I regularly get cornered at a reception or dinner by an intense person who feels an urge to unload some unsolicited advice (N.B. see my earlier post, “The Advice We need.”) Usually the advice is idiosyncratic. But over the past few months, such advice has taken on a disquieting sameness, something like this:

It’s time to ditch degrees as the focus of higher education. “Know-how,” not book-knowledge, matters to employers and society. MOOCs, Khan Academy, and many other digital outposts enable the learner to tailor his or her learning to the acquisition of specific competences, such as bookkeeping, building spreadsheet models, or estimating an economic order quantity. Such tailoring democratizes learning by putting decisions about education in the hands of the learner. You learn what you want or need without all the extra stuff that some expert supposes you should learn. Credentials, such as bachelors and masters degrees, are authoritarian: someone else judges what’s right for your learning and tells you what to study. There are too many hoops to jump through to get the typical college degree; most of these have nothing to do with being useful or making a living. University degrees dominate society today. They suppress innovation and the flow of talent to where it’s needed. The revolution of competencies is coming. It will overthrow the credentialization of society and the institutions that promote it. Digital education is the spearhead of this revolution. Bring it on!

Uh…no. I doubt that we’ll see the eclipse of diplomas and degree programs any time soon. Society still needs them. This blog post explains why.

“Credential” derives from a Latin word, meaning to warrant creditworthiness, confidence, authority, status, or special rights and privileges. The Oxford English Dictionary defines it as “a qualification, achievement, quality, or aspect of a person’s background, especially when used to indicate their suitability for something…a document proving a person’s identity or qualifications.” A credential is typically a written document, for instance, a university degree. In modern business practice today, the term has a slightly archaic aroma. I can’t remember the last time someone asked me for my “credentials” though I’m regularly asked for “some I.D.,” a passport, a credit card, or a membership card.

Those who don’t like academic degrees focus on “competence” instead. The Business Dictionary defines it as:

“A cluster of related abilities, commitments, knowledge, and skills that enable a person (or an organization) to act effectively in a job or situation…a sufficiency of knowledge and skills that enable someone to act in a wide variety of situations. Because each level of responsibility has its own requirements, competence can occur in any period of a person’s life or at any stage of his or her career.”

The concept of “competence” is one of the cornerstones of human resources management today: it defines the requisites for employment promotion, raise in compensation, and skills development. And since “competent” is better than “incompetent,” it is the basis for hiring or terminating employees. All of this supposes that competences are measurable, an assumption that is the wellspring of the employee assessment field. A focus on competences is so pragmatic, but fraught with issues. How was the competence defined? Who measured it? How? What are the standards for distinguishing “just OK” from “very good?” Does the competence you acquired in New York mean the same to an employer in Shanghai? Can the specifications for a competence be scaled across a large organization without losing their relevance for a particular job or individual?

The problem with the opening sentiments is that they do not contrast competence from incompetence, but from credentials that are university degrees. But competences and credentials are not mutually exclusive. A valuable university degree probably requires the demonstration of a number of competences, such as written and oral communication.

And a valuable university degree entails so much more. Consider that a great educational experience envisions growth in three dimensions:

· Knowledge: names, dates, formulas, mechanics of how things work. This is the “know what” stuff of education. It is incredibly valuable because it frames the context for how one interprets one’s experience.

· Skills: public speaking, selling, negotiating, organizing a team, driving a car, fixing a leaky faucet. This is the “know how” stuff of education and is the main focus of vocational schools.

· Attributes of character: empathy, emotional intelligence, social awareness, work ethic, or personal integrity. This is the “know why” stuff of education.

Know what. Know how. Know why. The common definition of “competence” is so vague that it’s hard to pin down into just one area; but I would say that it is mainly about skills (know how) and less about context (know what) or character (know why).

Mastery of context and growth in character matter enormously in what it means to be an educated person. Knowledge is the foundation for pattern recognition, problem assessment and recommendation, and critical thinking. Consider the saying, “To a child with a hammer, every thing looks like a nail”—the child has a competence (hammering) but an inability to interpret her context in ways that discriminate actual nails from, say, a china vase.

Character is the foundation for action-taking. One might suppose that human trafficking is a competence, but is it a worthy activity? We want people who understand the moral and social consequences of their competences and take actions that are ethical.

Ultimately, a credential helps to define what it means to be a professional. Fields such as engineering and medicine require a formal credential, a license, to practice. The license is based on passing entry exams and completing university degrees. Business is less formalized though graduate degrees (the MBA) and specialized field certifications (accounting with it’s CPA and investing with its CFA) help to distinguish a higher level of professionalism for those who hold them. The business degrees and certifications are no guarantee against incompetence or unprofessional conduct, but they do suggest a higher level of achievement, mastery, and confidence in the individual.

My point is this: it’s not either credentials or competences; it’s “both…and.” We want people to be both competent and worthy. To focus exclusively on competences is to focus a way of doing. Academic degrees embrace the doing and they promote a way of thinking about the world and even a way of being in it: know what, know how, and know why.

The current rage about competences is especially relevant to business schools. Some would argue that b-schools could save a lot of time, money, and effort by distilling their instruction into a few “how to do it” modules. But focusing on competences and ignoring context or wisdom is one of the root causes of Enron’s collapse and the Global Financial Crisis. The world will be a better place if business leaders are broadly developed, and not just trained in a bunch of tools. Sure, the world needs people who are competent in the use of tools. But it also needs so much more. Don’t settle only for competences; get a degree.