Technological advances in education are attracting a great deal of attention, and rightly so. As outlined in the recent New York Times article, “Silicon Valley Turns Its Eye to Education,” investors are lining up to fund educational technology and apps. The opportunities created by these advances are driving careers in both industry and academia via platforms such as Coursera. However, by focusing on these digital achievements, we run the risk of ignoring important advances in lower-tech educational experiences, such as models that tie pedagogy to business. Such models have the potential to provide revenue to help fund education and practical business exposure for students, which can translate into new skills for a future career.

Take, for example, Grace Care Center, which operates an all-girls orphanage just north of Trincomalee, a city on the northeast side of Sri Lanka. In the three years following the end of the civil war in Sri Lanka, tourism has more than doubled. And, thanks to beautiful beaches, whale watching, and scuba diving, Trincomalee can reasonably expect to see its fair share of tourism growth. Recently, a team of students from the University of Michigan’s Ross School of Business reviewed the potential for a hotel that could both generate revenue to support the orphanage and more importantly, offer opportunities for some girls in the orphanage to develop skills that would give them an employment advantage in the growing Sri Lankan tourism industry. The girls would receive basic training in bookkeeping, waiting on tables, or stocking supply rooms; practice those skills in an apprenticeship role; and later have the opportunity for growth in careers such as accounting, hospitality management, and inventory management. In the context of the work, the girls would also receive mentorship on responsibility, reliability, and persistence—characteristics that would support their long-term success regardless of their vocational choice. 

Ross business students with Grace Care Center girls. (Image by Laura Jakosky)

This approach is not new. Detroit Cristo Rey, part of a US network of schools, offers affordable education to inner-city high school youth through action-based learning opportunities. Students in the program attend school four days a week and spend the fifth day working at a local business. Rather than paying the student for their work, the local business pays the school. The program provides needed revenue to the school, as well as important lessons for the students. In the context of their work, students can understand the practical benefits of learning math and how to write well, and the value of responsibility, reliability, and persistence at an early age. Before the school year starts, Detroit Cristo Rey also conducts a multi-week boot camp to emphasize the importance of social skills and professionalism, preparing students for the year ahead. The results are impressive: Thus far, 100 percent of its students have been accepted to college.

No doubt there are some challenges to this model. Educational organizations are not necessarily equipped for or good at operating businesses that employ students. The analysis of the Sri Lankan project, for instance, did not support having the educational provider own and operate a hotel. Similarly, Detroit Cristo Rey worked with a different team of Ross students to consider the possibility of opening up an adjacent, abandoned theater; the theater was donated, but the analysis suggested that it didn’t make sense for the school to start up and run a theater. Simply put, most educational institutions do not have a comparative advantage in running businesses like a hotel or theater, nor are there obvious scope economies—for example, cost savings in operating an educational institution as part of a larger organization that includes a hotel or theater, versus operating the educational institution as a stand-alone entity. 

Thus, looking to cross-market contracts with existing hotels, theaters, or other businesses run by experienced managers may offer a better solution. Businesses that receive (student) labor in return for monetary contributions to the school and mentoring components for the student are more likely to succeed. 

Still, an educational institution may have a comparative advantage in expanding its services in one way: job-specific preparedness. All schools educate and train students to prepare them for future vocations and, to some degree, the school’s reputation is based on the graduates it produces. Schools operating under the Detroit Cristo Rey model have the heightened responsibility of preparing students for jobs, and the quality of the students’ performance in those positions places the­ school’s reputation directly on the line. In essence, this is a Kelly Services model, where a company provides temporary employees to customers and vouches for the quality of their work. Here, schools vouch for the reliability and skill of their students and follow up when students don’t meet expectations. The ability to succeed in a job requires training beyond the scope of typical high-school education. It also requires that schools have a mechanism for assessing performance and acting when students don’t perform well. But many schools have a comparative advantage in providing this type of service; they already have a relationship with the students, and tools for providing information to students and assessing their performance. That is why Detroit Cristo Rey provides the multi-week boot camp before the students begin working. Many educational providers may benefit from expanding their role to include providing high-quality, reliable employees.

Technologies have opened up many new opportunities for education. LectureTools is just one example of a firm attempting to personalize education through individual assessments and programs that adjust automatically to those assessments. Dozens of other firms do this on a massive scale and in real time, aided by the fact that every student who enters a virtual classroom has a either a smart phone, laptop, or tablet. However, there are limits to technology. Virtual classrooms cannot operate without Internet access, which the rural parts of many emerging markets don’t have, and it’s difficult to reduce certain skills to bits and bytes. Innovations in business models that support education must therefore go beyond incorporating technologies, and combining business and pedagogy using old technologies is showing considerable promise.