Jay Cross
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What Counts?
Wednesday, August 04, 2004
by Jay Cross

CLO Magazine
August 2004


Businesses exist to create value, and the source of value resides outside the learning function. As Peter Drucker has pointed out, “Neither results nor resources exist inside the business. Both exist outside. The customer is the business.”

Try to imagine a business without customers, perhaps an insurance company on a desert island or a manufacturer that never ships. No value, right? What goes on inside an organization is just rearranging the furniture.

Training directors bemoan not being able to demonstrate significant business results. If they remain entirely within the training function, they never will, because they don’t own the yardstick that measures business results. Who owns that yardstick? Generally, it’s training’s sponsor, the person with authority to sign off on large expenditures. This is usually a company officer who can weigh the potential returns and costs of various investments and select those likely to create the highest net value. Since the sponsor decides training programs’ economic fate, it’s worthwhile to contemplate how sponsors typically make decisions.

All business decisions are relative. When assessing value, where you stand depends on where you sit. A training director may measure success in terms of lower costs and more workshops. A line manager is concerned with quarterly targets or higher revenue. A senior executive focuses on organizational flexibility and competitive advantage.

Managerial decision-making is generally more subjective than people recognize. ROI is often a hurdle or a means to focus preliminary cost-benefit analysis to screen out clear losers. When the time comes to make choices, gut feeling and good judgment often win out over formulas.

Training directors sometimes claim that pinpointing training outcomes is impossible because so many other things muddy the results. It’s a weak argument. All business decisions are made with less-than-complete information. Waiting for “enough” information often means ceding thought leadership to the competition.

Sponsors don’t usually back a project unless its economics are so compelling that they can do the math on the back of an envelope. If the odds are good that I’ll get $750,000 in benefits from my $75,000 investment, I don’t need four-place accuracy to decide to spend the money. This is business, not a science experiment. As a Fortune 50 company official recently told me, “We manage this place with sound bites.”

What if the benefits of your proposal are not obviously compelling? Pick another project. Executives are single-minded. They care about one thing: execution. They do not start from the assumption that training is the answer. They refer to people as “customers,” “employees” and “workers.” (We are the only ones who call them “learners.”) If people could master their jobs by taking smart pills, most training departments would close shop.

Not long ago I was addressing the division training managers at a top high-tech company. I suggested they work with their sponsors to identify business requirements and gain their agreement–in writing–on what would constitute success or failure in a training post-mortem. To my amazement and disappointment, many of the training managers rebelled. “To do what you’re asking,” they said, “we’d have to understand the business.” Well, duh. That was precisely what I was saying.

The way to get funding, to make significant contributions, to be recognized by management, to be promoted and to reduce the stress in your life is to make business metrics your yardstick for success and describe what you do in business terms. Here are a few examples to think about:

* Make sales force productive sooner.
* Implement strategic initiatives.
* Educate customers online.
* Increase reach into new markets.
* Decrease staff turnover.
* Reduce cycle time.
* Roll out enterprise processes.
* Speed up time-to-market.
* Keep partners in sync.
* Merge organizations effectively.



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1 Comments:

Blogger Mary Lynn said...

Well said!

As one who transitioned from business management (with a nice MBA behind me) into training and elearning management, I heartily agree with you: "... and describe what you do in business terms"

As you said, business decisions are often highly subjective. Business managers virtually never have complete information or accurate numbers, but still must make good decisions. As learning/training managers we must give them the best information we have so they can make wise decisions about budgets for time, money and for programs. If you're in another country or culture you communicate in their language or you're not understand. Ditto here, you must communicate in the language of the decision makers if you want to be understood.

1:34 PM  

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