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|Bonus Focus - Strategic L&D: Are You Increasing Your Company’s Ability to Execute?|
By Tom Hilgart and Chip Cleary
Life sciences companies face changing regulatory landscapes, evolving research pipelines and shifting access to doctors, caregivers and patients. How do they excel? Of course, it matters to have a compelling strategy. But what many believe matters the most across industries is the ability to convert strategy to reality. In short, organizations thrive based on their ability to execute.
How can business leaders grow their ability to execute? In large part, a company’s ability to execute depends on it having the right talent in the right places. In turn, business leaders depend on how well their companies build talent. Business leaders expect their core functions such as sales, R&D, and manufacturing to provide mature capabilities. Increasingly they now expect Learning & Development (L&D) to provide a similarly mature capability for building talent. They expect L&D to be able to:
· Identify what improvements the business requires in its ability to execute
· Target what specific capabilities people require to make those improvements
· Define the learning investments needed to develop those people capabilities
· Systematically manage those investments to achieve the targeted results at effective costs
· Make results visible
· Drive continual improvement.
Many L&D groups are not yet ready to live up to this expectation. This article identifies key practices that L&D can adopt to contribute more strategically to their companies’ ability to execute.
A Shift in Perspective: From Service Provider to Investment Manager
Many L&D groups view their role as "providing a service” to the business. Such L&D groups focus on satisfying their customers’ "demands.” They think in technical terms about the service they offer. What content should they provide? How often should they run programs? How much should things cost? While providing responsive service is helpful, this perspective forms a barrier. L&D groups that adopt it come to be viewed by the business as "order-takers.”
This service-driven perspective leads companies to choose learning investments based on when a need surfaces rather than how much business value addressing it will create. Whatever requests arise first are the ones that get filled … until L&D caps out its budget. It also forces business leaders to act as the "order-makers” who must decide whether launching a new program is a good idea. Finally, it forces L&D itself to respond to an unpredictable stream of requests, many with short lead times.
Business leaders want learning programs to target relevant and measurable business results and they do not consider those programs complete until the results are achieved. It is not enough to run a multi-stage blended onboarding program for sales representatives. It is not enough to run a well-regarded leadership development program for high potentials. Rather, L&D must identify the specific capabilities the business requires and how it will know that the target population has achieved them. This is hard work. Business leaders do not have the time or the expertise to identify the "where, when, how, and why” behind the many potential investments in learning that they might choose to make. They want a trusted advisor to clarify the decisions they face.
The most effective L&D groups view their role as enabling the business to define and manage a portfolio of investments in learning that improve its ability to execute. L&D serves as an investment manager that provides business leaders with the learning equivalent of compelling investment prospectuses. Business leaders are the investors who always make the call on which investments among the ones presented to fund. Once the business selects investments, then L&D implements them and closes the loop to ensure that the results targeted are actually delivered.
If Your Budget Is A Dry Document, Are You Really Tracking What Really Matters?
When L&D and business leaders adopt this investment-driven perspective, it permeates how they engage, starting with how they state the budget. Most L&D organizations base their budget on some form of demand plan. Typically, this demand plan lists development and delivery activities (e.g., "We’ll create these 27 new programs” or "We’ll run 10 sessions of this program and 20 sessions of that one.”)
Because the typical demand plan shows only activities and costs, it positions L&D as a cost center. However, when we adopt the investment-driven perspective, we expand the demand plan to also give business leaders visibility into value. The result, which we call a Learning Investment Portfolio, states specific results expected for each program:
· Alignment to business goals ("Why are we considering this program?”) and
· Targeted results ("What counts as success?”)
When we include these elements, we shift from talking about "programs” and "costs” to instead "results” and "investments”. We ask business leaders "Is this a worthy return?”
Figure 1: The Learning Investment Portfolio
Giving Your Business Leaders a Bird’s Eye View
The Learning Investment Portfolio treats each program as an individual investment. Portfolios typically contain dozens or even hundreds of programs. Given this much detail, business leaders require a way to step back to evaluate broader decisions about their learning investment strategy. How much am I investing in advancing the business strategy versus ensuring smooth day-to-day operations? How much am I investing in proprietary versus generic skills?
Business leaders require a portfolio analysis to give them insight into the key investment trade-offs they face. The Value-Added Matrix is the result. It categorizes investments to show just where the money is going.
The matrix allocates the investment portfolio into four quadrants and summarizes and totals the investments in each.
The two quadrants to the right of the vertical axis contain investments to advance the company’s strategies. We call these investments Drivers when they employ differentiated content and Accelerators when they employ generic knowledge.
The two quadrants to the left of the vertical axis contain learning programs needed to run the ongoing operations. We call these Enablers when they employ differentiated knowledge and Fundamentals when they employ generic knowledge.
The two quadrants above the horizontal axis, Drivers and Enablers, contain learning programs that employ content that is unique to the business, unavailable in the marketplace. These are programs that need to be built using subject matter experts from inside the company. The two quadrants below, Accelerators and Fundamentals, contain learning programs whose content is readily available in the marketplace. These are programs that should be bought and perhaps customized.
Organizing the line items in the portfolio into this matrix view improves business leaders’ control over their learning investments by making crystal clear the net result of the many individual investment decisions they make.
Figure 2: The Value-Added Matrix
A Concrete Way to Articulate Alignment
Everyone agrees that learning programs must align to targeted business results. However, "alignment” can be a nebulous concept. Everyone knows that they want it. Fewer are clear on how to get it or even tell when they have it.
We have found that the key to creating alignment is to focus on business processes. One way to view a company is as a set of interlocking processes such as product development, marketing, sales, procurement, manufacturing, collections and so on. Successful companies are able to master the processes that matter most. In fact, when we talk about a company’s "ability to execute,” what we mean is precisely its ability to perform its critical processes at their targeted levels.
To create alignment, the business and L&D must identify where and how learning investments will improve the critical business processes that create growth and profitability. It’s not enough to say, e.g., that we want to train medical affairs staff to "better understand our products.” Rather, we must identify what change we expect to see in which business process. Is it increased first time sales? Is it higher utilization?
How often do your business leaders come to L&D saying something like, "I want a two-hour course to communicate the following points!” The problem with simply trying to align to "business needs” is that just about anything can be framed as one. Most mistakes in aligning learning investments come from being imprecise in what we consider a "business need” and correspondingly focusing too early on too detailed a level of conversation.
We need a systematic way for leaders and L&D to articulate "business needs” to ensure step-by-step alignment between business outcomes on the one hand and learning solutions on the other. That’s what the Ability-to-Execute Alignment Framework provides.
Figure 3: The Ability-to-Execute Framework for Alignment
Using the framework, business and learning leaders trace the chain of causality between end business outcomes and learning solutions through four levels. An investment:
1. Improves business outcomes by
2. Improving business processes by
3. Improving people performances by
4. Providing a targeted, effective and efficient learning solution.
When a business leader comes to "order a solution,” it’s important to back up and ask "why?” The framework gives the business and L&D a reliable map to define alignment.
Once L&D has targeted a business outcome and articulated alignment, it can then bring all of its technical capabilities to bear. Sometimes, L&D gets so involved in implementing the learning solution (and tackling the thousand problems that crop up) that it never quite finds the time to step back to see whether it actually delivered the business results it originally targeted. Now how much of your money would you put with an investment manager who rarely reports back on your returns?
Figure 4: The Results Contract
We’ve found that the key best practice for evaluation is simple: build it in from the start. Define a Results Contract before you begin. The Results Contract makes it clear what success actually means and what achieving it will require from all involved. It states:
· Business need
· Targets for success
· Target audience
· Performance need
· Solution to be provided
· Responsibilities L&D will bear in providing the solution
· Responsibilities that the business will bear in implementing the solution
· Time line
· Evaluation plan
After L&D and the business implement the solution, L&D conducts the evaluation and develops a Results Report that compares actual results to the targets. Where there are gaps, L&D provides corrective actions to address them and preventative actions to make the L&D system itself stronger and reduce the chances that a similar gap will recur on other investments.
Pulling the Pieces Together: A Comprehensive Approach
Above, we have identified some key practices through which L&D can become more strategic by advancing a company’s ability to execute. These pieces form part of what we call the Aligned to Business Methodology.
Figure 5: The Complete Alignment to Business Methodology
The way the pieces fit together is:
1. L&D and business leaders identify where investments in learning may advance the business’s ability to execute. They do this by:
a. Bottom-Up: L&D continually walks the beat to stay current with the business and identify emerging gaps.
b. Top-Down: Annually, L&D and the business scan their critical business processes to identify where targeted business process measures are not being achieved.
2. When opportunities arise, L&D and business leaders use the Ability-to-Execute Alignment Framework to align potential learning investments with business results.
3. L&D enters the investments that result into the Learning Investment Portfolio. Business leaders use this summary to prioritize investments and track results across investments against their targets.
4. L&D and business leaders use The Value-Added-Matrix to evaluate the portfolio in terms of the ratio of investments that are Drivers, Accelerators, Enablers and Fundamentals. Based on that evaluation, the portfolio is accepted as the plan and budget for the year.
5. As the year proceeds, L&D leads a governance process, which may adjust the learning investments that will be made in response to changes in the business.
6. As new investments are made, L&D and the business generate a Results Contract to define success and clarify responsibilities. Then, L&D provides a Results Report to close the loop and ensure that the results desired are actually achieved.
To what extent is L&D making a truly strategic impact in your company? Would borrowing some aspect of the aligned-to-business approach help?
Tom Hilgart and Chip Cleary are the co-authors of The CEO’s Talent Manifesto: Align Talent Investments to Achieve Targeted Results.Email Tom at email@example.com and Chip at firstname.lastname@example.org.