three threats facing business leaders in the knowledge economy

Three Threats Facing Business Leaders in the Knowledge Economy

Strategies to combat the dangers, drive productivity enhancements, and build present and future prosperity.

© 2010 IMPACT60 Learning Systems™, LLC

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• 21st Century Game-Changing Trends

• Competitiveness in the Knowledge Economy

• Three Threats Facing Business Leaders

• Strategies for Success Today

• Brief Message from IMPACT60

Areas covered

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21st Century Game-Changing

Trends

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In 2000, the top five economies ranked by gross domestic product (GDP) were:

1. United States: $10.53T

2. Japan: $4.85T

3. Germany: $2.24T

4. United Kingdom: $1.54T

5. France: $1.54T

A look at global economics—Past

Source: World Resources Institute

US JP DE UK FR $-

$2

$4

$6

$8

$10

$12

GDP in trillions (2000)

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In 2010, the top 5 economies ranked by gross domestic product (GDP) were:


2. China: $9.87T

3. Japan: $4.34T

4. India: $4.05T

5. Germany: $2.96T

A look at global economics — Present

Source: The World Factbook, CIA, 2010

US CH JP IN DE $- $2 $4 $6 $8

$10 $12 $14 $16

GDP in trillions (2010)

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By 2050, the top five economies ranked by gross domestic product (GDP) are projected to be:

1. China: $70.71T


3. India: $37.67T

4. Brazil: $11.37T

5. Mexico: $9.34T

A look at global economics—Future

Source: Global Economic Paper No: 170, Goldman Sachs, 2008

CH US IN BR MX $-

$10 $20 $30 $40 $50 $60 $70 $80

Projected GDP in trillions (2050)

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During the first half of the 21st Century, the top 5 economies will grow by:

• United States: 266%

• Brazil: 1,490%

• Mexico: 1,516%

• China: 5,217%

• India: 7,286%

The world’s growth leaders – 2000 to 2050

Source: World Resource Institute; Global Economic Paper No: 170, Goldman Sachs, 2008

US: 266%

Brazil: 1,490%

Mexico: 1,516%

China: 5,217%

India: 7,286%

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• The world is experiencing an unprecedented explosion of what might be considered a “world middle class.”

• By 2030, two billion new people—30% of the global population—from developing countries are expected to join the middle class.

• Among other things, this will lead to accelerated and major shifts in social-economical development across many sectors of the global economy.

The expanding world middle class

Source: Global Economic Paper No: 170, 2 Goldman Sachs, 2008

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• By 2050, the U.S. will no longer posses the largest economy in the world—it will be one half as large as China’s and only slightly larger than India’s.

• China’s and India’s middle classes will be larger than the entire U.S. population while Brazil’s and Indonesia’s middle classes will rival that of the U.S.

• America will no longer hold a decisive advantage over the rest of the world in key areas such as fiscal wealth, access to resources, and a better educated—and perhaps more productive—society.

Impact of trends on the U.S.

Source: Global Economic Paper No: 170, 2 Goldman Sachs, 2008

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Competitiveness in the

Knowledge Economy

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• In 2008 and 2009, the global economy was weathering the most difficult climate in generations while 2010 and 2011 can be characterized as a period of significant uncertainty, especially in developed economies.

• Today’s difficult economic environment underscores the importance of not losing sight of long-term competitiveness fundamentals amid short-term urgencies.

• Competitive economies are those that have in place factors driving the productivity enhancements on which their present and future prosperity is built.

Global competitiveness—the economic perspective

Source: The Global Competitiveness Index, 2009 – 2010: Contributing to Long-Term Prosperity amid the Global Economic Crisis, and 2010-2011: Looking Beyond the Global Economic Crisis, World Economic Forum

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In today’s globally competitive environment, the key factors that economies and businesses must have in place to drive productivity enhancements are:

• Modern technology

• Organizational practices

• Workforce skills

Global competitiveness—the business perspective

Source: Innovation and Productivity: Using Bright Ideas to Work Smarter, The Treasury, New Zealand Government, 2008

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All three factors must work in combination today:

• Modern technology spurs innovation and enhances productivity.

• Well-planned and executed organizational practices are essential for operational efficiency and effectiveness.

• A highly-skilled and well-trained workforce is the critical component that makes both plans and technology work.

Global competitiveness—the business perspective

Source: Innovation and Productivity: Using Bright Ideas to Work Smarter, The Treasury, New Zealand Government, 2008

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“The next wave of enduring great companies will be built not by technical or product visionaries but by social visionaries — those who see their company and how it operates as their ultimate creation and who invent entirely new ways to organizing human effort and creativity.”

- Jim Collins

Today’s great companies

Source: The Most Creative Product Ever, Jim Collins, 1997

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• The world is changing faster than ever before — countries and companies around the world will continue to fiercely compete for their place in the global economy.

• People are the critical source of competitive advantage in the knowledge economy.

• Highly qualified human capital assets are the only real way for organizations to differentiate themselves, enhance productivity and drive prosperity in today’s ever changing and hyper-competitive business environment.

Making the connections

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Three ThreatsFacing

Business Leaders

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1. Failure to understand the criticality of human capital assets.

2. Failure to understand the necessity for ongoing skills development.

3. Failure to understand the strategic and practical value of training.

Three Threats

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Threat #1: Failure to Understand

the Criticality of Human Capital Assets

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• The knowledge-base economy is indeed a game changer for, unlike any other economic period, knowledge is both a tool and product.

• Knowledge resources are as critical to success today as any other strategic resource.

• People—their expertise, know-how, and interpersonal capabilities—are essential assets in today’s business environment.

People are the essential asset

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• Many business leaders do not comprehend the transcendent changes taking place today and still view their employees as liabilities on a balance sheet rather than highly-valued, appreciable assets.

• This can be dangerous since, for many companies, people are their only source of long-term competitive advantage.

Your employees—liabilities or assets?

Source: Maximizing Your Return on People by Laurie Bassi and Daniel McMurrer, Harvard Business Review, March 2007

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Economic success in the 21st century depends more than ever on the effective use of intangible assets such as

• knowledge,

• skills, and

• innovative potential

in order to gain a competitive advantage.

Intangible assets = competitive advantage

Source: Economic and Social Research Council, 2005

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Organizations are finding themselves ill-equipped to compete in the knowledge economy because

• too many workers lack the right skills to help their employers grow and succeed, and

• organizations’ success depend on the knowledge and capabilities of their employees.

Employee knowledge + capability = organizational success

Source: Bridging the Skills Gap – How the Skills Shortage Threatens Growth and Competitiveness…and What to Do About It, American Society of Training and Development, 2006

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The ingenuity, agility and skills of people are crucial to competitiveness in

• an economy driven by innovation and knowledge,

• marketplaces engaged in intense competition and constant renewal

• a world of tremendous opportunities and risk, and

• diverse workplaces and communities that hinge on collaborative relationships and social networking.

21st century skills are crucial

Source: 21st Century Skills, Education & Competitiveness, Partnership For 21st Century Skills, 2008

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• People are the essential asset in today’s knowledge-based economy.

• People are the only source of long-term competitive advantage.

• Success of organizations depends on the knowledge and capabilities of their employees.

• People directly impact business growth and profitability today more than any other asset.

The value of human capital assets in summary

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Threat #2: Failure to Understand the

Necessity for Ongoing Skills Development

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• In 1950, 20% of U.S. jobs were classified as “skilled” meaning they required some education beyond high school.

• Today, this number is 85% and growing.

• The resource pool for the kind of employees today’s jobs require is diminished as we have an over-supply of low-skilled and under-supply of high-skilled workers.

The state of skills in the U.S. today

Sources: Bridging the Skills Gap – How the Skills Shortage threatens Growth and Competitiveness...and What to do About It, American Society of Training and Development, Fall 2006; The Future of American Jobs, Trends Magazine, November 17 2009

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• Overall, skill levels in the U.S. workforce have stagnated for more than 30 years.

• When American baby boomers entered the workforce in the 1970s, they led the global economy in college degrees.

• Today’s younger workers do not possess higher skills than their soon-to-be retired baby boomer seniors.


Source: A Reform Package, Peterson Institute for International Economics

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• Three in four employers (74%) said recently they are concerned about experiencing a knowledge drain as older workers leave the workforce.

• 97% of these employers have not yet calculated the cost to transfer knowledge from older to younger employees — or worst yet, the costs for not transferring older workers’ knowledge.


Sources: Employers Worry More about the Impending Knowledge Drain Than the Impact of Delayed Retirement, According to MetLife Study, MSN Business wire, December 15, 2009; How to Plug Your Company's Brain Drain, CNN/Fortune, July 19, 2006

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When polled in 2009, 79% of nearly 1,200 organizations said their employees have skills deficiencies.

• 50% reported gaps in the skill sets of their executive leadership.

• 31% identified gaps in managerial, supervisory, and customer service skills. Also, communications and interpersonal skills.

• 30% said that there were gaps in the skills of their sales personnel.

The skills gaps are significant

Source: Skills Gap Poll, American Society of Training and Development, 2009

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The health of the U.S. economy depends directly on how broadly and deeply Americans reach to achieve a new level of literacy that includes

• academic and technological capabilities, and

• thinking, reasoning, listening, and teamwork and decision-making skills.

The knowledge economy demands a new kind of literacy

Source: 21st Century Workforce Commission National Alliance of Business, 2000

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U. S. employers cite the most important skills needed by recent high school and two- and four-year post secondary graduates as• professionalism and work

ethic, • oral and written

communications, • teamwork and

collaboration, and • critical thinking and

problem solving.

Employers need workers with soft and conceptual as well as functional, etc. skills

Source: Corporate Voices for Working Families & the Society for Human Resources Professionals, the Conference Board, Partnership for 21st Century Skills, 2006

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The nature of work in America and around the world is undergoing a radical transformation with the advent of the knowledge economy.

This new paradigm requires workers to be far more skilled than at any time in the past.

The need to upgrade workers’ skills will grow well into the 21st century.

We must rethink everything

Source: The Future of American Jobs, Trends Magazine, November 17, 2009

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Threat #3: Failure to Understand the

Strategic and Practical Value of Training

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• An IBM Business Consulting Services study states: “CEOs overwhelmingly believe that revenue growth is their number-one financial priority.”

• [and] “CEOs recognize that growth and differentiation require major change, yet deficiencies in skills and competencies seriously threaten the growth agenda.”

Training impacts senior executives’ top priority

Source: Global CEO Study, IBM Business Consulting Services, 2004

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The lack of training—an obstacle to business growth

Source: The High-Performance Workplace Study, Accenture, 2006

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• An Accenture study states that in the past two decades, a company’s workforce has become increasingly important to business success, and most senior executives view people and workforce-related issues as a critical, competitive differentiator.

• Across geographies and industries, most companies still struggle to build industry-leading work-force skills.

• Such shortcomings can present significant obstacles to growth for virtually every company.


Managers can

• increase overall leadership effectiveness between 50% and 60% by focusing on developing their employees and their own communications competencies, and

• increase productivity and reduce tension within the workplace.

Training increases management’s leadership effectiveness and drives productivity

Source: What's a Manager to Do?, Jim Trinka, PhD, Chief Learning Officer FBI and former Director of Leadership and Organizational Effectiveness IRS

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Managers that shift from being ineffective to effective managers

• improve employees performance by 25%, engagement by 52% and retention by 40%,

• their employees become more committed, experience greater job satisfaction, will “go the extra mile,” have fewer absences, stay with the company longer, and

• prioritize learning, and proactively build their levels of competence.

Training positively impacts employee performance, engagement, retention

Source: Corporate Leadership Council Study, Corporate Executive Board, 2004

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• According to the latest statistics on why customers leave, 65% do so because of something that the front-line is or is not doing.

• A TARP Worldwide Financial Services study showed that among customers who register a complaint, 54-70% will buy again if their complaints are resolved—moreover, this improves to 95% when customers feel their complaints were resolved quickly.

Training aids in improving customer relations, satisfaction, loyalty

Source: Customer Advocacy: Creating the Business Case for Customer-Centric Companies with Fanatical Customer Advocates, Hitachi Consulting

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• According to a Harvard Business School study, the top 10% of small businesses provide three times more hours of employee training, as compared to the bottom 10%.

• An HR Magazine article explained that companies in the top quarter of employee training expenditures per employee per year ($1,500 or more) average 24% higher profit margins than companies that spend less per year.

Training increases business success and profitability

Source: Training programs should be seen as investment, not expense, Nashville Business Journal, September 12 2003; Article by Susan J, Wells, HR Magazine, 2001

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• A common myth held by many senior executives is that ‘training and development is an expense and not an investment.’

• How do you view training?

AS AN EXPENSE?

AS AN INVESTMENT?

• Are you capitalizing on the strategic and practical value of training?

A retrospective: the moment of truth

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1. Failure to understand the criticality of human capital assets.

2. Failure to understand the necessity for ongoing skills development.

3. Failure to understand the strategic and practical value of training.

Three Threats Reviewed

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Strategiesfor

Success Today

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1. Focus on your PEOPLE.

2. Continuously train and develop your workforce.

3. Choose the correct partner.

Strategies

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Strategy #1: Focus on PEOPLE

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“Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.”

- Jim Collins

Get and keep the right people

Source: Good to Great, Jim Collins, 2001

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From ManTech’s Former President & COO Robert Coleman:

“First, to turn a popular phrase on its head: employees aren't the most important asset in a company—employees ARE our company.”

“As a mission-driven company, every day, we come to work to help deliver unique best-value solutions, consulting services, and technologies that meet our clients’ mission-critical needs. So when our people learn and grow in their capabilities, our company learns and grows its core competencies.”

Employees ARE the company

Source: Perform with Pride, Training+Development Magazine, March 2009

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From PepsiCo’s Chairman & CEO Indra Nooyi:

“Today’s marketplace is incredibly competitive, not only in our industry, but in every industry around the globe—the difference between success and failure is talent, period.”

“We attract the best, [and] we focus on providing associates with the training, tools, and opportunity for their professional growth and development.”

Talent is the difference between success and failure

Source: Doing Good While Doing Well, Training+Development Magazine, June 2008

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Strategy #2: Continuously Train and

Develop your Workforce

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From Adobe’s President & CEO Shantanu Narayen:

“It’s really very shortsighted to say you’re not going to invest in your people. It’s one of those things that is so core to us that I don’t spend a lot of time thinking about it.”

“Training resources are available and abundant, and all managers have it in their quarterly and annual objectives to provide and encourage development among their employees, so it’s really pushed.”

It’s shortsighted not to invest in people. Managers must develop their people

Source: Innovation Is the Framework of Adobe’s DNA, Training+Development Magazine, May 2009,

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From Lowe’s Chairman & CEO Robert Niblock:

“I think having well-rounded programs for leadership and development across the entire organization is vital.”

“Employee development is critical because in the retail business nothing else matters. They are the ones driving the sales and making sure we’re addressing customer needs. If that doesn’t take place, we don’t have sales at the register, and we don’t have a reason to exist.”

Leadership and development is vital. Employee development is critical

Source: Training at Lowe’s: Let’s Learn Something Together, Training+Development Magazine, November 2009

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From Caterpillar’s Former Chairman & CEO Jim Owens:

“…as our people grow, our business grows.”

“No great company gets there on the strength of a handful of leaders. It gets there by creating a cast of thousands of employees who enthusiastically help drive the enterprise to a leadership position.”

“Through learning, our employees build the knowledge and skills needed for their current and future jobs.”

As people grow, business grows. Training builds job knowledge and skills

Source: Learning IS A Powerful Tool, Training+Development Magazine, January 2008,

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Strategy #3: Choose the Correct Partner

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Choose a Training and Development partner who:

• Understands today’s business environment and issues.

• Understands the strategic importance of workplace learning and development for your organization’s long-term success.

• Provides a new approach to workplace learning and development in the 21st century.

• Can address (faster, better and more cost effectively) the unique demands for human capital development in a knowledge driven economy.

Putting it all together with the right partner

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Choose a Training and Development partner who can help you meet key business goals such as:

• Improving operational efficiency and effectiveness.

• Increasing productivity and decreasing costs.

• Improving employee morale and retention.

• Increasing customer satisfaction and loyalty.

• Gaining greater overall competitiveness.

• Achieving higher levels of growth and profitability.

Putting it all together with the right partner

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1. Focus on your PEOPLE.

2. Continuously train and develop your workforce.

3. Choose the correct partner.

Strategies Reviewed

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Brief Message from

IMPACT60

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Who we are

IMPACT60 Learning Systems™

• Provides clients with a new approach to workplace learning and development in the 21st century.

• Has a revolutionary training platform that is a faster, better, and more cost effective way to address the unique demands for human capital development in a knowledge driven economy.

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Who we areIMPACT60 Learning Systems™

• Delivers workplace learning and development tools to expand the capabilities of clients’ personnel who are responsible for business growth and profitability: management, leadership, sales and customer service personnel.

• Provide its products and services through a radically-conceived, designed, built, and priced 21st-century training platform; branded as 60 MINUTES for IMPACT™ Workshops.

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Our value proposition

Our approach to training minimizes, if not eliminate, the negative impact of the seven (7) problems of traditional training programs including:

• Lengthy durations

• Overloading of Information

• Delivery approach deficiencies

• Transferability limitations

• Lack of impact and measurability

• Operational and functional inflexibilities

• Cost inefficiencies

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Our value propositionWe measure success by our ability to provide highly effective management, leadership, sales, and customer service programs for today’s business environment, and by how well our workplace learning and development tools support clients in their ongoing effort to meet key business goals such as:

• Improving operational efficiency and effectiveness

• Increasing productivity and decreasing costs

• Improving employee morale and retention

• Increasing customer satisfaction and loyalty

• Gaining greater overall competitiveness

• Achieving higher levels of growth and profitability62


Our workshops are – Benefits to youConcisely Timed and Highly Focused

Each one-hour workshop focuses on a single skill—or sub-set of a skill—at a time and contains no extraneous content. Your people will

• take less time away from their jobs.

Immediately Applicable

Each new skill learned can be used immediately, ensuring higher transference of knowledge and greater utility of the training, which will

• improve business results.

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Our workshops are – Benefits to youResults Based

Combine workshops to create a “continuous learning environment” that will

• increase the skills and capabilities of your staff, and

• build a more productive and profitable workforce.

Uniquely Flexible

Plan and conduct training in a single workshop, several individually-focused workshops, or a workshop series that will

• enable you to align your training needs to your business strategy.

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Our workshops are – Benefits to youRadically Priced

License workshops à la carte or in sets of 12, 24, or 48 for a fixed annual fee. Receive preset “purchase volume discounts” when licensing workshops in sets. Receive “large users’ discounts” when purchasing a license to train more than 100 people in a given year. You will

• have greater budgetary control over your purchases.

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Contact us Headquartered Location

o 13800 Coppermine Road, Herndon, VA 20171 Telephone Numbers

o Local – (703) 406-2295o Fax – (703) 406-2695o Toll Free (855) 667-3500

Website URL

o http://impact60learning.com Email Address

o [email protected]

Contact Us for A Free Training Needs Discussion/Assessment

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http://impact60learning.com/

mailto:[email protected]