In the new economy, “graduation” is a dangerous concept. Learning is an ongoing event and part of everyone’s job description as new responsibilities, companies, and industries become the hallmarks of economic development. In fact, training budgets accounted for six percent of payroll among leading firms in a recent study of 1997 data that was funded in part by the U.S. Department of Labor. The number is probably even higher today. So what’s significant is not just that education at $785 billion per year is our nation’s second largest industry after healthcare, but that a huge proportion of that money is spent on continuing education and training for business skills. Most estimates hover around $65 billion annually, a figure that is easy to validate, particularly if we are willing to include entry-level consulting.
Training Model ExpandsGiven the financial backdrop, it makes sense to regard training more as a process than as a periodic event like an auto tune-up. Combined with the limitations of traditional classroom learning (travel costs, scheduling difficulties, and scalability issues), this emerging view has fueled interest in online learning. Several estimates put the e-learning component of business training at just under $10 billion over the next three years. At least on the surface, it seems we are taking to heart a digital age version of Mark Twain’s advice: “Don’t let school interfere with your education.” Traditional instructor-led training, however, won’t disappear. There are situations in which classroom training — human, face-to-face interaction — is preferable. Content does matter and plays an important role in choosing what modality is best. I can’t imagine a high-level strategy course or good team-building course that doesn’t include a dynamic classroom experience. In addition, learning styles vary across people in such a way that the social, discipline, or entertainment elements of the classroom are crucial to the learning process. The best educators and analysts recognize that learning will take place in a range of venues: Web-based virtual classrooms, self-paced e-learning courses, traditional instructor-led sessions, and various combinations of these alternatives.
May Many Flowers BloomIn parallel to the opportunity, there is a wide span of approaches to creating value propositions for users and investors. Some firms, Hungry Minds and Smart Planet among the leaders, have focused on building consumer portals, while others have become aggregators in the B2B market. Training Net is the largest of these firms, and offers more than 500,000 online courses across dozens of categories, including management and professional development skills, law, engineering, and Internet skills. Ninth House has garnered enormous attention with its broadband media effort and offers users an interactive, movie-style training solution so that a learner will get a unique “learning experience.” It attends to such so-called “soft skills” as leadership, communication, and project management and offers thought leadership from widely recognized consultants, including Tom Peters and Ken Blanchard. Other companies, Centra among the first, have focused on building virtual classrooms and tools for collaborative e-commerce. These offerings include Java application software for delivering live demonstrations and meetings over a firm’s intranet and extranet, as well as the Internet. And of course, there are the ubiquitous IT educators, addressing both desktop applications and “professional IT” content (programming languages and network architecture). SmartForce, probably the e-training company with the largest market share, has expanded its offerings from IT content to include basic management and interpersonal material. Other firms have focused on assessment and knowledge management tools or tracking and mentoring services.
Just Getting StartedAnd the list goes on: A growing assortment of companies, business models, technologies, alliances, and visions of the future exist. There are dozens of companies in the IPO queue, despite the lagging performance of a number of publicly traded firms. Moreover, the traditional people-to-people training companies and professionals haven’t stood still. Their experience with CD-ROM delivery, teleconferencing, and virtual classroom experiments has helped them get a sense of the challenges and opportunities in the new learning environment. As in other settings, there are folks looking over the fence so that a stampede to convergence or “integration” across delivery formats and business offerings is likely in the future. Cornelia Weggin, an equity analyst at the investment firm W.R. Hambrecht, puts it this way: “We are still in the foundation stage for the growth of a new old industry. People with careers in technology, and investors, should be ready to place bets on situations where the communication revolution, especially broadband and multimedia, will be used to improve corporate learning.” In effect, business is getting another chance to define how to nourish a key asset and source of wealth creation: talent. By any measure, it promises to be quite a party.
Nicholas Imparato (imparato@hoover.stanford.edu) is editor of Public Policy and the Internet (Hoover Institution Press, 2000)
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