We sat down with CentralKnowledge, Inc. President, Ajay Pangarkar, at Training 2016 to discuss the disconnect that often exists between “the business” and training departments. In this episode of The DevHops Podcast, Ajay offers some excellent tips for trainers looking to avoid over-promising a training ROI to finance professionals, and how to deliver learning that lasts.
(A transcript of this podcast is provided below for those who cannot listen in)
Ajay: My background, as I mentioned is first in accounting, so I’m a CPA by training. I’m a professional legal accountant. I’m not sure I should brag about that too much! People are probably going to turn off this recording and say, “Oh God, an accountant’s talking. Let’s get out of here.”
Noel: Ha! We’ll edit that out.
Ajay: I don’t see myself as a traditional accountant, per se. I’m a business strategist, a business professional. My first degree is actually in finance, and I went on to do a lot of work in that area. I worked as a director of a division in companies. I told this story in my session; as a director, when I’m sending my employees to training, and they’re coming back doing nothing, why am I spending my money on this? They might as well just sit there. Why am I …? They might as well just sit there and do nothing, and I’ll save my money because the money is coming out of my budget—until you prove to me that what I’m buying is changing my life here.
I went and did a graduate degree in Adult Education, and I combined both. That’s a short, Cliff Notes version of bringing the two together. The point being is, and the thing is, I guess what gets under my skin is this “training ROI movement.” Because, as an accounting professional, and if anybody who’s listening has a background as an MBA or any type of finance background, they know that there are strict rules around accounting and around finance. Business leaders are formally trained to think this way, so when you toss the word “investment” out there or a “return on investment,” their wheels start turning one way, and we’re pitching it another way.
They’re not listening when we say, “return on training.” They’re not thinking about financial return. I’ve been using this in the session, but one dollar in is not two dollars out. That’s not what they’re expecting from training.
The problem is that we’ve been brainwashed in the training space, to think that every dollar we put in has to produce two dollars out—or more. That’s not what leaders are expecting, and that’s the big problem here.
Related: “It’s Time for Training to Talk to the Business” – Recent byline from Noel Wurst in Training Magazine
Sudesh: Okay.
Ajay: Where I’m coming from, basically the short form of it is, I want people to understand that the word “return” is not about financial in training. It’s about, “What is it contributing to the improvement of the business, or an improvement of performance objectives?”
I was speaking to Noel earlier, and I said, “We’re a cost center. Marketing is a cost center. Finance is a cost center.”. People might be surprised. They may say, “Finance is a cost center?” Training is a cost center.
Cost centers are not expected to be measured on return on investment, financially. That’s a bit of what we’re talking about this morning, and that’s what troubles me, what keeps me up at night.
Sudesh: That’s interesting, because, I think one of the challenges that technology projects face, any technology project, is that they’re split into long-term and short-term investments. When you look at a radical platform transformation, and say, “I’m going to move from platform X to platform Y,” often, the value drivers for that are immediate capital savings, to speak from financial terms. But when you think about training, and the perspective of having short, medium, and long term impacts, certainly when you’re talking about immediate training ROI, “I need to become compliant in this area in order to meet the letter of this law.” That’s a given, right?
In order to do business, you have to do that, but I think you’re talking about more strategic and operational training outcomes that may lengthen the time of payback in value. Are you speaking to the idea that anybody who is attending a training session is going to have an outcome that would better the business? I’d be interested to hear how you’re thinking about it.
Ajay: Today, it’s getting a little convoluted. Training is not just training anymore. In the good old days, you would be sent to a session. You would sit there and listen to some person rant about something, and hopefully you go back to your desk and learn. Now, that still happens. We’ve got eLlearning that does that in eight hours, and so, rather than a person, now you’re watching a computer, and you do that for eight hours.
There are two things that are happening in the convolutedness. One is you have to separate the actual training activity, so the actual learning activity is separated out. For business leaders, that’s seen as a line expense. They don’t see anything worth more, as far as accounting purposes, or financial accountability for the line expense. but we have all this technology that has come about in the last few decades. We have LMSs. We have mobile learning tablets and computers, and all this investment that goes into the training department now become tangible investments.
When you start talking about return on investment, now we start thinking about, “Okay, training is an expense. It’s a cost. It happens for a moment. It’s done.” The results from training may last for a few years, or some period of time, and people are applying these skills—but it’s not accounted for anywhere. It’s a theory, right? It’s out there. If I tell you something today and I charge you for it, you pay me, you may use it a week, or month, or a year from now, but it’s not tangible.
Sudesh: That’s interesting because I think there is an accounting method that does take it into effect. I want to say that it was introduced by someone in about 2001, or 2002. When I was going through and doing my MBA, I recall hearing about an accounting method …
Ajay: Robert Kaplan?
Sudesh: Yeah, that does take this value.
Ajay: Yes, it does.
Sudesh: What is that, and what does that measure?
Ajay: Okay, we’ll get to that in a second, because that’s a little more … People are going to get bored with that! We can get right into that, but look up Robert Kaplan. You’ll find out what’s up. Dr. Robert Kaplan, actually. Speaking of which, his partner in crime, Dr. David Norton, wrote the Forward for our book, The Trainer’s Balanced Scorecard.
Sudesh: Oh wow, nice!
Ajay: They’re the co-founders of “the balanced score card.” What I’m saying is that training is one thing that’s a line expense. I’m talking about from an accounting perspective, or a finance perspective, from a business leader’s perspective, okay?
Sudesh: Yeah.
Ajay: Then you have all this equipment. Now, equipment for leaders is an investment. It’s called “a capital investment,” and as a capital investment … I just heard you say MBA, so you know what I’m talking about. A capital investment, it has to contribute to the profitability of the organization over a period of time. Now, when we’re investing in computers, or in LMSs, or in software, and major training infrastructure projects, then that part becomes an accounting-based return on investment measurement, but not the way we look at it as far as training ROI measures it. We’re talking about actual net-present value calculations, or cost volume profit measurements, or internal rate of return measurements.
All these measurements are based, because, this equipment, just like this building we’re sitting in, or any equipment, computer system a company buys, it’s not all meant to make a profit directly correlated to the business, but indirectly. We’re sitting in this building for Disney, but this is not printing money for the company. We rent it. Everybody’s contributing something to the business over time.
Your desk that you’re sitting at, the tables we’re sitting at, these are all capital investments, but they’re not expected to make money. You know what I’m saying?
Sudesh: Absolutely.
Ajay: That’s what we’re confusing. So, number one, training is an expense. Capital investment size is getting more convoluted, and that’s where the training space is getting a little confused about what they mean by “return on investment.” We have to start capping the major investments as capital investments, just like every other accounting aspect, but training always remains an expense. That’s a bit of a difference. You can’t account for that. People take it … They really screw up my words because they take it wrong. They say, “Well, you know, Ajay, you’re saying that training is not important.” I didn’t say that. These leaders know training is important.
We’re sitting here, and the leading companies in the world right now, Apple, Google, Facebook, they’re all knowledge-driven organizations. These companies don’t have … Well, maybe Apple does, but these companies don’t have tangible assets like General Electric or Wal-Mart. These companies have knowledge assets, so if you’re telling me that they don’t believe in training and learning, you’re completely wrong. Their business would not exist without it, but they can’t account for all that knowledge they have. There’s nowhere on the balance sheet that all that knowledge is valued.
Mind you, that’s another thing I’m writing about, by the way. How our accounting system is built for the industrial revolution, not the knowledge revolution.
Sudesh: That’s a common topic in today’s accounting world.
Noel: One thing I’m excited about this show, and hearing more about in general, and I’m guilty of this—a lot of times, people talk about training, eLearning specifically, and how it enables you to reach more people. It enables you to train more people faster. It enables you to scale globally, and start training where otherwise you weren’t able to go train people halfway across the world, and now you can do it very quickly.
I, myself write a lot about how eLearning helps you reach more people. But we shouldn’t just talk about reaching more people. It’s being able to train more effectively and have the results from training last a lot longer. Because, if the finance department doesn’t care that we were able to train 10x more people, if none of those people came back and did anything with that training, there’s no return there.
Ajay: Yeah, we’re going back to the “butts in seats” kind of thing. That’s why we’re looking at that metric again, and that doesn’t count, right?
Noel: Right.
Ajay: We’ve been preaching that “butts in seats” is not a relevant metric. Okay, but to your point, in eLearning, reaching more people—technically that’s just butts in seats. eLearning is not about the vehicles. I’m really struggling with my peers here, because we’re always talking about the vehicles. It’s about the leaning transfer. It’s about, “How do we get the knowledge to them, and then how do they use the knowledge” It’s not about, if we’re putting it in a computer, of if I’m talking to you, or somebody from the past, or whatever it may be. The vehicle is the way to facilitate that process, but it’s not learning itself, and that’s the problem that we have.
The problem with eLearning, for me, anyways, is that we like to preach about we can reach more people, and it’s virtual, but we still are taking our bad habits from instructor-led learning, and transferring them onto a laptop. It’s like, “What’s the difference if I sit before somebody for eight hours a day listening to them, or I sit in front of a computer for eight hours a day?” That’s not eLearning to me. A computer has just replaced somebody else.
That’s not eLearning. eLearning is, to your point, “How do I access this knowledge when I need it, how I need it, where I need it? How can I apply this learning immediately?” Now, the movement right now, and you guys know about it, is microlearning. Then, of course, the trend of gamification and all that stuff. Now, I have my opinions on some of this. I won’t get into it now, but microlearning is interesting. It used to be called “on-demand learning,” where you would access learning where you need it, when you need it, which I think is some of the stuff that you do.
Sudesh: That’s exactly it, yeah.
Ajay: That stuff, really, to me, is interesting, because …
Sudesh: It’s, “pull.” It’s not, “push.”
Ajay: Yeah, exactly. It’s fantastic. YouTube is an example of that. How many times have you renovated anything in your house? What’s the first thing you did? Go to YouTube.
Sudesh: Well, first of all, I thought about not doing it. Ha! But, secondly, yeah.
Noel: When you don’t have the option, and your wife starts talking to you about renovating something—YouTube.
Sudesh: It’s funny that you bring this up because my wife and I run an RV rental company. It’s an interesting side project that we started a couple years back because we have two young children, a three-year-old, and a five-year-old. When you try to do a road trip for any amount of time, and keep your sanity as a parent, it’s a challenge.
Getting an RV is having the worst of 2 worlds. It’s having an automobile and a house, and you’re moving it constantly, right? The result of that is, things break you didn’t even think existed. Who knew that there was a separate power system for the coach, versus a separate power system for the interior, etc., So, yeah, YouTube is the “pull resource” that gives you that advantage.
Skytap really is this platform that allows you to put anything you want into an instructor-led, or virtual training course. It really causes some really big challenges to come up, because people are doing things that you never thought they would do. Because they can take something like an SAP environment, the entire ERP system, and stuff it into Skytap and say, “We want somebody to be able to pull that resource, and only learn about these specific things. I only need to know about the database connection, or I only need to know about the web UI connection,” or whatever it is they need.
It causes some really interesting value drivers to be seen. We have employees who really need to do this “thing,” and do it extremely well, in order to have the customer outcome we want, or we don’t really want employees to be able to do these things, but we do want them to be able to do this. From a microlearning standpoint, what do you think about the value drivers, and how ROI should be thought about there, because that’s a different way to think about it.
Ajay: I love microlearning. I don’t like the term micro-learning per se, because I think it dumbs it down too much.
Sudesh: Yeah, it makes it sound like, “tiny-learning.”
Ajay: It’s on-demand learning. I think one thing that our peers can learn is that, especially when you’re developing courses, to make it into that on-demand context, to your point, what Skytap does. It’s very important to be able to access that learning when you need it, and where you need it.
I think the ROI is quite immediate. If you want to talk about ROI as far as, not financially, but the return in the benefit to, say, level 3—the applications or job. You can see that immediately. If I’m struggling, working … I work with Excel a lot. I was trained in Excel, in advanced Excel, but I don’t remember half the stuff. I mean, I sat in these week-long courses. That was a course. Somebody invested in building this Excel course, whoever it was, and I sat for a week, it was actually several weeks, and the last week was the advanced macro-functions, pivot tables, etc.
Now, I can safely say that I have a signed certificate saying I went through this. But if someone says, right now, “Do a pivot table,” I’m going to say, “Oh crap.” I don’t know where to start, so what do I do? I go somewhere. I go to Google, my favorite person right now. I go to Google and say how do I do a pivot table?
Then I’ll click on the video tab, find all the videos on it, and then I look for the video that’s two minutes, or a minute, or three minutes. Not the one that’s twenty minutes, the one that’s two minutes. I say, “Okay, this is going to tell me what I need to do.” I’m going to fast forward that little bar on the bottom, to find the point, every so often, to what he or she is talking about, where I’m going to need the information. I get that glimpse of information. I close it down, and go and do it.
Now, think if we did that with all our training courses. Think about the power. I know we can’t do it with everything, but 80% of the courses out there can be on-demand learning. It can be microlearning.
Why aren’t we doing that? There’s 20% or 25% of courses that have to have formal training, maybe it’s safety training, or compliance training, or whatever it is, but even that … Back in the day when I was seventeen-years old, I worked at Burger King. I hope your young listeners are understanding what I’m about to say here, because there’s a bit of foreign language, but we had a VCR and videotapes. They put me into this little closet or cubicle in the back of the restaurant, said, “Here’s ten tapes, here’s the VCR. Watch them all. You’re going to be here eight hours. Just watch one after another.” Then they made me sign-off a sheet.
If they asked me what was on tape one, after I went through tape ten, I would not remember—but I signed-off on a sheet anyways. I signed-off on compliance training, or safety training, but it doesn’t mean I actually learned anything. To our point, if they gave me a microlearning concept that I can actually apply, or actually even showed me the fryer, of how to empty the oil from the fryer, or whatever the case may be, that’s microlearning. That’s immediate learning, and 80% of earning should be that way.
Nobody needs to know the history of oil in an oil fryer, or how the oil fryer came about. All I need to know is it fries my french fries, and this is the temperature it has to be, and this is when the oil has to be changed.
That’s really all it is. The ROI is actually immediate. To your point, Sudesh, if I’m going to put money into micro-learning, the cost is significantly lower.
Sudesh: Yeah, the investment is much lower.
Ajay: The investment is significantly lower, so first of all, selling the pitch to the leaders is a no brainer. Second, I put the thing in, and they’re actually learning something, so I can prove now that the return is that they’re actually doing it. I’ve got my level 3 objective.
Sudesh: What’s interesting about that point is, I have a background in ITIL, and Six Sigma, because in my former life, I did a lot of service management activities. It would be great if you could first review the incident logs, the error logs, and the frequently asked questions, before you implemented the microlearning strategies, so you could connect those points. Especially since most of these organizations have that tracking system anyways to get the relevant information out, so that’s a really interesting way to look at it.
Ajay: Well, to your point, I think we probably talked about this before the recording, and I talked about it in my session, but the work we did at Apple, that was microlearning. Back in the day, it was 2005, I don’t think they called it microlearning. Consumer reports came to Apple and Steve Jobs, and said, “We’re not making you number one in customer service.” Of course, we know the reputation of Steve Jobs, nothing was impossible.
What Steve Jobs does is says, “We’re going to become number one in customer service.” but for most companies, when you say, “become number one,” or, “become best in customer service,” the first thing that comes to their head is, “Well, we’re going to greet the customers more politely.”
For Steve Jobs, it was, “How do we make sure that when the customer calls in … Well, first of all, we want 100% no-calling.” That was his philosophy. Think about that, just wrap your mind around that. Steve Jobs said that to the AppleCare department, “We want nobody to call in for support.” Unrealistic, but that’s his goal. He knows it’s unrealistic, but he’s saying, “We have to get as close to zero calls as possible, which means that we have to … The ones that are going to get in, we want to make them exceptionally happy.”
To go back to your example of looking at logs, and looking at all these things very microscopically, Steve Jobs said, “What are our customer people weak in? What are they unable to answer, and what are the most common questions that come in from support? What is happening in each of these products? Let’s target those things, and make those people better. Let’s not throw them before an eLearning course, or instructor-led course. Let’s actually sit with them, and coach them, and mentor them. ‘Sit with Sudesh for ten minutes, and show him actually how to do it, rather than waste my money into a week-long training course.’ ‘I don’t know, how to use an iPhone.’ Maybe he just needs to know how to turn it on. I mean, that’s the only thing, you know what I’m saying?
That’s your level 3, level 4 objectives right there in a nutshell. For some reason, in this business we’re in, training and development, we like to overthink this stuff. I’m not sure why.
Sudesh: You know what’s interesting that I haven’t heard you talk about, is that training and development is based on a revenue model. The revenue model often is, “It’s better to sell a comprehensive training course, than a point-training solution which includes a lot of other support issues.” I’ll give you an example.
If I’m a third party, and I’m responsible for delivering content and training for an individual, and I come in and I look at the way my revenue model works—revenue model 1: I get fifty subscriptions for a twelve-month period. Revenue model 2: I get, say, 180 micro-subscriptions for a twelve-month period. Those micro-subscriptions are a lot more upkeep, a lot more overhead, and a lot more, I think, diligence in the end, because you truly have to understand the aspect.
I think the flipside of the discussion here is, in the platform world and in the Skytap world, there’s all this new thing called “microservices.” What they’re doing is, they’re disbanding all these old mainframe and X86 systems, and they’re saying, “Well, instead of having a service that looks up all the address and profile information for a customer, let’s have it just look up a phone number.” Then how many services do you have to call?
The same problem is happening. “Oh well, now we have to call eighty services to get that correct profile.” The flipside of this is, there is overhead support in other aspects that would have to be reviewed. I’d love to get your thoughts on that.
Ajay: At the end of the day, you’re right. There is, but if I can prove immediately the level 3, level 4 impact to the business, say, in the Apple example I gave, their level 4 was on customer service. They actually had the metrics around it, they had the performance metrics, but while it does cause more detail, and maybe more overhead to support this stuff, it actually, also, at the same time, eliminates all the redundancy and the waste. I think it does offset it a bit.
I’m not saying it’s perfect, but I’m saying … “I don’t need to show you why customer service is important. I just need to make sure that you’re able to serve the customer better.” So that redundancy and the waste where I was spending forty hours building that part of the course is no longer needed. Mind you, the flipside to your point, because I’m making it more granular, and more specific, I’m now going to be investing it.
I think it’s more of how we’re allocating and investing our resources and time better, than actually just trying to do everything. That’s my two cents worth. I call it either a shotgun approach, or a sniper approach. I like the sniper approach, because the shotgun approach is spray and pray. You just put it out there, and you get a lot of holes, and chances are you will hit something. You’ll hit everything, great, but you’ve got that one target and you also hit everything else, rather than you just wanted to hit that one target.
That’s my perspective on it, but I’m not saying that I have the solution. I’m just saying, let’s start thinking this through. Let’s start being a little more reasonable. There’s a lot of great tools, there’s Skytap. There’s a lot of great things out there. We live in a technology age. We should not be making things more complicated, we should be making things simpler.
You and I sit here with our phones, and our computers, and our laptops, and our tablets with apps on them. That’s again, microlearning. We just access something with a tap of a screen, and we get our things done, and we learn something out of it. Why aren’t we doing that more in training? Why are we making it more convoluted than it should be?
At the end of the day, there’s no holy grail to this solution, and in our business, there are a lot of people with vested interests in their own methodologies. I won’t out people here, but I want to caution people when I say this—I don’t come with a methodology. All my writings, and everything I write about in my articles, in my books, is all based on actual business facts and premises. It’s not made up by Ajay, but a lot of people out there in our business have made up their own methodologies, and so you have to question it.
It’s like the Colombian coffee growers saying, “If you drink two or three cups of coffee a day you’re going to live longer—sponsored by the Colombian coffee growers.” Well, hello, let’s think about who is pitching these methodologies in training, and telling them it’s the greatest thing since sliced bread. Who’s it coming from? You have to ask that, and anyways … I’m sorry. I’m going on a bit of a rant here, and a bit of passion, but I hope that people think about this. If you want to add anything, Noel?
Noel: One thing you mentioned very early on in your session, was that business leaders were trained in business school not to increase revenue, but to reduce cost. Maybe the first way to impress your business leaders, or to get that buy-in, is by showing you can reduce costs, not by going in and promising that you’re going to immediately increase revenue. Number one, it might not be true. Number two, they might not even buy it.
Ajay: Reducing costs is basically simple. We’re trained in business, if you go to any MBA program, the first thing you hear is not increasing revenue, it’s cutting costs. When training professionals get asked the question, “What is it going to cost us?” they think they’re being attacked. They get defensive, and they think, “You think it’s too much,” or, “You don’t want to do it at all.” That’s not why the question was asked. The question is, “Can you do it more effectively for a lesser cost? Can you find another way of doing it?” If you say no, they’re not going to get annoyed with that, but prove to them what the outcome is going to be for that cost.
If you say, “No, I can’t reduce the cost,” okay, “Then what’s it going to do for me?” That’s going to be at any cost level, so that’s another thing. Of course, this is going to be the inspiration of my next article, “But wait, there’s more: The Infomercial.” We love doing that in training. I’m want to tell trainers to stop doing that. Stop over-promising and under-delivering. We’re like the infomercial, “But wait, there’s more. I’ve got more for you. You don’t believe that? I’ve got more for you.” We’ve got to stop that.
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