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Learnings

You can learn business.  My journey building M5 was all about accumulating knowledge to be a better entrepreneur, manager, and leader.  This blog is to help me keep some of the notes from that trip, and sharpen my thinking for the next one.

Is This My Highest Priority?

3/10/2014

16 Comments

 
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The story became company legend.  Our CTO, let’s call him “Eric,” interrupted band practice to check a developer's status on an important project.  Getting a lukewarm response, Eric shot back, “Is band practice really your highest priority now?”  After he left, the group realized they had found their band name - “Is This My Highest Priority?” They went on to win the first battle of the bands with an electrifying rendition of “Seven Nation Army.”  Inc. magazine published a photo of them practicing above their article on the program.

In my experience, Eric’s skepticism is the norm.

Knowledge acquisition is mostly an afterthought at work.  Managers relegate learning programs to the province of HR, where executives have other priorities, like compliance or making the workplace equitable.  Some companies run, “Welcome to your new job” boot camps, but learning curves are most often viewed as a one-shot climb.  And most staff see themselves as educated - past tense.

How high should learning be on the priority list? 
It would be nice if we could start out with a model that compares the ROI of learning programs to prioritize them against other projects.  So I bought Josh Bersin’s “The Training Measurement Book.”  I’ll save you the read. You really can’t.  

Bersin surveyed 136 big company training departments and found that only 5% measure ROI of their programs, and 8% measure “actual business impact.”  Why?  First of all, it is hard to isolate training’s impact, given all the other external factors.  Also, the returns usually come out preposterously large - “far higher than most organizations can compute.”  Try measuring the ROI for sales training.  I did, using M5's numbers for junior sales reps, average sales, churn and discount rate on the recurring revenue booked.  I assumed an expensive training program for a team of 20, in which they all spend a full hour a day for a year learning, supported by 1/2 of a full-time trainer.  If the program’s impact after a year is a 5% improvement in revenue, you get a 274% return on investment.  Off the charts.

The reason that learning often doesn't get top billing, isn’t only that it is hard to compare to other initiatives.  We don't trust learning programs to work.  That’s our experience on the ground, usually.  We tend to read books and forget them.  Or an inspiring speaker gives us a buzz, but in a few days we realize we can’t actually do any of what she said. We usually give up on our commitments to practice a little each day.  And our paradigm for learning is school, which hasn't changed much from the one-size fits all lecture + test based model.  According to the Conference Executive Board, "Corporations spend an estimated $145 billion annually on training initiatives, but more than half of those dollars fail to result in tangible returns.“

So not only are the benefits fuzzy, the path to achieve them is uncertain.  This keeps learning below other tasks on the priority list.

This will change. The benefits of learning are increasing.  We’re now in a knowledge economy that values good ideas and decisions more than cranking out more units faster. Networked computers amplify and multiply the skills of any one person in a company.  

Plus, we are learning how to learn faster, better, and with more predictable results.  New EdTech companies are funded every day.  Tim Ferriss is experimenting with how to learn whole languages in a week.  Stikk reports that using its portal to setup stakes, referees, and supporters massively improves odds of succeeding with personal change goals.  Companies like Udemy, Lynda, Udacity, and Coursera  are throwing up tons of quality course content online, enabling a “flipping” of the learning experience that uses everyone’s time better.   Skillshare, Everwise, Curious,  and many others are facilitating learner-teacher matches quickly.  And neuroscience is teaching us a lot about how to rewire the brain, shedding light on how most programs are simply too wimpy and don’t include the practices (like practicing) you really need to make a lasting change.  
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Some leaders have made a major mark with learning programs.  CDW’s founder, Michael Krasny, once told me that every dollar he put into training came back in multiples. As David Kaplan tells the story in Verne Harnish’s, “The Greatest Business Decisions of All Time,” soon after becoming CEO Jack Welch invested heavily in GE’s Crotonville learning center while firing 100,000 people. His Board presentation described “infinite” ROI.  Verne also points out that Steve Job’s top priority during his last two years was building Apple University.

At M5, Eric and the other skeptics came around.  Every minute in the band room was returned, plus interest, with additional energy and engagement from staff.  And for every person we had skilled up that left the company, we hired two talented replacements attracted by our learning culture and promoted three from within, avoiding recruiting altogether.  Not to mention the benefits of improving teamwork and reinforcing our learning culture.
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Learning is moving rapidly up the priority list both for companies and individuals.   I love it.  It makes work more fun.  It energizes and accelerates people and organizations.  

Besides, our species had better start getting better faster or else robots will surpass us, ushering in "The Singularity" ... 

16 Comments
Mike Blumenfeld link
3/13/2014 10:36:31 am

The commitment to learning is absolutely necessary but I have seen many companies "commit to learning" by offering seminars, extra curricular activities, job swithcing, incentives etc. but then fail to create the culture within the company to actually utilize all this training and get people to work together.

Training is often "something companies do" vs. actually making things happen as a result of the training. To me, the important commitment is to make good things happen and training is just one of the tools you can do to achieve these results. What is more important than training is setting the example of the kind of behavior and performance that is desired and then being consistent in following through in recognizing, utilizing and sharing the rewards of everyone's efforts when the objectives are achieved.

An effective leader who leads by example is far better than a executive who is committed to training his troops to do what he doesn't have a clue how to do and who is not consistent in implementing the principles the training courses teach. The former gets things done. The latter creates confusion and miscommunications which lead to less than optimum results.

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Dan Hoffman link
3/14/2014 01:47:27 am

Thanks, Mike! Huge point. My experience is that effective learning programs are far from the traditional training programs. Modeling behaviours, talking about them, incentivizing them, reinforcing them -- these are all tremendous assets for a company's leader in developing people. I agree most companies and CEO's don't bother - too low a priority. And, yes, the result can be like what happens when an alcoholic hangs out in a bar.

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Eric Diaz
3/14/2014 02:50:41 am

Saw the amazing growth of M5 in such a short time and now understand what drove that success. You should write a book on this Dan as it would be a great read.

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Dan Hoffman link
3/14/2014 03:42:24 am

Thanks for the encouragement! I am increasingly focussing to bring innovation in learning to businesses, will be researching and writing more. This was big for M5, but I felt like we only scratched the surface.

David Joerg
3/14/2014 03:39:40 am

I wonder if there's better supporting evidence you could provide for the assertion "Plus, we are learning how to learn faster, better, and with more predictable results".

I'm not sure that's true, actually. Would it be fairer to say instead that we are experimenting with new learning techniques more, and more publicly, than before? With so many experiments ongoing, surely some of them will bear fruit -- scalable fruit, if you will.

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Dan Hoffman link
3/14/2014 03:47:14 am

Great point. I actually edited the post to reflect your comment, thank you. There are a lot of people chasing this, a lot of exciting experiments going on, and I hope that it'll show results. I'll be on the look-out for real proof. And scalability. Like, even better than Tim Ferriss learning Tugalog in 4 days and being interviewed for 7 minutes live on Philippine TV. (http://www.youtube.com/watch?v=04pWZXH7Umg&list=TLFjc3rcRx7mXCCzscZ2kBEQhe7r_yMaPS)

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Dan Hoffman link
3/14/2014 03:49:01 am

And another thing. One of the things that struck me in thinking this through is whether the issue is the uncertainty more than anything. Why start, why engage, if so many times learning doesn't stick?

David Joerg
3/14/2014 03:54:04 am

In response to your 10:49am comment below about uncertainty, I don't mind uncertainty -- I'll take a good bet all day long. But after the dice are rolled I like to see how many pips came up on the dice, and how many chips I get. Learning programs with their unmeasurable ROI offer no score at the end, so I take a gamble and in the end I have nothing to brag about.

To put it another way, you might agree that business people typically do things for one of two reasons:
1) it has "always" been done that way, OR
2) it's a gamble with a measurable payoff/result at the end, so that the gambler can in the end say "I was right" and take the credit.

Learning programs fit neither of these, right?

Would it be easier to sell the idea of learning programs by attaching it to 1), by putting it in terms of something else that is already a well-accepted practice?

For example, it is standard accounting practice that assets depreciate, and it is understood that best practice with many assets, such as a building, is regular maintenance. Deferred maintenance is *more expensive* than regular maintenance.


Human Capital Best Practices?

Human Capital Accounting?



Why do salespeople get to spend so much on flying around and taking clients out to dinner? We "just know" that dinners lead to sales?
Why does Coke spend so much on brand advertising? We "just know" that billboards lead to sales?

Can investment in learning achieve the same degree of obviousness?


I'm just full of questions today.

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Dan Hoffman link
3/14/2014 07:55:30 am

Ah two choices. If culture changes, we will all just "know" learning is crucial. If someone figures out how to quantify learning, the profit-motive will make it happen. I don't think they are exclusive ...

I've been noodling with this problem. Cultural change means unwinding all the conditioning we underwent in school. We were lectured to. We followed the assembly-line learning paths, one-size-fits-all, one-room-schoolhouse, another brick-in-the-wall model. And worse of all, we were told what to do, so rebellious kids learned to rebell against learning. What would it take to unwind that? To get grown-ups of all stripes to seek learning?

On the other hand, what if we could precisely hitch learning to the profit-wagon? You could imagine that someone who is certified in leading teams is worth $7.21/hour more, and people would strive for that certification knowing employers would seek it. Imagine deconstructing college or business school, which have a kind of generally accepted but blurry value, into separate certificates, or "badges." Linkedin, and some others, are working on this idea - I've heard it called a "global supply chain for skills."

There's pitfalls here, though. Recently, Marcelo Garcia awarded me two stripes on my blue belt. I had no idea why. I felt like I didn't deserve it - good white belts still beat me routinely. I asked Josh Waitzkin what happened, and why the criteria for belt promotion isn't more clear and transparent. Then all the students could just work more efficiently to get their belts. Josh said - that's exactly why. Narrowing the criteria for promotion weakens the belt, making it like a Driver's test, or the belts given by more commercial, less serious academies that crank them out. Chasing mastery has to transcend that kind of technical specific. You are rewarded and encouraged for being on that bigger path.

I'm sure I could write more clearly, and I hope to, but long short you are raising two really intriguing challenges.

I think the answer is these two plus one. I go to the metaphor in "Switch" - to change something you need to consider the elephant (emotional), the rider (rational) and the path it travels. You bring up the first two - I'd add that making learning really easy and convenient and cheap makes it an easier path to travel. All three are happening, all three will start to shift what's common in the workplace.

Rich Aguinaldo
3/14/2014 04:33:49 am

I had the honor of experiencing Dan's commitment to the training "program" at M5 and while it had its bumps in the road, I don't know how we could have grown M5 the way we did without it. Now, I put program in quotes but to be honest, it was not a "program". It was a way of life there. Whether one took advantage of the individual music classes was an individual choice but it was the work culture itself that promoted the learning/training. I've been fortunate to have moved on in my career and I am actively looking and implementing ways to promote that same culture we experienced at M5. Can one truly measure ROI when it is infinity?

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A. CTO
3/14/2014 05:07:31 am

Great anecdote! Sorry the skeptics caused such friction, but overcoming that friction was probably a learning opportunity in itself. I'd be willing to bet that the developer in the anecdote -- let's call him Alex -- was the least productive and most disruptive member of the software team. But the band probably rocked!

Keep the good stuff coming, I'll always be your biggest fan.

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Alex
3/14/2014 05:38:25 am

Really, Eric? Disruptive, yes. Least productive, not by a long shot. There was a woman who sat near Alex who did less than anyone. I think you know who I mean.

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Zen Ben
3/15/2014 09:20:27 am

You two should have a therapy session together or something. Hug it out. It's not healthy to carry those negative feelings with you.

As for the post, I too was a skeptic. Then I was recruiting, interviewing all of these employee referrals, and hearing about it from random strangers. And the press coverage was fabulous, too.

All that said, fast forward a few years and the true to commitment to learning meant that we really contributed to growing people's capabilities. As they became more capable, they succeeded and grew as people and in their careers. It was personally rewarding to see our people grow and develop in that way.

All that was a big part of our growth engine

"An organization is nothing more than the collective capacity of it's people to create value" - Andrew Carnegie

Dan Hoffman link
3/15/2014 11:12:41 pm

Thanks, Zen Ben. That comment makes me happy. I learned a lot from you on this journey - the career paths you & team set up pulled people in an up through the company with predictability and speed. Big fun!

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John Coctostan
3/19/2014 01:24:25 am

Great post, Dan. Probably the best piece I've read on culture since the Netflix deck that made the rounds 4-5 years ago. As an investor I've never had what you'd consider a real job but allow me to offer up an addendum from the peanut gallery.

This has to start from the top. Otherwise, managers have to weigh the very real but somewhat squishy positives: eventually better employees and performance against the more tangible negatives: short-term productivity loss, potentially losing folks to job-switching, having to pay them more, having them aim for your job, etc. That may sound cynical but I'd guess it's accurate for a large number of organizations.

By the top I mean CEO and maybe even board depending on the company. If it starts in HR, I can't imagine it getting very far.

Huge opportunity IMO, and I assume partially explains trading multiples for some of the HCM vendors although I'd bet serious coin they haven't scratched the surface.

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Dan Hoffman link
3/19/2014 03:56:36 am

Thank you for the inspiring complement. And encouragement. I'm glad to hear an investor's gut feel on my thesis. I'll be happy pick up the Underhill's bill for that lobster ...

You've hit on a huge point, and one I'm also wrestling with. Employees need to trust that getting help learning something is not going to be seen as a sign of weakness. I agree with your suggestion that the CEO and senior team leading the way by example, by talking about their learning and modeling the behavior, is one of the most powerful ways to foster this sort of culture. I wrote a little about this in an earlier post: http://www.hoffmanindustries.org/1/post/2013/11/four-skills-ceos-can-develop.html.

I found that this kind of work culture really helps. Out in the open, your colleagues can reinforce and participate in what you are doing. Learning is a great team sport. When we were all working on public speaking, we would constantly critique each other, and it was fun. Short of that, it might be better to do your training and development outside of work, or using a work-sponsored safe mentor, such as can be found through a service like www.geteverwise.com.

But managers can build little islands of culture, if they are intentional about it. If they internalize the sad fact that the number one reason people leave their jobs is because they don't like their managers, they might be more likely to risk some of those "short-term" hits you point out, in exchange for the longer term plusses we experienced.


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