Disruptive Change

Will Unbundling Kill Higher Ed as We Know It?

The competency-based education marketplace eschews the bundled approach of traditional degrees, instead promising to produce workers adept in just the right skills employers want. Education expert Ryan Craig believes that unbundling could destroy all but a handful of colleges and universities.

• By Dian Schaffhauser
• 01/06/16

If the unbundling of higher education were like the unbundling of a cable package, most TV viewers would relinquish the Golf Channel and QVC, and so might just as many students give up ample office hours, support from IT, the library, athletics and on-campus social activities in return for a big reduction in tuition and fees. In fact, that's exactly what UK's Coventry University has done, according to Ryan Craig, as noted in his 2015 book, College Disrupted: The Great Unbundling of Higher Education.

Craig is the founding managing director of University Ventures, a private equity fund that invests in post-secondary education companies through partnerships with traditional colleges and universities. Current investments include medical universities; University Now schools, which use a competency-based approach; ProSky and Galvanize, which provide "top-up" skills in technology, entrepreneurialism and marketing; and e-portfolio vendor Portfolium, among other organizations.

As Craig explained, "Bundling transfers consumer surplus to producers." Cable operators "inordinately" benefit from selling cable bundles to customers, whereas unbundling returns that surplus to the consumer — in the case of higher ed, the student. But the concept goes beyond basic economic considerations.

It's Craig's belief that students may one day find they don't need a bachelor's degree to become employable. When that day comes, the traditional four-year college experience could be considered as "old-fashioned and elitist" as a debutante ball. While Craig wouldn't be pinned down on a date by which this unbundling of higher ed will take place, he did offer clues to help us recognize its inevitable arrival.

Insurgent Activities Working Against Degrees

Currently, hiring managers continue using the bachelor's degree as a primary screening mechanism. It has become, said Craig, "the price of entry for a white collar career." But a lot of employers are "very frustrated" with that state of affairs, he added. Most institutions develop their degree programs — "product" in Craig vernacular — based not on what employers need or want but on what faculty want.

Now that more schools are adopting data-informed processes to help re-architect their programs, he asserted, colleges can use data to shift the emphasis from that faculty-centered model to "what competencies students actually need, what competencies employers actually want." As a result, "We're seeing all kinds of insurgent activity acting against the degree."

Craig offered these examples of "insurgency" as evidence:

• Just-in-time coding bootcamps that have the potential to train tens of thousands of people for "remunerative careers" in technology. Many bootcamp students already have degrees, often from elite universities. But not all. In March the White House announced a "TechHire" initiative that would put people (including the near-unemployable — those with criminal records) into "fast-track training" through coding boot camps.
• The use of "nanodegrees" at Udacity and "specializations" from Coursera that bundle specific groups of courses. These options received a boost when Google both teamed up with these MOOC companies and created custom assessments for its own hiring practices — which indicates, Craig pointed out, "that they're no longer taking the degree at face value."
• In its United Kingdom operations, consultancy EY is removing academic qualifications from its entry criteria. "They're keeping that hidden from the hiring manager because they believe it is absolutely not indicative of performance in the job," said Craig. Instead, the company is opting to put every candidate through a suite of custom-developed "strengths assessments and numerical tests," an approach it has been testing since 2008.

The college degree has acted as a "signal" to employers about what they can expect to receive from candidates, Craig explained. "Until now it has been the best signal — the highest fidelity signal — that employers have had. That's why it has become the default currency of the labor market."

But Google and Ernst & Young have found a "better signal," he noted. As more employers join their ranks and adopt similar practices, the idea that students need a traditional degree will be chipped away, Craig predicted, ushering in the era of the "competency marketplace."

Competency Currency in Play

Craig doesn't care for the word "competency," because it tends to denote vocational skills. But it's the best there is, he added, for describing "anything that can be assessed, up to and including high-level cognitive skills — problem-solving, critical thinking and so forth — that are predictive of one's career trajectory."

The idea of the competency marketplace or "competency currency" is to help employers identify candidates who are close matches for positions based on the competencies those open jobs require. Craig is convinced that LinkedIn is the closest to delivering on that promise. "A competency marketplace is a LinkedIn on steroids," he declared. (Craig said neither he nor his company has investments in LinkedIn.)

In 2014, LinkedIn bought Bright.com, a job search startup that had developed algorithms for parsing and extracting competencies from résumés and job descriptions. Eventually, Craig suggested, LinkedIn will ask its individual members to allow it to use that technology to pluck out competencies based on their professional experience. (The social network had long ago begun that work with its skills and expertise endorsements that currently appear on individual profiles.)

As Craig explained, LinkedIn will be able to create competency profiles based on the skill sets and other qualities possessed by the tens of thousands of members who already have a particular kind of job. On the member side, somebody who is interested in developing his or her career or doing a career change will be able to turn to LinkedIn to identify the gaps "between where you are and where you need to be."

People will remediate those deficiencies not by getting a four-year degree, Craig said, but by pursuing "a series of short discreet learning experiences — courses, assessments, MOOCs and so on."

In other words, LinkedIn is well positioned to help employers identify the best candidates for a given job opening and to help job seekers figure out what they need to do to get the jobs they want. At some point, Craig expects the company will also have ties to providers of those learning experiences.

Unbundling in higher education will happen, he predicted, "when the fidelity of the signal that employers receive from a competency marketplace is better than the signal they're getting today from degrees."

Institutions Remain Unconvinced

Not every college or university will lose out to the competency marketplace, however. Craig said that for the foreseeable future "elite universities" are safe. Students raised in the "hothouse environment" of a Yale or Harvard or Stanford will continue to flourish in the job market.

But not so with everybody else. Institutions that want to survive, Craig insisted, will need to "differentiate, distinguish, innovate in terms of programmatic areas, connection with employers [and] modes of delivery — but also in terms of what the actual product is." Increasingly, it will be something shorter and "easier to complete" than a four-year degree."

In particular, those schools that can somehow co-opt the ownership of meta-data related to a person's competencies will be in an excellent position to keep a student as a "customer for life" by recommending continuing education at strategic points in his or her career.

Craig recently emceed a panel at a LinkedIn education event that featured representatives from two of those "elite" universities — Duke and the University of North Carolina — and the for-profit Kaplan University.

Of the three, Kaplan came off as sounding like the closest fit for the unbundled world of education. According to Tere Traub, an executive director, Kaplan's students are older and predominantly female; they're working; they may be single parents; and they either want to get promoted on the job or change careers. Her university has already instituted the competency model to teach its students skills around such areas as teamwork and communication. "Our obligation is to teach the students how to think, because ultimately, things are changing so quickly," said Traub during the panel discussion. "If you can't adapt, you're not going to survive, no matter what you're being taught."

The reps from the two elite institutions weren't convinced that unbundling was a foregone conclusion for any kind of school. One argument against a competency marketplace, noted Michael Schinelli, chief marketing officer at the U North Carolina Business School, was that competencies will be ever-evolving. "When someone gets into their 10th, 15th, 20th year where they're in their prime earning years, to model their entire educational experience on competencies we have now is a risk." Better, he said, to remember that college in all of its variations and layers is meant to help students learn how to think. "If you learned how to think, that's the best equipped graduate we can produce."

The other argument came from Elizabeth Hogan, associate dean in Duke's School of Business: Work is about more than mastering a set of competencies and plying it for the highest ROI. "What's the definition on return on investment? There are certainly lots of MBAs that think their ROI is starting salary. There are lots of other MBAs in the Peace Corps who are there to help." The job of the Dukes of the world — and any other university — is to "create knowledge and make the world a better place," she said. "In the sense that we're continuing to make that work for the many different flavors of students who want to come to Duke, that's where we'll be focused."

Craig is unfazed. As he told the LinkedIn audience, "Degrees are essentially a version of enterprise software. The way enterprises bought software five, 10 years ago, you had to buy a huge package that some would call 'bloatware.' You would spend hundreds of thousands of dollars on it. You'd have huge annual maintenance fees. But you bought it once. Well, we have a product that people buy once. It's called a degree."