We Confused Credentials With Capability, and Now the Bill Is Due

For decades, credentials worked as a shortcut.

Degrees, elite institutions, brand-name employers, and impressive titles stood in for proof, not because they were perfect signals, but because actually measuring real capability was expensive, slow, and subjective.

So we outsourced judgment to pedigree.

AI is breaking that tradeoff.

When machines can:

• Write as well as top graduates

• Analyze faster than junior consultants

• Learn new domains on demand

…the credential stops being predictive.

What’s left is uncomfortable.

Many people who looked “qualified” were never truly tested on capability. They were validated by systems that rewarded book smarts, compliance, endurance, and signaling, not judgment, adaptability, or real-world effectiveness.

And now the bill is due.

Book smarts vs. street smarts (and why this suddenly matters)

For a long time, book smarts scaled well.

If you could:

• Absorb information quickly

• Perform in structured environments

• Optimize for exams, frameworks, and clear rules

…you were set up to win in elite institutions and early white-collar careers.

Street smarts, judgment, reading a room, navigating ambiguity, persuading others, and knowing when to act mattered, but they were secondary. You could learn them later.

AI flips that order.

AI is rapidly commoditizing:

• Information recall

• First-pass analysis

• Structured reasoning

What it doesn’t replace, yet, is:

• Judgment under uncertainty

• Empathy and persuasion

• Context awareness

• Accountability for decisions

Those are street-smart skills, and they’re becoming the differentiator.

A telling signal: what McKinsey is actually doing

One of the clearest signals of this shift isn’t what companies say, but how they’re reallocating talent.

McKinsey, one of the most credential-driven institutions on the planet, has reportedly:

• Reduced headcount in reporting, analytics, and research-heavy roles

• Increased investment in client-facing, relationship-driven, judgment-heavy roles

That’s not a rejection of intelligence. It’s an acknowledgment that pure analysis is no longer scarce.

Judgment is.

Elite institutions vs. state schools (a reframing)

This is where things get controversial and also interesting.

Elite institutions tend to optimize for:

• Abstract reasoning

• Individual performance

• Clear evaluation criteria

• Delayed exposure to messy systems

Large state schools often force:

• Self-navigation

• Social calibration across backgrounds

• Working while learning

• Real consequences earlier

• Learning by doing, not just absorbing

This doesn’t make one better than the other.

But in a world where AI handles more of the “book smart” layer, environments that develop adaptability, judgment, and social intelligence earlier may quietly gain value.

Not because they’re smarter, but because they’re closer to reality.

Learning vs. doing

We spent decades over-rewarding learning signals:

• Where you studied

• Who trained you

• What you were exposed to

AI shifts the premium toward doing:

• What decisions you’ve made

• What outcomes you’ve owned

• How you adapt when the playbook breaks

This is why credentials are weakening as proxies.

They measure potential, not performance.

What Proof Actually Looks Like Now

The implication is practical, not philosophical. In a post-credential world, proof doesn’t look like a resume line; it looks like evidence of judgment. 

What decisions did you make when there wasn’t a clear answer? What tradeoffs did you choose? What broke, and how did you respond?

Screenshots of dashboards you built, metrics you owned, experiments you ran, deals you closed, or systems you redesigned now matter more than where you learned to do them. 

The market is quietly rewarding people who can point to outcomes rather than experiences because AI can explain how things work, but it can’t prove you can make them work.

Why the bill is due now

The correction is happening because:

• Employers are demanding proof, not pedigree

• Workers are realizing prestige doesn’t convert into leverage

• AI exposes how much “knowledge work” was just structured repetition

This isn’t anti-education.

It’s post-credential realism.

Education still matters, but it’s no longer the moat. Judgment, adaptability, and real-world effectiveness are.

The uncomfortable takeaway

If your value is mostly tied to:

• Where you went to school

• Who you worked for

• How smart you sound

AI is quietly eroding your edge.

If your value comes from:

• Making good decisions under uncertainty

• Reading people and situations

• Acting at the right moment

• Owning outcomes

You’re becoming more valuable, not less.

The market isn’t turning against intelligence.

It’s turning toward capability.

And that’s a very different game.