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Use Design Thinking to Prove ROI

For the past 30 or 40 years, many things have changed in learning and development, except perhaps one area: proving the value of learning. Certainly, we’ve made some progress in this arena, and there is good promise that more is to come. But in many cases, talent development leaders still struggle with the nagging issue of how to connect major learning programs to the business.

Some serious dilemmas stand out: 

  • DILEMMA #1: More than 50 percent of learning and development is wasted.
  • DILEMMA #2: What senior executives want from learning and development is rarely measured. One study found that 96 percent of Fortune 500 CEOs want to see the business connection, yet only 8 percent see it. And 74 percent want to see ROI, yet only 4 percent see it.
  • DILEMMA #3: Very few learning and development professionals have data to show top executives that their programs make a difference to the company’s bottom line.
  • DILEMMA #4: Most executives perceive learning and development to be a cost, rather than an investment. Thus, in times of economic anxiety, it’s the first budget to cut—when, really, it should be enhanced.
  • DILEMMA #5: Hard skills are widely perceived as being far more valuable than soft skills. Although data shows the payoff of soft skills is higher. But these skills require a major learning investment that CEOs may be reluctant to continue to provide funds. 

How do we correct this nagging and persistent problem? Design thinking may be the answer.

What Is Design Thinking?

Design thinking is a process that has its roots in innovation. Essentially, the process suggests that you should set your goals around what you want to achieve in detail and mobilize the entire group of people who are involved to design the product, service, or process to achieve those goals. 

That’s not necessarily a new idea. But historically, business results achieved from learning efforts (the goal) has not been clearly defined. 

In Design Thinking for Strategic Innovation, Idris Mootee explains that design thinking involves several key elements: 

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  • It’s a way to take on design challenges by applying empathy.
  • It’s an approach to collective problem solving.
  • It’s a framework to balance needs and feasibility.
  • It’s a means to solve complex or wicked problems.
  • It’s a mindset for curiosity and inquiry.
  • It’s a fixed process and a tool kit.
  • It’s a way to handle problems on a systems level.
  • It’s a culture that fosters exploration and experimentation.  

In terms of learning and development, design thinking means that all stakeholders work in a very collaborative way to design for the results desired from learning. The desired results can be any or all of the following outcomes: 
Reaction

Learning

Application

Impact

This is a chain of value that must exist for learning to drive business impact. This flow of outcome data is a classic logic model. In other words, the result at one level is a pre-condition for the next level. For example, to drive business impact, application results must be present. 

As we explore in Measuring for Success: What CEOs Really Think About Learning Investments, the results desired by executives—our funders and supporters—is business impact. Even in the government or nonprofit sectors, business impact measures of output, quality, cost, and time exist. In this setting, learning helps to get more work done, have better quality of work, save time as the tasks are completed faster, and even reduce the cost of work. Regardless of the type of organization, there is a need to connect learning to the business. 

Consequently, learning success must be defined as delivering business value. How do you do it?

Using Design Thinking to Deliver Results

Designing thinking’s role in proving ROI starts with defining outcomes. With the desired results clearly defined, all of the stakeholders involved are focusing their efforts on achieving business results. This simply involves eight steps to design for the needed business results. 

  • Start with why. Align programs with the business. The why becomes the business need and the proposed program is aligned to the specific business measure.
  • Make it feasible. Select the right solution. The right solution will drive the business measure.
  • Expect success. Design for results. The success of learning is now defined as “business results.” Objectives are set to push accountability to the business impact level. With reaction, learning, application, and impact objectives, designers, developers, facilitators, participants and managers of participants know what they must do to deliver business results.
  • Make it matter. Design for Input, Reaction, and Learning. This ensures that the right people are involved at the right time and that the content is important, meaningful, and actionable, setting the stage to drive business results.
  • Make it stick. Design for Application and Impact. This ensures that a participant is actually using the learning (Application) and that it has an impact. Results are measured at both Application and Impact Levels. Barriers must be removed or minimized and enablers are enhanced to drive desired business results.
  • Make it credible. Measure results and calculate ROI. With impact data in hand, the results must be credible. The first action is to isolate the effects of the program on the impact data. If ROI is planned, the next action is to convert data to money. Then the monetary benefits are compared to the cost of the program in an ROI calculation. This builds two sets of data that sponsors will appreciate: business impact connected directly to the program and the financial ROI, which is calculated the same way that a CFO would calculate a capital investment. (For more details, see Measuring for Success: What CEOs Really Think About Learning Investments.) 
  • Tell the story. Communicate results to key stakeholders—Reaction, Learning, Application, Impact, and perhaps even ROI data form the basis for a powerful story. Storytelling is critical and it’s a much better story when you have business impact data.
  • Optimize results. Use black box thinking to increase funding. Designing for results usually drives the needed results, but there’s always an opportunity to make the results even better. This involves improving the program so that the ROI increases in the future. Increased ROI makes a great case for more funds. When funders (executives) see that the program has a positive return on investment, it will be repeated, retained, and supported. 

With this approach, each person does their part to produce the business results, not relying so much on measurement to see if the results are there. Using this process almost guarantees the business results, because you have designed for it. That’s the big difference and it makes life easier for everyone. 

Want to learn more on how to use design thinking to deliver business results and increase the investment in talent development? Check out The Business Case for Learning. You can download a sample chapter from the new book here

About the Author
Jack J. Phillips, PhD, is chairman of the ROI Institute and a world-renowned expert on measurement and evaluation. Phillips provides consulting services for Fortune 500 companies and workshops for major conference providers worldwide. Phillips is also the author or editor of more than 100 articles and more than 75 books, including Measuring the Success of Leadership Development: A Step-by-Step Guide for Measuring Impact and Calculating ROI (ATD Press). His work has been featured in the Wall Street Journal, Bloomberg Businessweek, Fortune, and on CNN.
About the Author
Patti Phillips is president and CEO of the ROI Institute and is the ATD Certification Institute's 2015 CPLP Fellow. Since 1997, she has worked with organizations in more than 60 countries as they demonstrate the value of a variety of programs and projects. Patti serves on the board of the Center for Talent Reporting, as Distinguished Principal Research Fellow for The Conference Board, and as faculty on the UN System Staff College in Turin, Italy.

Patti has written and edited numerous books and articles on the topics of measurement, evaluation, and ROI. Recent publications include Measuring the Success of Leadership Development, Making Human Capital Analytics Work, Measuring the Success of Learning Through Technology, Measuring the Success of Organization Development, and Measuring Leadership Development: Quantify Your Program's Impact and ROI on Organizational Performance.
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