School organizations must become responsive and flexible to address rapidly changing social, economic, and demographic conditions. Reform attempts to date have not worked because they were layered on old structures and perceptions in a fragmented, piecemeal fashion. The fundamental transformation of education that is required demands a paradigm shift. In contrast to mere reforms or restructuring, changes that are transformative are comprehensive, connecting strategic and business aspects of organizations with human and psychological issues to create fundamental changes in the way all members and groups perceive, think, and behave. Values--standards, precepts and principles--determine perceptions and must be identified to successfully transform schools. Identifying core personal and institutional values allows for an evaluation of services that meet the needs of students, instituting accountability by measuring productivity and performance in multidimensional and complex ways. Transforming schools enable all people in them to achieve self-actualization through high expectations, high standards of quality, and equal access to growth opportunities. An index is appended. (Contains 10 pages of references.) (TEJ)