July 2014


The economic urgency around higher education is undeniable: the price of tuition has soared; student loan debt now exceeds $1 trillion and is greater than credit card debt; the dollars available from government sources for colleges are expected to shrink in the years to come; and the costs for traditional institutions to stay competitive continue to rise.

At the same time, more education does not necessarily lead to better outcomes. Employers are demanding more academic credentials for every kind of job yet are at the same time increasingly vocal about their dissatisfaction with the variance in quality of degree holders. The signaling effect of a college degree appears to be an imprecise encapsulation of one’s skills for the knowledge economy of the times. McKinsey analysts estimate that the number of skillsets needed in the workforce has increased rapidly from 178 in September 2009 to 924 in June 2012.

Students themselves are demanding more direct connections with employers: 87.9 percent of college freshmen cited getting a better job as a vital reason for pursuing a college degree in the 2012 University of California Los Angeles’ Higher Education Research Institute’s “American Freshman Survey”—approximately 17 percentage points higher than in the same survey question in 2006; a survey of the U.S. public by Gallup and the Lumina Foundation confirmed similarly high numbers. “Learning and work are becoming inseparable,” argued the authors of a report from the Institute for Public Policy Research, “indeed one could argue that this is precisely what it means to have a knowledge economy or a learning society. It follows that if work is becoming learning, then learning needs to become work—and universities need to become alive to the possibilities.”

Even the demographics of students seeking postsecondary education are shifting. The National Center for Education Statistics projects that by 2020, 42 percent of all college students will be 25 years of age or older. More working adults are becoming responsible for actively honing and developing new skills for the new technologies and jobs emerging on a day-to-day basis.

Despite these trends, few universities or colleges see the need to adapt to the surge in demand of skillsets in the workforce. Distancing themselves from the notion of vocational training, institutions remain wary of aligning their programs and majors to the needs of today’s rapidly evolving labor market. At the same time, the business models of most traditional schools make them structurally incapable of responding to changes in the markets that they serve. Therefore, whether institutions like it or not, students are inevitably beginning to question the return on their higher education investments because the costs of a college degree continue to rise and the gulf continues to widen between degree holders and the jobs available today.

Who will attend to the skills gap and create stronger linkages to the workforce? This book illuminates the great disruptive potential of online competency- based education. Workforce training, competency-based learning, and online learning are clearly not new phenomena, but online competency-based education is revolutionary because it marks the critical convergence of multiple vectors: the right learning model, the right technologies, the right customers, and the right business model. In contrast to other recent trends in higher education, particularly the tremendous fanfare around massive open online courses (MOOCs), online competency-based education stands out as the innovation most likely to disrupt higher education. As traditional institutions struggle to innovate from within and other education technology vendors attempt to plug and play into the existing system, online competency-based providers release learning from the constraints of the academy. By breaking down learning into competencies—not by courses or even subject matter—these providers can cost-effectively combine modules of learning into pathways that are agile and adaptable to the changing labor market.

The fusion of modularization with mastery-based learning is the key to understanding how these providers can build a multitude of stackable credentials or programs for a wide variety of industries, scale them, and simultaneously drive down the cost of educating students for the opportunities at hand. These programs target a growing set of students who are looking for a different value proposition from higher education—one that centers on targeted and specific learning outcomes, tailored support, as well as identifiable skillsets that are portable and meaningful to employers. Moreover, they underscore the valuable role that employers can play in postsecondary education by creating a whole new value network that connects students directly with employers.

An examination of online competency-based education unveils the tectonic shifts to come in higher education. Over time, the industry-validated experiences that emerge from the strong partnerships between online competency-based providers and employers will ultimately have the power to override the importance of college rankings and accreditation.

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  • Michelle R. Weise, PhD
    Michelle R. Weise, PhD

  • Clayton Christensen
    Clayton Christensen

    Clayton Christensen was the acclaimed Kim. B. Clark Professor of Business Administration at Harvard Business School and the co-founder of the Christensen Institute. The Economist called his theory of Disruptive Innovation the most influential business idea of the early 21st Century. He's the author of The Innovator’s Dilemma and The Innovator’s Solution, Disrupting Class, The Innovator's Prescription, The Innovative University, and most recently, How Will You Measure Your Life?