College Education: Why we Need a New Signaling Mechanism
Old Synergasm Post
Originally published February 21, 2012
Where we’re at:
Take a look at any industry and you’ll notice that all products are on a spectrum that separates luxury from commodities: Macs are luxury goods, PC’s are commodities. Ivy League schools are luxury goods; state schools are commodities. Craftsman tools are luxury goods. The Wal-Mart version are commodities. You get the picture…
Why is this important? Where they fall on this spectrum determines how much people are willing to pay for that product. This is largely due to how much society in general values the product as a signaling mechanism. Want to appear hip? In tune with the young crowd? Buy yourself a Mac! This works for a while; early adopters to a luxury good are often rewarded with the prestige that surrounds that product. Because others believe that you take on the same traits as the product you’re consuming, you’re willing to pay a bit more for the product…to credibly signal that you do indeed possess those traits. The iPhone was like that for a while, and it worked quite well…until everyone and their uncle bought an iPhone. Now the awkward two-finger typer who doesn’t know the difference between Notepad and a C prompt is just as likely to have an iPhone as the guy who jail-broke iOS 5. Alas such is the way most signaling stories end.
The landscape of education is no exception. Why did I go to college? The same reason my entire generation went to college: we knew that the secret to a better life was to get a degree from a good school so we could get a good job. Everyone knew that just by going to college, employers would be fighting amongst themselves as to which one would get the distinct honor of offering us a juicy starting salary, sizable stock options, a company car, expense account, secretary, and very profitable profit sharing! Or so we thought. Unfortunately, because of the commoditization of college degrees, they’re not worth what they once were. Just as the iPhone can no longer credibly signal the technically savvy from the technically inept, a $50,000 piece of paper can no longer distinguish between someone that’s going to be exceptional and someone that’s going to struggle with the most basic of tasks. Said another way, we’re in the process of a breakdown of the most commonly used signaling mechanism for gaining employment.
What this means today:
First, inside a corporate environment change is a hard slow process. This means that most corporations still won’t hire you unless you have a college degree even though most of the jobs that they want you to hire you to do could easily be done by those without a degree. HR doesn’t really care what you majored in, but they have to be sure to check the box that says “candidate must have graduated from a four year college or university” (Note: I hope to change this in my lifetime!) . But the next level, the hiring manager, doesn’t usually care about your formal education CAVEAT: if that hiring manager has a 4 course alphabet soup after their title (MBA, CPA, CFA, PhD), they may still think that your degree matters. What that hiring manager really cares about is your experience. And specifically, how your experience is going to simplify their life. They don’t want you to know the same things that they do. If two people have the same skill sets, the same opinions, and always come to the same conclusions, one of them is unnecessary. If those two people are you and your boss, guess which one he thinks is unnecessary?
Second, all employers want to hire the best talent they can for the lowest price that talent will accept. They know the second part of that: their budget. But it’s harder for them to figure out who the best talent is. It used to be easier: back when fewer people went to college, it was a pretty safe bet for an employer to assume that someone who graduated college was likely to be better talent that someone who didn’t. Now they have to go off the other things on your resume. What did you do to differentiate yourself from all the other commodities that went to your school? What unique projects did you surround yourself with that might make you the one person who is inimitably qualified to handle the next big assignment? What experiences did you take part in so that you would have a skill that no peer possesses?
Where do we go from here?
Just as Apple reinvents itself (the iPad was a strong signaling mechanism for “cool”…briefly), educational institutions could do the same thing. I don’t think this is very likely, though. As The Innovator’s Dilemma taught us, disruptive innovation is much more likely to come from a small upstart than it is from a corporate giant. And formal education today IS a corporate beast!
More likely this means that we need to reinvent the concept of valid signals. While I greatly admire Kahn Academy (and highly recommend you check out some of their videos) they’re not so much reinventing a new signaling mechanism as they are designing a better way to go about learning the material which you wish to credibly signal. Knowledge is notoriously difficult to credibly signal which is why diplomas came around in the first place. It was much easier to accept an accredited universities’ determinations that Person A graduated with a 3.7 and Person B graduated with a 3.8 than it was to invest the time required to come up with and independent judgment.
MITx will be piloting a certificate of completion this spring. In the future, it looks like they’re going to have registered test taking centers that verifies your identify and ensures that no cheating occurs during the test.
Today we’re in that awkward phase where the 4-land highway is being built, but right now all we have to go on is a temporary dirt road. So today it seems best to focus on building yourself as a luxury brand. School’s are pumping out commodity after commodity: every student takes the same set of classes and develops the same set of skills. There’s very little to differentiate oneself if all one does is go to classes and do the bare minimum to graduate. Instead, you need to jump into all the opportunities that present themselves…and invent still others that allow you to differentiate yourself. The more circuitous your journey, the harder it will be to duplicate and thus the more protection you have from commoditization. And remember, luxury brands command premium prices; commodities can only compete on price.
If nothing else, remember that the ubiquity of education is great for everyone!…except you!
Is there an easy way to credibly signal one’s knowledge? A solution that would allow an individual to craft one’s own path of learning and then easily demonstrate that knowledge to other’s? Perhaps a blog? A personal website? A successful implementation of this concept could result in a very profitable business as we transition away from college degrees.