Budgets are getting squeezed--time to invest in learning?

If you believe a tough economy can spur creativity, this is the best time in the past 10 years to rethink, refresh, and revitalize your learning strategy. Place your company on a faster track toward the future while dealing with financial constraint.

For many organizations, no area will be hit harder during budget time than learning, and many of you may have already entered a period of tight or declining budgets. CEOs began tightening up on expenses somewhere between early 2001 and early 2002. Regardless of where you may mark the beginning of your own funding squeeze, you will probably agree it has arrived, and will continue at least into 2004.

Training magazine, in its last annual issue coveting training investments, reported that the rosy spending plans collected in spring were followed by cancellations and retrenchments throughout the industry. Training estimated, for example, that a third of the leadership sessions planned were "simply not held." In its October 2003 survey, the magazine reports employers' expenditures were down again, marking the first two-year consecutive decline since 1982. Given the tendency of our function to trail broad investment indicators like capital spending and the stock market, we can expect to be wearing fight belts for some time.

Thinner "actuals" in the current year will signal to budget reviewers that next year's plan should be even leaner. Ponying up a fair share of expense reductions is only fight, but do not assume a defensive posture while doing so. Without new thinking, one is backed awkwardly into a lame position: "Well, the company survived just fine without doing the things we proposed a year ago, so this year we are re-proposing last year's stuff, scaled down."

Is There A Better Approach?

We can gain confidence from recognizing that learning has matured from a discretionary curiosity into a viable function of business. Lean budgets have slowed its breadth of application, but not its innovative edge. Tough times have forced a new sense of discipline, moved the action closer to the customer, improved the measurement of return on learning, intercepted and incorporated recent advances in technology, sharpened the quality of choices in the outsourced world, and infused the field with a keener sense of accountability for the success of the business. By tapping into this tougher, new learning, our plans can be a breath of fresh air, rather than a pale, downsized version of the recent past.

Here are four suggestions for staging a lean-but-exciting new year, one your clients and top management can look forward to: 1. Link learning to the company's future. Declare immediately that your new learning plan will not be the faded edge of a difficult downturn, but "Year One" of a new three-year cycle of increased innovation and positive impact on the company.

Set aside the debates among economists, pollsters, and investors, over the timing, strength, and speed of the recovery. These are details. Assume the recovery is not only happening now, but is beginning to impact your business. Ask: "How will our company be different in the improved economy? What investments will we have made in the business to make us stronger against competition? What new abilities as a total organization will we have demonstrated three years from now?"

Make it a top priority to become literate on the best senior-management thinking on these questions, and tell everyone your strategy is to make management's job easier in getting where they want to go. If, after trying hard, you can't get these answers from management, say so, and make getting them to the answers your priority. Write the opening slide of your plan today, declaring it the first of three annual installments in service to those three questions.

2. Take the offensive: Throw out some "comfortable habit" investments and figure up the savings. This step requires a mindset adjustment. It is not necessarily wise to lead with your strength if "strength" is defined as the initiatives that are the least controversial-or most acceptable--to the organization, your staff, or yourself.

* That middle management course on leadership skills the company started seven years ago and the COO loves? Cancel it for two years and see if there is any measurable impact on the business.

* Finally succeeded in getting half your training offerings on line? Cheap but bad is no value. Take a close look at those e-courses and be prepared for a possible quality letdown. Pare back bad courses, renegotiate and find new sources if necessary. Postpone online offerings that don't meet standards. Begin a three-year ramp-up of newer, better courses.

* That open enrollment course on "finance for non-financial managers" still getting glowing ratings from all attendees? Scrap it. Accounting literacy is not business literacy, and measurement means little if your people don't know their place in the recovery.

* Your learning back office received a customer service award this year? Consider outsourcing the operation to a Learning Management System shop.

Make your own list of opportunities. Identify your top four or five comfortable habits and run scenarios in which you no longer perform them.

3. Reallocate your spending. Fund your own new ventures, committing to some things you have never tried. My recent tour of some learning hotspots reminded me how poorly innovation conforms to economic expansions and contractions in the economy. The recent slump has turned the lights out on some promising projects, but has also spurred new thinking and, with it, tests of new tools and methods. Besides, the adaptation process is rapid in a recovery; anticipate that today's wild new experiment will quickly become tomorrow's competitive standard.

A Nimble Giant. Residential real estate giant Century 21, with 88,000 brokers, knows all about the challenges of running a complex learning support system. Before they reinvented their field training, a staff of 4,500 trainers swarmed the 6,600 office operation, running classrooms of franchisees through manuals produced by a large central staff. Today the same massive task is handled by just 150 "roving master" trainers who collaborate with local manager-coaches and a handful of central-office designers. The learning load grows daily. To compete, brokers need skills in Power Point, digital photography, web-based advertising, and wireless office management, to name a few. Century 21's svelte system handles it all.

How do they do it? First, the company figured out which content was absolutely crucial in order for brokers to produce income. All learning content and objectives were then geared to that simple goal. Media selections were made with an eye to optimum value and ease of distribution, rather than maximum use of the latest, leading-edge technology (no streaming video where tapes will do). The learning group made access easy, offering 120 hours of free online learning, holding online, live classes and making virtual classroom learning at home an attractive option for many.

Century 21's financial results are bard to fault. Attrition, the cost monster of all storefront-based businesses, was cut in half in the first two years of the new operation, while agent income grew by 16 percent. All of this saw the firm through a 145-percent expansion of the agent population, a growth hard to contemplate under the older, higher-turnover conditions. Cost of training? This ran above prior years in the inaugural cycle, then dipped below historic levels and has stayed there. Doing more with less? I'd say so.

Action Learning in Defiance of Distance. Xerox, determined to hang onto its next-generation executive talent and laced with tightening budgets, challenged the Center for Creative Leadership (CCL) to help it revise its development of emerging leaders. A couple of years ago CCL, which has built its reputation in the face-to-face world, joined Xerox to take a firm step into cyberspace. CCL recast the classic "action learning" model into a blend of learning modalities. In-person interactions were reserved for problem selection, team building, online workspace practice, and presentations to management. Online work was sandwiched between the face-to-face sessions. Self- assessment tools were repurposed for desktop use, and most of the project work was performed online by the geographically dispersed teams.

By orchestrating the modules for mutual support and providing coaches and tutorial help, the new model achieved efficiencies. The six-month elapsed program time replaced an earlier two-year version, while delivery and tuition costs were reduced by 60 percent. Encouraged, Xerox expanded the effort to Europe, where the second iteration in that region, involving 14 countries, is underway. The company is refining such features as problem selection and sponsorship, while conforming closely to the original design. Meanwhile, CCL continues to strengthen its foothold in blended learning.

Taking Aim at Productivity. Pepsi, First Data, J.P. Morgan Chase, and Midwest utility Ameren are among a few pioneering companies that have used learning to help their people improve performance at the immediate point of action. All are clients of Root Learning, Inc., the innovator in visual-based business literacy.