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Most Creative People

Say Hello To The University Of Microsoft

Corporations are turning to digital credentials instead of higher ed to train and educate. Why it's happening, and where we're headed.

[Source Photos: Flickr user Fusion-of-horizons, Mike Mozart]

Peter Janzow was in the midst of a successful career in ed tech, including at one point founding Brownstone Learning, a homework management startup. When he got laid off, suddenly his bachelor’s degree in history, from Knox College—his only academic credential—felt inadequate and dated.

"Do I need to reskill?" he wondered. "I became very familiar with what’s going on in terms of alternative credentials." One thing quickly became clear to him, he says: "We’re all going to be lifelong learners; we need to get credit for that in a way that’s demonstrable."

Fast-forward to today, and Janzow has landed at Acclaim, Pearson’s first big bet on the next generation of learning credentials. The platform, built on top of Mozilla’s open-source badges framework, provides organizations a way to grant and verify badges, and students with a way to claim and share them.

"If we can provide verified credentials, that’s solving a real employer need," says Janzow, who leads the Acclaim team, a startup embedded within Pearson VUE.

Acclaim arrives at a time when traditional academic degrees are falling out of favor, in part due to their staggering cost, and online learning options are on the rise. Back when badges emerged on the scene in 2012, education pundits were optimistic that these new digital credentials could be a "fantastic bargain" by allowing students to bypass the expense of college tuition. "If digital badges infiltrate the credential market, they could shake the economic foundations of a higher-education industry that over the last 30 years has consistently increased prices much higher than inflation and family income, resulting in over $1 trillion in outstanding student loan debt," Kevin Carey wrote in The New York Times. But so far, it's been private employers, not universities, that have taken the lead.

Meanwhile, demand for continuing education has exploded, thanks to technology's impact. Amid this rapidly shifting landscape, it has become incredibly difficult for prospective students to evaluate the return on investment associated with a course or program; for companies, it has become difficult to find qualified new hires and keep employees’ skills fresh.

The solution, many companies have decided, is to get more deeply involved in education and training themselves. In April, LinkedIn bought course provider Lynda.com for $1.5 billion, helping to close the gap for the recruiters and job-seekers on its site. And it is Microsoft—and not an educational institution—that is the top certificate-issuer on LinkedIn, in a ranking dominated by technology companies like Cisco and Google. Last year, Microsoft became one of Acclaim’s first customers when it entered into a partnership with INSEAD, resulting in an online course on "Business Strategy and Financial Acumen."

"Microsoft is in a moment of transition right now," says Hilary Albert, who manages the program. "We have tens of thousands of people we need to change and train."

A sample dashboard from startup Degreed

Microsoft ran a pilot of the course last fall for nearly a thousand employees, and is now on track to offer the course three times per year. In the most recent session, 83% of students completed the course and 66% earned a certificate.

Albert attributes the course’s completion rates—high in comparison to many other online courses—to the paired value of the Microsoft and INSEAD brands. "It’s a way for people to take part in a prestigious institution. It’s a way to differentiate yourself from other people that work here. And because it’s a cobranded badge, it has value outside of Microsoft," she says. According to LinkedIn, profile views for members with certifications are six times higher than for those without.

Adobe, Autodesk, IBM, Microsoft: Acclaim has a growing list of private-sector customers, and so far has issued more than 1 million badges. For some badges, claim rates (meaning the course or objective was completed and passed) are as high as 90%—a promising sign that the marketplace is seeing value in the credentials.

But challenges remain. One of the dangers for Acclaim and its customers is that the new badges will get lost in the sea of certificates, nanodegrees, and other résumé-builders.

"I think that the [Mozilla] community overemphasized the wide-open nature of badges at the start," Janzow says, noting that "literally any individual can issue any badge based on any criteria." The result has been a system in which many badges are offered but few are claimed.

That issue of diluted value extends to certifications more broadly, says Matt Sigelman, CEO of Burning Glass, which uses data analytics to better match people and jobs. "There are only a couple hundred that get mentioned in job postings," he says. "Are we just creating a different kind of noise?"

Expanding the new credentials to nontechnical industries poses another challenge. In fields like software development, where skills are defined and measurable, credentials have largely kept pace with evolving employer expectations. But in fields where softer skills like communication are prized, the credentials remain inchoate—another rationale for companies moving education in-house, where they can design the curriculum to their specifications and closely monitor student progress.

Another view of the Degreed platform

The last challenge is figuring out where the new wave of credentials will live. Students issued badges by Acclaim customers will have to claim their badge by creating an account; once logged in, they’ll be able to share the badge on LinkedIn and elsewhere. Other badge-issuers are using Mozilla’s "backpack," also designed as a central hub for students to manage their badges over time. Then there are options like Degreed, a startup that pulls all of your learning—from badges to more traditional forms of company-sponsored professional development—into a central dashboard.

"You learn in higher education for two, four, six years. You learn in a professional context for 30 or 40 years," says Degreed founder and CEO David Blake. "We need a better way to capture that and make all learning matter."

Companies pay Degreed for access to the startup’s platform, but Blake says accounts are portable, even for job-switchers. "Honestly, it’s been refreshing and a bit surprising how eager companies are to empower employees," he says. "I think some of it is because in this category of media—learning content, learning platforms—in the enterprise context, there is this long, pent-up dissatisfaction."

Blake envisions a future in which traditional credentials, like university degrees, coexist alongside modern markers of achievement and ways of gauging experience. "Badges, nanodegrees—we’re still at this noisy level in our evolution. I think what will happen next is credentials that can bring all this together and contextualize things."

He hopes to make Degreed the place where that happens. For now, the market remains dependent on résumé PDFs and LinkedIn profiles, funneled into the labyrinth that is job-screening software. Indeed, frustrated job searchers may welcome greater corporate involvement in training and education. But recent corporate activities go far beyond helping colleges and universities graduate career-ready students.

"We’re going to see private companies creating their own education systems," CEB executive Jean Martin, a human resources expert, told an audience of education insiders at a recent conference. Human-resources departments are increasingly borrowing from supply chain management practices, she said, as they look to custom-engineer their "suppliers" of people. "Walmart is saying, 'We want to source our cashiers ourselves, and we want to do it starting in the sixth grade.' They're seeing this huge skills gap at the same time that they’re seeing a need to reshore a lot of jobs."

Even if Walmart does an excellent job of preparing students for those jobs, it’s unclear whether other employers would be interested in hiring workers with a credential from "Walmart U."—a major risk should those jobs ever evaporate.

Related: The brand evolution of Microsoft in 3 minutes

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