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 / Summer 2006 / Issue 43(originally published by Booz & Company)


William G. Ouchi: The Thought Leader Interview

A champion of decentralized management shows how better education means competitive advantage, but only if school principals are treated like business unit managers.

Photograph by Vern Evans
The most pernicious management problem in the world is also the most significant. It’s the problem of designing public school systems that can educate young people for the unprecedented global society that awaits them when they come of age. If we take that problem seriously, then we need to pay attention to the research and thinking of William G. Ouchi. Bill Ouchi, age 62, is the Sanford and Betty Sigoloff Professor in Corporate Renewal at the UCLA Anderson School of Management, and a long-standing expert in organizational design.

Although he has single-mindedly pursued the reform of public school management for 25 years, Professor Ouchi (pronounced “oh-chee”) is still best known for introducing the principles of Japanese management to Western business audiences. His best-selling book Theory Z: How American Business Can Meet the Japanese Challenge (Addison-Wesley, 1981) made him famous as an advocate of such then exotic approaches as team-based management, lifelong career paths, and consensual decision making.

Today, Professor Ouchi is one of the very few writers who can claim substantial influence in both education and business management. His 2003 book, Making Schools Work: A Revolutionary Plan to Get Your Children the Education They Need (Simon & Schuster), is based on in-depth study of the few large urban school systems that made consistent improvements in student test scores. The book identified seven elements common to good school systems: giving school principals local autonomy (as if the schools were business units), giving families a choice about which school they could send their children to, making schools accountable for student results, giving local schools control over their budgets, delegating authority as low as possible in the hierarchy, instilling a “burning focus on student achievement,” and setting up schools as “communities of learners,” where all the teachers figured out solutions together.

Since Making Schools Work was published, its precepts have been adopted by school systems in New York; Chicago; Oakland, Calif.; and Hawaii (where Professor Ouchi was born). In 2005, Richard Riordan, the former Los Angeles mayor who was Governor Arnold Schwarzenegger’s first secretary of education, evoked Professor Ouchi’s work when he wrote, “If you made a list of people’s silver bullets for public education — smaller classes, better pay for teachers, more phonics, longer school years, no social promotions — the concept of changing governance structure would be near the bottom of the list. None of the favorite silver bullets is going to work, though, unless principals are empowered and can in turn empower teachers and parents.”

Though Professor Ouchi’s education research has been limited to North American and Japanese schools, his points seem universal. For example, the issues of centralization help explain the difficulties that European educators have now in dealing with children from immigrant Muslim families. And his working hypothesis for schools — that they cannot succeed without local autonomy — has implications for leaders in any sort of global organization who are trying to make a difference in the world around them.

Professor Ouchi sat down with strategy+business in his office at the University of California at Los Angeles in January 2006.

S+B: How would you describe the state of education in the U.S. today?
It’s dire. Right after World War II, the average American felt that the public schools were excellent and that children would get a better education than their parents had received. Today, the average American gives the schools a C-minus.

S+B: Were schools in fact different then? Or is it just perception that has changed?
Schools were very different, mainly because the students were more homogeneous. Some people will go on from there to say that the difference was cultural. They’ll say that today’s poor children come from uneducated families, where people don’t understand education and don’t care about their children. This is absolutely dead wrong.

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