What General Motors Can Teach U.S. Schools about the Proper Role of Markets in Education Reform.

Abstract

It is human nature to search for bullets that promise to improve performance without painstaking effort - but choice plans, charter school programs, and school-based management initiatives are not magic bullets, Messrs. Murnane and Levy warn. These approaches will contribute to better schooling only if they stimulate change based on the Five Principles discussed below. Market-based initiatives have been among the most durable types of reforms to be proposed for improving American education. Over the last 25 years public school choice, tuition tax credits, and vouchers that families could use to pay for education at private schools have all been advanced as ways to raise student achievement. More recently, school-based management and charter schools have emerged as strategies both to stimulate initiative and to hold schools accountable. All these proposals are based on a single underlying theory: if schools were free to design their programs and to market these programs to families, U.S. education would improve. In this article, we argue that the theory is neither right nor wrong, but incomplete. Well-designed market-based initiatives can be one-half of effective education reform. But without the other half of reform, even well-designed initiatives will accomplish little. And under any circumstances, badly designed initiatives can do great damage. The argument begins with a 15-year-old episode from a surprising source, General Motors. The Lessons of Hamtramck In the early 1980s General Motors was in trouble. Production costs were high. Product quality was low. Consumers increasingly were choosing competitors' products, and General Motors' market share was declining. The market was sending a clear signal: GM had to change the way it was doing business. But what kind of change? Much of GM's labor force worked with dated equipment and had only minimal skills. The workers were further limited by the web of rules written into union contracts. Many General Motors plants had more than 75 job classifications, each with strictly defined duties. Confronting these problems was like confronting the Gordian knot: renegotiating work rules, upgrading training, reorganizing management, unraveling a history of weak productivity. But if bureaucracy and work rules were GM's weaknesses, money was its strength. And so GM evolved a strategy to spend its way out of problems by investing in robotics. Robots - robots that Ford and Chrysler could not afford - would be the sword to sever the knot. Problems in specific areas would not be solved; they would simply be bypassed by computerized machines. The showcase for these ideas was to be GM's Hamtramck plant, a newly built Cadillac plant outside Detroit.(1) At Hamtramck 260 robots would handle assembly, welding, and painting operations. Parts would be moved from place to place by 50 automatic vehicles. Laser beams and cameras would be used to monitor quality. Since the point of the equipment was to bypass organizational problems, most of those problems were not addressed. Front-line workers received minimal new training. Management structures were left unchanged. Production plans were based on the expectation that the new equipment would work right the first time. Hamtramck was a disaster. Robots failed to install parts or apply paints properly. Occasionally they destroyed the car on which they were working. Because expectations had been so high, backup systems were weak. Getting the right people to fix the robots often required several hours, during which the assembly line was idle. Employees were both frustrated and scared. The cars themselves were awful. Hamtramck was giving the rest of the world lessons in what not to do. For every manager - a CEO, a school principal - the Hamtramck experience holds two lessons. First, consumer choice can signal an organization when change is needed - no small accomplishment. But consumer choice cannot tell an organization how to change. …