Many ORPG games use the standard experience(XP and level model to reflect character growth and development. This, like hit points and armor class, is a holdover from MUDs (primarily DIKU)who, in turn, grafted it from Dungeons and Dragons. Generally, XP is earned by defeating enemies and greater levels unlock better abilities. However, it also leads to some ugly player behaviors. Two of the most common are "grinding" (the process of engaging in repetitive gameplay to gain advancement) and "camping" (waiting in one spot where a particular enemy spawns). It also often encourages content bypass (since players will flock to content with the highest benefit to cost ratio and ignore less beneficial content). None of these are generally considered particularly fun nor desirable.

In the MUD dev archives I came across an interesting alternative that I am strongly considering. Basically, it works like this. Characters have ratings for skill groups (craft, combat, lore,etc.) as well as individual skills. By completing tasks, they gain knowledge that makes advancement in that particular skill easier. However, to make significant gains, they must push their skills and attempt increasingly more difficult tasks. Completing tasks also makes it easier to advance in related skills.

For example, Bob is a baker of Novice skill. By successfully baking a cake (a fair accomplishment for his skill), he gains some points that can be used to advance. Since he used a craft skill, these points are tied to craft. So, it might not be enough to raise his brawling abilities (unless, of course he had also been using that skill), but it probably is enough to bump a craft skill up a bit, especially cooking. Additionally, since he has demonstrated an accomplishment of skill, his cooking "soft cap" would loosen a bit. If he bakes another cake, he will gain a few more points, but would not gain the cap benefit again, because he has already accomplished this and now needs to do something more difficult.

Let's say he instead was just baking cookies repeatedly. Cookies are easier, so he gains fewer points. Additionally, since he hasn't really accomplished anything, he is going to be stuck at Novice unless he tries something harder. And, after a while, baking more cookies won't get him any more points (though he will be very good at making cookies!).

As far as I can tell, this seems to reward players for attempting tasks in areas they wish to advance while allowing some wiggle room for a little general advancement at lower difficulty without devolving to constant repetition. It allows some cross training, but since skills inevitably require some practice to use, you don't get the master baker suddenly turning into a dragon slayer.

I also envision tutors who can help teach the basics of skills by assigning tasks and providing instruction.
Your fighting the tide here. Players will always grind, you can only minimize the effectiveness of it and increase the entertainment gained from playing 'properly'. World of Warcraft is a good example of this. You can grind, but it's not as effective or entertaining as questing. The time to xp ratio of grinding is always beaten by the time to xp ratio of doing quests (quest reward + xp gained while completing the task, as well as a reasonably good item and some bonus coin).

Now I really want to play World of Warcraft... I was over it when I got to level 60, but now I'm having trouble remembering that once you hit the level cap it gets extremely boring because you've got to do the massive group instances over and over again just to gain rare drops. Curse you Jmurph, curse you!
And your idea's been done before, just can't remember where.
Actually, WoW was a central theme of the mud dev discussion. The consensus seemed to be that the quest system was a good thing, but, at the time, grinding xp was far more effective for advancement, which was not. Glad to hear that has been fixed!

Remember, you can Arena for good stuff pretty quickly now ;-)

The point isn't to totally kill grind, mind you- some players actually enjoy it, strangely enough. But, as you very accurately point out, ensure that it is not the most effective, nor only, way to play.

Lord of light: I am not really seeking novelty, so if you could remember where you saw a similar system, that would be excellent. Especially to see how it did!
I'm addicted to a skill/subskill/childskill/underskill scheme, which correspond to "broad industry", "field", "specialisation", and "activity". Each activity you attempt will earn a fixed number of points (adjusted based on game balance on a per-activity basis), but all of the points you earn are divided amongst the skill, subskill, childskill, and underskill. So if I earn 8 points baking cookies with the "Craft - Cooking (Baking - Cookies)" skill, I've actually earned the following:

"Craft" +2
"Craft - Cooking" +2
"Craft - Cooking (Baking)" +2
"Craft - Cooking (Baking - Cookies)" +2

So because I've baked cookies, I've become a lot better at baking cookies (8 effective points), better at baking in general (6 effective points), a bit better at cooking anything (4 effective points), and only a tiny bit better at fine art with my hands (2 effective points). If I were to bake cookies again, I would have 8 points of experience, but if I were to try to make a roast, I'd only have 4 points of experience towards that.

Basically, the idea is to reward players who highly-specialise (if you spend your whole life field stripping hand guns and doing nothing else, you'll be able to do it with your eyes closed) while preventing a person who grinds a single activity from becoming an expert on all other related activities; they will get better, but it's much better to practise everything than it is to grind away forever.