countries are enjoying the benefits of a highly educated and skilled workforce. Developing countries are investing heavily in education and are rapidly emerging as major players in economic and political spheres. Many of these countries are in the Far East. You may have heard of them; China, India, Taiwan, … the destinations for outsourced work and the source of a large fraction of our manufactured goods.

In his 1982 book, Out of the Crisis, Dr. Edwards Deming spoke to the quality crisis our manufacturing sector was facing, most notably the threat from Japanese auto companies. Today we have a crisis that dwarfs the quality problems we faced then and affects not only manufacturing but every business and industry. Indeed, every aspect of our society. We have a crisis in education.

Our education system is a mishmash of 50 widely varying standards funded by taxation systems that result in wildly varying levels of revenue available to schools depending on where ones lives. Any business will tell you that having to build to 50 different specifications with over 15,000 different funding levels will not produce a uniform, world class product.

In education, we perform poorly not only state to state but internationally. We cannot measure our performance against other states and feel good about being in the top quartile. We are not competing against a neighboring school district or another state. We are competing against the brightest minds around the world, teaching systems that focus on the knowledge and skills needed in a global economy, governments that have acknowledged that education is the backbone of their economic future and international standing and are making the investments that are resulting in highly educated, skilled, and competitive workforces.

Can you, as teachers, school administrators, local, state, and federal elected officials honestly say that you are competitive in this environment?

We will continually fall farther and farther behind if we do not change an educational system that served the industrial needs of half a century ago and today produces 30% dropout rates. This figure is vastly misleading if one also includes the grossly undereducated who do graduate but are not fit for international competition and are barely able to compete for low end jobs domestically.

Education is no longer something that is done when you are between the ages of 6 and 18. Education is now a lifelong pursuit necessary to remain relevant in any field, to adapt to rapidly evolving technology and ever changing markets.

To remain relevant in the world we must drastically cut unproductive spending so that our increasingly limited discretionary funds can be focused on producing wealth. Today our spending on social support programs is driven by systemic, system wide failures of our government – at all levels. To remain relevant we must focus our resources on efforts that have a high return on investment and produce those returns in a short period of time. Education is that investment. A workforce with the education and skills to compete globally will be net contributors to our collective wealth vs. a net drain on resources provided by an ever shrinking number of productive workers.

Without an educated workforce all other investments are impaired, diminished in value or are a complete waste. Low income housing becomes a complete write off as it is covered in graffiti, stripped of copper, and eventually demolished. Welfare is wasted by rules that discourage or prevent getting a job or an education that would lead to employment. Government investment in R&D is impaired by fewer people having the vision and skills to commercialize new discoveries.

When one takes a look at the condition of our school system one wonders how, on a macro level, it functions at all when the inputs are:
• Students who are not ready to learn. How can one be ready to pay attention and have a passion to excel when you are tired from working a minimum wage job late at night, are hungry, have little to no parental support, live in a dangerous neighborhood, have peers who deride any inclination to learn,…
• Schools where deferred maintenance has resulted in buildings crumbling from neglect
• Textbooks that do not exist, are ancient and falling apart, or are written by monopoly text book companies who, in the name of political correctness have stripped them of content or present only one sided perspectives.
• Teachers that have long since had the enthusiasm of youth beaten out of them and teach with methods and lessons plans created decades ago.
• Administrators preoccupied with keeping the lights on in the face of ever shrinking budgets and hamstrung in their ability to remove ineffective teachers or reward those that excel
• Unions that resist change, protect ineffectiveness, and promote performance at the lowest common denominator
• Learning standards that are so low that even if they are met the result is woefully inadequate with respect to the knowledge and skills needed to obtain a job with at least a living wage

With the exception of schools in affluent districts, it is a miracle that they function at all. If even 25% of all students are ready for college or training in the skills needed in a rapidly evolving, global economy then 75% of the spending on what should be one of the investments with the highest rates of return in the shortest amount of time is wasted having produced a product that is unfit for use or will need costly rework to become minimally functional.

Our own societal attitudes reflect a distain for education. Our elected officials are derided if they have attended a well regarded university. We even denigrate those who teach us. Professors are frequently labeled as “academics” in the fullest pejorative manner and accused of never having to live or create anything in the ‘real’ world. We wallow in our collective ignorance, deliberately mispronouncing words and using poor grammar to “appeal” & “resonate” with the electorate. Perhaps it is time that we create an electorate that values education and is not both illiterate and innumerate.

At the April 15, 2010 event at the Kennedy space center in Florida, President Obama announced his vision for NASA’s future. In an interview with National Public Radio, Tea Party protester and Titusville Patriot Group member, Don Forward, expressed his views. “I’m skeptical. I don't think it's going to be - they're virtual jobs, you know, it's nothing. And this is not going to help the people - it's going to be a lot of engineers and stuff like that, it's not going to help the day to day person who works out at the cape, actually making the cape run, I don't think it is.” http://www.npr.org/templates/story/story.php?storyId=126025832&ft=1&f=2

Our political parties talk endlessly about “getting people back to work.” This sounds good but the reality is that many of the jobs that are lost are not returning. The lowest skilled jobs are increasingly becoming scarce as their functions are automated and the new low level jobs require real skills. A single person may now oversee 10 self checkout stations at the grocery or home centers like Menards or Home Depot. Manufacturing workers are now responsible to run increasingly sophisticated machine tools and perform statistical process control. Independent truck drivers use GPS & systems to optimize routes to decide which run to take next to maximize profits. Administrative assistants must use office software & collaborate with other distant admins to arrange important meetings between company leaders.

Reform of our educational system will require sweeping changes in how we think about and value education. First we must realize that education is not a social support program. It is the core investment that establishes the foundation of our national competitiveness and security both economic and physical.

Reform must begin with accountability and globally competitive minimum standards uniformly deployed and supported throughout our educational system, regardless of where a student lives. The sciences need to again receive the emphasis that put us on the moon back in the 60s. Performance must be the determining factor in teacher compensation and advancement, and that compensation and the prestige of being a teacher must be comparable to that of rewarding careers the private sector.

In setting standards we must be clear about the ends and flexible about the means. Much has been said about the pitfalls of “teaching to a test.” If a test validates that a student has mastery of all subjects (not just math and science) at the corresponding grade level and is able to demonstrate an ability to read with comprehension, and write with cogent expression, then by all means teach to the test.

The changes required will face resistance at every level from local to powerful national interests such as teachers unions. Locally, the argument will be loss of local control. This is not the case. Local school boards are free to set standards that exceed those deemed necessary for global competition.

Unions need not be obstacles to progress. Originally, unions were set up to protect workers from abuse by employers. They evolved to teach skills to people to assure quality in their respective trades in order to be worthy of their premium pay and benefits. The world has changed since then. There are ever fewer low skill jobs and workers to be protected and ever more high skilled jobs where people who have the education and skills are now free agents commanding market prices for their services. If teacher pay and the prestige of a teaching career became competitive with private industry, if teachers no longer have to work in crumbling schools, if teachers have the tools, materials, and support to implement innovative, effective, teaching methods, if teachers are encouraged to excel, then the original goals of unionization will have been met. In order to remain relevant, unions then must earn the dues their members pay and the pay and benefits they seek from their communities by focusing on enhancing teacher skills and devising new and engaging teaching methods. Unions will need to evolve from “protecting” teachers to protecting students from ineffective teachers and assuring continually improving excellence within their ranks.

To achieve the needed revolution in teaching we must begin by accepting that the problem is not the students. It is us, the adults. It is us collectively who must change our attitudes about teaching, how we value, compensate, and promote teaching. It is us who continue to ignore the destruction of human souls at the hands of poverty but provide few meaningful alternatives to hopelessness. Is it us who believe, or at least act, as though those from impoverished backgrounds cannot be expected to achieve much so we set our standards to assure this outcome is realized.

Proof that socioeconomic status is not an excuse for failure is exemplified by Jaime Escalante who passed away just this year (March 30, 2010). A celebrated teacher in his home country of Bolivia, he started over in America mopping floors in a restaurant and doggedly earning the right, after many years of struggle, to teach in America’s schools beginning in 1974. He did not choose the most affluent school but rather a school in the barrios of East Los Angeles.

His success at teaching was not instant but he believed in his students and continually challenged them to improve until he was able to offer his school’s first calculus class in 1979. Eventually his school had more students taking and passing advanced placement calculus tests than all but three other public high schools in the entire country (students earn college credit for passing advanced placement tests in high school). His, and his student’s success inspired the movie Stand and Deliver.

In the end, petty politics and professional bickering lead him to leave and teach in another school. Jamie proved three things:
1. That students and their socioeconomic background are not the problem.
2. That inspired teaching can have tremendous results even in the poorest of schools.
3. That the forces of the status quo can overwhelm even the best.

Changes in the attitudes of adults and students alike will be slow. Success will initially be slow but as Jaime proved it can accelerate rapidly. It will begin with a teacher inspiring one or two students to become engaged in a subject, students that will ignore the jeers of their peers and study and realize that they have the capability to succeed. Their success will influence their (true) friends to see that a brighter future can be theirs and more parents and more teachers will become involved in creating success.

All this sounds a bit simplistic and perhaps it is. But that is how it worked in one school, with one teacher who believed.

The challenges may seem insurmountable but this cannot deter us from beginning work. Where to begin? Effort will be wasted if we do not know what the objectives are so we must first establish the performance standards, by subject, by grade level in order to be globally competitive. This cannot be left to politicians or done entirely locally. National standards need to be set by a board consisting of teachers, academics, and industry leaders that can identify and quantify what knowledge and skills are needed to compete with the best and brightest around the globe.

Second, we must identify and adopt teaching methods that leverage technology, engage students (locally and globally), and demonstrate applicability to the real world – at every step of education. It is too late to try and show a junior in high school how geometry applies to real life. This connection must be established early on when the wonder of childhood can be touched and inspired.

Third, we must value, reward, and evaluate teachers based on performance. This itself is a complex subject but it must motivate and reward teachers for taking on the most challenging teaching assignments – not the ones where students may be the easiest to teach.

Fourth, the funding for schools must be changed so that a uniform standard of education can be found independent of where one lives. This applies to the classroom environment (lab equipment, textbooks, etc.) for students, as well as resources for teachers, and the quality of teaching within the school. Funding and the quality of education can no longer be dependent on the wealth of the local community. Education must be valued as highly as national defense for our ongoing security for truly as our intellectual and economic security declines so does our national security.

Fifth, given that the vast majority of student will now in fact be prepared to attend college, and our state colleges no longer have to provide remedial reading and math instruction, we must assure that these student have access to post secondary education be it of a vocational nature or university studies and we must assure that this education is affordable and not saddle graduates with a huge debt to begin repaying upon graduation.

Thirty years ago the cost of a bachelors degree at a respected university was less than the cost of one year of college today. Our country recognized that a free high school education was (then) the passport to a job that would support a family. The entry criteria for that good job have been raised and it is now a college education. We must reconsider how our students can gain access to affordable, quality, post secondary education.

There are many other competing priorities to transform our educational system that must be addressed concurrently but without the above, effort on the rest will be largely wasted.

Why must we make these painful reforms? In reality they should not be painful but common sense. But since it is difficult to gain consensus on what common sense is, the short answer is that we cannot afford NOT to make the tough choices needed for meaningful and continually improving reforms. Failure to do so will result in an ever accelerating gulf between those that have an opportunity for a good education and for those that don’t or choose not to participate. Social unrest will result in an increasingly resentful lower class and the privileged will take refuge in increasing numbers behind their gated communities - self styled, but comfortable, prisons of plenty.

The costs of a lack of education are largely visible at an economic level but much more costly in terms of wasted lives and human suffering. Conversely, some benefits of an education are easily identifiable but most are intangible quality of life benefits and are as difficult to value as the suffering inflicted by poverty.

Early in this article a few of the visible costs of a poor education were listed. What about the indirect and opportunity costs of:
• Lost government revenue
• Wasted human potential
• Increased spending on security to protect business and personal property from desperate people in or near poverty
o Consider the irony of the growth of low wage jobs as security guards whom we hire to protect us from those with similarly low wages
• A pervasive sense of hopelessness that prevents people from believing that meaningful alternatives exists and spawns successive generations of people (in geometrically increasing numbers) who also believe that their situation is hopeless
• The absence of notions of responsibility and accountability and increasing notions of entitlement simply because of being impoverished
• …

In a similar manner the direct benefits of an education are easy to enumerate:
• Income to support a middle to upper class life style
• Taxes paid
• Not a consumer of social support programs
• Ability to afford private schools and respected universities
• Health care

Some benefits, while very real, are more difficult to value:
• Safe neighborhoods
• Reliable transportation
• Ability to make wise lifestyle choices
• Access to a wide variety of career opportunities
• Engagement with companies and people from around the globe
• …

Given the myriad costs and benefits, the return on investment from a world class education can be calculated in nearly an infinity of ways. Any way it is calculated, the returns are exceedingly large, and near term (with respect to other potential investments).

Let’s look at a highly simplified model of the costs of social programs using the following assumptions:
1. Generation 0 begins with a single person consuming social programs
2. Each person in each has two children
3. Every person remains social programs for their entire lives
4. The lifespan is constant at 75 years
5. The cost (not indexed for inflation) of social programs including overhead and spending on the individuals if $50,000/year

Here is the data showing that social spending will increase geometrically forever.

Generation # of people in Generation Cost of Generation / year Cost over 75 year lifetime
0 1 $ 50,000 $ 3,750,000
1 2 $ 100,000 $ 7,500,000
2 4 $ 200,000 $ 15,000,000
3 8 $ 400,000 $ 30,000,000
4 16 $ 800,000 $ 60,000,000



















If a single assumption is changed, that one child of the two in each successive generation does not need social services then each generation only has one person using social programs and the costs remain constant at $3,750,000 forever.

Now let’s make some highly simplified assumptions about a person who gets further education:
1. Starting salary at age 23 is $50,000
2. Works through age 65
3. Average raise in excess of inflation is 3%
4. Overall tax rate (all taxes) is 30%
5. Savings/year is 5% of gross salary
6. Annual rate of return on savings is 4%

When this person retires:
• Lifetime salary $ 4,274,195
• Lifetime taxes $ 1,282,258
• Lifetime spending $ 2,778,227
• Lifetime savings (including interest) $ 477,354

There are several things to note from this:
• Assuming all assets are spent at the time this person dies he would have contributed $ 4,537,839 to the economy vs. costing $3,500,000. A difference of $8,037,839 per person over a lifetime.
• This person paid in over $1.2M in ALL taxes, but the person he was supporting cost $3.5M in social spending alone.
• It takes 2.73 educated workers to support one person on social programs even if ALL taxes paid went ENTIRELY toward social spending.

Even though these models are extremely simplistic they clearly show one thing, that a system that does not create an educated workforce is not sustainable. If people do not have the knowledge and skills to avoid social programs or are not provided the tools they need to move off them then our economy will collapse under the weight of welfare and global impotence.

A quick internet search for the benefits of education and the costs of social spending returns many results. I will cite only two here but they validate, with considerably more rigor the basic problem revealed above with simplistic assumptions.

From a January, 2007 study entitled The Costs and Benefits of an Excellent Education for All of America’s Children and produced by: Henry Levin of Teachers College, Columbia University; Clive Belfield, City University of New York; Peter Muennig, Columbia University and Cecilia Rouse, Princeton University (http://www.cbcse.org/media/download_gallery/Leeds_Report_Final_Jan2007.pdf):

“We find that each new high school graduate would yield a public benefit of $209,000 in higher government revenues and lower government spending for an overall investment of $82,000, divided between the costs of powerful educational interventions and additional years of school attendance leading to graduation. The net economic benefit to the public purse is therefore $127,000 per student and the benefits are 2.5 times greater than the costs.

If the number of high school dropouts in this age cohort was cut in half, the gov-ernment would reap $45 billion via extra tax revenues and reduced costs of public health, of crime and justice, and in welfare payments. This lifetime saving of $45 billion for the current cohort would also accrue for subsequent cohorts of 20-year olds.”

If the return on a high school education is 2.5 times its cost – imagine the return on a college education.
A study by The Heritage Foundation, a conservative think tank, entitled The Fiscal Cost of Low-Skill Households to the U.S. Taxpayer Published on April 4, 2007 by Robert Rector, Christine Kim and Shanea Watkins, Ph.D. concluded the following (low-skill households refer to households headed by persons without a high school diploma) (http://www.heritage.org/Research/Reports/2007/04/The-Fiscal-Cost-of-Low-Skill-Households-to-the-US-Taxpayer ):

“Receiving, on average, at least $22,449 more in benefits than they pay in taxes each year, low-skill households impose substantial long-term costs on the U.S. taxpayer. Assuming an average 50-year adult life span for heads of household, the average life¬time costs to the taxpayer will be $1.1 million for each low-skill household, net of any taxes paid. If the costs of interest and other financial obligations are added, the average lifetime cost rises to $1.3 million per household.”
This is not just about avoiding social spending. It is about global competition. If other countries take the technological lead (in any area you choose) then we will become importers of products based on that technology simultaneously transferring our money to them and further reducing our standard of living as we are forced further down the economic food chain, creating an ever increasing demand for social programs.

This is a dangerously slippery and steep slope - and we are poised at the edge.

Given the substantial ROI of education, how quickly might these returns be realized?

If progress is made in controlling the cost of college education and programs are established to assure that high school graduates who are prepared for college level work can attend college then benefits will be realized in only four years.

As learning standards are set, high school classroom environments improved, teaching methods changed, teachers are rewarded based on performance, and the vast majority of students graduate at grade level, then these gains will be realized in six years.

As these changes are driven further down the K-12 continuum the gains will be sustained and more substantial as students are engaged and enthused about learning at ever earlier ages and retain their love of learning.

As parents see the changes and support for their student they in turn will become more supporting and assure that their children are attending school and avoiding destructive behavior. Students see that there is a path that leads to a rewarding career and as more in fact succeed fewer and fewer will deride those who want to learn as they too will want the trappings of success. Students will come to school ready to learn.

As success takes hold, spending on social programs is naturally reduced and the money can be diverted to education vs. subsistence. The same overall amount of money is spent on social programs and education only it is being spent in a much more productive way. It is like an investment in a machine tool that will increase efficiency AND quality thousands of percent. We can’t afford NOT to make the investment.

Instead of a vicious cycle of massively wasteful and even destructive spending, a virtuous cycle is created where spending is increasingly focused on activities that have a very positive return on education. The beauty is that this return is the greatest for those most in need!

As Jaime Escalante demonstrated, although money is important it is not the determining factor nor is it a precondition to begin making the changes needed. Education is not just a concern for those who have children in school. It impacts everyone. If you want to have someone funding your social security then, given the demographics, you want kids to be able to have high paying jobs!

Where do we begin? We need to initially focus on things within our sphere of control. The thing most in our sphere of control is ourselves. We need to begin to individually and
then as a community change our attitude. We need to:
• Recognize that all efforts need to be directed at improving student outcomes. Not outcomes for administrators, or unions, or …
• Engage students in removing graffiti (detention activity?) and making their school something they can be proud of
• Assure that maintenance staff provide a clean environment for learning
• Engage the community in assuring school buildings are properly maintained
• Assure that classrooms are a place of learning and safe for both students and teachers (even if it means security people in each classroom)
• Establish zero tolerance for disruptive behavior and truancy
• Transform unions into the engines of teaching innovation. Form groups at local, state, and national levels to:
o Research and create new teaching methods that use the latest technology to engage students
o Devise compensation/incentive programs that measure and reward excellence in teaching
o Provide input into the standards for subjects at each grade level to assure they are constantly updated to be globally competitive
o Assure that time during the school year is focused on the students and that time outside of the school year is focused on teacher and technique development. Teachers are paid for an entire year. Instead of taking time away from teaching during the school year, time during the summer should be spent on advancing teachers skills, revising teaching methods, and continually updating class content. Summer is not entirely for vacation…
o Reinvigorate teachers who have had the passion of youth beaten out of them
• Transform administration into the engines of innovation to:
o Implement the teaching methods and enforce learning standards for promotion to the next grade
o Shape legislation to provide uniform, reliable funding for schools (independent of the wealth of the district)
o Assure that legislation is written to advance student success and that it can be administered efficiently
o Create the most efficient mechanisms to administer school districts so that the maximum amount of resources are directed toward students and the learning environments
o Work with bodies to assure that meaningful, globally competitive, national standards are established for each grade and subject
• Stop social promotion
o Provide support to students who need help and actively engage in remedial work
o Hold school teachers and administrators accountable for the havoc wreaked on children & society by social promotion
• Engage with the community to let them know of school performance (good and bad), school needs, and activities underway to increase student achievement
o Require parental/guardian participation in student’s educational activities
o Assure awareness of student achievement and school attendance/behavior
o Establish community support for their school boards, administrators, and teachers so that the community can take pride in their schools and students.
o Assure the community values education, will not tolerate truancy, supports students and helps them to be ready to learn see the value in education.
o The community must hold school boards, administrators, and teachers accountable for student success and for providing the tools for success – enabling teachers, providing facilities conducive to teaching AND learning
• …

These local efforts must be leveraged to engage at the state level to:
• Provide input in forming globally competitive national standards for each topic in each grade
o A high school diploma must represent a uniform level of achievement no matter the state or school district in which it was awarded
o States and local school boards are always free to exceed these standards
• Establish effective teaching methods with the equipment and materials to implement them
• Implement a system that rewards teachers based on performance (itself a very complex topic – but one that needs to be addressed)
• Assure that processes are in place where unions and administrators can rapidly remove ineffective teachers
• Assure that school needs are clearly articulated and desired programs are well defined including expected outcomes, actions to achieve those outcomes, a mechanism to meaningfully measure progress, and needed funding.
• Establish procedures to assure that social promotion has stopped
• Provide a funding mechanism that is stable and does not depend on the wealth of the local community
o Fund deferred maintenance on school facilities
o Fund new or upgrades to existing facilities to provide state of the art learning environments and equipment
• …

Who would not want to work in a system where people are unified and working to make the above a reality? What community would not support efforts that create success for students, teachers, and administrators? Who would not like to see results in only four years and ever increasing returns beyond that?

We have over 15,000 school districts in the US. 15,000 living laboratories where new teaching methods and tools can be piloted rapidly and the most successful communicated and implemented by others. We also need to look at the tools, techniques, and curriculum used internationally, and rapidly learn from them as well as the governmental policies that support the success of their school systems. Unless we look at education from a global perspective we will be blind to what has created success around the world. Remember, the objectives are firm, the means are flexible.

Solutions will come from both the public and private sectors. Already we have multiple choices for education including public, private, and charter schools. Where public dollars are involved we must assure a level playing field for all options. Schools receiving public funds cannot cherry pick who attends. People with means will always have the option of sending their children to private schools. Yet the wealthy have a large stake in the success of the educational system as a whole. Their companies will need skilled employees, they will want their tax dollars (indeed everyone’s tax dollars) to provide world class infrastructure and advanced R&D instead of being taxed to provide endless subsistence to the uneducated masses. It would be in their interests to not have to invest in home security systems and gated communities to protect themselves from those living without hope.

An image of the future without change is simply frightening. Unless we rapidly and drastically reform our educational systems our standard of living will be diminished to that of an economy whose time has passed and is largely irrelevant to the world around us. We will rapidly become poor relative to those who have recognized that their economies are dependent on a world class workforce and have consistently made education the backbone of national policy. Without a competitive workforce, the income divide will be unimaginably vast. A few will be extremely wealthy, a few more will be able to live comfortably, but the vast majority will be poor and social unrest will force the well off to live in their self styled prisons.

Yet, a vision of the future that begins only with a change in our attitudes is exciting and invigorating. There is no other area in which an investment of our resources (time, effort, money) can have the magnitude of return on investment in so many areas in such a short period of time.
• In four years – more college graduates as a result of
o Making sure students that are prepared to begin college level work can afford to attend
o Our state colleges and two year schools will no longer be backwater institutions wasting resources on remedial classes and attempting to teach college level classes to those with barely an 8th grade education
o Addressing the problems that result in 20% of college freshman not returning as sophomores
o Addressing the problems that result in a bachelors degree taking more than four years to earn and college’s six year graduation rate of 65% (this is worse than our high schools!)
• In six years – high school students will be graduating and performing at grade level as measured by globally competitive standards
o Our teachers will be engines of teaching innovation
o Our administrators will be engines of hyper efficient administration, advocates for the innovative teaching methods presented by teachers, and shapers of legislation that assures uniform education across our country
• In 12 years – with active community support, parental engagement, our students will enjoy the support of parents, peers, and their entire neighborhood as people embrace the value of education and see a path for the future of all children – not just their own.

The numbers of both sides of the balance sheet are huge, the money wasted on social spending, the returns to society of an educated, skilled, contributing member of society. The benefit is the SUM of those huge numbers.

In less than a decade we can be well on our way to eliminating well over half of our spending on social programs. Instead of perpetuating viscous the cycle of poverty and hopelessness we will be creating virtuous cycles of hope and success. With a globally competitive workforce we will:
• Maintain and increase our leadership in technological innovation
• Increase our economic, energy, and national security
• Lead the world in renewable energy technology and its commercialization
• Commercialize increasing amounts of fundamental research and development
• Increase the health of our society and reduce health care costs
• Reduce our national deficit and pay down the national debt
• Redirect spending to building and maintaining 21st century infrastructure
• Reduce political bickering over wasteful spending
• Increase people’s retirement security as they will have personal saving that reduce the dependence on government based programs
o Economic independence may open door to rational discussion on who should receive social security. Social security would be a sufficiently small fraction of overall retirement income that foregoing it would not be a hardship.
• Productively engage the talents of our people
• Create and retain the jobs of the future at home
o The economy will continue to evolve and jobs will continue to move around the world. With our workforce we will be creating the new technologies and jobs and our system of education and retraining will allow us to continually adapt our workforce to higher value pursuits.

• …

We are in a global race to lead in education and produce a competitive workforce. Every challenge and our government faces and every initiative it undertakes from high speed rail, to smart electrical grids and green technologies depends on this. If we fail to lead we will be buying technology from emerging economies like China, India, and Taiwan.

The challenge is clear. The benefits of success are monumental, as are the costs of inaction.

Reform, change, and adaptation are not one time efforts. Our world is constantly and rapidly changing and we must be at the forefront of these changes. The only way to assure this is to have the best educated workforce in the world.

Let’s get going!

Leading to Recovery - Presentation at 2009 PMI MN Professional Development Days

Leading to Recovery


GOOD MORNING!! - Thank you for coming. When I looked at the presentation schedule I was a bit surprised to find myself speaking about leadership in the Technical Skills & Tools track. But it works out well as the two sessions in the Soft Skills track this afternoon, “Influencing Others: How to Get the Results You Want” and “Leadership: the Final Frontier”, will be excellent follow-on discussions to this presentation.

In thinking about what I could share with you today I considered topics like best practices in project management, reasons projects fail, characteristics of successful project managers, and similar topics – but these have been covered very well by many others. The thing that kept coming to mind was the monumental change we’ve experienced in our economy and how we can cope and compete in a post investment banking world. A situation brought about largely by a massive lack of leadership by many people at many levels.


Today I will discuss how we might turn the enormous baskets of lemons that have been dumped on our doorsteps into lemonade. I will share insights from a management guru, contrast characteristics of leadership and management, examine some of the changes we’ve experienced, discuss reforms needed to lead to recovery, and present opportunities hiding in desperate situations.

A word of warning, You will undoubtedly find the distinctions between I am going to present between leadership and management quite harsh as I initially did. However I hope you will accept the challenge to reflect on these distinctions and allow new insights to form.

Reflecting on the massive change we are experiencing I began to wonder if what I’ve learned from my formal education and subsequent experience was still valid, what adjustments to my mental model of the world were needed, and what opportunities could be realized from such a catastrophic economic situation. I found myself revisiting writings from people whose experiences span decades and still remain relevant. I was particularly struck by the insights of Peter Drucker, recognized as the founder of modern business management and self described “social ecologist”.

Drucker was born in 1909. He authored 39 books, countless articles, and was still actively contributing to the management body of knowledge when he died in 2005 at the youthful age of 96. At the risk of turning this into a Drucker fest I will share more than a few of his insights that seem particularly relevant now. Reflect on these quotes in the context of what we are experiencing.


On Banking. “Commercial paper (that is, short-term notes originated by nonbank financial institutions) did not originate with banks, but had a tremendous negative impact on them. Under U.S. law, commercial paper is considered a security, which means that commercial banks cannot deal in it. Because financial service companies, such as Goldman Sachs, Merrill Lynch, GE Capital, and so on, discovered this, they have largely replaced commercial banks as the world’s most important and leading financial institutions.”


On corporate greed and corruption. “It is easy to look good in a boom. But also, every boom – and I have lived and worked through four or five – puts crooks at the top. The only thing new is that the last boom considerably increased the temptation to fake the books – the exclusive emphasis on quarterly figures, the overemphasis on the stock price, the well-meant but idiotic belief that executives should have major financial stakes in the company, the stock options (which I have always considered an open invitation to mismanagement), and so on.”


On excessive compensation. “I am for the free market. Even though it doesn’t work too well, nothing else works at all. But I have serious reservations about capitalism as a system because it idolized economics as the be-all and end-all of life. It is one-dimensional. I have often advised managers that a 20-1 salary ratio between senior executives and rank and file white collar workers is the limit beyond which they cannot go if they don’t’ want resentment and falling morale to hit their companies.

Today, I believe it is socially and morally unforgivable when managers reap huge profits for themselves but fire workers. As societies, we will pay a heavy price for the contempt this generates among middle managers and workers. In short, whole dimensions of what it means to be a human being and treated as one are not incorporated into the economic calculus of capitalism. For such a myopic system to dominate other aspects of life is not good for any society.”


On our government. “We are rapidly moving to doubt and distrust of government. We still revise unsuccessful programs over and over again, and assert that nothing is wrong with them that a change in procedure will not cure. But we no longer believe these promises where we reform a bungled program for the third time. We no longer expect results from government.”

Today we face challenges the likes of which have not been seen for three generations and probably not in the memories of many, or any, here today. Clearly, we will not be able to manage our way out. What we will need is strong leadership – in many places, at many levels.

It is important to understand the distinction between leadership and management. One is not better than the other. Both are essential. We probably all think of ourselves as leaders and we probably are in our own unique situations but most people are better suited to one or the other.

There is one incontrovertible maxim in leadership. You can only lead if you have followers. There are many reasons to follow but you will only have (loyal) followers if people trust you. Trust is earned. It is given. Trust will only exist if you CONSISTENTLY:


1. Demonstrate integrity. Honor your commitments & promises.
2. Set high – but achievable standards.
3. Listen – seek first to understand then be understood. It is easy. All you have to do is keep your mouth shut.
4. Engage people in creating the future. People will (or are more likely) to accept change they helped create but will predictably resist or outright reject change that is forced upon them.
5. Treat people with respect and trust in their abilities. Support your coworkers. Be there for them when it counts. Encourage them to freely share their thoughts and feedback – encourage constructive dissent - and act to incorporate their views.
6. Publically recognize success as the accomplishments of others. Don’t claim success as your own. Have a sense of humility.
7. Treat people fairly in all things. Be consistent.
8. Accept and do not punish failure – provided one learns from the experience and does not repeat the mistake.
9. Inspire optimism
10. Speak truth to power

We would all follow someone who lived these principles and I believe that we all aspire to these things in our own lives .

We are only successful to the extent that we make those around us successful – up, down, and sideways. This is true whether you are a leader or a manager. So what are the distinctions?

In his book Leading Change, John Kotter, professor of Leadership at the Harvard Business School, describes management and leadership as follows.


“Management is a set of processes that keep a complicated system of people and technology running smoothly. The most important aspects include planning, budgeting, organizing, staffing, controlling, and problem solving. Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances. It defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles.”

A good friend of mine observed that the positional power of management is given by superiors. The influential power of leadership is given by people above, around, and below. You cannot manage outside your position in an organization but you can lead from anywhere.

Frequently, leadership and management are conflated. Typically, management and control is what is emphasized & institutionalized. Change is a disturbance to the smooth functioning of an organization and is something to be systematically controlled or better yet – squashed. The result is organizations that are over-managed and under-led. That being said – managing change is important otherwise a well structured transformation process can get out of control. However, for most organizations the bigger challenge is leading change. Successful transformation is 70-90% leadership and 10-30% management. Yet almost everyone thinks about the problem as “managing” change.

Warren Bennis, Professor and chairman of The Leadership Institute at the University of Southern California, makes a harsher, but essentially compatible, distinction in his book On Becoming a Leader. In the following try to focus on what is being said – not how it is being said.


Bennis says that the difference between managers and leaders is defined by those who master the context and those who surrender to it.
· Managers administer, leaders innovate
· Managers are a copy, leaders are original
· Managers maintain, leaders develop
· Managers focus on systems & structure, leaders focus on people
· Managers rely on control, leaders inspire trust
· Managers have a short range view, leaders have a long range perspective
· Managers ask how and when, leaders ask what and why
· Managers’ eyes are always on the bottom line, a leader’s eye is on the horizon
· Managers imitate, leaders originate
· Managers accept the status quo, leaders challenge it
· Managers are the classic good soldier, a leader is his own person
· Managers do things right, leaders do the right things

If you are like me, I’m sure you are, to say the least uncomfortable, perhaps downright incensed, with Warren’s judgmental characterization of management. Forcing myself to re-read and examine what he has said I’m more inclined to accept his words as statements of fact rather than indictments.

The truth is that we need both leaders and managers. In fact we need fewer leaders than managers. If everyone were “leading” establishing their vision, setting direction,… we would have chaos. Leaders are not the people who make things happen. Leaders are frequently quite poor at detailed implementation.

Think of Steve Jobs. He is a very creative and inspiring leader. No one else in the company is like him. Now imagine the disciplined management it takes to transform his vision into and I-phone or and I-pod. However, also recognize that this management comes after setting the vision and leading the needed change.

Leadership is not easy. Remember, Steve Jobs was kicked out of his own company. In fact this is not an uncommon fate for entrepreneurial leaders.

Now that we are again supremely comfortable with the role of management and feel power and purpose again coursing through our veins, just remember – the manager is the boss and boss spelled backward is double SOB.

Leaders create an atmosphere of collaboration. If a leader creates an atmosphere where people are more concerned about failing at what they are doing rather than doing it the leader will not succeed. Fear leads to massive waste. The same can be said for internal competition. A company must have internally focused collaboration and externally focused competition.


Max DePree said in Leadership Is an Art, “The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant.”


Drucker identified the following characteristics for the next generation of leaders:
1. Broad education
2. Boundless curiosity
3. Boundless enthusiasm
4. Contagious optimism
5. Belief in people & teamwork
6. Willingness to take risks
7. Devotion to long-term growth rather than short term profit
8. Commitment to excellence
9. Adaptive capacity – comfortable with ambiguity
10. Empathy
11. Authenticity
12. Integrity
13. Vision

Leaders are needed to lead change as well as to react to unexpected change – to see opportunities, revise the vision, and set the new direction. Change creates opportunity – in this case is opportunity of a lifetime. What we are experiencing is a paradigm shift and in a paradigm shift everyone goes back to square one.

Because leaders are continuously learning and adapting, you can substitute learners for leaders.


Eric Hoffer of Vanguard Management observed, “In a time of drastic change, it is the learners who inherit the future. The learned find themselves equipped to live in a world that no longer exists.”

Well there are a lot of things that no longer fit our assumptions. It has been said that it is not the things that we don’t know that cause problems. It is the things we know for sure that just ain’t so.


Here are some things that we used to know for sure that just ain’t so:
1. Here is one straight from business school - Corporate debt is good for shareholders – the underlying now questionable assumption being that financing is readily available
2. Home prices will go up forever
3. You can always refinance a mortgage that you can’t afford
4. Regulators Regulate
5. The market will regulate itself
6. Profit motive will prevent risky investment and behaviors
7. Government oversight is adequate
8. Auditor reports are reliable (PWC and Satyam)
9. Investment bankers and credit rating agencies properly assign and manage risk


In response, consumers have drastically altered their buying habits. Here is a short list of what’s in and what’s out
1. Neiman Marcus is out – garage sales are chic
2. Land barges and corporate jets are out – Prius is in
3. Dirty energy is out – alternative energy is in
4. Financing lavish lifestyles is out – living within our means is in
5. Onerous credit card debt is out – paying off debt is in
6. Making loans with no documentation of income & debt is out –bringing mountains of papers to prove every nickel of income or obligation is in
7. Complex un-ratable financial instruments are out – treasuries are in
8. Lavish compensation is out – clawbacks are in
9. Lax oversight and enforcement is out – accountability and regulation is in
10. Onerous credit card rules & interest rates are out – consumer rights are in
Reality has changed. Our paradigms have drastically shifted.


Drucker says the following, “In a time of change you need to carefully examine “the future that has already happened”. Assess what has occurred that does not fit your current assumptions and thus creates a new reality – a need for a new intellectual framework to win in the new market.

Today’s realities fit neither the assumptions of the Left nor those of the Right. They don’t mesh at all with “what everybody knows.” They differ even more from what everybody, regardless of political persuasion, still believes reality to be. “What is” differs totally from what both the Right and the Left believe “ought to be.” The greatest and most dangerous turbulence today results from the collision between the delusions of the decision makers – whether in governments, in the top management of businesses, or in union leadership – and the realities.”


I believe that our ability to recover and indeed to lead the recovery requires sweeping reforms in government and the regulation of financial institutions (which I won’t address today), ethics, education, energy and the environment (which are inextricably linked), and health care. In recent months some progress has been made on some of these issues but much remains to be done.

What happened to ethics? How did we create Tom Peters, Bernie Madoff, and Allen Stanford? Why would loan originators push families into home loans for which they clearly were not qualified?

We talk about business ethics as if it were separate form any other form of ethics. Why is there any notion that our business ethics should be any different than our personal ethics? Hippocrates established the basis of ethics 2,400 years ago with the oath among other things, to "Above all, do no harm". This applies to everyone and to all endeavors. It is a sad commentary that we need to write policies on business ethics, provide training on business ethics. To be sure there are cases that present dilemmas but those situations bear no relation to the lapses that brought us to where we are today.

What we are experiencing is nothing less than the fruits of a massive loss of personal integrity in leadership.


Heraclitus (hair a clight us) , the Greek philosopher, said, “The soul is dyed the color of its thoughts. Think only on those things that are in line with your principles and can bear the full light of day. The content of your character is your choice. Day by day, what you choose, what you think, and what you do is who you become. Your integrity is your destiny. It is the light that guides your way.”

Leadership cannot be faked and integrity cannot be acquired at a later date. Our deeds are who we are. As Emerson echoed, “What you are speaks to loudly that I cannot hear what you are saying.”

What is needed is nothing less than the expectation that we return to the private virtues that Drucker describes.


He said, “In a moral society the public good must always rest on private virtue. To make what is good for the country good for the enterprise requires hard work, great management skill, high standards of responsibility, and broad vision. It is a counsel of perfection. To carry it out completely would require the philosopher’s stone that can translate the basest element into pure gold. But, if management is to remain a leading group, it must make this rule the lodestone of its conduct, must consciously strive to live up to it, and must actually do so with a fair degree of success. For in a good, a moral, a lasting society, the public good must always rest on private virtue. Every leading group must be able to claim that the public good determines its own interest. This assertion is the only legitimate basis for leadership; to make it a reality is the first duty of the leaders.”

Back in 1959 Drucker coined the term “knowledge worker” as distinct from craftsman performing manual work that relied on skills acquired through apprenticeship. Knowledge and skill are different in that skills change very, very slowly. Knowledge changes itself and makes itself obsolete and very rapidly. To stay relevant, knowledge workers must engage in continuous learning throughout their careers.


Knowledge workers rely on substantial formal education and the ability to acquire and apply theoretical and analytical knowledge. Knowledge workers change the nature of work itself and the structure of organizations. The ascendance of knowledge and the transition from manual to knowledge work made workers free agents. Information technology has rapidly accelerated this transition and continuously changes the speed and dynamics of knowledge and information exchange in nearly unimaginable ways and has lead to the DIS-integration of the familiar corporate structure, the most visible manifestation of which is currently outsourcing. In today’s global economy, a vast and increasing percentage of work is “knowledge” work. We are in competition daily with the best and brightest knowledge workers around the globe and we are steadily losing our ability to compete.

We need to reform education in order to maintain our leadership position in a knowledge-based world and particularly in one where a paradigm shift has set everyone back to square one. Further, the foundation of any successful reform, any breakthroughs in any field, is education, and in that respect we are in serious trouble. Our schools are not world class, the products of our K-12 education system are high dropout rates and a minority of students actually performing at the level of a high school senior.

Consider as a poster child for reform, a bill that passed our state legislature. Elimination of GRAD requirement (HF 501, Mariani, DFL-St. Paul/SF 405, Wiger, DFL-North St. Paul): This bill allows students who cannot pass the GRAD test – Graduation-Required Assessments for Diploma – to still receive a high school diploma.

There is plenty of data to show that our schools are failing. Nationwide, 58% of ADULTS cannot calculate a 10% tip on a $24 restaurant bill. 30% of high school students drop out and in inner cities the rate exceeds 50%. The percentage of students going on to college is falling as is affordability and the number of students pursuing math, science, and engineering careers.


The Trends in International Mathematics and Science Study 2007 International Mathematics Report presents some worrisome findings - emphasis mine.
(report available at http://timssandpirls.bc.edu/TIMSS2007/mathreport.html )


“At the eighth grade, Chinese Taipei (known to us as Taiwan), Korea, and Singapore had the highest average mathematics achievement. These three countries were followed by Hong Kong and Japan, also performing similarly and having higher achievement than all the other countries except the top three performers. There was a substantial gap in average mathematics achievement between the five Asian countries and the next group of four similarly performing countries, including Hungary, England, the Russian Federation, and the United States. Among the benchmarking participants, the two U.S. states, Massachusetts and Minnesota, and the province of Quebec were outperformed by the five Asian countries but had higher average achievement than the group of four countries.


Remarkable percentages of students in Asian countries reached the Advanced International Benchmark for mathematics, representing fluency on items involving the most complex topics and reasoning skills. In particular, at the fourth grade, Singapore and Hong Kong had 41 and 40 percent of their students, respectively, achieving at or above the Advanced International Benchmark. At the eighth grade, Chinese Taipei, Korea, and Singapore had 40 to 45 percent of their students achieving at or above the Advanced International Benchmark. The median percentage of students reaching this Benchmark was 5 percent at the fourth grade and 2 percent at the eighth grade.”

Let’s look at some of the results.
Page 82 – International benchmarks 4th & 8th grade
Difference between 4th & 8th grade
Interesting finding Page 70 – Gender performance


Here were the factors for higher achievement. None of these will be a surprise.
Homes with more books
Higher levels of parent’s education
Access & use of computers (at home & at school)
Positive attitude towards math
Schools with fewer students from economically disadvantaged homes
Schools with few attendance problems (particularly in 8th grade)
Few resource shortages & good working conditions for teachers
Teacher’s positive view of school climate & student perception of being safe


Here are some things that I believe need to be part of educational reform.

1. Stop social promotion – students need to perform at grade level. Social promotion may be an easy solution for teachers and administrators but this practice does an incredible disservice to students and condemns them to continual failure as they are promoted to ever higher levels of expectations when they cannot perform even at the lower level.
2. Establish uniform standards for subjects at each grade level. These standards must compete with world class standards in other (even developing) countries. Local communities can choose to exceed these standards but they set a competitive floor on expected knowledge. When a student graduates there needs to be a uniform understanding across the country and around the world about the level of mastery achieved.
3. Establish a system that rewards excellence in teaching and prepares teachers to effectively present world class learning opportunities
4. Assure that teaching is of uniform quality regardless of where it is delivered.
5. Assure that our schools focus on teaching. It is not possible for schools to solve social problems that result in kids who are not ready to learn or see no value in learning.
6. Create a system that uniformly funds schools so that schools in Hector are as equipped to deliver a 21st century education as those in the Hamptons.
7. Fund programs that help prepare kids for school and keep them in school. Kids don’t learn when they are hungry, or afraid, or tired from working to support their families, or associated with gangs that to say the least, disparage academic achievement.
8. Assure that higher education is available to those who are prepared. This implies two things. First that those going on to college are indeed prepared to master work at that level. Too many resources are expended within our state college system trying to remediate problems that should have been addressed in high school. The increasingly scarce funds for higher education need to be focused on higher education – not continuation of high school. Second it implies that higher education is affordable. Just as we as a country decided that government sponsored K-12 education was necessary to complete in an industrial society we need to recognize that a college education or similar advanced training is now the entry level standard to succeed in a knowledge-based, global economy.


The March 26th, 2009 Minnesota Public Radio’s MidDay program had an excellent discussion relevant to needed educational reforms. You may want to access it online and listen to it.

For the above to be judged a success, and indeed to measure the success of any effort, metrics and criteria for success must be established.


Drucker observed, “In any social situation of the kind we deal with in enterprise, the act of measurement is neither objective nor neutral. It is subjective and of necessity biased. It changes both the event and the observer. Events in the social situation acquire value by the fact that they are being singled out for the attention of being measured. The fact that this or that set of phenomena is singled out for being “controlled” signals that it is considered to be important. Controls in a social institution such as a business are goal-setting and value-setting. They are not objective. They are of necessity moral. Controls create vision. They change both the events measured and the observer. They endow events not only with meaning but with value. And this means that the basic question is not “How do we control?” but “What do we measure in our control system?”

Drucker has essentially restated the Heisenberg uncertainty principle that essentially says that the very act of measurement changes the system. What you measure is what you get so care must be taken in choosing the metrics to avoid harmful distortions as people predictably try to game the system.

For sure these are drastic and potentially costly changes, but they are necessary for our competitiveness and indeed our security. Consider the payback on investing in 16 years of education and 50 years of productive work, paying taxes, and leading in production and delivery of the goods and services needed in a globally competitive, knowledge-based economy. Consider the costs of continuing as we are where dropout rates are high, many “graduates” are ill prepared for higher education, and many of those that are cannot afford it. Consider the costs of more crime, more jails, more social programs, teen pregnancy, health care for the indigent, and ever shrinking tax revenues in the face of ever increasing demand.

We view education as an expense rather than as an investment, particularly if it is other people’s children that are being educated. No substantial progress will be made as long as we hold this view. The reality is that there is nothing with a higher return on investment than education. It is an investment we simply cannot afford NOT to make.

In the sixties our educational system was devoted to math and science so that we could put a man on the moon before the decade was out. Today, our efforts in the sciences face a no less daunting challenge – the remaking of our energy system to avoid catastrophic climate change.

To be sure there are people who do not believe that climate change is real or if it is that it is manmade. There are also those who believe that we did not go to the moon, that the earth is flat, and that Elvis is not dead. I don’t believe any amount of rational discourse is going to alter these people’s minds. But even if global warming is not real, surely it is still better to not pollute. It surely will not harm us to develop sources of clean energy that will not be depleted. Given that virtually the entire world’s scientific community agrees on the causes and effects of global warming, that changes are happening even faster than they have predicted, and given the magnitude of the social and economic effects – I think we are better off accepting that global warming is real and that we had better deal with it NOW.

In our capitalistic world (including China, Russia, India, - virtually all but the most failed, totalitarian states) nothing will happen until the cost of doing something are outweighed by the costs of doing nothing. Only advances in technology and supporting government policies are going to make that happen. No single company can make the necessary long term investments in basic R&D in alternative energy nor can companies create policies that encourage commercialization and adoption. This is the role of government. We have the talent available, we know the need, there are many technologies to develop. We need to act NOW!

Why is it important to make these investments? Other than not toasting the ice caps, it will be hugely PROFITABLE - IF we are in a position to lead. Currently the largest producers of photovoltaics are in China and Germany. .


Of the 10 leading wind turbines manufacturers one, only one, GE, is a U.S. company. Will we invent, license, and sell worldwide or will we be buying someone else’s technology, sending them our money instead of reaping the rewards.

Consider the global market for technologies that reduce consumption, reduce emissions, remediate existing contamination, recycle existing resources (anyone for mining our landfills?) and provide renewable energy resources. Consider that China is in fact recognizing the impact of pollution on its economic wellbeing and the wellbeing of it citizens. Consider the fact that as soon as the economy recovers the demand for energy will rebound and again drive prices sky high increasing our security risks as we compete for scarce resources and trigger another economic slowdown.

In setting policies we must be much more aware of unintended consequences of well intended actions. Ethanol is big – but we didn’t fully understand the energy efficiency of its entire life-cycle nor did we foresee the global impacts of burning food for fuel. When considering the next generation of biomass incinerators and cellulosic ethanol plants we must think about the implications of burning or fermenting everything that grows, leaving nothing left in fields and forests to return to the soil, increasing erosion and the need for more petroleum-based fertilizers.

Our new challenges are long term, the solutions are long term, and the investment required is long term. The problem is that we have an exceedingly short memory.

Thanks goodness for the economy that we again have cheap gas – right?? A year ago when gas was $4 a gallon you couldn’t give SUVs away. If you bought a high mileage car dealers would throw in a SUV for $50. All we heard about on the news was high mileage cars, hyper-mileing, alternative energy sources we hadn’t even heard of – algae, new photovoltaic, bio-diesel from coffee grounds, hydrogen comes back every time, and now even salt power. Earlier this year when gas was back to $1.45 we stopped hearing about these things. Trucks were selling and cars that got good mileage sat on dealer’s lots.

There is no single solution to the world’s energy needs. The solution will involve every imaginable energy source standardized for delivery into transportation fuels and smart electrical distribution systems. Our future lies not in the rumble of Hummers but in the hum of electric vehicles and the swoosh of wind turbines – but these are today’s technologies and can only be the start.

To recover sustainably and to our full potential will require finally addressing the issue of health care. I don’t pretend to have answers but I would suggest that you have a cup of coffee with my sister, a physician who constantly struggles to balance the tension between the time she would like to spend with her patients and the demands for “productivity”.

As I said, I don’t have answers and the topic is too complex to cover here but I do have some basic questions. When did the practice of medicine shift from the physician’s office to a call center cube in an insurance company staffed by a high school dropout telling doctors what they can and cannot do? When did health care’s customers cease being the patient become the insurance companies? And more recently, just when did the focus change from health care reform to “health insurance reform”?

I remember a different era in health care. It was a time when the statue of Chief Kandiyohi was on the bank at the corner of 5th street and Litchfield Avenue in Willmar, MN. It was a time when, if I walked with my Mom from my grandparent’s apartment above Shorty’s hardware and she took at right at the statue, the entire city of Willmar knew from tennis shoe skid marks and wailing for the next block and a half that I was being taken to the clinic where I would be punctured with HUGE needles. It was a time when doctors practiced medicine, not insurance companies. Doctors were able to spend time with patients and provide the care needed without ordering all possible diagnostics in order to defend against lawsuits. Aside from the needles, I think it was the golden age of medicine.

Education, energy and the environment, and healthcare - these are government level issues. Only the government can set policies and bring sufficient resources to bear. Our role is to become engaged in the discussion, communicate with facts, provide our elected representatives workable solutions, and demand fiscally responsible, effective, programs with accountability for success. The resulting policies and programs must direct investment to areas that will provide both a short term boost and long term value.

Let me share some thoughts that I hope will generate continued discussions and creative solutions in our own communities.

The new realities are that businesses of every size are under enormous pressure to cut costs. Markets are radically changing and businesses must be able to react or they will cease to be in business. The world is in agreement about the reality and threat of global warming. People and business in particular are becoming more conscious of their own carbon footprint not only because of environmental correctness but also because of economic savings. The centers of outsourcing are losing their attractiveness due to decreasing labor arbitrage advantage, and increasing political instability.

So what does this mean for us? Here is one possibility. It means that short supply chains could easily trump global supply chains. Why? .


1. Reduced transportation costs throughout the supply chain. Currently many countries import raw materials to make (for instance) circuit boards and integrated circuits. These components then get shipped to (more often than not) to China for assembly. After that, the finished products are shipped around the world to distribution centers, then to retailers, and finally to the end customer.
2. Shorter chains are more responsive and have less inventory in process
3. Shorter chains are less complex and costly to manage
4. Geographically “close” suppliers likely operate in the same language, in the same legal system, and within a few time zones
5. Efficient manufacturing and engineering offset the decreasing advantage of low wage locations
6. Goodwill is generated by creating and keeping jobs at home. I am NOT advocating protectionism. I am suggesting that when the fully allocated costs (including carbon) of global supply chains are taken into account I believe there is a case to be made that short supply chains provide economic and competitive advantage.

Companies are desperate to find low cost, productive, easily accessible areas with low turnover, low political and natural disaster risks, excellent transportation links, redundant high speed telecomm and data capabilities, and an educated, English speaking, easily managed workforce, located within a few time zones, in the same legal system.

This presents large opportunities for communities outside traditional locations to present their value proposition. Notice that the word “presents” means that they must get the word out about their community’s potential. Just because they know their potential does NOT mean that people will be beating a path to their door. Just because you build it does NOT mean they will come.

To take advantage of the new realities communities must bring new alternatives to business. They cannot wait for business to figure it out because most of them won’t and it is easier for them to continue with existing business relationships.

We must also assess government policies to identify and leverage unintended consequences. For example:

Firms that have received government bailout funds have restrictions on hiring people with H-1B visas. This doesn’t sound so bad, but it doesn’t apply to the outsourcing vendors working for these firms. This can have the consequence of driving companies that had planned on keeping jobs onshore – even if partly done by H-1B vias holders – to take all the work offshore. This presents an opportunity for creative communities to capture this business.

Not all challenges involve technology, outsourcing, or the politics of immigration. Consider opportunities hiding in the most desperate situations. Take Flint, MI where entire blocks of housing are deserted and elected officials are actively considering bulldozing large tracts of their own city and shrinking the city’s boundaries. The sad fact is that some places simply are not going to come back to their former glory. Other areas are going to grow. How to reconcile supply with demand? Clearly we can’t move houses across the county – or can we if we move them in small pieces. What if we provided jobs to an army of unemployed or underemployed workers to recycle entire houses? Some companies already do this. We need to scale this up massively.


This is a win win win opportunity. Benefits include:
Reuse & Recycling virtually entire homes
Rafters, doors, floors, cabinets, lumber, electrical outlets & faceplates,…
Roofs and foundations – ground to provide aggregate for road construction
Essentially everything except the sheetrock can be recycled – and perhaps even this
Reduced demand for natural resources
Employment to dismantle and build new homes
Learning new skills
Dismantling is not destruction
Learn how things are built
Apply skills to building new homes

I hope that this has been a thought provoking discussion. We have covered prescient observations of a management guru, the need for and the qualities of leadership, examined what has changed, what reforms and investments need to be made, and shown that there are substantial opportunities available if we frame the new realities correctly.

Although we call ourselves project managers we in fact have the capability to engage in our communities as leaders as envisioned by Kotter, Bennis, and Drucker.

In closing I would like to share two more thoughts. First a thought on competition.


“Every morning in Africa a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows if must outrun the slowest gazelle or it will starve to death. It doesn’t matter if you are a lion or a gazelle. When the sun comes up you’d better be running.”

Lastly, a thought on how to reach out to those who have been impacted in so many ways by this recession. Although we can do more I think this would be a good start.


Here is Peter Drucker on the purpose of society: “For the individual there is no society unless he has social status and function. There must be a definite functional relationship between individual life and group life. For the individual without function and status, society is irrational, incalculable, and shapeless. The “rootless” individual, the outcast – for absence of social function and status casts a man from the society of his fellows – sees no society, He sees only demoniac forces, half sensible, half meaningless, half in light and half in darkness, but never predictable. They decide about his life and his livelihood without the possibility of interference on his part, indeed without the possibility of his understanding them. He is like a blindfolded man in a strange room playing a game of which he does not know the rules. Make time to reach out to a “rootless” person who may be unemployed. Drop them a note of support or take them out to lunch.”


Thank you. I look forward to hearing your comments and taking your questions. Two comments before I do. I deliberately presented controversial distinctions between management and leadership in order to provoke a gut reaction and get everyone thinking. I also talked about leadership as if it exists only in the upper echelons of companies. If this is big “L” leadership then there are an infinite number of little “l” leadership opportunities for all of us to be leaders in our own situations.

If you are a mentor, if you exude the characteristics necessary to establish trust, if you exemplify Drucker’s characteristics of leadership – then you are recognizing and seizing these little “l” opportunities and are likely already recognized as a leader.

Globalization & Healthcare

The following article was published in a small local paper nearly three years ago. At that time I suggested that healthcare would be subject to offshore outsourcing. It is now coming to pass and insurance companies are actively looking at this alternative to control costs.

With the current debates about healthcare, education, and the environment I thought it would be useful to revisit a three year old editorial.

Here are links to recent articles about Medical Tourism:

http://www.eturbonews.com/10910/medical-tourism-outsourcing-health-care
http://www.cio.com/article/499827/Offshore_Outsourcing_Sending_Healthcare_Overseas
http://abcnews.go.com/Travel/wireStory?id=6240372
http://www.oregonlive.com/travel/index.ssf/2009/08/medical_tourism_becomes_an_ant.html

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Mom and Dad, How’s the Curry?


I have a picture in my office that is an apt metaphor for competing in a global economy. It is of a male lion lying down in the foreground and a gazelle standing in the background. The text under the picture reads, “Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed… Every morning a lion wakes up. It knows it must run faster than the slowest gazelle or it will starve to death. It doesn’t matter if you are a lion or gazelle. When the sun comes up, you’d better be running.”

There is a lot written in the press about globalization usually framed as a polarized vision of it being good for large companies and bad for workers. As with most issues, the truth lies somewhere in the middle.

Globalization has been characterized a race to the bottom when in fact it is a very intense race to the top. Articles on the export of manufacturing and service jobs being lost to offshore competition appeals to our fears even though the loss of jobs is a very small percentage of the overall workforce. We cannot ignore this reality but fear-based responses are nearly always counterproductive. There is in fact opportunity IF we respond aggressively and productively.

We have all heard of the offshoring of jobs that involve repetitive process that can be clearly documented and executed anywhere. We tend to think of “low end” types of work but technology is enabling more and more high-skill jobs to be performed remotely such as reading x-rays and MRIs in India. Medical cost are driving insurance companies begin encouraging their insured to have operations in Europe as they have high quality medical facilities at much lower costs.

The fact is that production will flow to the area that can deliver the “product” at a sufficiently high level of quality at the lowest cost. You may think that areas where services must be performed “in person” such as in nursing homes as being immune from this trend but think again. As healthcare costs continue to rise in the United States, there may be a time when it is economically advantageous to send Mom and Dad to a very comfortable nursing home in India with doctors and nurses trained in the U.S. and a staffing level that allows care workers to dote on their every need. Mom and Dad, I hope you develop a taste for curry. Sorry about the monsoons, just pretend you’re in Seattle.

By now we have probably all accepted the fact that when we call a company to place a reservation, get help with computer problems, or resolve billing problems we will be talking to someone in India. While we may cringe at the prospect of having to deal with accents we find difficult to understand, the task at hand is usually successfully concluded (eventually) and even in the face of our frustration the person helping us is always impeccably polite. In the U.S. this work is minimum wage and unlikely to support a family, but in India this is a sought after job that pays a high (relative) wage and attracts educated and ambitious young people. The offshore companies creating these jobs gain valuable experience running large telecommunications systems and designing and securing complex data centers. Taken in its entirety, this is not the minimum-wage, low-tech, low-skill operation it appears. Moreover, these companies are continuously seeking to leverage their experience to take on more complex operations. This is in turn encouraged through government policies that emphasize technology and education.

Make no mistake, today’s offshore companies are not content to just do the “low end” work we don’t want to handle ourselves. Tomorrow they will be capable of doing what we (still) do here today. Unless we have the capacity to continually create the technologies and jobs of the future the offshore companies will assume this leadership role leaving us with neither the capabilities to invent the future nor the cost structure to compete in what has passed us by.

We in the U.S. are not entitled to global leadership. We must earn this position every day. This will not be accomplished by trade or industry protection but rather with policies that encourage research and development, affordable higher education in science and engineering, and immigration policies that encourage the world’s best and brightest to come to the U.S. and help create the future here.

Currently, we attract the best and brightest students from all over the world, educate them in our finest colleges and universities, and then force them to leave the country. Increasingly, due to policies put in place post 9/11 these students are choosing to attend fine educational institutions in countries other than the U.S. This further exacerbates the problem depriving us of their valuable research and post-graduate work that would have otherwise been done here, not to mention going on to start the next eBay, Google, or Intel in some other country. It should also be noted that our best students also have these options and are increasingly taking advantage of them.

We need diversity and we need college education to be affordable for all our citizens. We also must assure that our high-school graduates are prepared to immediately undertake demanding college-level work. While in Minnesota we may compare favorably with other states (although recently we slipped seven places) we must recognize that we are competing with countries like India, China, and Finland and not Arkansas, Mississippi, or California

Our national security is preserved only if our economic security is assured. Even military strength cannot be sustained without the capabilities required to preserve economic security. This security will not be sustained in a country with our current high-school drop out rate, where graduates need remedial training before attending college, and where there is a lack of emphasis on science and engineering needed to create our future and assure our security.

There is no cause to act out of fear, but there are reasons for considerable concern. Our leadership position and security are ours to lose. Affordable, high quality college education and prepared students are the best investment we can make in our future security and prosperity. We must retreat from polarized, fear-induced positions to study, understand, and respond with comprehensive and cohesive public and private initiatives to the challenges of living in a global economy.

In a race to the top we must be the ones raising the bar. We face a real and growing challenge. As Americans we have always risen to the challenge. It is time to unite and rise again.