There are three main things that I believe go wrong with our current educational system.

Firstly, it's way too focused on theoretical subjects, leaving out important skills that are no longer taught at home, such as planting, building, repairing, cooking and plumbing. All subjects we learn in school are important. There is no balance between theoretical knowledge and practical skills, however. It's really weird spending 12 years in school and not being able to survive on basic skills that everyone should know. These are skills that people used to learn at home, but times have changed and the educational system is not adapted.

Secondly, the learning methods are also outdated. The point is not to memorize facts, but learn how to learn. Critical thinking is almost never trained, teachers are happy when students acquire information, whether they can actually process it or not. A correct education would combine content, thinking skills and personal development. The founder of Khan Academy has also founded the Khan Lab School, which is a good example of how education could be much more interactive and promote personal growth. This is the difference from traditional schools http://khanlabschool.org/why-khan-lab-school and you can check out its curriculum here: http://khanlabschool.org/curriculum . Furthermore, a concept has to be well-understood no matter how much time it takes, so as to avoid knowledge gaps. Flexible, non age-related fixed academic groups are a good idea.

Note that apart from language/thinking skills mentioned above, it focuses on
science a lot more in a project-based learning approach. Which brings me to the third point. The current educational system is not up to date with technological advances. People barely know the basics of computer science, while nowadays most of the economy, health system, services etc are based on computer programs. A computer is not a tool anymore. It's a necessity. Learning a programming language is as important as a foreign (human) language. Furthermore, science should be learned through projects and not theoretical concepts.

I plan on writing an article on this topic in the near future. Education is so important and currently, as you said, it serves mostly the state system instead of individual development.