L&D as-a-service, or as-a-business? Two very different concepts and for most organizations, one is unsustainable. In this article, we’ll use the Net Zero model to illustrate how L&D needs to change to increase it’s chances of survival.

Net Zero is a controversial subject, and much talked about at the moment. And understandably too. But we won’t be delving into the wrongs or rights of carbon and greenhouse emissions but rather the concept of Net Zero. The Net Zero model provides a simple way to show how L&D can improve the way they work, and how they’re perceived by the organization.

What is Net Zero?

Net Zero is used to describe an company that creates harmful emissions through its day-to-day operations but offsets them in some other way. But this doesn’t necessarily mean that they are tackling the thorny issue of reducing the output in the first place.

Here’s a simplified Net Zero model:

The anomaly

The strange thing about the Net Zero model is that Net Positive is bad and Net Negative is good. All our lives we’ve been conditioned to believe that anything positive is usually good. So if you had double-take the model, you’re not alone. Most people need a little time for it to sink in.

Why is this relevant to L&D?

Critics have referred to Net Zero as false reporting, creative accounting, and even smoke and mirrors. Over the years, I’ve heard similar terms used to describe attempts at training evaluation and ROI, when measuring the impact wasn’t considered before scoping or design. I’ve even heard of people being asked to ‘come up’ with evaluation figures, when being pressed by senior leadership.

These bad practices usually raise their ugly heads when L&D believe they exist to provide a service.

Why is this important?

For many corporate L&D teams (*Disclaimer: not all), their fate will lie in their ability to fundamentally change how they work. Stop working as a free-to-use, order-taking, content creation service and start operating like a business. Change of this scale requires a significant shift in mindset and focus; to ensure the financial value they provide is significantly greater than the cost of creating that value.

Here’s the Net Zero model again but tweaked to show how L&D can be perceived internally, based on how they operate.

In the context of L&D, the aim is to offset the cost of running an L&D department by improving business performance by a larger amount. Significantly larger. Training ROI has always been elusive, and problematic to determine mainly because of the sheer number of variable factors. A bit like chasing rainbows; it’s rather pointless.

Instead, think of L&D as a business.

What can you do?

Here are six things you can do to start transforming your L&D into a profitable, value-add function:

1. Know the difference between ROI and profitability
   Even if ROI for a project shows a greater financial return than any budget assigned to the project, this doesn’t mean that L&D is adding value. It’s important to factor in your departmental operating costs, such as wages, benefits, IT software licenses (for example, Articulate or Adobe Creative Cloud), any subscription costs for media (for example, Shutterstock or iStock), any cross-charges incurred from other departments involved in the project. To be profitable, you must deliver more financial value to the business than your operating costs plus any budget that a project team has injected to support their project specifically.
2. Know the anticipated financial return before determining the best solution
   If you can’t ballpark the expected financial return to the business, how will you know if it has been successful? The economic cost of the problem is the first thing to establish, then the anticipated return. Without these numbers, you can’t recommend the most effective solution with any confidence or data to back you up.
3. Involve users at every stage
   This is an absolute no-brainer, but you’re extremely unlikely to find the best solution without asking users what the real problems are and then ideating what may help. Then involve them in every iteration of rapid prototyping, design, and development.
4. Rethinking what your team can and should provide
   Training isn’t always the right option. Despite the department being called Learning and Development (another thing you may want to rethink), sometimes the best way to enable people is to provide the right tools at each point of need. L&D teams often have incredibly skilled people, able to use a variety of software and authoring tools. Try using the skills and software on hand to develop helpful tools and resources.
5. If you can’t fix it, find someone that can
   On occasions, the best solution may be something that L&D can’t deliver. So use your connections across the business to find someone that can and then influence them to help by showing why they should. The best solution could be something as simple as setting the default state of a data field in an order entry system to ‘selected,’ which may reduce call duration, increase calls taken, and consequently increase sales.
6. Be proactive and shout about it
   Most organizations will experience peaks and troughs in demand for L&D. Seasonal trends often dictate that some periods are busier than others throughout the year. One quick and big win for L&D is being proactive during lower utilization. Ask a department which metric they would like to improve, establish the financial value of achieving it, involve users to ideate and prototype possible solutions, then estimate the cost to solve. Taking this proactive approach enables L&D to improve business performance continuously, rather than just being reactive.

Key takeaways

Running L&D as a business has many benefits, but here are two key things to take away from this. Firstly, as a profitable business unit, providing more value to the business than the cost to deliver it makes budget conversations much easier. Secondly, as a profitable business unit, you reduce any risk of being negatively impacted by the inevitable annual company restructure.

Get in touch to find out more.