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Chuck: Let's shift a little bit to kind of your second career, since you're about as good at being retired as I am. So if you stand back and think about the world today, what do you believe is the problem or the business or the industry that's most in need of innovation.
Darren: Fundamentally the two that need the most innovation easily. the healthcare industry needs a level of innovation in terms of customer care, for sure, because there's a real social justice issue in terms of getting care to a broader set of people in need of care. And then the other one I spend 90% of my time on is his education and in the education world. I mean, you can pick up a newspaper today and just see, you know, I think we're in a $1.6 trillion. Going into student loan debt, you go with surpassed credit cards, and it's a business where we High Five When the six year graduation rate is 60%, I can't imagine running a business that, you know, that's six years. I mean, the the four year rates got to be sub 50%. That just wouldn't work in our business world. And you know, the cost of delivery is one of those things that there's pain today in the system. But in all of our other businesses, Moore's laws taken over, and we've been able to deliver a better outcome at lower cost. You know, virtually all of our work today is focused in this world of education. And really, the work is focused on low income or limited income students and trying to figure out a path that we can dramatically improve the completion rates dramatically, improve the Career Readiness rates, dramatically reduce the debt rates, and ultimately improve our communities. Clay Christensen, who wrote the innovators dilemma back in 2017, he he was quoted he said that 50% None of the 4000 colleges and universities in the United States will be bankrupt in 10 to 15 years, this should scare the heck out of higher ed. And I still feel like there's some movement, but it just feels to me like there's almost an unwillingness to accept this financial change that's coming in. So what do you what do you think it's going to take for higher ed to acknowledge that there is a problem and really embrace the idea that they're going to have to change and innovate to be successful? Unfortunately, Chuck, it might be like the financial crisis of 2007. You just have to experience it. I don't know if it's five years, 10 years 15 or 20. But Clay's absolutely right. You just have to look at, oh, I think the birth rate in 2007 drop nearly 20% in a year. So you can imagine that pipeline of kids, you can just do the math out 20 years and say, we're going to see this precipitous fall off in terms of college going kids, particularly given our immigration status. Today, so you can see this combination you start with how is the market changing? You know, these schools that exist today in is 4000. There are schools out there that have less than 1000 kids in their university. And so and they are starting to drop and you have this other reality of the business model that's super hard. And you know, this the the 10 year model, on the one hand, I understand why it exists for academic freedom. I don't understand a model that will ultimately cap off its best and brightest from getting to those tenured position because it's lifetime employment. I couldn't run a business where I couldn't find a way to find positions for our best and brightest coming up. So it's got all the clouds, but this one, this one is going to have to experience crisis to find its way out of crisis.
Chuck: And one of the things I've observed is they're they're amazing innovation stories. That all start in crisis because It changes, it changes all the rules, right? If an American hire, right, it's a 200 year old institution, it's got all these, a lot of great things were built into it. But it's got a lot of structure that doesn't work or is inefficient today, you know, you know, I'm doing a lot of work around innovation and leadership development. And a lot of universities are talking about this. And so I've been thinking to myself, so you have these institutions that are really kind of anti change, anti innovation, right? They're not trying to change it all. They have decided they're going to be in the business of teaching people how to lead innovation. And it would seem to me that if I was going to go learn how to do something, I'd want to learn it from someone who actually had done it, versus someone who was actually part of an organization that was kind of against it. So what do you think about that discrepancy? It just seems like a really odd place for us to try to be training the future leaders about innovation, when they don't want to innovate to start with.
Darren: Well, I think there's a there's a lot in what you said I, I would guess, knowing the work you're doing here. And other parts of this universities or universities I've been at, I think the human beings that run them actually do embrace innovation. If you think about their life calling, you know, a lot of them start with doing the research, understanding, and they want to solve problems, which is terrific. Now you get down to that issue called resources, process history. And my, it tends to be more of a guest than actually knowing is that a lot of those things get in the way trying to find the right forums. In order to make that happen, or the cultural consistency across the university is probably a starting point. You can innovate in a university to differentiate and get everybody to come along. So an example could be no Northeastern University. So if you think if you're Northeastern and you're out there, you've got some pretty heavy competition. So you had to galvanize around this innovation across the university, which is really the renowned internship programs, kids come from everywhere to go to this little Northeastern University, you know, right in the backyard of some of the most prestigious universities, but you had to have this galvanizing type of cause to get innovation in the university. And one of the challenges I think, is that when I look at the many companies I've been studying of where innovation has occurred, it's rarely done through a consensus or shared governance model. And I think one of the tricks of higher ed is is there's this feeling that everyone's in this shared governance, which is essentially another form of consensus, and I think this idea that everyone has a vote and I get why it exists. But it's not a vehicle of change. I know you were involved in getting cristo rey to go from it was basically a one school idea. And you were part of helping it become a much more of a network of school. So can you walk us through just briefly what problem you guys had to solve to make this work? Yes. So the, the seed of the idea and the innovation was, you know, what we were seeing is all of these high quality high schools, Catholic high schools, closing in the inner city. And so a lot of our Catholic high schools were essentially becoming prep schools for good prep schools, but really hard for, you know, limited income families to attend and is so in order to make the math work, the great innovation in that really came out of a simple idea of we need to pay the bills, hence the work study program was born. And what's really fascinating about it is that it really was born of financial necessity. Or you could say it would been a crisis because you, you couldn't make it work affordably. And what we discovered was the intangible innovation from it was really this social emotional development for limited income kids. And it got the business community to buy in and support it. So from one school and a handful of jobs, there's 3300 corporate partners today, and it pays for 60% of the bills. And you can either have management rules and processes, or you can have just a set of mission standards. And we really went to a set of 10 simple mission standards, and a decentralized model that said, for this thing to work, what our role in life is, is to recognize that we are the stewards Have the blueprint, but local innovation can happen is they develop their school provided they're within these 10 mission standard. So at the high school level, our graduation rates are north of 90%. Many of our communities, what you see in high school graduation rates, given the zip codes we target is sub 50%. And a lot of communities that we target, the college enrollment rate might be 30, or 40%. And we're north of 70%.
Chuck: Walk us through how that leads, because I think that leads into some of the work you're doing in two other places. So can you give us a little background on some of the interesting work that Drexel funds doing and how that's trying to take on some innovative ideas and in education.
Darren: so that the same founders of Cristo Rey, a handful of us got together and formed a venture capital fund. What we said is that what did we learn through Cristo? Rey, and how can we think about innovation in education for limited income kids that is scalable, because a lot Lot of times, what you'll figure out is you can have a great innovation without scalability is altom Utley, a huge wasted opportunity. We said, Why don't we put a venture capital fund together and target the seven states that have either vouchers or tax credits or something like that, and go into the communities and identify where innovation is already occurring, and invest into that innovation to see if it's scalable to these limited income kids. What we're looking for is where's their great need? Where's their innovation and potential scalability? So then, and we'll bring you to the third one, which is all in Milwaukee. So what's the problem you're trying to solve there? The problem there is that we've had this decade and decade and decade long problem in terms of college completion rates for low or limited income kids. So if you look at kids of color over the last almost 40 years, so think Pell Grant recipients what we've seen as this study Auburn college completion rate that hovers around 12%. And part of the issue that we see there is the kids who get started never finish, they're saddled with this level of debt that they can never get rid of. So that's a little bit of a social justice issue. And and so we said, Is there a way to dramatically change those college completion rates? Because if you complete college, it's worth a million dollars over your lifetime. And can we get you placed in a career that you've trained for? And can we do it at a manageable level of student loan debt, and so I bumped into an organization This is back to I don't see around corners, but I found this group called Wallen education partners that have been working on this problem for 26 years. Average taxable income for the families is under 20,080% of our kids are kids of color that come from the Twin Cities and our college completion rate. The last five years has exceeded 90% last year. 93 are career readiness which is really the killer to graduate and go into a job or go on to their master's degree is 95% 80% of them returned to the community. It's a big deal. And then 40% of them last year graduated with no debt, and the other 60%, half the Minnesota average, which was around $17,000. And I said to myself, if this was a business, and you're achieving 93, and the rest of the world's 12, capital would rush in, I joined their board to try to figure out how this mousetrap worked. And we support a bunch of kids up there. And then I convinced their board that I'll put my own personal capital and but I want to try it in a different city, which is Milwaukee. And so we came to Milwaukee, essentially replicating the work that they have been perfecting for 26 years. And what I see is that if we can do it in the right way, you can have an all in Raleigh, you can have an all in Atlanta, that it's scalable because you have to alternate Take innovation down to self interest fear University and only 12% of your kids are completing. And now it's 90, you get to collect a revenue stream that you would never have collected before. If you're a community trying to retain diverse talent, you have a self interest in doing that, too. So part of scaling innovation that I've realized in in these spaces, is that coming with a value proposition for people where self interest is clear and beneficial, create some momentum. So if you now know it's possible to drive the graduation rate up for these kids that are, frankly starting out with a disadvantage, doesn't it say that there's a business model and higher ed, where you could actually build a higher ed system that should increase the completion rate for everyone. There are some that are well ahead on that day, as So Georgia State the population of students, they serve our kids. So to give you an idea to check the kids that are in our program here, the 40, the average taxable household income is $9,200. And the reason that's important in the challenge for the university that we have to work on is that these kids have so many other demands. So I've got a couple that they must work because they are part of the economics of their family. In a university setting. The ones that get it don't have a ratio of advisors of one to 1000. That is not uncommon. You know, our advisor ratio in Minnesota is one to 100. And so and what makes it work is this advisor model we would have to and this is part of the work is work with the universities to help them see the value of the The personal relationships. And the challenge today is that where that will take them is outside the four walls. And within the four walls, you know, take our university. I love Marquette, I think we have 90 African American students in this class of 2000. You know, you think about 90, in 2000, you have to create community, too. And so, these are all insights that when we work with our universities, we try to send groups of our students to a university as a cohort, so they have community. And so there's that work and and ultimately, you want to say, Boy, let's go take care of those kids. But when they're 90 of 2000, hard, but you know what, that's why you just keep chipping away. There's gonna be something in there that makes the experience for the universe. To be better.
Chuck: So last question is, is there any question that you wish or think we should have talked about while we were here today?
Darren: The question I would have said is innovation, what is the power of No. And what's behind that innovation is that the great innovators that that I have bumped into will tell you time and time again, one of the best responses that I received was no and no sometimes could take the form of no more resources, because innovation is not bound by a checkbook innovation, a lot of times is only bound by your imagination and a lot of places and that there is the power of No. And so where has the power of no affected innovation in your company?
Chuck: You know, one of our key product strategies was to do whatever someone told me we couldn't do. Our lighting business was built around three or four products. And each one of them's original Genesis was actually being told it would never work. No one would do it. There's no point to this. And you realize that's your version of No, a lack of resource is really important to innovation. Because the moment you tell people, there's no easy way around, it drives creativity, right? You know, a constraint is actually maybe the starting point of innovation is maybe a way to think about it. You said something about earlier, we were talking about how ego gets in the way. And, you know, I was thinking about myself when you said that, and I know, you know, you were on the board as I was going through my process to decide to retire and my original plan at KCreeri was I committed for three years. And so 16 was far beyond what my original commitment was. And I was asking myself as you were talking about how a CEOs ego gets in the way so they fall in love with the things They're good at because so many people have told them, it's great. And I was asking myself, did it happen to me? And I think it did. And it's actually what led me to all the things I'm doing now. So I was in love with innovation. And this idea of building a company about solving these problems. And this, you know, I'll call it a process, people first process second culture where anything's possible. And that is what had built this company that at the, you know, at the peak was up almost $1.7 billion. That's what made us successful. It made us who we were, and as the company evolved, and our markets slowed down, and the pressure to Hey, no, you have to run this like a regular company, and it's about predictability. And we'd rather we'd rather have you hit a lower goal, but do it consistently, then try to hit home runs. And I remember being really frustrated by that advice, and I don't know that I saw it until I stepped away. I didn't want to do that other job because I like innovation. It's actually what makes me excited. And you the best thing that happened to me was realizing the job had changed around me and wasn't very much fun anymore. I really appreciate you sharing that because, you know, it's something I will take away. I don't know, I could have described it before today. So thank you much for that. And more importantly, thank you for being here during You know, we've known each other a long time. And I told Kyle, the producer, as we were preparing physicists that you're going to hear a story about someone who, you know, worked at Nordstrom and Best Buy an advanced autoparts. And we going, I thought, we're doing an innovation show. And I said, when you hear this, you're going to hear innovation in a way that I think we just too often get overlooked and your story, whether it be the things you did in your business career or you're doing in your second career around education are just, they're some of the most powerful and amazing innovation stories and I cannot wait for people to hear this because everyone knows the Steve Jobs story and everyone knows the answer. story. But the Darren Jackson story has impacted multiple industries and people in different ways. And it's just it has been a pleasure having you on the show, and we're so thankful you could be here today.
Darren: It's great to be with you, Chuck and great to share stories. And I am really excited that you're helping young people understand the ingredients, and ingredients are different than a process for sure. And whether it's the ingredients of innovation, or the ingredients of leadership, you know, it's it's a mix, right? And so, this will help them understand that as they're building their stories, you know, ingredients are important, and the ability to take the work that you're doing and then allow those ingredients to go across the university with our young people gives me great help.