From scaling PSI through 30+ acquisitions to reshaping assessment delivery, Assessment Industry Executive Steve Tapp joins John Kleeman for a powerful conversation. Steve offers powerful reflections on leadership, company culture, and the importance of keeping both your clients and your people at the center of every strategic decision.
Full Transcript
John Kleeman:
Welcome to the Learnosity Podcast, Beyond the Score. I’m your host, John Kleeman, an executive at Learnosity and an industry pioneer. The 2025 Promise of the podcast is that for a century or so, assessment has been slow to evolve, perhaps even been stagnant. But now with the availability of highly advanced technologies like AI, it’s finally ready to make a quantum leap into it’s a space age, giving us new opportunities to reshape how we think about assessment and how we use it. In this podcast series, I talked to experts about emerging technologies, ideas and enduring responsibilities that will recast assessment now and into the future.
This episode, I’m really pleased to welcome an industry veteran, who’s been hugely impactful in the assessment industry, who doesn’t often come into the limelight. Our guest today is the legendary Steve Tapp. Steve has been in our industry for 30 years and is most famous for being president and CEO of PSI as it grew hugely in the last decade or two. At PSI and the sister company, Talogy, they acquired about 30 companies and grew the company into a global force in the licensure certification and talent management industries. Welcome, Steve.
Steve Tapp:
John, thank you. Great to be with you. I don’t think the word legendary and Steve Tapp have ever been used in the same sentence before, so.
John Kleeman:
Well, I assure you that’s how I and others think about you. And I just spoke to one of your colleagues, actually, yesterday, and she said how impressive you were and how capable you were and how the fact you’ve built all these companies into one was amazing. Tell us a bit about the PSI story
Steve Tapp:
The PSI story. I don’t know if everybody really knows the history, but PSI originally was started by Floyd Rue in the 1940s. He was a professor in industrial psychology at USC, and had a passion for leveraging assessments to drive individual’s, ability to get jobs, especially in the industrial sectors, in the postwar era, and started PSI as a consulting business and from his son William, and then his grandson in-law, Doug Walner, it grew into a robust assessment industry leader into the 1990s, early 2000s, and then was one of the earlier businesses that was probably acquired by private equity. It had private money. And I joined in 2009 as we were going through that transition from founder, family business run to a private equity, more professional business, and all the challenges that go with that culturally and organizationally and more how do you think about strategic focus and strategic growth.
John Kleeman:
And you did make, I believe 30 acquisitions.
Steve Tapp:
Yeah. Yes. It sounds scary when you say it as simple as that, but for the early years, we really focused on organic growth. So from 2009 to 2015, our goal was to really look at areas of content. PSI has always been a test publisher. Well, the IP and the content was really important to us. So in the early years, we really focused on building out new content for new end verticals, both for talent acquisition, talent assessment, as well as licensure and certification. And grew rapidly into the mid 2000s and 10s. 2015, 2016, we took on some additional investment from a larger private equity group. And at that point, a very good friend and mentor of mine, the late Greg Becker, I think at that point has started to coin one of our goals was to become the third P in the industry, which is now with some common language.
John Kleeman:
And just to interject, in case anybody listening doesn’t know who the other P’s are, Pearson, particularly Pearson Vue, and Prometric. Go ahead.
Steve Tapp:
And Greg was like, “That should be one of our visions would be to be known as the third P.” Again, we were much smaller at that point. So when we looked at the opportunity to continue to grow organically and be competitive versus taking a larger leap forward, it was designed that there was what they would call an inorganic or acquisitive strategy to grow the business. We needed to look at how did we gain scale, how did we gain a technology quicker than we potentially could build it ourselves?
So in the early days of the investment, we acquired some amazing businesses, AMP, Innovative Exams, LearnDirect out of the, EKS out of the UK, and started to really build out our ability to develop more content, have more test centers, early pioneer in remote manufacturing, and really just create a buzz, if you like, in the industry that allowed us to be more competitive and be able to talk to larger organizations or add new end markets that historically we perhaps wouldn’t have been able to compete in. So that was the strategic background of that. How do we scale from being a business that at that time was $70 to $100 million to a business that ultimately came north of $400 million?
John Kleeman:
Really impressive. I mean, I’ve just been in a few acquisitions in my time and the most recent one was a Learnosity Questionmark, and we’ve become hugely stronger by joining Learnosity and Questionmark together. But I mean we had different cultures, different systems, some of these words, some of us used Google Docs and all those kinds of things. I mean, the cultural and changes as quite a challenge to do with 30 companies is super impressive.
Steve Tapp:
I think this will move into our next area conversation. I think you mentioned a key point there when you look at acquisitions, I think culture and mission is very important and being able to try and communicate and find organizations that have a similar mission and have a cultural fit. You can imagine, and we’ll talk about this a little bit later, you can imagine across 30 plus acquisitions, not everyone is going to fit that ideal cultural mission-based focus. And there were certainly some that were challenging and I’m sure some individuals that might listen to this that will say, “Hey, it wasn’t quite as rosy as Steve maybe implies.” And that’s absolutely fair. I do think that one of our key goals was really that mission.
John Kleeman:
What do you see as the mission of the assessment industry?
Steve Tapp:
I have always felt, and like I said, I’ve been in the industry for 30 years going back to my days in Philadelphia with ASI and Promisor and then into the PSI world. It was always about the impact that assessment can have on individuals at the various point in their life, whether that is through their school and education days, in the sense of taking formative and summative exams, whether that’s moving into admissions and college and higher ed, or ultimately where I’ve focused more is that next step into the career and the proving their skills and abilities and knowledge and personality and traits to fit certain industry types. So really important certainly for PSI, but I think for all of us in the assessment industry is that impact and that at the point in time that the individual is taking an assessment, he’s having a huge, it’s changing lives.
There is something as an outcome from that opportunity that it’s going to be important for that individual, wherever they are in their learning cycle. And that was always the driving mission for me and that the impact that you were having, and seeing that in the employees that work not just in PSI, but all the companies in the assessment industry, I think there’s that mutual passion for aiding individuals and ultimately then the industry vertical or the organizations that are hiring those people that’s really drivingā¦ There’s a power around assessments that I think people in our industry really have a passion for.
John Kleeman:
No, I agree. I think it’s a really nice industry to work for that reason. And a lot of people really care about the candidate and about validity and about fair tests, and I think having that mission as a company is really important at Questionmark, we’ve always been keen to make assessment made available more widely, and Gav at Learnosity, his mission was always to say that education was a human and to make it much easier to get better quality assessment from things like making things really accessible. And I think people are happier working in an organization with a mission and with a purpose, and that helps make the financial goals happen too.
Steve Tapp:
Yeah. Well, and I think that brings an important point. I think the challenge in our industry is thisā¦ Conflict’s maybe the wrong word, but this balance that you have to constantly get between the power of the assessments, innovating for assessments, looking at new ways at measuring skills and abilities and traits, and how do you leverage technology to do that, whether that is new ways of creating content, new types of items. I mean, Learnosity and Gavin have been a bit at the forefront of some of that with some of the work they’ve done. Certainly, PSI was one of the early pioneers in on the fly testing.
So it’s always innovation going on, but at the same time, especially for our clients and candidates, there’s this operational excellence requirement and this challenge of perfect delivery. It’s a huge ecosystem of delivery. And that was always something, and still is something that really intellectually intrigues me. It’s just like the complexity of actually taking that concept of an assessment and taking it all the way through to successful delivery and scoring and outcome. There are so many pieces that have to go right. I think that constant battle of the mission of really wanting to create great assessments and then the complexity of how do you deliver that and thatā¦ Because it is so important to that one individual at the time they’re taking the test, that operational excellence that you need to deliver that battle between.
John Kleeman:
I think that is really important. There’s our Transport for London, the local London transport system here has a motto of, “Every journey matters.”
And I think it’s a bit like that, every assessment matters. And obviously they don’t succeed everywhere in the transport sector and we obviously don’t succeed everywhere in the assessment sector, but I think there’s a bit of a triangle of candidate convenience, security cost, maybe a bit of psychometrics in there and getting it all right is hard.
Steve Tapp:
It is hard. And at the executive level within I think the assessment companies and hopefully folks from the other organizations would say the same. It’s hard to take a call from a candidate or an email from a candidate or a client where you’ve had some kind of issue, whether that might be a test center problem, a remote proctoring issue, a scoring issue. But generally, 99.9% of the time, the process is working really well, but that one or two instances is impactful. So it’s trying to get that balance has always been important.
And I think going back to the passion of the employees, I think that was always, and I know PSI was no different to all of the organizations. Because of that understanding of the mission of assessments and the impact they have, I do think that the people in our industry really own that no matter who you talk to, it’s yourself, Gavin. And when I talked to folks still left the PSI team that now with ETS, the Talogy folks, friends and colleagues across the industry, everybody is always laser focused on that candidate experience and how do you make that better? And we see that around innovation. How can we use innovation and AI and virtual proctoring and how do you improve that process to make it a better experience, a quicker experience, a more interactive experience, but at the same time make sure that there’s not a frustrating one too? So yeah, always a challenge and something that I think the industry does a great job of trying to balance.
John Kleeman:
So going back to the M&A, I mean, I think a lot of us see companies getting bought and sold or have been part of it or whatever, but I how do you determine what kind of company will be a good potential fit when you are looking at that?
Steve Tapp:
Well, I think the first thing you have to do when you look at your strategic plan is what are we trying to achieve? We are trying to grow market share in our same core markets, so that would give you an idea of, okay, let us look at our immediate competitors and see which ones might be open to those conversations. And the original one of our first acquisition of an AMP when we did PSI would’ve been a great example. We competed on the fringes, but basically both did test delivery. I think understanding, am I trying to grow market share?
Then another potential strategy would be, am I missing a piece of content or am I missing a piece of technology? So do I need to acquire a new product or solution that can accelerate my market competitiveness? So whether that was, in our case, we were missing a remote proctoring, this was in year, but we obviously saw that trend coming. We acquired some new content areas and areas that we wouldn’t have been able to build quick enough for market share. So that might be an option. I would say even though PSI had historically grown up in the talent management space in that 2015 to 2017 point, we really were a licensure and certification business at our core, but still had that DNA of a talent management business.
So again, this was an opportunity for us to acquire something of scale that would allow us to move into much bigger, into a much bigger adjacent market and a much bigger total addressable market, where TAM gets used a lot. But so, when we acquired PAN, Performance Assessment Network, that really became aā¦ One, it leveraged the PSI DNA and started launching our PSI talent management strategy, which allowed us to acquire other businesses like Cubics and Caliper, Select International, that really then created the background of the talent business. So that was moving into an adjacent market still assessment, still had the same mission leveraged some of our DNA-
John Kleeman:
Can I just jump in and explain TAM a bit to our listeners? TAM is a total addressable market and is the size of the total market you’re in. So if you’re a small specialist niche player, then your TAM is probably quite small. Whereas if you’re got a very wide market, then your TAM is large, even if you’ve only got a small part of it at the moment.
Steve Tapp:
And I think John, one of the decisions that a leader or an owner of a business has to decide is am I going to try and have a narrow TAM but really own that particular vertical and really drive to win market share? Or am I going to try and expand horizontally into a much bigger addressable market so that I can have more opportunities, but I might be a smaller fish in those particular verticals? And I think that’s a decision that folks have to fancy.
And then I’d say the final, which was a big piece ultimately of our PSI technology strategy was you’ve got core markets, you’ve got adjacent markets, you’ve got needs for technology and solutions, and finally it was international expansion. How do we create opportunities to grow internationally? In that case, we generally focused on acquiring businesses in some cases, maybe even consulting businesses that weren’t necessarily technology or content focused, but had really good individuals in situ.
And we were able to leverage that initially in the UK, then into the Middle East and ultimately into Asia, and then give those individuals, build up their teams, give them obviously administrative support, but also give them products and solutions to sell locally to the clients that they had. So those were, I’d say in a stepping stone. We went core market share, missing solutions, adjacent market, and then into international expansion, land and expand, we called that strategy. So that was the process we went through. We had a great team, all very aligned, we had good investors and that was a really fun and exciting period from that 2015 into COVID and even post-COVID, obviously certainly a huge impact, but was a great period for the PSI business.
John Kleeman:
I mean, I think knocking all those businesses into shape is very impressive. Let’s just move on and look more about the market wider and the assessment world. And I mean, maybe let’s start with content because I think you were originally at a publisher before you came to PSI, and historically we’ve seen content as being hugely valuable, content is king. Is that going to remain the same, do you think? Or will AI just make whatever content you want and content will be less valuable?
Steve Tapp:
I do think that the importance of content and having experts within our businesses who have curated, and if you like, validated that content is always going to be important. I think the ways that that content is going to be developed or presented and the types of assessment items that might come out of that is going to change rapidly. But I think we are going to see organizations, whether they’re publishers, test publishers, curriculum publishers, training, learning, L&D businesses, I would imagine that they’ll all be trying to work out how to create content quicker and more efficiently and how to leverage the tools in a positive manner, how to protect that content and that IP. But I still think that content is, as you said, king. And it was a big part of the PSI strategy to make sure we owned enough content to create the resiliency in those markets and work with our clients, where they were looking to use that content. So yeah, I think there’s going to be different ways, but.
John Kleeman:
In recruitment I can certainly see the validated that you can use, that if somebody takes it and you can identify whether the right person for job is important, but I wonder if we’re going to see more AI evaluation of people and the AI model is going to be as important or more important. I mean, I don’t know.
Steve Tapp:
That’s a great question. I think that’s a big unknown. I do think in the knowledge and skills in the licensure certification world, AI obviously has a huge impact on the ability to curate content. And we’re seeing all those tools that allow you to now build item banks and forms much more rapidly. That also means that people that are cheating could also leverage those same tools to review content and create content, steal content. So that’s going [inaudible 00:21:33].
I think in recruitment, talent acquisition, those assessments historically have had a lot more focus on soft skills, personality traits, behavior traits, and the validation of science behind that there is very different to the scoring and measurement of more knowledge and skills tests. So AI there is, how’s that going to impact? There were trends thatā¦ Or not were trends. There are trends of significantly using AI in talent retention, especially in video interviewing and how you can use AI to measure things other than just how truthful response is. So how do they look and act?
So it’s certainly going to be an interesting few years, and John, you and I have had this chat before. Every podcast or every marketing post on LinkedIn is all about the power of AI. So it’s so important and I think as leaders and especially someone like myself who’s not a technologist, more of a business manner, how do you manage your organization to make sure that you’re balancing the need for innovation, the security and protection of your business and your assets, but at the same time, how do you compete in a world where AI and technology is rapidly advanced in the way that we’ve historically done, our test delivery and test building and measurement skills?
John Kleeman:
And one of the things I think all the business leaders need to do is maintain the uncertainty, so nobody knows what’s going to happen. So although you might need to make bets in some areas, make bets maybe in more than one area or don’t be too certain about how the future’s going to go, because if you retain a strategic ambiguity and some ability to go in different directions, then you’re probably more able to pivot than if you go in a particular direction. Do you agree with that or not?
Steve Tapp:
Yeah, I completely agree. Yeah. I do think that there’s just not one solution that we’re going to all focus on. I think it’s going to be how do you leverage it across the whole ecosystem? And then what are we measuring? Are we moving away from more traditional measures to more soft skills? That’s obviously a big question for some of the folks.
John Kleeman:
Definitely. And I mean, I think the whole issue about critical thinking or other skills you need to be working with AI. What about certification and proctoring? Do you have a view about whether it’s going to go more and more online with remote proctors or go back into test centers?
Steve Tapp:
I think that’s like the $100 million question, especially for the three P’s and some of the folks that are trying to work out how to compete with those organizations. Obviously the rapid adoption of remote proctoring, virtual proctoring, post-COVID was a much needed and necessary solution to the way the world changed. I think it was, given the rapid implementation, done as successfully as most of the organizations could have hoped for. Again, back to that balance of security, protection, delivery, customer experience versus operational excellence. My impression of the industry is that the thought that we would go to a hundred percent virtual proctoring, as we got four or five years post the COVID need for rapid implementation, we are probably at a point where there’s an inflexion point at the moment. Still seeing a lot of organizations, especially in very high stakes, critical life measuring, like healthcare and some of these really high-end professionals, where the test centers are still really valid.
I mean, ultimately is that still a much more secure, protected environment, especially in the use of rapidā¦ There are people out there, bad actors out there that are always looking to break the systems. I do think that remote proctoring, virtual proctoring has expanded rapidly, has improved. It’s always improving the balance of using AI, and proctors and life proctors and how you facilitate the check-in process and the security aspects is going to continue to evolve. But I think at least for the foreseeable future that test centers online, it’s still going to become a choice that a certification or licensing body is going to have to make. And they’re going to have to work with their test administration vendor and determine what’s best for their candidates. That accessibility versus security, the importance of the certification versus the need to have that available for a broader population as possible. So all those trade-offs are going to continue to be discussions.
John Kleeman:
I mean, I think it probably varies a little bit, like you’re saying. I think if you are testing doctors or pilots, you probably do need have them in the room being observed by people. And also there might be practical skills there which need equipment or whatever though, there’s obviously a lot of stuff being done in VR and things. But I think, I mean, in IT certification, we’re certainly seeing a big trend towards more virtual and things. And there is possibly an argument that it’s easier to cheat remotely, but I think it is possible to do things in a test center too, like bringing in little buttonhole cameras or other things.
And I think also if you do lots of tests, test often it can be more effective and harder to cheat. So I think that for, and it’s so much easier if the candidate can take the test at their home, maybe when the kids are asleep or without having to travel to a test center. And it’s all very well if you live in a big city, but if you don’t live in a big city, the center can be a real pain. I think virtual pottering has hugely empowered it be more inclusive exams
Steve Tapp:
Yeah. And it’s always a balance and what’s the best fit for the program. I think one of the advantages as the industry is evolved is the rapid content and speed of form development and content development does reduce somewhat the exposure issues that historically more fixed form testing had. So that would lean towards, we can create content quicker than the cheaters can steal the content, which would then say, virtual proctoring, if you can at least secure the identity of the individual taking the test, that would lean towards it, that it’s safer to do virtual proctoring. And your point, we’ve seen it’s hard to scale virtual proctoring for large event type based testing. That’s a challenge. So again, for organizations that are still having event testing with large populations on across small windows, virtual proctoring is hard because you’ve got everybody hitting the system. So getting the balance of scalability, and is that better off doing more traditional event sites or setting up event sites, more likely additional.
John Kleeman:
Event sites, good example.
Steve Tapp:
Yeah, so I think each one isā¦ It’s again, conversation between the client. What am I trying to achieve? What’s my population? What service can you deliver for me? Where do we use innovation? Where do we need test centers, et cetera, et cetera.
John Kleeman:
I think that’s valid, and I’d think this argument will run and run a bit. So look, I’d like to close with what advice you give other managers and leaders in the fast moving assessment and tech world. Many of them will think of what you did at least at PSI as being legendary and perhaps yourself as legendary. What advice would you give people managing and leading in our industry? What should they do and what should they not do?
Steve Tapp:
A couple of pieces of advice. First of all, and this is a cliche, but high-grade people, there are some amazing talented people in our space. Don’t be afraid to put together really high-powered teams. And as a leader, your job is to mentor and lead them. And I’m a big believer in if you have the right team, you’re always hiring for succession planning and hiring. And we were fortunate enough over several iterations to really have great people. Listen to your clients. I think it’s very important to understand candidates and clients.
Don’t ignore what’s going on with your clients. Sometimes, I think with the organizations, you focus so much on new opportunities or the new shiny toy or that you sometimes forget that our real raving fans are probably clients that have been with us a long time. So make sure you’re focused on that. And again, the employees, they are protecting that. And continue to network, continue to work within the industry. It is a very collegial industry and I do think that it’s amazing how much collaboration can take place. So the power of collaboration and partnerships I think is important for the space. So that would be the tips. Yeah.
John Kleeman:
Really good advice. Thank you. Steve, I really appreciate you giving up the time to do this. And thank you also to all our listeners. Thank you for listening to this episode of Learnosity’s podcast, Beyond the Score. With me, Jon Kleeman and my guest, Steve Tapp, ex-CEO of PSI. We appreciate your support. And don’t forget, if you’ve enjoyed this podcast, why not follow through the podcast through your favorite listening platform and also check out our back catalogue? Please reach out to me directly at John@Learnosity.com with any questions, comments, or if you’d like to keep the conversation going. Thanks again, and please tune in for our next podcast.
Steve Tapp:
Thanks, John.