(FORTUNE Magazine) – IT'S LIKE Pearl Harbor. The Japanese have invaded, and the U.S. has been caught short. Not on guns and tanks and battleships -- those are yesterday's weapons -- but on mental might. In a high-tech age where nations increasingly compete on brainpower, American schools are producing an army of illiterates. Companies that cannot hire enough skilled workers now realize they must do something to save the public schools. Not to be charitable, not to promote good public relations, but to survive. In many ways, today's education crisis is more serious than the grim days of 1941, when American troops had to train for war with wooden rifles. Then, in four short years, U.S. industry created a war machine that helped conquer two heavily armed foreign powers. Today's problems cannot be solved simply by building new plants and equipment. And yet, says Procter & Gamble President John Pepper, ''I wonder if we are talking about this issue the way the U.S. sat down to talk about what to do after Pearl Harbor? Do we have the same degree of intensity, the same degree of absolute determination that there is no way we are going to fail?'' A few people do, perhaps none more so than Owen ''Brad'' Butler, the retired chairman of Procter & Gamble (see box). But momentum has been slow to build, partly because the save-the-schools movement has been an uncoordinated effort. Says Albert Shanker, president of the American Federation of Teachers, a union comprising 24% of the nation's teachers: ''We have hundreds of people struggling to find the same answers. We need a system of sharing and communication.'' With that in mind, FORTUNE in September convened a two-day summit at the Willard Hotel in Washington, D.C. More than 100 leaders from business, government, and academia met to discuss specific steps business could take to help the schools. It was an action-oriented conference focused on solutions, not problems. As American Express President Louis V. Gerstner put it, ''We need to adopt that famous Noah principle: No more prizes for predicting rain. Prizes only for building arks.'' Participants addressed two questions: What should business do to make the schools better? What should business not do?

The best answer to the second question came from Mary Futrell, president of the National Education Association, the largest teachers' union. She said: ''Don't come to us and say, 'This is the plan.' If you do, the education community will resist. But if you come and say, 'We will work with you to help determine what the plan should be,' you will have 100% cooperation.'' In a rare display of unanimity, executives, educators, and politicians called for a complete restructuring of the school system -- a perestroika of public education. Said former Secretary of Education William Bennett: ''What we need is something approaching a revolution.'' That he got no disagreement from Shanker and Futrell -- who represent the unions Bennett loves to hate -- was in itself revolutionary. Said Shanker: ''We must start thinking of students as workers, which means we've got to deal with the same issues business does. One of the most helpful things you could do is talk to us about the kinds of problems you found and the kinds of changes you brought about in your own companies.'' Even restructuring the schools will not do much for the 20% of U.S. children who are poor and who enter school so far behind that it is almost impossible to catch up. ''We are talking about the child who was not properly nourished, who has never had any intellectual stimulation,'' says Butler. ''To put that child into first grade unprepared is like taking a husky 22-year-old who has never seen a football game and putting him on the field against the Cincinnati Bengals. In five minutes that youngster will learn to hate football.'' Clearly, there is no single cure for what ails the schools. But on the following pages, you will see how business can make a difference.

RESTRUCTURE THE SYSTEM If 80% of the products a company turned out were defective, would the chief executive solve his problem by asking employees to work 20 minutes longer each day? Hardly. As Al Shanker puts it, ''If you wanted to turn your business around, you would be asking, 'How can we fundamentally restructure what we are doing?' '' Schools, he says, must do the same. No wonder the schools are producing so many lemons. They function much like the 19th-century factories they were originally designed to resemble. Batches of boys and girls still roll like widgets from room to room where, Shanker says, ''each teacher puts a part on the kid.'' Classes are large and impersonal, lectures predominate, and every 40 minutes, just when the children settle down -- GONG! -- the bell sends them off to their next station. The result: gaggles of graduates with the forbearance needed for unskilled manual labor, but devoid of the problem-solving skills necessary for today's globally competitive workplace. Says Theodore Sizer, chairman of Brown University's Department of Education: ''CEOs must realize that there are serious systemic and structural problems in the schools -- on the insides of schools. The culture must be changed, and the change must be radical.'' How can business help? Primarily by supporting imaginative individuals who dare to challenge the status quo. The Exxon Education Foundation, for instance, recently approved a $600,000 grant to the Coalition of Essential Schools, a group of 56 high schools around the U.S. that Sizer organized to experiment with new approaches to teaching. Classes in a coalition school contain an average of 20 students and may last as long as two hours. Teachers act as coaches rather than as conduits of information. Semeka Smith, 13, a student at Manhattan's Central Park East, explains: ''In a traditional school we would be asked, 'How did Christopher Columbus come to America?' Here we're asked, 'What other mode of travel could he have used?' You use your mind more.'' Testing new pedagogical approaches can be exhausting for teachers, who are often faced with redesigning an entire curriculum. ''There's no textbook for what we're doing,'' says Larry Barnes, a vice principal at R.L. Paschal High School in Fort Worth, Texas. Paschal is trying out Sizer's concepts on 135 of its 2,100 students, effectively creating a school within a school. Kids must be reading at their grade level to participate; teachers stay with the same students for four years. Says Barnes: ''There's a lot of personalization here.'' There's also some money -- $267,000 -- from the Burnett Tandy Foundation, which was endowed by the wife of Charles Tandy, who started Tandy Corp. At the request of former superintendent I. Carl Candoli, the foundation agreed to pick up Barnes's salary and contribute toward a tenth month's salary for teachers participating in the experiment so they can attend workshops and seminars to develop the curriculum. It was the foundation's support, in fact, that persuaded the school board to go along with Candoli's tango with reform. Last June the first 17 seniors in Paschal High's experimental program graduated; 15 went to college (overall, 60% of Paschal's students go to college). In August, Arkansas, Delaware, Illinois, New Mexico, and Rhode Island announced they would try Sizer's ideas in at least ten schools each. Says Arnold Shore, executive director of Exxon's Education Foundation: ''We are at the beginning of what promises to be a workable revolution.''

MOBILIZE STATE-BY-STATE How can the efforts of 16,000 school districts turn into a national restructuring of public education? Brad Butler has the answer: ''Central leadership has got to come at the state level. There is a much better chance for coordinated reform within a state than for reform of a national system.'' Minnesota, South Carolina, Tennessee, Arkansas, and California have already started to change. In each case, business leaders actively encouraged the reform. ''My experience has been that if the business community and the governor want this thing to happen, it begins to happen very quickly,'' says Butler. ''If either of those ingredients is lacking, it's very tough.'' South Carolina, which enacted a 1-cent sales tax increase in 1984 to pay for its widely acclaimed Education Improvement Act, stands out as a paragon of reform for two reasons. First, the governor, the business community, parents, and educators were all involved. Second, the state set up a division of public accountability to monitor progress and make sure they stayed involved. South Carolina business leaders signed on after former governor Richard Riley asked a group of 30 to serve alongside educators on two committees charged with drawing up an education-reform package. The businessmen were acting out of enlightened self-interest -- a desperate need for better- educated workers. Says Montez Martin Jr., president of Montez Real Estate in Charleston: ''We knew that our lifeline was at stake.'' Some companies had serious reservations about expanding in South Carolina unless voters passed the Education Improvement Act. Corporations donated $100,000 to a foundation that sponsored TV commercials promoting the proposed reforms, ranging from higher teacher salaries to management training for principals. But the battle to win over the politicians was, in the words of House Speaker Pro Tem Jack Rogers, ''a little like the charge of the light brigade.'' On opening day of the 1984 legislative session, the Education Improvement Act had virtually no support. The business leaders persisted. One of South Carolina's largest ad agencies produced a videotape free of charge featuring 20 chief executives endorsing the bill. The piece de resistance was a telephone bank, funded by corporate dollars, that alerted South Carolinians whenever their representatives were wavering on an education issue. Before one particularly tough vote, the bank phoned all the constituents of a representative who was still undecided. The next day the exasperated politician walked up to a business lobbyist, his hands filled with telephone messages. ''That's enough,'' he said. ''You've got my vote.'' Since the Education Improvement Act was passed, the average combined math and verbal SAT scores in South Carolina have risen 35 points to 838 -- the largest increase in the nation. Teachers' salaries, once among the lowest in the U.S., have risen 48% to an average of $24,400 and are now in line with those in other states. Yet, warns reformer Robert Selman, president of Keenan Co., a Columbia real estate firm: ''It would be an enormous mistake to assume that this first wave of improvement has fixed the schools and that we can get back to business as usual.'' The two committees that drafted the Education Improvement Act are already planning for the 1990s. Their goals are ambitious: They want to begin restructuring the schools, reduce the South Carolina dropout rate, and make preschool programs more widely available.

GIVE PARENTS A CHOICE Former Secretary of Education William Bennett says we should have it. Arkansas Governor Bill Clinton says we should have it. A Gallup poll says 71% of Americans think we should have it. Yet because of virulent opposition from the education establishment, only one state, Minnesota, is daring to try it statewide. ''It'' is choice: letting parents decide which public school their children attend. Advocates say that if nothing else can reform the schools, free-market forces will. ''In industry your customers vote every day on the quality of your company, by either buying or not buying your product. We ought to have some competition in the education system.'' So says Joseph Alibrandi, chairman of Whittaker Corp. and a member of the California Business Roundtable, which has been pushing for choice in the state for three years. Critics of choice, primarily teachers' unions, including Futrell's NEA, see it as a forerunner to a voucher system that would allow parents to select among public and private schools, a move the critics fear would destroy the public ones. Another worry is that choice would drain inner-city and rural schools of their best students -- and their state funding -- leaving those schools in worse shape than before. Minnesota hopes to prove the critics wrong. In May, after four years of lobbying by Governor Rudy Perpich and the Minnesota Business Partnership, the legislature passed a law that permits parents to send their children to any public school in the state; $3,600 in state tuition will follow each child who changes schools. The landmark legislation, which will take effect over the next two years, grew out of a 1983 study commissioned by the Business Partnership, a group of 82 chief executives. Choice programs have been available in Minneapolis since 1971 and to other Minnesota school districts that wanted them since last year. In practice the idea has its downside. For instance, some parents of Minneapolis kindergarteners now find they have too much choice. In addition to considering a school's proximity and facilities, they must also think about its philosophy: There are as many as ten programs for 5-year-olds, from Montessori, which is ungraded and emphasizes self-teaching, to Fundamentals, a teacher-directed program, complete with report cards and a dress code. Still, a survey of 137 parents who switched their children to different schools last year showed that all were more satisfied with the quality of education. Says Michael Kirst, a professor of education at Stanford: ''Everybody is waiting to see what happens in Minnesota.'' If choice works there, it could be one answer to the need for radical reform.

LOWER THE DROPOUT RATE If you think education is expensive -- taxpayers pay about $4,200 a year to send a child to school -- try ignorance. It costs some $14,000 a year to keep a prisoner in jail; 62% of all prison inmates are high school dropouts. Welfare families drain the government of an average $4,300 a year; dropouts head more than half of them. The cycle of ignorance, poverty, and crime seems almost unstoppable: Despite a plethora of remedies prescribed over the past several years, 25% of all high school students drop out before graduating -- about the same percentage as 15 years ago. / In the heart of Appalachia, Kentucky's Ashland Oil has been waging a one- company campaign to lower the dropout rate and to encourage other educational reforms. Since 1982 the $6.9-billion-a-year oil refiner has put its entire corporate regional advertising budget into education. Last year, alarmed that about one-third of Kentucky students leave school before graduating, the company devoted all that money to dropout prevention. The cornerstone of Ashland's campaign is a series of commercials directed at children and their parents. One particularly poignant ad shows a young girl holding her baby and saying: ''Jobs are pretty scarce around here. Specially since neither my husband or me finished school. Things are gonna be different for this one. He's gonna stay in high school if I have to tie him to his chair. Sometimes I wish someone had done me that way.'' The National Advertising Council and the Council of State Governments were so moved by the commercials that they are now using them, without the Ashland logo, in a nationwide public service campaign aimed at reducing the dropout rate. Ashland also devised a clever way of bringing the message ''Don't Drop Out'' directly into the classroom. The company produced a videotape showing how an Ashland television commercial is made, beginning with storyboards that illustrate frame by frame what will happen in the ad. The videotape also stresses skills, such as reading and writing, that are needed to produce a commercial, and to succeed at just about any job. Elementary and junior high teachers show the video to their students and then pass out blank storyboards. The children are told to draw their ideal life stories -- but they must start with graduation from high school. Often the results are just what Ashland hopes for. One sixth-grader named Stephanie shows herself progressing from high school to law school to the Supreme Court. Her final entry: the ''good life''!

RAISE COLLEGE ENROLLMENTS A high school diploma doesn't buy what it used to. According to a recent study sponsored by the William T. Grant Foundation in New York, male high school graduates age 20 to 24 earned 28% less in real terms in 1986 than their counterparts of 1973. A college diploma, on the other hand, buys more than ever. The average annual income of a college graduate in 1986 was 49% higher than that of a high school graduate; in 1980 it was 25% higher. That's the dollars. What about the sense? Because the academic year is 40 to % 60 days shorter in the U.S. than in Europe or Japan, many American students are two years behind their international peers at graduation; for them a college education is a chance to play catchup. Says Governor Clinton of Arkansas: ''The U.S. has the highest college-going rate in the world ((57%)), and it is still too low because of the deficit our kids carry out of high school.'' It is particularly important, he says, to get more poor young people into college. In rural Lowndes County, Alabama, a largely black area with a high illiteracy rate, General Electric is trying to do just that. The GE Foundation has committed $1 million to triple the number of college-bound youngsters in the county over the next five years. The money will pay for SAT-preparation courses, teacher-enrichment programs, a Saturday academy in science and math conducted by professors from nearby Tuskegee University, and scholarships to Alabama colleges for high school graduates. General Electric has a compelling reason to educate the children of Lowndes County. The company has invested $700 million to develop a plastics plant in the area and, as Tuskegee president Benjamin Payton notes, ''Right now there isn't a single black person in Lowndes County who has sufficient education to work as a chemical engineer in that plant.'' But, he adds, ''I promise you that in five years there will be.'' Initially GE will work with students who show the greatest promise. But with each successive class, the company plans to reach further down into the pool. Says Paul Ostergard, president of the GE Foundation: ''When you're running programs like this, you need success models fast. But if we don't have the commitment to go deeper each time, we're not going to make it.''

RECRUIT BETTER TEACHERS Consider this statement by actor Bill Cosby in a brochure for Recruiting Young Teachers Inc., a nonprofit group led by David Rockefeller Jr.: ''If you want to know who really molds our children's future, it's not the politicians, the movie stars, or corporate leaders. It's our teachers.'' Now consider these statistics: -- The SAT scores of high school students who plan to become teachers are, on average, 23 to 40 points lower than those of students intending to enter other professions. -- In Massachusetts, only one in five elementary teachers has had any college math or science. -- By 1995, if current trends continue, American schools are projected to be short 700,000 qualified teachers. The facts are scary, but not surprising. ''We decided, perhaps 30 years ago, that teaching wasn't very important,'' says Brad Butler. ''We stopped making it the kind of career that drew the right kind of young people into it.'' Now, finally convinced of the crisis, industry is working to bring more, and better, teachers into the schools. Gannett, Hearst, Primerica, and Time Inc. are among the companies that have contributed to Rockefeller's organization, founded in 1986 to persuade talented men and women to become teachers. In February, Recruiting Young Teachers began an ad campaign featuring an earnest young man -- whom much of America would love to grow old with -- coaxing and coaching his students. So far, 100,000 potential recruits have called the organization's 800 number for more information. Concerned primarily about the shortage of science and math teachers, Polaroid has developed a program it hopes will serve as a model for companies nationwide. Project Bridge enables up to ten Polaroid employees a year to switch careers and become math or science teachers. Participants enter a one- year certification program, which Polaroid pays for, at Harvard University or Lesley College in Boston. The company gives employees their full base pay during the certification period. ''I've always had the desire to teach, but I probably wouldn't have done it if Polaroid hadn't offered this bridge,'' says Jim Rinkus, 55, a plant engineering manager. He is one of six Polaroid employees, age 37 to 68, who left this fall to become teachers. Polaroid money also makes it possible for teachers on sabbatical to work at the company, where they learn more about industrial applications for math and science. Faye Ruopp, a teacher at Lincoln-Sudbury Regional High School near Boston, spent the 1987-88 school year at Polaroid. In terms of her professional development, she says, it was the best thing she has ever done. ''I feel that I'm teaching better than I ever have,'' says Ruopp. ''I now know specific instances, like camera testing, where you need to know statistics. If you can tell kids why they need to learn something, the chances of them learning it are far greater.''

PROMOTE JOB TRAINING When four New York City banks tried to fill 250 entry-level teller jobs last summer, they found only 100 qualified applicants. The banks' problem raises a compelling question: Aside from teaching the three R's, how can schools best prepare students for the workplace? American Express and Shearson Lehman Hutton think they have an answer. In 1982, working with the New York City public schools, they began the Academy of Finance, a two-year program for juniors and seniors that combines classroom instruction with on-the-job experience. In addition to their regular course loads, Academy students take classes in economics and finance, and attend seminars that stress good work habits, such as dressing neatly and being on time. Between their junior and senior years they work as paid interns at financial services firms. The Academy's goal is to equip students for the workplace in general, and for the financial services industry in particular. ''The results we've gotten from these kids are just great,'' says Stephen Lacoff, personnel director at Bear Stearns, who, despite slow times on Wall Street, hired 25 interns from the Academy last summer, mainly as back office and clerical workers. ''They're bright and aggressive and they work really hard.'' To be accepted by the Academy, students must have a 75 average, make a two-year commitment to the program, and demonstrate a ''positive attitude.'' In other words, the Academy helps kids who would probably have made it anyway. Says Gerstner of American Express: ''The purpose of the Academy is enhancement, not reform.'' To that end, it has been extremely successful. In New York City, 50 companies, including Oppenheimer, Salomon Brothers, and Standard & Poor's, help participating high schools with everything from financial support to curriculum planning. Nationwide the American Express Foundation sponsors Academy programs in 30 high schools in 14 cities at an annual cost of $450,000. Because the demand from schools is beginning to outstrip American Express resources, the company is about to establish a National Academy Foundation. Composed of business sponsors and educators, it will expand the academy concept to other industries, such as insurance and retailing. Last year American Express launched an Academy of Tourism and Travel, which is now training high school students in Miami, New York, and London. The Academy of Finance might be too good for its own good. In an unexpected turn, 90% of its graduates have gone on to college -- leaving New York City banks still struggling to find entry-level tellers.

SUPPORT PRESCHOOL PROGRAMS No investment in education offers a higher payback than preschool for poor youngsters. A study by the High/Scope Educational Research Foundation in Ypsilanti, Michigan, shows that one year of quality preschool before kindergarten cuts the likelihood that a child will become a dropout by one- third. Yet preschool programs such as Head Start reach fewer than 20% of children poor enough to qualify. By themselves, business leaders probably can't do much to expand preschool programs. But they can lobby state and federal governments to spend more money on early childhood education. Says the NEA's Futrell: ''When CEOs speak about the need for Head Start, America listens.'' Lack of money is one big problem. Lack of trained teachers is another. Head Start has a 30% turnover rate, a figure few companies could tolerate. Irving Harris, a Chicago businessman and philanthropist who has invested $20 million in programs for disadvantaged children, warns: ''We're never going to get the job done unless we have trained people to do it.'' Institutions such as the Erikson Institute in Chicago and Bank Street College of Education in New York City are putting special emphasis on training preschool professionals, but they, too, badly need financial support. A special project under way in Arkansas might provide a partial solution to the twin deficits of money and teachers: the Home Instruction Program for Preschool Youngsters (HIPPY). Developed 20 years ago in Israel to prepare immigrant children for the rigors of Israeli schools, the program uses parents as teachers. Working with storybooks and worksheets, mothers like the one pictured on page 43 teach their 3- and 4-year-olds 15 minutes a day, five days a week, 30 weeks a year for two years. The parents are trained by paraprofessionals, who visit the homes once a week. Training and salaries for the aides constitute the main expense of the program, which comes to $500 to $600 per child a year in Arkansas; traditional preschool programs cost $4,000 a child. In Arkansas, 1,400 mostly low-income families have become HIPPY adherents. The results, says Governor Clinton, have been ''phenomenal.'' Tests in one school district showed a 33-month gain in educational level among HIPPY children in 16 months. Parents are stimulated as well. After one year of working with HIPPY, nearly half the mothers in two Arkansas counties -- all of whom were on welfare -- went back to high school, got a job, or applied to enroll in job-training courses.

INSPIRE THE STUDENTS The scene is a large auditorium, full of inner-city school kids. Up front, a young black man in a Naval officer's uniform paces back and forth, holding a portable microphone. ''With an education,'' he says, ''you cannot be denied.'' The kids watch, enraptured. ''Name the last six presidents,'' he commands. One student answers correctly; the Navy officer dramatically gives him $10. The audience goes wild. The music blares. From the back of the room a strapping man in a flashy Navy flight suit and sunglasses strides toward the stage. He stares out at the audience. ''You think Michael Jackson is bad?'' he asks. ''You think punk gangs called the Bloods are bad? They're not bad. I'm bad. I fly 550 miles an hour. And if those gangs bother me with their .44 magnums and their spray cans, I'll go get my boys -- and my gang is called the United States Navy. You know what makes me bad? I have a college education. That's what makes me bad.'' Meet Navy lieutenants Montel Williams, 32, a special-duty intelligence officer, and Drew Brown, 33, an attack pilot now in the reserves. They call themselves ''The American Dream,'' and they are on their toughest mission yet: to motivate kids to stay in school. Since January, Brown and Williams, who both grew up in the ghetto, have spoken to 100,000 students, teachers, and principals in 15 cities. Their message is simple: Stay in school. Go to college. Stay off drugs. And most important: You can be a success. Says Brown, whose father, the late Drew Bundini Brown, was the trainer and motivator for heavyweight champion Muhammad Ali: ''You know why these kids drop out of school? Because nobody's ever told them that they're good. That they can make it through college. I was a punk kid like the rest of them, but I had something special. My father gave me two choices: graduate college or death.'' The two men are powerful persuaders. A week after they spoke to 15,000 students in Baltimore, participation in student government and other school organizations rose 15%. Procter & Gamble's Pepper was so impressed when he saw them on the Today show that he invited them to Cincinnati. They spent four days there in September, talking to 10,000 students. Inspired by the impact they are making, Brown, who graduated with a degree in business administration and economics from Southern University in New Orleans, and Williams, who has an engineering degree from the U.S. Naval Academy, plan to begin speaking full time starting in February. (The Navy will allow the men to wear their uniforms during presentations.) Their fee depends on what cities or school districts can afford. Brown, however, offers the following advice free of charge: ''I propose serious involvement by everyone. If you can't get your companies involved, you go get a kid. Take one kid you don't know to a museum. Do you know why kids don't make it? Because they don't know what success is. Why don't you show a kid your $300,000 house? Show him the hard work you do from seven in the morning until ten at night. He thinks you just popped out of your mother and became CEO. He doesn't know you worked as a stock boy. He doesn't believe he can touch you. Show him your office. He might just say, 'I think I'm going to college because I like this kind of life.' ''

Are business leaders, educators, and politicians prepared, finally, to confront the crisis in the American schools with World War II-like determination? The concern, the commitment, and the concrete examples evident at the FORTUNE Education Summit are reason to hope. But there is also reason to fear: Producing a better-educated work force will take at least a generation. As Brad Butler says: ''We are at risk, because we may lose patience.'' Bill Bennett talks about dedication. ''In the end,'' he says, quoting his hero, Jaime Escalante, the math teacher featured in the movie Stand and Deliver, ''reform takes ganas: desire, perspiration. The Japanese have a word for this too: ganbatte. It means persistence.'' Persistence, patience, hard work, and teamwork can win this war. Says South Carolina's Montez Martin Jr.: ''When the business leaders and the political leaders, the community leaders and the educators, get together behind a good cause, nobody can stop us. Nothing can keep it from happening, even when the odds are against us.'' The odds may just be starting to change.

BOX: THE FACTS

-- Of the 3.8 million 18-year-old Americans in 1988, fully 700,000 had dropped out of school and another 700,000 could not read their high school diplomas.

-- Illiteracy among minority students is as high as 40%. By the year 2000, minorities will make up a majority of the school-age population in ten states.

-- In standardized tests between 1983 and 1986, American high school seniors came in last in biology among students from 13 countries, including Hungary and Singapore. They were 11th in chemistry and ninth in physics.

-- In all, 84% of the 23,000 people who took an exam for entry-level jobs at New York Telephone in 1988 failed.

-- Before a health clinic opened, 300 pregnancies occurred in a single year among the 1,000 girls at Chicago's DuSable High School.

BOX: SOURCES OF HELP -- Committee for Economic Development 477 Madison Avenue New York, N.Y. 10022 212-688-2063

-- Recruiting Young Teachers Inc. 20 Nassau Street Princeton, N.J. 08542 212-649-5682 (New York office)

-- GE Foundation 3135 Easton Turnpike Fairfield, Conn. 06431 203-373-3216

-- Coalition of Essential Schools Box 1938 Brown University Providence, R.I. 02912 401-863-3384

-- Academy of Finance 131 Livingston Street New York, N.Y. 11202 718-935-3776

-- Home Instruction Program for Preschool Youngsters (HIPPY) Office of the Governor State Capitol Little Rock, Ark. 72201 501-682-2345

BOX: A RETIRING EXECUTIVE GOES PUBLIC

As befits the man, his revolution began quietly. The Committee for Economic Development, a group of 250 business leaders and educators, was meeting in New York in 1982 to discuss competitiveness. Speakers covered the usual: the need for investment tax credits, a higher savings rate, and better technology. At the end of the session Brad Butler, then chairman of Procter & Gamble, turned to the group in surprise. ''How can you talk for an hour about productivity,'' he asked, ''and not ever mention the word 'education'?'' That question prompted two national studies by the CED that galvanized the business community and led to the Clark Kent-like transformation of Butler. The low-profile, mild-mannered chairman of a secretive company has become a trailblazing, pulpit-pounding crusader for reform in the public schools. Since retiring from P&G two years ago, Butler, 64, has given hundreds of speeches, visited scores of students and teachers, and testified before Congress. Says BellSouth Chairman John Clendenin: ''When you talk to Butler, you are talking to a pillar of the nation in terms of focusing attention on this problem.'' Butler's father left school after sixth grade to help support his family; his mother quit after ninth grade. But they made sure their son got a better ( chance. Indeed, Butler had such good memories of his public school education in Baltimore that when he left the Navy after World War II, he considered becoming a teacher. ''I chose to become a salesman, but I felt a strong obligation to pay back what a generation of teachers had done for me. I'm finally getting around to it.'' He laughs. ''A little late.''