strategy+business is published by PwC Strategy& Inc.
or, sign in with:
strategy and business
Published: May 30, 2006


William G. Ouchi: The Thought Leader Interview

The critical difference was this: In any industry, if you have a homogeneous product or service, your costs go down and you can deliver results more effectively. The U.S. had that homogeneous student body in the 1950s. Now, we have a tremendously diverse student body, which we’re jamming into the same old education factory that was set up for homogeneous throughput. We need an organizationally more flexible and more complex solution.

S+B: You mean we need the educational equivalent of a differentiated product line.
That’s exactly right. Moreover, school systems are much bigger. Before World War II, we had 25 million public school students in this country and 127,000 school districts. Today, we have 50 million students and only 16,000 districts. The typical American school district today has 15 times as many students as did the typical district of World War II. No company can grow 15 times in size, not alter its structure, and continue to be effective. But our school districts have not altered their structure. They are organized and run exactly as they were in the 1950s. And they don’t work.

S+B: Why was there that much consolidation?
After Sputnik went up in 1957, there was a hue and cry in the U.S. that Soviet children were better at math and science than American children. This was blamed on having too many small high schools that couldn’t offer advanced courses in physics and math. So we rushed to replace small school districts with big ones.

American businesses did much the same in building gigantic factories that turned out products of horrible quality. At that time, the productive capacity of every economy in Western Europe and Asia had been destroyed in World War II; virtually all manufactured products had to be bought from the U.S. American factories had 20, 30, or 40 acres under one roof. Nobody in their right mind would operate such a factory today. But we are still managing 4,000-student schools.

Failing to LEARN

S+B: What led to your interest in school management?
It started with the 1984 Los Angeles Olympics. This Olympics had been a great success. It made money. The traffic didn’t tie anything up. And it left Los Angeles with a real can-do attitude.

Subsequently, some of the Olympic organizers formed a broad-based civic improvement group called the Los Angeles 2000 Committee. Roy Anderson, who was then the chief executive of Lockheed, was the chairman. I was asked to cochair the committee on the economy. We also had committees on pollution, health care, transportation, housing, jobs, and water and power, but at the end of this enterprise we were unanimous: Fixing the public schools outranked every other issue in determining the future of Los Angeles. All roads led back to K–12 education.

S+B: Why was that so important?
Because if people don’t have a good education, they can’t afford even the most inexpensive housing. They can’t contribute to the cost of their own health care. They will not attract employers to locate in L.A. And on and on.

So 12 of us formed a group called LEARN: the Los Angeles Educational Alliance for Restructuring Now. Bob Wyckoff, then the president of Arco, and Dick Riordan, who would later become the mayor of Los Angeles, co-led it. I was the only academic member; most of the others were business leaders. We met once a week.

Our question was how to fix the L.A. Unified School District. This is the second-largest school district in the U.S., with 740,000 students. Only about 20 percent of the students in that district were performing at an acceptable level. We all felt that the problem was management: The district had become top-heavy, autocratic, bureaucratic, and unresponsive. My feeling was that every school district in America was run in the same top-down, centralized, bureaucratic way. So if managing it differently would make a difference, there was no available evidence, because no one had ever done it differently.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store


Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.