Everyone is concerned about education, now more than ever. While most people agree that the system needs to change, the question of how to change it does not have an easy answer. It is also important to distinguish between K-12 and post-secondary education. The solutions will most likely be different for college education versus primary and even secondary schools. Having thought about these issues a lot over the past several years, I was very excited to see a section on education in Rita McGrath’s book Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen. McGrath has been a strategy professor at Columbia University for the past 27 years. I was incredibly curious to read her take on the future of education.

McGrath agrees that education should have been disrupted by now. However, she also has a unique perspective on why the field has shown to be so resistant. The reason is that it is hard to prove to others what you know, and a credential from a respected institution is an easy solution. That seems to make a lot of sense, doesn’t it? In the world of the Internet and smartphones, we have more information in our pockets than anyone could possibly keep in their heads. If the only argument for going to college is to acquire knowledge, then in today’s world, a college education would not be necessary. Unlike 100 years ago, academia no longer has a monopoly on knowledge. However, offering a credential, that is a different story.

Online education, especially massive open online courses (MOOCs), has been around for a while. It has been a tremendous gamechanger for those who are genuinely interested in obtaining excellent education without incurring high costs or being limited by geography. Everyone in the world with Internet access can now also have access to the same knowledge and learn the same subjects. However, despite all the benefits MOOCs have brought, they have not been able to replace the college education, make the experience relevant to its users, or monetize their business model. For McGrath, the big question that remains is what kind of credential should a student receive after completing MOOCs.

McGrath sees university degrees as “the last barrier standing between traditional education models and a major disruption.” Degrees have been a convenient shortcut for employers to filter out job candidates regardless of whether a job actually requires a degree. Sadly, that has contributed to a vicious cycle, which continues to trap many students. They seem to have only two options: take out debilitating education loans or do not go to college and then pursue a dead-ended professional life. Ironically, by requiring a degree for a job that can be done without a degree, employers have made it more expensive for themselves to hire talent.

So, what are the alternatives to the traditional education model? One option we have been hearing a lot about is an apprenticeship model. In her book, McGrath mentions that in Switzerland, where apprenticeships are common, 70% of ninth graders choose a vocational track instead of pursuing higher education. An apprenticeship is deemed as valuable as a college education for creating a good life. College is reserved for careers that truly need advanced studies, such as medicine, law, and accounting. Because of the high popularity of an apprenticeship model, the youth unemployment rate in Switzerland is a quarter that of the United States and the lowest one in Europe.

In the United States, we continue to use degrees as a proxy not just for technical knowledge, but also for soft skills, writing skills, communication skills, and so on. Unfortunately, too many participants in the American system are not well-served. Employers do not always get employees with the skills they expect them to have, and graduating students do not get the kind of jobs they had thought the universities were preparing them for all these years. Typically, when constituents are poorly served, a system reaches an inflection point for disruption.

McGrath believes that we need an alternative form of credentialing to certify the level of skill one possesses, rather than bestowing some sort of a degree. Several online resources have been offering online badges and verified certificates as replacements for traditional transcripts. Up until now, these experiments have been met with skepticism. However, McGrath says that companies’ attitude toward alternative certification systems is changing. She cites that 60% of surveyed employers are changing to skills-based hiring instead of requiring a degree. Degreed and LinkedIn Learning are examples of two companies that have built a business to certify people for their skills. Top-paying companies, including Google, Netflix, Apple, and Oracle, no longer require a four-year degree for certain jobs.

Another alternative to the traditional education model is the income share agreement (ISA). Purdue University first introduced it in 2016, and today several other universities are following this new financing model. Instead of paying tuition upfront, students sign a contract with the university or a third-party investor to pay for their education after graduation once they have landed a job. Under this arrangement, graduates pay a small percentage of their income each month for several years, until they pay off the cost of the education. It is too soon to tell whether ISAs will go mainstream, as it is not yet clear if this approach will work financially for both the students and universities on a large scale over a long period of time.

An additional problem with the traditional education system is that students are required to take a load of classes regardless of their interest in the topic. What makes this problem even worse is that professors are not rewarded for an engaging and inspiring way of teaching. Instead, they are required to publish research consistently, causing many professors to view the actual teaching as an afterthought or even a nuisance. That is not a good combination. No wonder so many students cannot wait to get out of college even though they are paying an exorbitant amount of money for their education.

McGrath and the late Clay Christensen envisioned several outcomes to this problem. First, the research/publication-based model may taper off and shift to the “celebrity model.” Popular instructors who focus on scholarship may be more in demand. Moreover, the universities’ “brand” may become less important, while the “brand” of the individual professors may increase. Having a degree from Harvard University may become less valuable than obtaining a “credential attesting to the completion of Christensen’s course on disruption.” We may also see the school rankings get replaced by rankings of individual courses or programs.

With all these potential changes upending the traditional education system, McGrath does not believe that the entire university system should disappear. She still sees tremendous value in liberal arts education and the “coming of age” experience many students experience in college.