FUTURE OF EXECUTIVE EDUCATION | The Future of Leadership Development

The Future of Leadership Development

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The need to develop leadership has never been so urgent. Businesses of all kinds realize that to survive in today's volatile, uncertain, complex, and ambiguous environment, they need leadership skills and organizational skills different from those that helped them succeed in the past. There is also a growing recognition that leadership development should not be limited to the few who are in or near the C-suite. With the proliferation of collaborative problem-solving platforms and digital "adhocracies" that emphasize individual initiative, employees across the board are increasingly expected to make consistent decisions that align with corporate strategy and culture. Therefore, it is important that they are equipped with the relevant technical, relational, and communication skills.


The leadership development industry, however, is in a state of turmoil. The number of players offering courses to impart the hard and soft skills required by corporate managers has skyrocketed. And yet, organizations that collectively spend billions of dollars annually to train current and future executives are increasingly frustrated with the results. Several large-scale industry studies, along with our own in-depth customer interviews, indicate that more than 50% of top leaders believe that their talent development efforts do not adequately develop critical skills and organizational capabilities.




The problems of training traditional managers

Apprenticeship managers find that traditional programs no longer adequately prepare managers for the challenges they face today and those they will face tomorrow. Companies are looking for the communicative, interpretive, emotional and perceptual skills necessary to lead a coherent and proactive collaboration. But most executive education programs, designed as extensions or substitutes for MBA programs, focus on disciplinary skill sets, such as strategy development and financial analysis, and seriously underestimate important interpersonal, communication and emotional skills.

No wonder CLOs say they have a hard time justifying their annual training budget.

Executive training programs also do not meet their own stated objective. "Lifelong learning" has been a buzzword in business and university circles for decades, but still far from reality. The training of traditional managers is simply too sporadic, exclusive and costly to achieve this objective. Not surprisingly, the best business schools, including Rotman and HBS, have seen demand increase significantly for personalized programs based on cohorts that meet idiosyncratic business talent development needs. Corporate universities and the personal learning cloud - the growing combination of online courses, social and interactive platforms and learning tools from both traditional institutions and newcomers - fill the void.


There are very main reasons for the unrelated state of leadership development. The first is a gap in motivations. Organizations invest in executive development for their own long-term good, but people participate to improve their skills and advance their careers, and they don't necessarily stick with employers who have paid for their training. The second is the gap between skills developed by executive development programs and those required by companies, particularly the interpersonal skills essential to thrive in flat, networked and increasingly collaborative organizations. Traditional providers bring a wealth of experience in teaching cognitive skills and measuring their development, but they have much less experience in teaching people how to communicate and work with each other effectively. The third reason is the skills transfer gap. In short, few executives seem to take what they learn in the classroom and apply it to their jobs, and the further the learning place moves away from the application place, the greater this gap. To develop essential leadership and managerial talent, organizations must close these three gaps.




The Skill Transfer Gap: What You Learn Rarely Applies

One of the biggest complaints we hear about executive education is that the skills and abilities developed are not applied on the job. This challenges the foundations of executive education, but it is not surprising. Research carried out by cognitive, educational and applied psychologists dating back a century, together with the most recent work in the neuroscience of learning, reveals that the distance between where a skill is learned (the locus of acquisition) and where it is apply (the application locus) greatly influences the probability that a student will practice this skill.

In fact, it is much easier to use a new skill if the place of acquisition is similar to the place of application. This is called a close transfer. For example, learning to map the aluminum industry as a value-linked chain of activity is more easily transferred to an analysis of the steel business (near transfer) than to an analysis of the semiconductor industry (far transfer) or the steel industry. strategic consulting (additional transfer)

To be sure, when we say "distance," we are not just referring to physical reach. New skills are less likely to be applied not only when the application site is far from the acquisition site in time and space (such as when learning in an MBA classroom and applying the skills years later on the job) but also when the social (who else is involved?) and the functional contexts (what are we using the skill for?) differ.

Anecdotal evidence on skills transfer suggests that just 10% of the $ 200 billion annual outlay for training and corporate development in the United States offers concrete results. That is an amazing amount of waste. More specifically, it increases the urgency of the corporate training and executive development industries to redesign their learning experiences.  

The good news is that the growing variety of online courses, interactive and social platforms, and learning tools from both traditional institutions and startups, which constitute what we call the "personal learning cloud" (PLC), offers a solution. Organizations can select PLC components and tailor them to the needs and behaviors of individuals and teams. The PLC is flexible and immediately accessible, and enables employees to acquire skills in the context in which they must be used. Indeed, it is a form of learning at work in the 21st century.

In this article, we describe the evolution of leadership development, the dynamics behind the changes, and the ways of managing the emerging PLC for the good of the company and the individual.





The state of leadership development

Traditional players in the leadership development industry (business schools, corporate universities, and specialized training consultancies and businesses) have been joined by a host of newcomers. These include human resources consulting firms, large management consultancies like McKinsey and BCG, and digital startups like Coursera and Udacity. This is a rapidly changing landscape of service providers, but it's a world we've come to know intimately as educators, consultants, and leaders of executive education programs at Rotman (in the case of Mihnea) and Harvard Business School (in the case from Das). And to help make sense of everything, we've built a table that compares players (see below).

The Landscape of Providers

As demand grows for executive education that is customizable, trackable, and measurably effective, new competitors are emerging. Business schools, consultancies, corporate universities, and digital platforms are all vying to provide skills development programs, and each player has certain advantages and constraints.

ADVANTAGE	CONSTRAINT
Business schools with open programs	A large store of intellectual and pedagogical capital	Limited capability to provide contextualized learning
Business schools with customized programs	Can adapt content to the challenges facing the client organization and ensure the transfer of core skills	Inadequate follow-up when customization reaches the realm of personal learning and design
Strategic consultancies	A highly contextualized approach to skills transfer and development	Inadequate technology and know-how for evaluation and feedback
Human resources consultancies	Can identify participants’ core skills to create fully individualized coaching and development	A shortage of expertise in relevant functional domains
Corporate universities	Can deliver content that is immediately relevant to the organization, and in the context in which the skills will be applied	Limited ability to measure skills acquisition and application
Remote personalized learning platforms	Low-cost alternatives to programs that transfer functional and technical knowledge	Limits on contextualized learning and the development of relational, affective, and collaborative skills

We are now seeing powerful trends that are reshaping the industry and fueling the emergence of the PLC as a networked learning infrastructure. First, the PLC has reduced the marginal cost of establishing an internal learning environment and allowed Human Resources Managers (CHROs) and Learning Managers (CLOs) to make more demanding decisions about the right experiences for individuals and teams in their organizations A Unicon study reports that the number of corporate universities, providing in-house, on-demand, and often on-the-job education, has grown to more than 4,000 in the United States and more than double that number across the board the world. However, we believe that in the future, even as companies offer learning opportunities to more leaders in all their organizations, the changing cost structure resulting from the digitization of learning environments will lead to a modest increase in development resources. of leadership.

The second trend is the decline of standard classroom-based programs for executive development, such as those offered primarily by business schools and universities. Most organizations require pre-and post-acquisition measures and relevant skills, such as communicative competence and leadership acumen, that traditional programs were never designed to offer.

The third trend is the emergence of customizable learning environments, through platforms and applications that personalize content according to the roles of students and the needs of their organizations. The dominant platforms now have millions of enrolled in individual courses and tens of millions of total users.

These trends are linked and form a cohesive pattern: As learning becomes personalized, socialized, and adaptive, and as organizations become more sophisticated in measuring the return on investment in talent development, the industry is moving away. from a single package for all material and turning to the PLC. The PLC enables the quick and low-cost creation of corporate universities and internal learning programs in the same way that platforms such as Facebook and Instagram facilitate the formation of discussion groups. It is the "Petri dish" that encourages the rapid growth of learning communities. And it's vital to keep managers engaged and growing on the job.

At the base of the amplification of this trend is the rapid digitalization of the contention and the integration, which is beginning with the set of the leadership in the important modi. Innanzitutto, consent to the separation (or separation) of the elementi at the cost of a high-cost program. I guadagni dei fornitori di istruzione dipendono dalla loro capacità di raggruppare contenuti a basso cost (lezioni, discussioni di almost, esercitazioni e simili) with experience of high value as formazione personalizzata, apprendimento basato its progetti e sessioni di gruppo ad alta intensità di feedback. Più servizi touch sono inclusi nel pacchetto, più a provider può addebitare.

Second, digitization makes it easier to deliver value more efficiently. For example, classes can be videotaped and then viewed online by more students at their convenience. Similarly, discussion groups and forums to deepen understanding of conference concepts can be organized online, often through platforms such as Zoom, Skype, and Google Hangouts, allowing many more people to participate. , and with less problems and expenses. Millennials are already comfortable with social media-based interactions, so the value of being physically present on campus may be diminishing anyway. And because the discrete components of an online education program (individual lectures, case studies, etc.) can be priced and sold independently, the cost of developing various skills has decreased, particularly technical and analytical skills whose teaching and learning have become routine enough.

Finally, digitization is leading to disintermediation. Traditionally, universities, business schools, and management consultancies have served as intermediaries linking companies and their employees with educators: academics, consultants, and coaches. Now, however, businesses can go online to identify (and often select) the highest quality individual teachers, learning experiences, and modules, not just the highest quality programs. Meanwhile, instructors can act as "free agents" and take on the highest paying or most satisfying teaching jobs, escaping the routines and salary restrictions of their parent organizations.

The rise of the personal learning cloud

The PLC has been taking shape for about a decade. Its components include MOOCs (massive open online courses) and platforms like Coursera, edX and 2U to deliver interactive content online; training and corporate development ecosystems of LinkedIn Learning, Skillsoft, Degreed and Salesforce Trailhead, aimed at rapid and certifiable mastery of basic skills in interactive environments; solution-focused, on-demand leadership development approaches such as McKinsey Solutions, McKinsey Academy, BCG Enablement, and Digital BCG; and talent management platforms such as SmashFly, Yello, and Phenom People, that connect learning needs and student outcomes with recruitment, retention, and promotion decisions.

The PLC has four important characteristics:

1. Learning is personalized.

Employees can pursue the skills development program or practice that is right for them, at their own pace, using media that are optimally suited to their particular learning style and work environment. The PLC also enables organizations to track learner behaviors and outcomes and to commission the development and deployment of modules and content on the fly to match the evolving needs of individuals and teams.

2. Learning is socialized.

As the experiences of Harvard’s HBX and McKinsey’s Academy series have shown, learning happens best when learners collaborate and help one another. Knowledge—both “know-what” and “know-how”—is social in nature. It is distributed within and among groups of people who are using it to solve problems together. The PLC enables the organic and planned formation of teams and cohorts of learners who are jointly involved in developing new skills and capabilities.

3. Learning is contextualized.

As our interviews revealed, and as recent evidence from LinkedIn Learning has shown, most executives value the opportunity to get professional development on the job, in ways that are directly relevant to their work environment. The PLC enables people to do this, allowing them to learn in a workplace setting and helping ensure that they actually apply the knowledge and skills they pick up.

4. Learning outcomes can be transparently tracked and (in some cases) authenticated.

The rise of the PLC does not imply the demise of credentialing or an end to the signaling value of degrees, diplomas, and certificates. Quite the contrary: It drives a new era of skills- and capabilities-based certification that stands to completely unbundle the professional degree. Indeed, in more and more cases, it’s no longer necessary to spend the time and money to complete a professional degree, because organizations have embraced certifications and micro certifications that attest to training in specific skills. And seamless, always-on authentication is quickly becoming reality with the emergence of blockchains and distributed ledgers—such as those of Block.io and Learning Machine. Microcredentials are thus proliferating, because the PLC enables secure, trackable, and auditable verification of enrollment and achievement.

The PLC makes it possible for CLOs and CHRO s to be precise both about the skills they wish to cultivate and about the education programs, instructors, and learning experiences they want to use. The PLC’s expanding ecosystem covers a broad array of skills. At one end lie functional skills (such as financial-statement analysis and big-data analytics) that involve cognitive thinking (reasoning, calculating) and algorithmic practices (do this first, this next). The PLC is already adept at helping individuals learn such skills at their own pace, and in ways that match the problems they face on the job.

At the other end of the spectrum lie skills that are difficult to teach, measure, or even articulate; they have significant affective components and are largely non algorithmic. These skills include leading, communicating, relating, and energizing groups. Mastery depends on practice and feedback, and the PLC is getting steadily better at matching talented coaches and development experts with the individuals and teams that need such training.

But this is just the beginning. The PLC is proving to be an effective answer to the skills transfer gap that makes it so difficult to acquire communicative and relational proficiencies in traditional executive education settings. Meaningful, lasting behavioral change is a complex process, requiring timely personalized guidance. Start-ups such as SHIFT and Butterfly Coaching & Training are providing executive teams with a fabric of interactive activities that emphasize mutual feedback and allow them to learn on the job while doing the work they always do. BCG’s Amethyst platform allows both executives and teams to enter into developmental relationships with enablers and facilitators so that they can build the collaborative capital they and their organizations need.

The ubiquity of online training material allows CLOs to make choices among components of executive education at levels of granularity that have simply not been possible until now. They can purchase only the experiences that are most valuable to them—usually at a lower cost than they would pay for bundled alternatives—from a plethora of providers, including coaches, consultants, and the anywhere, anytime offerings of the PLC. And executives are able to acquire experiences that fulfill focused objectives—such as developing new networks—from institutions such as Singularity University and the Kauffman Founders School, which are specifically designed for the purpose.

For learners, the PLC is not just an interactive learning cloud but also a distributed micro certification cloud. Blockchain-trackable microdegrees that are awarded for skill-specific (rather than topic-specific) coursework allow individuals to signal credibly (that is, unfakeable) to both their organizations and the market that they are competent in a skill. In addition, the PLC addresses the motivations gap by allowing both organizations and executives to see what they’re buying and to pay for only what they need, when they need it.

Finally, the PLC is dramatically reducing the costs of executive development. Traditional programs are expensive. Courses take an average of five days to complete, and organizations typically spend between $1,500 and $5,000 per participant per day. These figures do not include the costs of selecting participants or measuring how well they apply their newly acquired skills and how well those skills coalesce into organizational capabilities. Nor do the figures account for the losses incurred should participants choose to parlay their fresh credentials and social capital into employment elsewhere. Assuming, conservatively, that these pre- and post training costs can amount to about 30% of the cost of the programs, externally provided executive development can cost a company $1 million to $10 million a year, depending on the industry, the organizational culture and structure, and the nature of the programs in which the enterprise invests.

By contrast, the PLC can provide skills training to any individual at any time for a few hundred dollars a year. Furthermore, these cloud services allow organizations to match cost to value; offer client-relation management tools that can include pre assessment and tracking of managerial performance; and deliver specific functional skills from high-profile providers on demand via dedicated, high-visibility, high-reliability platforms. Thus a 10,000-person organization could give half its employees an intensive, year-round program of skills development via an internally created and maintained cloud-based learning fabric for a fraction of what it currently pays to incumbent providers for equivalent programs.

What the Future Holds

For companies that tap into the PLC, the fixed costs of talent development will become variable costs with measurable benefits. Massively distributed knowledge bases of content and learning techniques will ensure low marginal costs per learner, as learning becomes adaptive. The ability to clearly specify the skill sets in which to invest, and the ability to measure the enhancement of individuals’ learning and firms’ capabilities, will ensure that the (variable) cost base of a corporate university can be optimized to suit the organization and adapted as necessary.

Individual learners will benefit from a larger array of more-targeted offerings than the current ecosystem of degrees and diplomas affords, with the ability to credibly signal skills acquisition and skills transfer in a secure distributed-computing environment. People will be able to map out personalized learning journeys that heed both the needs of their organizations and their own developmental and career-related needs and interests. And as the PLC reduces the marginal and opportunity costs of learning a key skill and simultaneously makes it easier to demonstrate proficiency, far more people will find it affordable and worthwhile to invest in professional development.

Meanwhile, with CLOs having greater visibility into the skills development blueprints that providers use, the signaling value of traditional providers’ offerings will decline because their programs will become easily replicable. That’s already evident from the increasing number of “bake-offs” in which the leading B-schools are having to participate to win corporate business. Recently a prominent global financial-services firm considered training proposals from no fewer than 10 top-tier schools in the final round of evaluation—reflecting competition in the market that would not have happened even five years ago.

Increased competition will force incumbents to focus on their comparative advantage, and they must be mindful of how this advantage evolves as the PLC gains sophistication. We already see that the disaggregation of content and the rise of “free agent” instructors has made it possible for new entrants to work directly with name-brand professors, thus diminishing the value that many executive education programs have traditionally provided.

Now the PLC is starting to cut into the domain of higher-touch classroom-type experiences, with live case teaching and “action learning” programs that involve web-based case discussions and customized opportunities to tackle real-life problems. These advances are made possible by the capacity of online learning environments to offer synchronous multi person sessions and to monitor participants via eye-tracking and gaze-following technologies. For example, IE Business School, in Madrid, uses technology that tracks facial expressions to measure the engagement of learners and facilitators in its online executive education programs. The Rotman School of Management’s Self-Development Lab uses an emotional spectroscopy tool that registers people’s voices, faces, and gazes as they converse.

Business schools will need to significantly rethink and redesign their current offerings to match their particular capabilities for creating teachable and learnable content and for tracking user-specific learning outcomes. They need to establish themselves as competent curators and designers of reusable content and learning experiences in a market in which organizations will need guidance on the best ways of developing and testing for new skills. Given the high marginal and opportunity costs of on-campus education, business schools should reconfigure their offerings toward blended and customized programs that leverage the classroom only when necessary.

Meanwhile, newcomers in leadership development are benefiting significantly from the distributed nature of the PLC—cherry-picking content, modules, and instructors from across the industry to put together the most compelling offerings for their client organizations. Large consultancies such as McKinsey and BCG can tap into their deep knowledge of organizational tasks, activities, and capabilities to provide clients with a new generation of flexible learning experiences, alongside their traditional strategic, organizational, operational, and financial “solution blueprints.” Other entrants—such as human resources consultancies—can lean on their privileged access to organizational talent data (selection metrics and the traits of the most sought-after applicants) to design PLC-enabled “personal development journeys” for new hires, guided by best practices for building skills and tracking learning outcomes.

For individual learners, acquiring new knowledge and putting it into practice in the workplace entails significant behavioral change—something the skills transfer gap tells us is very hard and costly to accomplish through such purely didactic methods as lectures, quizzes, and exams. However, PLC applications that measure, track, and shape user behavior are a powerful way to make prescriptions and proscriptions actionable every day.

In the past, it was hard for the traditional players in leadership development to provide an ROI on the various individual components of their bundled programs. But the PLC is making it possible to measure skills acquisition and skills transfer at the participant, team, and organizational levels—on a per-program, per-session, per-interaction basis. That will create a new micro-optimization paradigm in leadership education—one that makes learning and doing less distinct. The payoff will be significant, for if a new concept, model, or method is to make a difference to an organization, it must be used by its executives, not just understood intellectually. And as platforms change the nature of talent development, leaders will emerge with the skills—and enough real-world practice applying them—to do the right thing, at the right time, for the right reason, in the right way.