Fernando Valenzuela

Dec 28, 2020

12 min read

Return to/on Education

A primer on education recovery that minimizes risks and delivers better returns.


Risk vs Return

As a consequence of #COVID19, most people would agree that the treatment of risk is the most difficult skill in decision making. The education pandemic won’t be cured for generations. Key current questions involve how risk should be measured, and how the required return (value) associated with a given risk level is determined.

The risks in learning have become widely exposed, limitations are now painfully evident as leadership practices in this sector have ignored the broad transformation that is happening in most other sectors.

Disadvantaged individuals faced disproportionate hurdles. Most education executives still lead and operate with a linear approach that limits their vision and capabilities to anticipate and adapt to alternative future scenarios.

This article is a call to action to re-think education in a way that can make individuals (all) to flourish.

In education, time is fixed, resources. are stagnant (at best) but expectations and demands will keep growing.

I decided to get myself actively involved in the impact investment and Venture Capital industries to build bridges between education and capital. I have learned by sharing projects with some of the leading minds in this space.

Recently I embarked on a project where we used the Institute for the Future’s methodology to design many future scenarios, artifacts, narratives and scenes that could transform learning.

All these experiences helped me realize that, if our education system does not adapt, the talent deficit will be exacerbated. We are able now to design agile and nimble processes in education to be able to adapt to the new reality.

I will position some educational assets as components of a proposed portfolio of educational returns that must be carefully managed to ensure their balanced appreciation and become a fundamental driver of the transformation that is needed in the sector.

A portfolio of learning assets

Portfolio theory deals with the measurement of risk, and the relationship between risk and return. I propose that we in education borrow these concepts from the financial industry to figure an alternative path for recovery and reinvention of learning.

The definition of learning risk leads us into a non explored territory. Not everyone agrees on how to define learning risk, let alone measure it.

Nevertheless, I think there are some attributes of learning risk which are reasonable to establish as relevant questions in order for us to move forward.

If an investor holds a portfolio of, let’s say, treasury bonds, she faces no uncertainty about monetary outcome. The value of the portfolio at maturity of the notes will be identical with the predicted value. The investor has borne no risk. However, if she has a portfolio composed of common stocks, it will be impossible to exactly predict the value of the portfolio as of any future date. The best she can do is to make a guess or most likely estimate, qualified by statements about the range and likelihood of other values. In this case, the investor has borne risk.

Students (or parents) face enormous uncertainties in regards to their learning investments:

Risk and reward quantified

A measure of risk is the extent to which the future portfolio values are likely to diverge from the expected or predicted value. More specifically, risk for most investors is related to the chance that future portfolio values will be less than expected.

A particularly useful way to quantify the uncertainty about the portfolio return is to specify the probability associated with each of the possible future returns.

Assume, for example, that an investor has identified five possible outcomes for her portfolio return during the next year. Associated with each return is a subjectively determined probability, or relative chance of occurrence.

Measuring risk by standard deviation and variance is equivalent to defining risk as total variability of returns about the expected return.

Thus far our perspective of portfolio risk has been confined to a linear, single-period investment horizon such as the next year. That is, the portfolio is held unchanged and evaluated at the end of the year.

An obvious question relates to the effect of holding the portfolio for several periods, such as the next 10 years: will the 1-year risks tend to become different over time?

Diversifying risks

Much of the total risk (standard deviation of return) is diversifiable. That is, when combined with other securities, a portion of the variation of its returns is smoothed or cancelled by complementary variation in the other securities.

A great share of the total risk could be eliminated simply by holding the stock in a portfolio.

Diversification results from combining resources which have less dependence among their returns in order to reduce portfolio risk without sacrificing portfolio return.

Each additional diversification yields rapidly diminishing reduction in risk.

The major difficulty as I try to convey these principles to learning is that returns on learning may be stated in terms of subjective expectations (grades, test results, etc.), not in terms of meaningful realized returns.

In general, and over long periods of time, the assets with high systematic risk should have high rates of return, there should be a linear relationship between systematic risk and return.

Are we able to diversify our learning in a way that we find less dependence on a single format?

Appreciation vs. Depreciation

Most assets can either appreciate or depreciate. However, assets with a finite useful lifespan (timing for learning) are more prone to depreciation rather than appreciation.

As with any other asset, our learning needs to focus on appreciation rather than on its natural path towards depreciation.

Appreciation is the direct opposite of depreciation, a decrease in the value of an asset over time.

By managing education as a conservative, traditional, repeatable and stable practice we are in effect avoiding risks but are accelerating its depreciation path as we delay our decisions to transform and we limit the dimensions of portfolio appreciation.

What is Appreciation?

Appreciation is an increase in the value of an asset over time. The term is widely used in several disciplines, including economics, finance, and accounting.

In accounting, appreciation refers to the positive adjustment made to the initially booked value of an asset. Moreover, accountants determined additional criteria to define the concept:

Which assets do I propose for learning?

I have developed over the past decade, a privileged experience that has exposed me to hundreds of global education institutions, thousands of Edtech enterprises and learning solutions. Throughout this journey I have been fortunate to meet with most of the leading minds that are transforming education around the World.

In one of the latest meeting at the Inter American Dialogue Education Leaders Forum we discussed some of the elements of a model than has evolved to integrate several dimensions of Return on Learning.

Later on at the Aspen Institute Mexico Education program, we hosted a number of events and powerful discussions that added value to this idea.

Throughout several experiences and content developed by my partners at Outliers School we acquired even more depth in understanding of the complexities of designing learning in the Digital Age.

The following model has been discussed, validated and improved but continues to evolve at every consulting engagement, board meeting, and every session that I have at the junction of Pedagogy / Technology / Capital and Impact.

My model places students at the center, surrounded by their context and aligning the legitimate stakeholders. Then it values inclusion principles and the creation of meaningful learning experiences that are conscious of thee latest pedagogical, neurological and socio-emotional advances.

It also assumes that every initiative operates in a Lab type setting where new information leads to improvements, adaptation and is constantly evolving with a benefit that must be balanced between students and institutions.

Finally it describes the assets that need to be managed for appreciation:

Return on Learning

This framework enables education stakeholders to set a different expectation for Return on Learning:

Education is exclusive and inequitable; it does not guarantee that all student develop the capacities that allow each person to carry out their life project and actively participate in the construction of more just and sustainable societies.

The main segment excluded both from being in school and from learning are children and youth who live in rural contexts, who come from low-income families, and who belong to indigenous groups and migrant families.

While almost all children between 7 and 12 years of age attend school, the current system excludes students in from school at each transition level, with a negative impact by gender and socio-economic status.

BEING at school does not ensure the development of the capacities needed for a full, participatory and productive life.

While we have much less information on the achievement of LEARNING in school, in general it is clear that too many young people are being left out of significant learning. More than half of the 15-year-old students in the nine Latin American countries that participated in PISA 2018 demonstrated insufficient levels of learning.

The tests are a narrow set of metrics that do not take into account the holistic needs of students.

Moreover, in contrast to the average for OECD countries, Latin America as a region still exhibits gender inequality in the development of mathematical skills, with men continuing to achieve at higher levels. Across the OECD, this historical achievement gap between men and women is close to zero.

The vision that guides a Return in Learning is that all young people develop the capacities that allow them to carry out their life project and actively participate in the construction of more just and sustainable societies through inclusive education, reimagined, supported and empowered by new technologies.

We have entered and age in which technology, neuroscience and learning science can be combined to in effect turbo charge the process of learning. Every individual can be given an education tailored with teaching interventions designed to capitalize on our understanding of how our brains learn.

This vision is largely based on the identified urgency to educate children and youth as agents of change with the necessary capacities to positively:

The concept of return in competences goes beyond the acquisition of knowledge and skills; it involves the mobilization of knowledge, skills, attitudes and values ​​to satisfy complex demands (OECD, 2018, The future of education and skills).

DRAW (digital, reading, arithmetics , writing) represents an evolution of the concept of foundational competencies or skills (mathematics and literacy); incorporates digital literacy at the very core of basic education and emphasizes it as the channel through which the other three foundational competencies will flourish.

DRAW provides equal weight to development in the arts, humanities, and STEM fields because it prioritizes digital knowledge as a tool through which ideas can be analyzed, created, and communicated.

DRAW ensures that all are digitally equipped to the most basic level, harnessing technology to amplify the creativity and capabilities of people in all fields. (Obiakor, Thelma (2020). DRAWing away from the past. Brookings Institute).

Return on transferable skills; also often called life skills, soft skills, social-emotional or 21st century skills. They are the ones that allow children and youth to learn with agility, adapt easily and become agents capable of navigating through various personal, academic, social and economic challenges. UNICEF

Developing agency means recognizing the importance of the relationships and connections we have with others. Thus, strengthening student’s agency implies not only recognizing and supporting them in their individuality, but also understanding, cultivating, and expanding the set of relationships that influence their formation and participation.

A concept underlying the learning framework is “co-agency” — the interactive, mutually supportive relationships that help learners progress toward their goals.

All other returns feed this one and are complementary.

Return on investment


Several countries outspent the United States for elementary and secondary education, including Austria, Norway, and Luxembourg, which spent $13.931, $14,353, and $20,900, respectively, in 2015. Luxembourg spends the most per student at the elementary/secondary level, and Mexico spends the least at $3,300 per student.

This section aims at questioning and optimizing the use of financial resources in learning. Moving away from a linear budget and a pre-set assignment of resources, towards a more competitive and zero-based approach that accelerates transformation and informs on resource allocation efficiency.

Return on trust

Good management involves trust. Students are not trusted, teachers are not trusted, parents are not trusted, institutions are not trusted.

On this part of the methodology we ensure that every aspect of the learning experience has a dimension on trust.

Can we trust that the institution is protecting sensible data?

How do they respond to bullying?

Are students guided to be trusted?

Is the teacher’s ability to appreciate learning trusted?


Return on time

Every topic or activity added to the curriculum takes time from everything else.

What is the best use of school time?

The time used for content leaves little room for teachers to mentor, coach, process information and design meaningful learning experiences.

Are we certain that allocating 50 minutes for a class is the best way?

Could we accomplish better learning over a shorter time?

Is it worth it to drive for an hour to assist to a lecture?

more …

Return on Information

The education system in general is incapable of designing, processing and acting on data real time.

What information could we access from our intervention?

What use do we get from data?

What will we do with thee answer to a question?

Can we track the context of each student that we serve?

Do we analyze data that helps us improve on student engagement?

Are we in a position to track most of our decisions on evidence?

Can we integrate measures that look holistically at our teachers / students beyond grades?


Return on Impact

Photo by Jon Tyson on Unsplash

We cannot ignore what Covid has painfully demonstrated. The decisions we make now will have implications for generations to come. Educational institutions don’t change because it’s the right thing to do, they changes because there is a designed alternative.

How we turn around is relevant. How we bring people together matters and how we design for equity matters.

I have developed an index on education that tries to balance for impact. Some of the questions are:

I hope that this article provided you with some insights and new ideas. I am permanently connected to these topics and discussions so I welcome your comments as we aspire to build better RETURNS ON EDUCATION>

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