When is a problem a good thing? When it launches a new effort in problem-based school development (PBSD). By starting with a problem identified by teachers themselves, PBSD overturns any notion that professional development is irrelevant to everyday life in schools. Problem-based school development builds the capacity of teachers and others to tackle problems in a way that allows authentic adult learning to take place--with simultaneous benefits for schools and the students they serve. John Clarke and his coauthors--practitioners at the school, district, and university levels--tell how a relationship between the University of Vermont and school districts throughout the state enables teachers to earn graduate credits through yearlong Problem-Based School Development Institutes. The institutes take participants through a cycle that includes identifying a problem, conducting background and action research, field-testing possible solutions, and recommending action. The authors offer the perspectives of both teachers and administrators as they provide guidelines for making PBSD work. They tell how teams at elementary and secondary schools used PBSD to make significant changes in curriculum and other areas, and they describe the strategies used to link individual school efforts together to create meaningful districtwide reform. While citing various success stories, the authors acknowledge the struggle between energy--which inspires change--and order--which schools need to function smoothly. They conclude by offering principles of policy development that accommodate both. By following these principles and the practical approach of problem-based school development, educators can create an environment where the creative energy of individuals fuels significant change, taking bottom-up reform to a new level of effectiveness.