"Competency-based education is an outcomes-based approach to education where the emphasis is on what comes out of postsecondary education—what graduates know and can do—rather than what goes into the curriculum. With a competency-based approach, you do not begin preparing a course syllabus by identifying content and readings. Instead, you begin by identifying competencies and then select the content, readings, and assignments to support student attainment of those competencies.
With a competency-based approach, students advance when they have demonstrated mastery of a competency, which is defined as “a combination of skills, abilities and knowledge needed to perform a task in a specific context.” Mastery is the sole determinant of progress, which means that delivery options multiply and expand since any instructional method or instructional provider that can move a student toward mastery is theoretically acceptable.
In competency-based education, assessment is embedded in every step of the learning process in order to provide students with guidance and support toward mastery. This heightened level of assessment is designed to build competencies in real time."
Western Governors was one of the first to successfully explore this and now you have Mozilla open badges and Straighterline working to take this to scale.
It does have huge potential but only if the consumer of credentials (those that hire people with special skills) decide they value the competency more than the piece of paper. That day is already pretty much here for IT, health care and some manufacturing jobs. Only a matter of time for the rest?