The edtech pros and cons of partnering with corporate big guns

By Carmel DeAmicis , written on September 26, 2013

From The News Desk

Big for-profit education companies -- Pearson, Kaplan, and McGraw-Hill -- have noticed the baby startups creeping into their space. In response, instead of trying to squish them fee-fi-fo-fum style, these companies have introduced accelerators to work with them. This year, Kaplan introduced a TechStars-partnership accelerator; Pearson teamed up with Washington-based accelerator 1776; and McGraw Hill announced an upcoming program with an as-yet-unnamed university to mentor and fund education startups.

A startup's ability to improve or disrupt the educational system could be limited by teaming up with old behemoths.

Education Week just ran an in-depth article looking at the new partnerships, and the corporate education officials in the story say very perky, upbeat things about "learning" from their nimble startup counterparts. "Being reminded of the intensity" needed to make new products. "Bring[ing] a startup mentality" into the larger, more complex institutions. But these same corporate executives contradict themselves in the same breath.

A large company such as Kaplan tends to focus more on “organic” innovations --improving or refining products that are already on the market, said Bernardo Rodriguez, the chief digital officer of Kaplan’s test-prep group, who is helping guide the startup program. Changing those products can affect hundreds of thousands of students, and millions of dollars in revenue, he said, making it 'hard to build an environment where motivation can be channeled to produce internal innovation.'
But if true innovation -- not just refining pre-existing products -- disturbs the status quo, profits, and logistics at Kaplan, then doesn't that make the startups Kaplan purports to be nurturing a threat? It's a Catch-22 for such a big company.

There's an unspoken pact-with-the-devil problem of launching your company from within the belly of the beast you're trying to kill, so to speak. There's a conflict of interest between a startup trying to improve education and a big company trying to make its profit margins even bigger. Companies like Kaplan and Pearson have been roundly criticized for their for-profit tactics that hurt students or schools and cost taxpayers needless dollars.

For example, Kaplan's University has come under fire for causing higher education students to go deep into debt without providing them with the rights skills and credentials for finding a high paying job. Pearson has been roundly criticized for lobbying government bodies for more standardized testing because the education companies make bank by administering such exams. McGraw Hill (along with Pearson and a few others) have a near monopoly on the textbook industry and charge ridiculously expensive prices.

Startups are for-profit companies too, so in some ways, it's a perfect symbiosis. But  true disruption of the education system will be innovation that cuts costs for schools -- not necessarily in the best interest of big educational corporations.

In the past, larger corporations sponsored one-off events or invested in particular companies, but the recent emergence of accelerators is a new ball game.

By partnering early on and mentoring education startups, these bigger corporations have an excellent opportunity to infuse them with the same ideology, develop relationships, and potentially limit the actual disruptive innovation these startups could cause. Or direct the innovation in a way that suits the needs of the for-profit companies, not necessarily the needs of public students, teachers, parents, and school districts.