Paying for Results: New Approaches for the Ed-Tech Marketplace – Digital Promise

Paying for Results: New Approaches for the Ed-Tech Marketplace

August 27, 2014 | By

While learning technology has improved opportunities for select classrooms and schools, it’s not yet delivered the systemic and revolutionary effects we’ve seen in other sectors.

One explanation is that many schools pay for technology products instead of paying for results. As such, there’s a prevailing “if we build it, they will come” approach that allows products to be pushed into the market and purchased without consideration for school needs, learning science, or student outcomes.

What if schools could signal to the market their big challenges and pay only for solutions to those challenges, rather than “products” or “services” that may or may not fit their needs?

Many organizations are working to answer that question. The White House recently issued a request seeking ideas for how “pull mechanisms” can ensure schools spend their money on learning technologies that lead to results.

Pull mechanisms are result-oriented approaches to purchasing, such as social impact bonds, prize competitions, advance market commitments, and milestone payments. The idea is that consumers leverage their buying power to drive development and adoption of products proven to work. When applied to education, these approaches are incredibly promising as methods for rewarding learning technology developers who can create better outcomes for students.

This summer, in partnership with nestGSV, New Schools Venture Fund, Coursera, Stanford Angels & Entrepreneurs, and Minerva Project, Digital Promise convened a group of organizations and thought leaders to figure out how we can enable these approaches in the ed-tech marketplace.

Here are three big takeaways from what we’ve learned so far:

  1. We need to understand the challenge before we can develop the solution.

    In the pharmaceutical industries, some companies receive purchasing pledges in exchange for developing reliable vaccines that could save millions of lives in developing countries. Demonstrating results in learning aren’t always that clear. While cells may react to a vaccine predictably, learners may respond differently to the same educational experience.

    That makes separating out the effects of one learning experience from another more difficult than testing a medication against a placebo. While we look to other industries for innovation inspiration, we need to make sure we stay focused on the idiosyncrasies of the learning technology market.

  2. There’s no shortage of challenges to address.

    These “pay-for-success” approaches work best for challenges with clear definitions and reliable measures of success. For example, about 18 percent of U.S. adults have low basic literacy skills. There are also 3 million adults in need of education, with only 250,000 currently enrolled in adult secondary education programs. With a clear gap between supply and demand, a prize competition could attract developers to this challenge and reward products and services that show promise for improving literacy and increasing the number of adults with a high school diploma.

  3. When developing solutions, apply available research.

    While we investigate the promise of pull mechanisms for driving developers to build learning tools that work, we need to boost our investments in research, from basic learning science to product evaluations. Developers need access to credible and accessible information on what’s known about learning, and they need evaluation methods that are both rigorous and appropriate for fast-changing technology products.

(Read about these ideas and more in our response to the White House Office of Science and Technology Policy Request for Information.)


There is already momentum moving in this direction. Groups of investors, philanthropists, entrepreneurs, policymakers, and educators are already developing ideas and action plans for pull mechanisms. And stakeholders from our summer workshop are continuing to build on the ideas above.

We’re also seeing examples of local and state efforts to make way for these kinds of models. For example, the New York City Department of Education’s iZone ran a Gap App Challenge focused on middle school math, while the Virginia Department of Education hosted Apps4VA, a challenge to build apps that harness data to improve education.

On a national level Digital Promise is examining challenges and best practices for ed-tech purchasing in a study with the Education Industry Association and Johns Hopkins University’s Center for Research and Reform in Education. The findings will shed some light on the opportunities and barriers for different purchasing approaches, including pilots and aggregated purchasing.

And of course we view our forward-thinking network of K-12 districts in the League of Innovative Schools as leaders in the push for aligning purchasing with student outcomes.

We know there are many other ideas and efforts out there. We want to hear from you – what do you think about pull mechanisms, prizes, and pay-for-success contracts in the learning technology market? Share your own ideas with us and sign up for regular marketplace updates to stay in touch.


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