Education and the Commercial Mindset

Samuel E. Abrams

417 pages, Harvard University Press, 2016

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As I document in Education and the Commercial Mindset, Milton Friedman and his disciples contended for decades that private markets could deliver better schooling than governments. In the 1990s, this belief was put to the test by Edison Schools and other for-profit educational management organizations (EMOs). Edison grew rapidly, running schools in cities across the country. Yet disappointing academic and financial outcomes soon pushed the company and its competitors to the margins. The focus of EMOs on standardized testing nevertheless found expression in federal policy with No Child Left Behind in 2002 and Race to the Top in 2009, with the unfortunate consequences of narrowing curricula and placing substantial pressure on students, teachers, and administrators alike.

For global perspective on the business mindset’s role in education, I analyze the divergent paths of Sweden, home to considerable educational privatization and standardized testing, and Finland, home to neither. While much has been made of the paradox of excellent schooling in Finland without strict accountability measures, little has been written about the significant employment of core business strategies by Finnish education policymakers. In this excerpt, I distinguish educational practice in Finland from that of its Nordic neighbors and explain this additional paradox. —Samuel Abrams

Finnish education has won much attention because Finnish students have consistently posted top scores on the Program for International Student Assessment (PISA), the OECD’s exam in reading, math, and science given every three years since 2000 to a random sample of approximately 5,100 fifteen-year-olds in each member nation. What has generated little attention, however, is how much better Finnish students have done than their Nordic counterparts. All four countries are small, egalitarian, and homogeneous (with the exception of growing immigrant populations in and around such cities as Oslo, Gothenburg, Malmö, Stockholm, Copenhagen, and Helsinki).

As with its Nordic neighbors, so with Finland, child welfare is of paramount importance. Of European nations, Finland ranks fourth for child welfare, just below Iceland, Sweden, and Norway, and just above Denmark.1 Of the thirty OECD countries ranked in descending order by UNICEF for “relative child poverty,” Finland ranks second, with 5.3 percent of children in this cohort (again, the United States ranks last, with 23.1 percent).2 Finnish educational policies, however, are substantially different. Much as Sweden stands out for privatization and choice, Finland stands out for shared pedagogical strategy, seasoned but light management, and innovative student assessment as well as solid teacher preparation and pay.

Some cynics of Finland’s success on PISA have countered that Finnish students have an advantage because Finnish is phonetic and thus less of a challenge to young readers.3 While this is true, Finnish grammar is exacting and the cause for much special education intervention in early grades, particularly for boys.4 As with Latin, so with Finnish, the final syllable of a noun determines its grammatical case. Latin has six cases (nominative, vocative, accusative, genitive, dative, and ablative); Finnish has fifteen.

Setting aside whether Finnish students have an advantage over their Nordic counterparts in reading on PISA (and given the complexity of Finnish grammar, it is far from clear that they do), what is clear is that they do far better in math and science as well, both of which require no more than basic proficiency in reading. The difference in science scores may be most telling because Finnish teachers, as explained, must have master’s degrees, whereas their counterparts in Denmark, Norway, and Sweden do not. In addition, as a result of decent pay, fine training, good working conditions, and consequently high status, teaching is an esteemed profession in Finland. There is accordingly no shortage of science teachers. By contrast, teaching is not esteemed in Denmark, Norway, and Sweden. In all three countries, there is a shortage of science teachers in particular.5

Denmark, Norway, and Sweden have, in fact, all recently introduced programs associated with Teach for America to provide fast alternate routes to teacher certification. Danish authorities not only introduced Teach First Denmark in 2015 to provide a fast track into teaching but also ran an advertising campaign to attract students to teaching in 2010 costing 5.7 million Danish kroner (approximately $1 million).6 Norwegian authorities not only introduced Teach First Norway in collaboration with Statoil in 2010 to attract science students specifically, but also ran an advertising campaign that year similar to Denmark’s costing 22 million Norwegian kroner (approximately $3.3 million).7 Swedish authorities not only introduced Teach for Sweden in 2013 but also revealed that the shortage of certified chemistry teachers in 2012 was so great that there were only ten new university graduates across the country qualified to teach the subject and only one in Stockholm.8

Finally, science is taught through doing labs in Finnish schools. This is especially true at the lower-secondary level. Furthermore, in keeping with the rule that any class using machinery for crafts (from woodshop and textiles to culinary arts) be capped at sixteen students, principals typically adhere to that limit in programming science classes in order to facilitate student engagement and faculty supervision.9 There is no such commitment or expectation in science classes in Danish, Norwegian, or Swedish schools and certainly not in US schools.10 In Norway, for example, science classes often involve demonstration labs done by teachers in front of the class. When I asked a Teach First Norway lower-secondary science teacher about this practice after observing two of her classes for eighth-graders at a school in Oslo as well as science classes in several other Norwegian lower-secondary schools, she said labs were the exception, not the rule. This teacher noted that classes were either too large or equipment inadequate to run labs properly. When asked about her own experience as a student a decade earlier in Bergen, she said she could not recall doing any labs.11

The differences in investment in facilities and smaller classes as well as teacher preparation and pay are patent. The same holds for the differences in PISA results. In the course of five administrations of the exam, Finnish students averaged a 550 in science, while their Nordic counterparts recorded nearly indistinguishable scores and posted a combined average of 494. With 100 points constituting one standard deviation, this difference is profound, indicating that what distinguishes Finnish pedagogical practice from Danish, Norwegian, and Swedish pedagogical practice must be substantial. This difference is all the more telling in that US students over this same period posted an average of 496.

PISA scores in science. (Data source: OECD, PISA 2000, 2003, 2006, and 2009, http://www.oecd.org/pisa/)

The similarity of US scores to Danish, Norwegian, and Swedish scores buttresses the arguments made by critics of A Nation at Risk a generation ago that US schools in general did a fine job but fell short in serving poor children. After all, while PISA results have recently caused concern in Denmark, Norway, and Sweden, schools in these three countries are by most accounts considered decent. Moreover, nothing akin to A Nation at Risk has been published in these three countries.12 That Finnish schools appear much stronger is simply a testament to policies and practices that can and should be replicated.


Beyond investing in more science labs, reducing class size so these labs may be properly run, and improving teacher education and pay, Finnish educational authorities have taken several distinctive steps. While Swedish educational authorities distinguished themselves as commercially minded in introducing vouchers in 1992 and allowing for-profit operators to run schools, their Finnish counterparts have, ironically, done a better job of implementing core business strategies.

Improving teacher training and raising teacher pay are two obvious applications of signature lessons from the business world. In cultivating leaders and policy makers from within the ranks of teachers—rather than appointing lawyers and businessmen—the Finns have likewise applied a central business strategy of building product expertise over time and enfranchising employees with significant opportunities for professional advancement.

Less obvious manifestations of business strategy include the decisions by Finnish authorities to abolish their school inspectorate in 1991 and never follow their Nordic neighbors and much of the rest of the world in administering standardized exams to all students.13 In this regard, the Finns applied a far more subtle business lesson. In administering exams to small samples of students rather than employing universal assessments, Finnish authorities conferred on principals and teachers more autonomy and thus ownership. At the same, they exhibited admirable efficiency, sparing students, teachers, administrators, and parents alike much stress, protecting instructional time from test prep as well as test administration, and saving money on test creation, proctoring, and grading. In the process, with minimal disruption, the Finns derived excellent information about student progress by employing fine exams and using external readers as graders.

These methods constitute the ultimate paradox of Finnish education. It is not merely that the Finns have produced an excellent school system without deploying heavy accountability measures or outsourcing school management. The Finns have achieved their success by being savvier in their understanding and implementation of business strategies.

The decision to boost teacher income, to start, is a textbook illustration of efficiency wages: it costs less to pay more. Henry Ford famously proved this in 1914 when he doubled the wage of assembly line workers from $2.50 a day to $5 while reducing the workday from nine hours to eight. Ford thus brought in better hires, increased the quality of production, and drove down the costs of both supervision and turnover.14 In a different domain, this is precisely what the Finns have accomplished: teachers make close to what their college classmates make, as explained, and they typically teach four periods a day in contrast to the US average of five.15 In addition, in rejecting merit pay, the Finns echo the legendary managerial theorist W. Edwards Deming, who contended that merit ratings as well as merit pay generate fear, undermine teamwork, and reward only individuals who know how to succeed in the system but not the system itself.16

In choosing principals, superintendents, and policy makers internally rather than looking outside, Finnish authorities have likewise taken a page from the corporate playbook: great organ izations, as the business historian Alfred Chandler documented, groom talent from within; this is especially true of sports dynasties, though that revealing subject was beyond the scope of Chandler’s analysis.17 Of the many officials I interviewed at the Finnish Ministry of Education and Culture, the FNBE, FINEEC, and the Helsinki Department of Education, all had been teachers for at least four years and several had taught for more than ten. In fact, two of the three authors of a landmark study of Finnish schooling published by the World Bank in 2006 are former teachers: Erkki Aho, who taught primary school for five years, then worked as a school psychologist, and eventually served from 1973 to 1991 as director general of the National Board of General Education, which merged in 1991 with the National Board of Vocational Education to form the FNBE; and Pasi Sahlberg, who taught math and science at the lower-secondary level for seven years and went on to earn a doctorate in pedagogy and serve as a policy analyst at the Education Ministry and the World Bank.18 There is no comparable representation of teachers at administrative or policymaking levels in the neighboring Nordic nations or, for that matter, in the United States.19

The Finnish approach to school supervision and student assessment comport, in particular, with Deming’s emphasis on leadership rather than scrutiny, and on high-quality sampling rather than universal examination.20 Deming argued that quality should best be determined before production, not after. “Cease dependence on inspection to achieve quality,” he wrote as the third of his fourteen points for management. “Eliminate the need for inspection on a mass basis by building quality into the product in the first place.”21 In elaborating, Deming wrote, “Routine inspection becomes unreliable through boredom and fatigue.” Deming urged instead careful study of small samples.22 National school inspectors had never played a significant role in Finnish educational culture. By 1991 they had no role. The FNBE shut the division down, in part because of bud getary constraints brought on by a deep recession, in part because authorities concluded that schools ran perfectly well without central monitoring. Going forward, municipal officials would be responsible for overseeing schools and submitting occasional reports to the FNBE.23

In the opinion of Eeva Penttilä, who was a teacher from 1965 to 1977 and thereafter a principal until 1997, there was so much trust in Finnish society that the school inspectorate was never necessary. In this respect, Finland is much like Sweden. Over the course of two decades of annual surveys conducted by Transparency International, from 1995 to 2014, Finland averaged a ranking of second most transparent (or least corrupt) country, ranging from most transparent to sixth most.24

“In my career,” Penttilä recalled in a 2009 interview as director of international relations for the Helsinki Department of Education, “I met one school inspector. He stood in the back of my class, spent a few minutes surveying the room, and left. It was a new building, and we were having problems with the pipes. I thought he was the plumber. At the end of the day, my principal introduced me.” 25

Trust, according to Sahlberg, goes a long way in explaining the Finnish employment of sampling rather than universal testing as well. Much as the United States tests all students in reading and math in grades three through eight and one year in high school,26 Denmark tests all students in Danish in grades two, four, six, and eight; in math in grades three and six; in English in grade seven; and in science in grade eight.25 Norway tests all students in Norwegian, math, and English in grades five, eight, and nine.27 Sweden tests all students in Swedish and math in grade three; in Swedish, math, and English in grade six; in Swedish, math, English, and science in grade nine; and in Swedish, math, and English at the upper-secondary level.28

The Finns not only restrict their testing to micro-samples but also test a far broader spectrum of subjects. Their practice is to cover every subject in the school curriculum (from math and reading to music, visual arts, woodshop, home economics, and physical education) over a ten-year cycle while testing a randomly chosen sample of approximately 10 percent of students in two or three subjects every year in grade nine. In addition, for longitudinal purposes, one cohort of approximately 6,000 students is tested in math every three years starting in grade three. FINEEC administers and grades the exams, except for the culinary component of home economics. In the case of music, visual arts, and woodshop, videos are made and centrally assessed. In all cases, students do not receive grades, nor do teachers. Only the principals find out from FINEEC how their students performed.28 Had Deming ever designed a system for assessing schools, it would most probably have looked like the Finnish system.

From Education and the Commercial Mindset by Samuel E. Abrams. Copyright © 2016 by the President and Fellows of Harvard College. Used by permission. All rights reserved.

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