Workforce EdTech: Innovation vs. Scale

The latest news release from the Bureau of Labor Statistics continues to paint a confounding picture. The U.S. added 275,000 jobs in February, continuing a strong run of job growth, and unemployment remained at less than four percent. Yet, the number of unemployed people (6.5 million), was half a million more than one year ago. The number of people not in the labor force who currently want a job (5.7 million) was little changed from February 2023, and there are 4.4 million part-time workers who want full-time work.  

That’s 16.6 million Americans looking for better work in a robust economy with 8.9 million unfilled jobs, and doesn’t totally account for the larger number of under-employed low-wage, low-skill workers struggling to get ahead, or college grads who are under-employed. This mismatch between labor supply and labor market demand is not likely to improve as the economy grows in areas that require training and skills American workers do not currently have.  

At the start of the year, Tyton Partners highlighted several fronts to watch in workforce edtech. Today, we delve into a central dilemma: the tug-of-war between innovation and scale. What is working? What is not? Where does innovation need to occur and how can we achieve impactful solutions on a grander scale? If we are to create an economy that works for everyone, both closing the skills gap and improving prospects for workers, we need innovation that scales.  

Our central premise is this: Innovative solutions already exist. The true challenge today is scaling these solutions effectively, ensuring that they reach more workers/learners. What we need is innovation in models for scaling more than anything else—and we believe philanthropy has a role to play in this challenge. 

Why is Scaling So Difficult?

The workforce ecosystem comprises diverse players: employers, training providers, workforce agencies, learners/workers, and third-party support organizations. Governments and policymakers are also key players in funding and creating incentives for cohesive action. Unfortunately, there is often not enough visibility or connection among these various stakeholders.  

Imagine a puzzle with missing pieces—each actor operates somewhat independently, with different incentives, making large-scale impact difficult. Workers need a comprehensive chain of support and an understanding of what employers want. Employers need visibility into workers’ skills, competencies, and availability to work. And providers need to create sustainable business models that meet both workers’ or employers’ needs in ways that can attract funding and revenue. Getting the pieces of this puzzle to mesh at large scale is difficult. 

Targeted, Innovative Point Solutions Do Exist 

Despite the challenges with scale, tremendous innovation has occurred to solve some of the pain points of workers and employers, such as navigating training choices, securing financing for education, and accessing crucial support systems (think childcare and time off from low-wage jobs), as well as finding a job once skills are acquired.  

One needs to look no further than some of the forward-thinking workforce venture funds that have flourished over the past few years to find innovative solutions. JFF Ventures, SHRM Labs, and Techstars Workforce Development Accelerator have all nurtured creative point solutions such as FactoryFix, ChargerHelp!, and Franklin Apprenticeships, respectively. Other leading investors such as Stand Together Venture Labs, WGU Labs, and members from Impact Capital Managers have invested in innovative solutions like Unmudl, and remain focused centrally on these themes. In addition, non-profit models that have targeted specific populations, whether Per Scholas, Merit America, or STARS by Opportunity@Work have each had hard-earned success and attracted philanthropic funding and are growing their learner/worker reach each year.

A critical question is “whether” and “how much” both the venture solutions and these non-profit organizations can scale to reach even more workers and learners. 

What Can Be Done? Some Missing Pieces 

Rethinking Philanthropic Support

Ultimately, private sector actors, whether employers or funders, must support a solution for it to have long-term sustainability. However, philanthropy has a big role to play in helping to fill the “missing pieces” by creating better visibility among the actors, linking the point solutions and supporting sustainable business models.  

Philanthropy can achieve this by:  

• Providing more patient, catalytic funding  
• Providing necessary policy and advocacy support  
• Using funders’ convening power to help align the interests and incentives of various stakeholders in ways that can promote broader reach and impact at scale.  

This applies both to early-stage ventures (when product-market fit and outcomes are important) and as solutions mature and need to prepare in a different way for scale (focusing on infrastructure support, creating sustainable revenue generation and repeatability of model). 

Collaborative Efforts in Local Context

Philanthropists can also drive more localized public-private partnerships that can bridge gaps in the ecosystem. Many great examples around the country exist where Chambers of Commerce, state agencies, employers, and education providers (whether public or private) are collaborating to close the job skills gap (e.g., P33 in Chicago, TalentFirst in Michigan, Academic Partnerships in Kentucky). Tailoring solutions to local contexts ensures relevance and effectiveness—but we should avoid re-creating the wheel each time in order to drive larger scale impact. 

Striking a Balance 

Striking a balance between nurturing innovation and creating scaled solutions is crucial in the world of workforce education technology. As we continue to innovate and push boundaries with effective point solutions, it is important to keep in mind the complexity of the big picture and the role of these solutions in long-term sustainability and efficacy. We need to challenge the key stakeholders—employers, funders, training providers, and policymakers—to focus on innovation in scaling models that address the context and needs of local and regional challenges. Then, we may make progress with impact at scale.  

If you have any questions or want to discuss further, please don’t hesitate to reach out to us.