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Growing Talent Management Firms: Trends in the L&D Industry—Same but Different?

Monday, March 22, 2021
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On the heels of my last blog post, which discussed the impact of the COVID-19 pandemic on the industry’s suppliers, it seems the perfect time to consider industry trends. During the last several years, I’ve written about what drives the L&D market and some of its dynamics, but I’ve never put them together in the context of implications for the future.

First, let’s be clear—the industry is growing by leaps and bounds despite the expected decline from the year before. Training Industry, Inc.’s 2020 number will be available soon, but for now it estimates that it is a $356B global industry with approximated $93B spent on external resources. I can recall not too long ago, perhaps even as little as a decade, when these numbers were in the single digits. There are a lot of reasons for this growth, such as significantly increased M&A supplier activity; industry disruption in the face of rapid technological advances; a continued and growing entrepreneurial presence; and the ease with which it has become to expand and deliver globally.

Underlying these dynamics, however, are the three main drivers of the industry: content, instruction, and delivery, each of which has undergone considerable change. Content is more readily available and accessible than ever before; instruction and learning science has expanded to new heights; and delivery has taken on a different look and feel, with many more options and combinations than in the past. While these three pillars of the industry remain its drivers, it continues to be incumbent on suppliers to ensure they are well poised in each.

Figure: L&D’s Industry Drivers

L&D Industry Drivers: Content, Delivery, Instruction
In their seminal book, Discipline of Market Leaders (1997), Michael Treacy and Fred Wiersema write that there are three major competitive strategies: operational excellence, customer intimacy, and product leadership . Their model holds up well even nearly 25 years later. When I look at the L&D industry, however, I believe those who will be around decades from now will need to be excellent in content, instruction and delivery. These three areas have become more interdependent and increasingly professionalized as the industry has grown. Content alone is no longer king; varied and advanced instructional formats are basic necessities; and customers demand new improved and efficient ways to deliver the content in an instructionally sound manner.

So, what does this mean for the trends the industry appears to be embarking on? The argument of which is cause versus which is effect is irrelevant, because they may continue to go back and forth. That is, are the drivers and industry dynamics forcing the trends, or are the trends creating the drivers? It’s probably a little of both. I’ve identified five high-level trends, which have been well documented in detail elsewhere but provide a reminder of what factors industry suppliers will be contending with in the future.

Changing Nature of Workforce Demographics

The global population is aging. This has inadvertently shaped expectations for rapid career movement. Having said this, the general population has been trending as less skilled but more technologically savvy, and college cost is becoming the province of the relatively wealthy elite. Finally, the workforce continues to become more diverse.

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Changing Nature of the Workplace

The COVID-19 pandemic has had a potentially lasting impact on how we work and the workplace configuration. Many major corporations have delayed employees returning to their physical offices until the end of this year. Yes, we have had to adapt, but will this dictate the future of the workplace as less in-person and more remote? Certainly, this could affect the significant reduction of office expenses and overall business operating costs. And, technology continues to assist in accelerating the ease with which we can work remotely and telecommute. In addition, the world is becoming more and more a global marketplace, requiring deeper understanding of how other countries and cultures operate, their likes and dislikes and buying patterns.

Impact of Technological Advances

There isn’t an area that technology hasn’t nor will continue to touch. This is true for the L&D industry. As we look forward, I am sure many of us think we are at the top of that evolution and that not much more can take place that will influence the industry. But none of us know what we don’t know or can see. There is so much more on the horizon, which makes the future exciting and scary.

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Evolution of Learning Processes

There is no question that technological advances have had, and will continue to have, a great impact on how we learn. We haven’t even scratched the surface on the advances in machine learning, artificial intelligence, robotics, virtual reality, and their likely vast influence on learning. But we also continue to experiment and learn about new non-technological influences on learning such as chunking, learning bytes, hybrid models, sustainability and reinforcement, and transfer of learning, neuroscience, among others. The true disruption of L&D in organizations—and society in general—will be the yet unknown power of integrating the science and art of learning.

Impact of Digital Sales and Marketing

Although not specifically limited to its impact on learning, suppliers need to get into the game around the ever changing and evolving sales and marketing environment largely prompted by advances again in technology. How to develop sales and marketing qualified leads has become a new game that has made it a little easier to access a company’s total addressable market but also somewhat more complex in how to sift through the increasing amount of readily available data. Social media outlets have changed the landscape forever. Website development, curation, and leverage will continue to be the number one sales and marketing tool. The use of LinkedIn, Facebook, Twitter, and other social media sites will continue to evolve, requiring frequent updates to just get into the game. And, now with the pandemic experience, even virtual selling has become relatively accepted. If anything, the greatest challenge may be determining how to resource, select, and implement the wide variety of sales and marketing tools available.

At the end of the day, as an internal or external L&D supplier, it is critical to stay on top of your game to best meet the needs of your customer base. With this comes the additional requirement of maintaining a high level of willingness and ability to be flexible in this ever-changing VUCA (volatile, uncertain, complex, ambiguous) world. How is your business addressing these trends? What are you doing to ensure you are relevant with each in continuing to best serve your end users?

For more insight, check out my book The Complete Guide to Building and Growing a Talent Development Firm.

About the Author

Steve Cohen is founder and principal of the Strategic Leadership Collaborative, a private consulting practice focused on business strategy and development. A 40+ year veteran of the talent development industry, largely on the supplier side, he has demonstrated a proven track record for building equity by growing top and bottom-line performance for eight different consulting enterprises in the education and training industry he has either founded and/or led. He has been called on to consult with numerous firms needing strategic planning guidance, business coaching, and board advisory services.

His latest book is The Complete Guide to Building and Growing a Talent Development Firm.

He can be reached at: 952.942.7291 or [email protected] or at his website: www.strategicleadershipcollaborative.com.

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