CHAPTER 4

The Business Case for Learning

Preethi Anand

In the early 2000s, when most learning leaders realized the potential of their function in driving business strategies to execution, it was hard to convince CEOs and business leaders of their value proposition. It is absolutely refreshing to see that today there is a growing interest—curiosity even—among business leaders about how learning and talent development can add value to their business strategy.

Today there is a very real opportunity to make learning and development a critical part of business success. Excitement aside, expectations from the function are also very high. But by incorporating a practical understanding of the current business landscape with foresight around the future of work, we can make a compelling business case for learning. So, what has changed? Why are we in the spotlight? Where do we begin? And how do we make the most of it? This chapter will answer these questions by describing the fundamental changes in the world of business, how it has set the stage to create a powerful business case for learning, and how we can play an active role in helping businesses flourish and stay competitive.

The World of Business: What Changed?

Imagine being CEO of a business in the 1920s. There were very few industries, significantly less competition, more available labor than jobs, rarely changing regulations, and business models that had been relevant for decades. Fast-forward to 2020—we can agree that a CEO’s life today is dramatically different.

I’ve heard people say that it was much easier to be a CEO then versus now, because these are unprecedented times with disruptive changes. But if we look back to the 1920s, we can see that it was the beginning of an era in which the industrial revolution was on full speed, mass production was changing consumer trends, and scientific management principles were emerging—it was a much bigger disruption regarding work or creating a livelihood. Consider even the 1980s and 1990s; when computers entered the workplace, they caused a huge disruption and were definitely unprecedented. So, we have survived disruption in business before.

The next argument is typically that there was much less competition in the 1920s, and hence a CEO could sleep peacefully, worrying less about becoming obsolete. But on the other hand, there were also fewer opportunities to become a CEO in the 1920s, which made it an unfulfilled fantasy for many back then.

I strongly believe that understanding the nuances that define the context in which a 2020 CEO operates will be extremely valuable in appreciating and empathizing with their cause; this understanding can help us offer a promising value proposition for the learning function. Here are several key factors that define today’s business context and the associated challenges and opportunities:

•  Growing possibilities with technology. We live in a world in which technology has pervaded practically all aspects of work and life. Name a task and there’s an app for it! This gives businesses immense opportunity to transform operations, rethink value propositions, innovate new products and services, and even create new business models. It also means that today’s CEOs are constantly aware of the fact that their competitors, by leveraging the latest in technology, can make their entire business obsolete. Technology is growing at a much faster rate than we can attain, so fast that, to a CEO, a wild imagination might give them a bigger advantage than prosaically understanding how technology works.

•  Fewer barriers to start a business. In the 1980s, when my father entered the workforce and considered settling down in a city in India, he literally had to choose between two companies to work for. Today there are three companies operating on my street! (One of them is operating from a garage, so I better make friends with them before they become a technology giant.) Many reasons make starting a business easy today: better access to funds, governmental support in the form of tax breaks and subsidies, and (the rarely acknowledged) better access to information. Reduction of entry barriers is an important factor for CEOs of organizations big and small, because it translates to more competition in an already crowded marketplace. It also reminds us of the fact that emerging companies are more nimble, with a faster reaction time to change. So pace becomes very important to business leaders.

•  Deconstruction of value chains. The first time I heard this phrase, it sounded like something Tom Cruise would say in the movie Minority Report. But this is becoming a wildly important factor influencing business strategy. Let’s examine how we managed finances back then compared with now. Just 15 years ago, all our financial management started and ended with banks: We used checks, demand drafts, and wire transfers for payments. We bought bonds, got mortgages, and opened accounts to deposit our earnings. Today, if we look closely at the payments space, there are so many players in the market, and banks no longer hold a monopoly. These players, which include many technology firms, took one link in the bank’s value chain and transformed it to offer an easier, faster, and better experience to customers. This completely redefined the competitor landscape. For example, Google’s autonomous cars could potentially affect Toyota’s market share in the same way Google Pay has eaten into the banking business’s pie. So, this makes constant innovation not a luxury, but a necessity for survival.

•  Increased stakeholder influence on business. Stakeholders have always played a vital role in how businesses operate. But a few decades ago, when CEOs spoke of their stakeholders, they often alluded to customers or shareholders, the simple reason being these were the stakeholders who could affect business performance. Today, we are talking about the dawn of a new age where the stakeholders’ footprint is much larger in the business landscape. Klaus Schwab, in his brilliant book Stakeholder Capitalism, talks about how companies are moving away from just delivering value to shareholders to also trying to create long-term value for all stakeholders (Schwab 2021). In simple terms, the expectations of a business from employees, clients, partners, governments, and other stakeholders is not just around profits anymore, but also about their plans to affect people and the planet. This has brought in a renewed focus on diversity, equity, and inclusion (DEI) initiatives and sustainability programs, among other things. Such programs are moving away from being ad hoc charity programs to becoming more closely tied to business strategy. HSBC, for example, has set an ambitious net zero carbon emissions target across its entire customer base by 2050 at the latest and is providing between $750 billion and $1 trillion in financing to help clients make the transition.

The New Learning Paradigm: What the CEO Wants You to Know

As challenging as it sounds, many CEOs have made their businesses thrive in this new normal. Large-scale transformations in marketing, operations, and research and development have played a major role in making this happen. Now, CEOs are also turning to the function that can influence transformations to bring the best out of their biggest assets, people. But the ask of the learning and talent development function is entirely different from what it was a few years ago. In fact, in a 2021 survey of Fortune CEOs, 71 percent of leaders said that the focus of their transformation efforts was around workforce and talent development (Deloitte 2021). Let’s explore what CEOs want us to know when we design the learning and development function’s business case.

On the Larger Focus of Our Business Case

If I were to use a metaphor for how CEOs are leading their businesses, I would probably compare it to walking on a treadmill on high speed (and yes, I have forgotten all about walking outside, thanks to the COVID-19 pandemic). When you walk on a treadmill, each step you take is a product of how you planned it five seconds ago. And when you take a step, your mind is already focusing on the next step, and the cycle continues; it’s always all eyes ahead. With the complexities that exist in the business landscape, CEOs are investing more resources on preparing for the future than solving the problems of the present. Books like The Signals Are Talking, by quantitative futurist Amy Webb, which explores a systemic way of evaluating emerging ideas in technology to better understand the future, are growing in popularity among business leaders. Hence, a learning function’s strategy should have a future-focused approach.

CEOs will appreciate a learning and talent development strategy that not only supports the business in providing learning solutions for performance challenges of today, but also has a vision for the future that mirrors that of the business. There are several ways in which learning leaders are approaching this: by investing in the identification and development of future skills, by exploring artificial intelligence and machine-learning-powered technology to amplify learning impact, by working toward creating a sustainable learning culture, and by designing transformation programs to reimagine the learning function for the future. I don’t recommend simply replicating all these best practices. The idea is to understand and synthesize your specific business’s strategy and craft a targeted learning strategy that aims to accelerate the organization’s plans for the future. In business terms, CEOs are seeing learning and development initiatives less as a cost of doing business and more as an investment in the future. We will discuss the financial angle to this shortly, but this perspective will help us rethink our initiatives. Traditionally, most of our initiatives are focused on improving performance and saving costs. But increasingly, business leaders expect us to seek solutions for and invest in initiatives that may give us returns in the long run, like future skills initiatives. If we want a seat at the table, we need to rethink our value proposition and re-engineer our function as one poised to prepare the business for the future.

On Financial Impact

Let’s be honest, learning leaders don’t often have coffee-table conversations about finances, but we all know that financial acumen plays a critical role in positioning our function as a strategic arm of the business. And the idea is not just to know about the key terms used in our financial statements, but to be able to read and interpret them. Financial statements give a raw picture of the entire business, and many experts decode how businesses are run by just looking at them. While this level of expertise would definitely play to our advantage, having an understanding of the financials in an organization would also help us in looking through the CEO’s lens.

Let’s discuss this with an example: Kamala is the head of learning and talent development in a multinational corporation. Her organization has consistently generated significantly higher revenue year over year, despite operating in a highly competitive market. However, its operating cost has also increased, reducing the profit margin. This prompted the CEO to focus on creating cost efficiencies across the organization. Kamala, equipped with this information, worked with her peers to study the factors responsible for the high operating costs. They realized that two different manufacturing units were hiring in huge numbers during the holidays and in the spring, respectively, owing to a surge in demand. Kamala and her peers proposed cross-training a significant portion of the workforce in both units to create a fungible pool of workers and avoid hiring costs. The solution was well received by all the stakeholders, and Kamala was tapped to lead a task force with HR, learning and development, and operations for the pilot program. In the first year of implementation, the project reduced costs associated with hiring and induction by 75 percent and increased engagement among employees in both business units. Kamala’s CEO now wants them to come up with a large-scale cross-skilling strategy for the business. This solution was possible only because Kamala understood the critical factors involved and how an optimal solution could influence the operating costs. Kamala is now a strategic partner to the CEO.

As L&D professionals, our mission in appreciating business finance does not stop with delivering value; we must also show it in quantitative terms. Today every business arm has to report on the financial impact of its initiatives to justify its requests for more funding. As learning leaders, we should also be able to make a powerful business case, supported by hard-hitting numbers. The Phillips ROI Methodology, for instance, provides a great framework to get started in this journey. When we think of measuring training impact, we often take the approach of doing a cost-benefit analysis. Business leaders use different methods to measure impact. It is important that we understand the financial measures commonly used in our organizational context so as to accurately portray the financial impact of our projects. Understanding measures like the internal rate of return, net present value, and payback period and applying them to specific learning initiatives will help business leaders immediately relate to the impact we showcase. Thus, learning leaders may want to design meaningful dashboards to represent the quantitative impact of the function.

On the Business Need for Skills and Skilling

One of the reasons I love being a learning professional in this age is the new level of excitement around skills, reskilling, upskilling, and cross-skilling. Skilling might be new to a business leader’s dictionary, but it has been in ours for decades. So why the sudden interest? In this age of massive competition and evolving technology, we know that an organization’s agility is its biggest competitive advantage. For many years, building an agile organization often meant having agile processes, agile strategies, or increased technology. In recent years, however, one idea around agility has been gaining in popularity: the idea of having a fungible workforce, one that adapts faster to changes and transforms with the evolving organization. And it didn’t take long for organizations to realize that using a skills-based approach could bring order to this potentially chaotic exercise.

Skills are objective; they can be tagged and classified to form an ontology that can be managed at scale. Josh Bersin (2021) explains on his blog that “SkillsTech” (tools that help in managing, assessing, analyzing, and developing skills in organizations) has a massive market because “every time the CEO wants to go in a new direction, skills and capabilities are fundamental to execution.” Many CEOs are excited about this idea because, for the very first time, they can see what their workforce is capable of and how it is evolving.

Skills ontologies are gaining in significance for two main reasons. First, technology has evolved so much that we are questioning the fundamental value add of many existing job roles, if not professions. Because automation and machine learning have made human intervention redundant for many job roles, organizations are supporting reskilling plans to prepare these employees for emerging roles. There are several success stories of such initiatives across the globe, like how a consortium of public and private partnerships in Sweden enabled reskilling airline-cabin staff to become assistant nurses to support hospitals burdened by the pandemic (AP 2020). Second, and more commonly, jobs are constantly evolving with agile ways of working, changes in organizational processes, and increased influence of technology. This makes the traditional idea of having job descriptions with skills and competencies that are reviewed every two years a thing of the past. We need to be able to systematically understand the changes in skills that are required to be successful in different roles and be empowered to take action real time. Several HR and learning platforms have already started moving toward becoming future focused and have integrated skills-powered engines, which provide intelligent insights for decision making.

Critical Ingredients for a Successful Learning Strategy

Armed with an understanding of the current business landscape and the key expectations of L&D from the CEO, let’s explore some of the critical factors that we will need to incorporate in our learning strategy for its successful execution.

Solve for the Present and Future Business Needs

There are great initiatives around learning and talent development led by experts and leaders in the field. Some of them are path breaking, while others are simple yet genius solutions to business challenges. Reading about them might tempt us to replicate them in our organizations. But every business leader will tell you that the simple “cut-copy-paste” approach will never really work for business strategies; it is more nuanced than that. I believe that it is very important to follow trends, not only in our field, but also in technology, psychology, and business strategy, and among our competitors. These trends, however, need to serve more as inspirations than blueprints for our initiatives. Our learning and talent development strategies will work only if what we create is a specialized solution for our organization. Our strategy needs to also mirror our business’s strategy, calling out the ways in which we will specifically be adding value to the organization today and how we will prepare the organization for the future.

Design Thinking Is a Way of Learning and Leading

Some of the world’s most forward-looking organizations have embraced human-centered design and design thinking to empathize with and design for the customer in mind. The brilliance of the framework is its ability to help people fixate on the “why” of a product or service and push designers to continually reinvent the “how.”

Let’s look at Company Z’s L&D planning off-site. Its business is going through a massive digital transformation. All of its processes, procedures, and ways of working are changing, as are nearly 60 percent of its job roles. Business leaders have asked the L&D team to present a paper on how the function will support the transformation. Unfortunately, the team has just invested in a proof of concept for an LMS and purchased three massive content libraries to support skill building for roles that will soon become redundant. The team comprises 10 trainers, three learning business partners, two instructional designers, and, of course, the head of the function. After a long (and heated) debate, the team members finally agree on an approach; they simply list all the digital assets and resources that they have on one side of a whiteboard; on the other side they list every bullet point from the business strategy document. They then go on to “match the following.”

I am sure some of you are cringing reading this example, but I’d also bet that you’ve been part of a similar scenario in the past. Clearly, this cannot be the right approach. Design thinking can be the beacon that guides us toward accomplishing our business goals by making the most of our available opportunities. Similar to the way it has helped businesses suddenly turn around revenues from products and services, design thinking can also help us take the much-needed turn if we embrace it with open arms and open minds.

Skills and Capabilities of the Learning Team

The previous example also brings up an extremely crucial aspect of the learning strategy—the learning team’s skills and capabilities. We are vocal advocates for massive reskilling and upskilling initiatives for the business, yet we often forget to focus on reskilling our own functions. We know digital is a massive disruptor, yet very few on our teams truly understand how to work within the digital environment. While many organizations are working on reskilling their L&D teams, there are some that simply do not have the funding for it. It is time we acknowledge the significance of reskilling the torchbearers of (ironically) the organization’s reskilling plans. This needs to be baked into our function’s strategy and must be a nonnegotiable expenditure, because several studies support its massive impact on the business. In IBM’s 2019 HR 3.0 study, companies with world-class HR skills were found to be five and a half times more likely to be “significantly more profitable than peers” and six times “significantly more innovative” than others (Wright et al. 2020). If we can help business leaders understand that the primary intent is to support business strategy and showcase the potential impact and financial benefits of a reskilling program, we will be able to make this happen.

From Custodians to Catalysts for Learning

The half-life of a skill is probably the most intriguing concept I have heard about in the last five years. It refers to how long a job skill is relevant before declining in importance. Typewriting skills, for example, must have been relevant for at least 20 years. Today the half-life of a job skill is an average of five years, which means that in five years a learned skill will be only half as valuable. It is quite evident that as a function, we cannot produce learning content and programs at the pace at which skills change. So, the best way we can enable learning in this context is by moving away from a “command and control” model of learning to designing and promoting a culture of learning. Many of us have already embraced social learning, employee-to-employee learning programs, and self-directed learning experience platforms, moving away from the traditional learning management system (LMS). For the same reason, there is also an increasing focus on building learning agility among employees.

Possibilities With Technology

There was a time when we explored technology as a means to execute our strategy. Even CEOs and business leaders are now learning the nuts and bolts of technology because the tables have turned. Today’s technology offers more possibilities than we can realize, possibilities that can help us put our best foot forward and gain a competitive edge. We need to explore the potential of learning systems and technologies as an integral part of our learning strategy. Be it artificial intelligence and machine learning, block chain, or natural language processing, technology can help us amplify our value proposition to the business.

Partnerships and Stakeholders

When I started my career, there was a very clear line separating the business support functions like HR, marketing, learning, and operations. Today I struggle to see those lines; instead, several learning projects are executed in partnership with one or more support functions. And then there are those projects that cut across even organizational boundaries. We truly are in an era of hyper-collaboration, which is probably the primary reason we were able to accomplish so much so fast (Kolk et al. 2018). Hence, identifying and creating a plan to manage our key stakeholders is one of the most important factors for reaching our function’s goals. In fact, several learning organizations have partnered with public initiatives, not-for-profits, organizations in their supply chain, and even peers and competitors to enable learning for organizational success.

Final Thoughts

In 1966, Robert Kennedy said, “Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of mankind.” Here we are in 2022, and this feels like it could be the tagline for the last two years. The COVID-19 pandemic gave us a shockingly sudden change in our context. As individuals, it helped us sort through our priorities in life, and despite all the darkness, we saw humanity at its best. As organizations, it was a litmus test on the resilience of our strategic plans, with technology playing a huge role in sustaining the business. We were already on a path toward a massive transformation as a function a few years ago, and the last two years may have accelerated these efforts. None of us can be certain what the future holds. But I believe that the next few years will be a time of paradoxes as we try to better understand our new normal and get comfortable with our new context. For example, while we are exploring all the possibilities of data and technology, we are also realizing the ethics and moral implications of those possibilities, and we might put an end to them before they are realized.

This will truly be interesting times for us, as I believe that we could be tasked with finding answers for questions we were never asked before. (Some organizations have already started asking us these questions.) Like, how can you build and sustain a learning organization? What are the ethical implications of your skilling initiatives? What is the plan of action for removing biases and making our learning systems inclusive? Can you make a forecast for emerging skills for our business plans? How can a human learn to work with an intelligent machine? How do you plan to train robotic processes? Can you make a proposal for building emotional intelligence among customer-facing robots? How do you build subject matter expertise when most of the job is automated? Can you show me a real-time heat map of key behavioral skills enabling and deterring team performance in teams? How can the learning function support global sustainable development goals? Can you look at organizational capabilities and propose how to reimagine the business model?

Our possibilities are endless.

About the Author

Preethi Anand is AVP of the Operations Technical Training Academy at HSBC. She is a learning and development professional with more than 12 years of experience in learning strategy and solutions design. With work experience at AIG, Polaris, and Intellect (a FinTech startup), Preethi has managed several portfolios ranging from competency mapping and development to branding for the learning function. She holds a bachelor’s degree in English literature and a master’s in social work, and recently completed an executive management program with Cornell University. She is also a PMI Agile Certified Practitioner. A frequent contributor to TD magazine and Training Journal (UK), she won the Bronze Award in the category Global L&D Professional of the Year, conferred by Training Journal in 2017. She was also named a 40 under 40 in HR by CNBC and Jombay in 2019.

References

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Bersin, J. 2021. “Understanding SkillsTech, One of the Biggest Markets in Business.” Business Trends, April 18. joshbersin.com/2021/04/understanding-skillstech.

Deloitte. 2021. “2021 Fortune/Deloitte CEO Survey.” Deloitte, Fall. deloitte.com/us/en/pages/chief-executive-officer/articles/ceo-survey.html.

Kennedy, R.F. 1966. “Day of Affirmation Address.” University of Capetown, Capetown, South Africa, June 6. jfklibrary.org/learn/about-jfk/the-kennedy-family/robert-f-kennedy/robert-f-kennedy-speeches/day-of-affirmation-address-university-of-capetown-capetown-south-africa-june-6-1966.

Kolk, M., R. Eagar, C. Boulton, and C. Mira. 2018. “How Hyper-Collaboration Accelerates Ecosystem Innovation.” Strategy and Leadership 46(1): 23–29. researchgate.net/publication/323131982_How_hypercollaboration_accelerates_ecosystem_innovation.

Schwab, K. 2021. “What Is Stakeholder Capitalism?” World Economic Forum, January 22. weforum.org/agenda/2021/01/klaus-schwab-on-what-is-stakeholder-capitalism-history-relevance.

Wright, A., J. Mertens, D. Gherson, and J. Bersin. 2020. “Accelerating the Journey to HR 3.0: Ten Ways to Transform in a Time of Upheaval.” IBM Institute for Business Value and Josh Bersin Academy. ibm.com/thought-leadership/institute-business-value/report/hr-3.

Recommended Resources

Anand, P. 2017. “Executive Dashboards to Win Over the C-Suite.” TD at Work. Alexandria, VA: ATD Press.

Horowitz, B. 2014. The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers. New York: Harper Business.

Iansiti, M., and K.R. Lakhani. 2020. Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World. Boston: Harvard Business Review Press.

Roose, K. 2021. Futureproof: 9 Rules for Humans in the Age of Automation. New York: Random House.