Does our educational system, especially the university system, create value? Should it? If it does, what value does it create? If it should, what value should it create? My last two posts were about creating value and our relation to the value chain, and this is a continuation of the same line of thought. This is especially relevant, because my son is about to enter university, in Fall 2012.  While we are agonizing over the decision of where he should go, what he should study, and how we will fund this endeavor, my mind always wanders back to the question of value – “Why is he going in the first place?”

I went to look for articles about similar subjects, and the vast majority of what I found were written by educators and administrators about the flaws in methods within the current educational framework. We have all been sold on higher education for so long, that we don’t even consider why we think it is important, or what purpose our current system is intended to serve, or whether it actually serves that purpose well.

The problem with education as I perceive it:
I asked a question about the relationship of education to the creation of value, and specifically the educational system or the education “industry”. When I reflect on the American education system (the only one that I am familiar with) I realize that it has changed a great deal in the last 100 years, and especially in the last 60 years since World War II. In my experience (in University in the 80’s) and in conversation with colleagues both older and younger than myself, it is pretty clear that for most americans, college is seen as a way to a better start of one’s career; a way to demonstrate to potential employers that you have “what it takes”.

In consensus, that is mostly what we were thinking when we started college at age 17 or 18. Most of us had some idea of some field of study that was interesting to us, and perhaps some notion of what kind of career we aspired to. Surprising as it may seem, beyond this, I have never talked to anyone outside of the creative or performing arts that had any more specific sense of what they wanted to “get” out of college. Most people that I have talked to, recognize as they entered their career, that college did not adequately prepare them for many workplace challenges.

As American industry has moved towards less expensive labor supply, and our economy has veered from manufacturing based value creation towards service based value creation, the nature of jobs have changed, and the percentage of young americans pursuing college degrees has risen tremendously. Much of this has been by the steady movement of heavy industry towards cheaper labor markets, and the correlated drying up of skilled labor jobs on American soil. This is one of the reasons that the housing market has had such an economic impact in the last 15 years – because it supports one of the few skilled labor markets that cannot be easily moved off shore.

Seth Godin wrote an article a few months ago about how our public education system evolved, containing this gem:

 

The Cost of education has increased at a pace more than twice the rate of wage growth over the last 30 years. Mark Cuban has written about college loans as the driver:

 

Another driver appears to be the expansion of service based value creation. Most service based value creation opportunities are more scalable, allowing smaller organizations to proliferate (because the means of producing value requires less capital), but also typically requiring more education to make those scalable opportunities work.

I think that this is all interesting, but how does any of it relate directly to value creation? People go to college to become equipped to create more value (or to be compensated for creating more value). But does that work? No – Because tradesmen often are compensated as well as college graduates or better. College degrees are simply a calling card for those who wish to “work for the man”.

If I am an independent value creator (have my own business), it is unlikely that anyone cares about my education, it is value that they care about. In this alignment (small business) creating value requires certain abilities: courage, critical thinking, intelligence, diligence, knowledge, skill, interpersonal communication and effort. Getting an opportunity to create value requires luck, persistence and a network. So which of any of these abilities does our education system provide?

Where do we get value creation abilities?
What, then, do universities actually do? Provide programmed knowledge correlated to specific domains along with a network of people intending to enter those same domains, or already in said domains? Why do we pay an average of $20k per year for 4 years to acquire this knowledge? Couldn’t the same knowledge be acquired faster, cheaper, on an individual basis, just by reading? I think we all know the answer is yes – but it raises the question: how would we know if someone had done it? Without college, how would we know someone had actually acquired the domain knowledge that would allow them to participate meaningfully in that domain? So a subsequent value that college provides relative to acquisition of domain knowledge is measurement.

Perhaps with the knowledge programming and measurement there is also a sense of competition or “sorting” out so that the students that are “accepted” to the “best” universities are actually going to be “better” at contributing value in some domain, than others who are not selected. We think that those who excel at acquiring knowledge in a university are somehow better suited to contributing value in some domain. So we have not only a measurement of academic knowledge acquisition, but also a relative measure of “talent” based on competetive evaluation against a peer group. The question is do those measures accurately predict a persons ability to create value in a specific domain. I think they measure intelligence, diligence, persistence of the student, as much as anything else.

Courage, Intelligence, diligence, effort, and persistence are supplied by us, luck is supplied by the universe, leaving only critical thinking, knowledge, interpersonal communication, skill and a network to be supplied by the educational system. In my experience, skill is developed by repetition, learning from mistakes, unless you are studying performing arts, school usually doesn’t provide this either. So that leaves critical thinking, knowledge and network. In my opinion, network is why people seek the “best” schools more than knowledge. They attend where they can study under masters whose names are recognized in the field that they aspire to. Harvard, Yale, MIT, UofC, Northwestern, Stanford – it’s hard to get in, so their is an aura of capability just in being accepted. The density of smart, capable, motivated people in these institutions is higher, because of the bar that must be passed to enter. But is the education any different?

Do employers value education?
So what, if anything, do employers value in one’s education? To answer that, we need to ask how many employers actually employ college graduates with no work experience. Over the years, many employers have reduced or eliminated training programs aimed at assimilating recent graduates. Especially in times of higher unemployment, when the pool of candidates tends to be filled with more experience, this is common. In the technology domain, the pool is somewhat diluted with foreign nationals. Everyone in the workplace, knows that what they learned in college was insufficient to allow recent graduates to immediately add value in the workplace. So employers value two things from a college graduate – domain knowledge and aptitude. Employers look at the reputation of an educational institution, relative to their domain to evaluate domain knowledge, and the relative measurement of performance of the graduate to determine aptitude. The interview of a recent graduate is different than an interview of an experienced contributor, because you cannot ask behavior description questions (what did you actually do?) and are forced to assess domain knowledge and perhaps critical thinking.

Does college add value?
Perhaps the biggest differentiator is critical thinking. Critical thinking is the ability to assimilate information, understand how that information relates to your decision process, and make decisions. Risk taking requires critical thinking. Creating value requires taking some risk. It also requires optimization – how can I create the most value, taking the least risk? When we want to grow our earning capacity, we don’t optimize profit (value / expense) we optimize sustainability (value/risk).

So where in our educational system do we learn critical thinking? Primary education gives us literacy and numeracy, and should provide basic living skills. I certainly can see that both literacy and numeracy can be taught in ways that develop critical thinking. Reading, assimilating information, relating information to decisions. Participating in simulations (class runs the country, class runs a business, class runs a school, class runs a household) are brilliant ways to teach critical thinking and engage students in critical thinking exercises in practice.

Where in your educational process did you learn critical thinking? How did you learn to assess risk and measure opportunity? When did you get a chance to practice it? How skilled are you at it?

The second biggest differentiator is interpersonal communication. Interpersonal communication is the skill that allows us to sell or products, to give employees direction, to understand our customers problems, to work together to accomplish more than each could do independently, to allow complementary skills and knowledge to solve larger problems than individuals could solve independently.

I recognize that most of our schools provide opportunities to work in group projects – do those really teach interpersonal communication? One aspect of the university experience that does teach this is student organizations and government – in that students have to work together to accomplish goals set by the students themselves. But this is not part of the formal educational experience it is a often ignored part of the university campus life experience. The educational process is not effective in providing this skill.

And the network, what is that actually worth? How many of us got value from our college network? Did it get you your first job? Did it help you with other opportunities? I got no value from my college network. None. Perhaps because the university that I went to is only acclaimed nationally in domains that I did not study there, and yet I moved to another region to start my career. I know many people who did get value out of the network they built while in college, and who leveraged alumni networks to gain access to opportunity.

College also did very little related to critical thinking, nor did it teach me about various domains and how value is created in those domains. Nothing in my educational experience really prepared me to make the real life decisions about career selection based on any reasonable predictive process that would help me select a domain to which I would be suited to add value. Perhaps this is because schools are taught, lead, managed and run by people who are sufficiently removed from the value creation process (relative to their knowledge domain) that they don’t understand how value is added in those domains in a pragmatic, non-theoretical way, and have chosen to remain in academia, rather than be confronted with a need to produce value in the domain where they maintain expertise. Mind you – they may produce value in the academic sense (papers, and research), and in engineering disciplines, they may participate in real-world projects as a consultant – but even that is very different from the day to day output required of individual contributors in those domains.

Is there a solution?
I don’t have a silver bullet solution. Perhaps for domains that were primarily pragmatic or practical, a required practicum or internship would be valuable. I learned more on a summer job fixing BASIC programs for a small software shop than I learned in my entire 5 year college experience, but I had the foundations of the domain before I started. Perhaps there is some better way for domains (industries) to expresss how value is created, so that students can start to understand what types of domains they are more clearly suited to. Perhaps critical thinking and life skill can become more central in the cirriculum starting much earlier, replacing much of what passes for science ( which became prominent only during the cold war ) as these are more essential to national competetiveness in a global economy than ever. Perhaps we can teach our children deferred gratification (that requires critical thinking skills) rather than the rampant consumerist mentality that infects our culture today.

If the government were to get involved, it could incent companies to provide internships and/or hire recent graduates (with tax incentives, or some other method). Additional incentives for training or education programs aimed at assimilating recent graduates into the workforce would be beneficial. This would ensure a more secure transition into the workforce. Perhaps corporations so incented and aligned, could play a more active role in driving cirriculum for programs targeting domains that they participate in. Government incentives could give citizens, in whom the government has already invested thousands in their education, advantages in getting hired, moving toward meaningful solutions to unemployment and immigration challenges.

However, corporations should re-think on their own without government incentives. If they are to remain competetive, they need to learn to develop leadership, to acquire talent when it is nascent, and develop contributors and leaders. This requires foresight, and a long view. The current market driven, quarter by quarter, profit driven approach to business rather than a long term focus on creating value needs to be overthrown.

In the end:
It will ultimately be overthrown, as the markets struggle and the global economy adjusts. We will be forced by either economic austerity or global crises to refocus our attention on value creation – and if we are smart, as a nation, we will re-align our educational system to optimize our nation’s ability to provide value in light of the new economic order.

Other articles about education:
“Buying an education or buying a brand?” Seth Godin
“The coming melt-down in higher education (as seen by a marketer)” Seth Godin

My other posts of creating value:
Political-Capital Value related Posts – Rich Stone