A Survival Strategy for Alternative Credential Providers

By

A recent survey from Kaplan and Money Magazine revealed that only 21 percent of parents feel the cost of college is justified. This treads on the heels of similar discouraging news: last year’s Gallup-Purdue survey revealed that only half of 30,000 college alumni strongly agreed their higher-education investment was a good one (and only 38 percent of younger alumni).

In my book, “College Disrupted: The Great Unbundling of Higher Education,” published last year, I predicted the “unbundling” of the degree into shorter, less-expensive credentials. The precipitating event for this trend is the rise of competency marketplaces like Skillful—launched in early March by LinkedIn in partnership with the Markle Foundation—to measure competency profiles against target jobs and careers. Competency marketplaces will allow prospective students to determine the best path for closing personal skills gaps and make better informed enrollment decisions, which leads to lower demand for current degree “bundles” and higher demand for new, shorter credentials.

My hypothesis is that degree exceptionalism will abate and degrees—starting with master’s, but continuing with bachelor’s—will be one credential among many. They’ll be on a leveling playing field with a plethora of novel credentials offered in blended and online modalities by colleges, universities, new postsecondary providers, bootcamps, not-for-profit organizations, museums, libraries, enterprises and solo practitioners seeking to disintermediate all of the above. For fun, let’s call these novel credentials microdegrees.

A New Value Prop

In my microdegree fantasyland, it will be critical to separate the wheat from the chaff. Quality assurance is one way to accomplish this. The current patchwork of regional and national accreditation could expand or evolve to encompass microdegrees. Although early microdegree providers seem to prefer to steer clear of the entire accreditation/Title IV ecosystem, the Department of Education’s EQUIP demonstration program and the coming of “Quality Assurance Entities” is a promising first step in this direction.

I predict that while quality assurance will play a role, the most successful new providers will distinguish themselves in a more old fashioned way: by offering a superior value proposition. From time immemorial, higher education institutions haven’t guaranteed any outcome to tuition-paying students. Higher education’s model has been very much: “you pays your money and you takes yer chances.” This leaves a path wide open to new providers: guaranteed outcomes. What outcome is most important to students? Presumably the job the microdegree is supposed to help them get.

Some microdegree providers are heading down this road. (In fact, some enrollment-challenged colleges are as well.) So if job guarantees are going to become standard features of microdegrees, what’s the best way to invest in and build the dominant microdegree providers of tomorrow?

To date, microdegree providers have focused on building employer-connected curricula, a slick interface and marketing channels. That’s a lot of building, giving rise to significant execution risk. But if the job guarantee is going to separate the wheat from the chaff, microdegree providers ought to begin building out this capability.

I would submit that job alignment is the harder part. Developing de novo relationships with hundreds of employers who will commit to hiring microdegree graduates will take years of trial and error once everything else is built, up and running (even if these employers contributed to or bought in to the curricula). In fact, I think this is so hard that it may not make sense to invest in curricula, interface and marketing until these relationships are established.

Staffers Step In

Microdegree providers may learn the hard way that these relationships are impossible to build in an investable timeframe using an education business model. They may, in fact, wish that they’d done some out-of-the-box thinking. Because there are thousands of companies with these relationships with employers, but none of them are education companies. We know them as staffing or placement businesses. Many have been in business for decades and their business models depend on a deep understanding of the talent needs of their clients.

Revature is one such company. University Ventures (where I work) recently invested in this Reston, Va.-based 12-year-old IT staffing firm. Over the past decade, Revature has recruited and placed thousands of coders and software developers into hundreds of clients. More recently, the company has leveraged its network of employers to become a microdegree provider of sorts.

Revature recruits current students and recent grads with an aptitude for coding, but none of the employment-ready technical skills. Students typically start online and progress to a 12-week bootcamp where they gain advanced, employer-specific technical skills in addition to soft-skills training. As part of their training, they produce e-portfolios, which are evaluated by Revature clients. Students who complete the training are hired by Revature and then staffed out to or placed at hundreds of Revature clients across the U.S. including Deloitte, Accenture, Geico or Freddie Mac. After a year or two, students are typically hired by clients.

For students who complete the training, their job with Revature is guaranteed. The training is free for students, and for the universities that Revature is now beginning to partner with. (Revature pays students’ salaries and client companies pay Revature.)

Guaranteed outcome, no tuition? That’s a value proposition that will be hard for other microdegree providers to beat. And if they can’t beat them, look for them to partner with or acquire staffing/placement businesses in order to establish an employer/placement network before spending millions of dollars on curricula, interface and marketing.

Ryan Craig (@ryancraiguv) is managing director of University Ventures, a fund focused on innovation from within higher education.

How should colleges teach in the digital age? Get the latest news and views each week.

Who we are

EdSurge helps schools find, select and use the right technology to support all learners.
© 2011-2016 EdSurge Inc. All rights reserved. Every student succeeds.