New L&D business models (with video intro)
The 70:20:10 Institute published a book introducing four new L&D business models: New Value Creators: Four Business Models That Redefine L&D.
The first two L&D business models—the Order Taker and the Learning Enabler—operate in the learning paradigm. The other two operate in the business paradigm.
Business model 1: The order taker
The Order Taker is responsible for providing formal learning solutions.
This means that L&D departments operating on this business model ensure learning solutions are available to match client demand. They also make this service provision as simple and efficient as possible. They offer no complex training analysis, theoretical models, or evaluations. Instead, they supply a detailed professional catalogue of the available formal learning solutions.
The Order Taker has the budget to facilitate training in organisations and take the burden from management when it comes to learning issues. The Order Taker exhibits an inherent pragmatism, decisiveness, and strong operational focus. This mix of activities, services and attitude makes the Order Taker attractive to management and training participants alike.
One disadvantage for the Order Taker is the near absence of evaluation to demonstrate business impact. Justification of expenditure, if any, is based on an overview of costs and the resulting participation. Therefore, management regards the Order Taker as a cost centre.
Business model 2: The Learning Enabler
Educational advice forms the core of the service offered by the Learning Enabler. The Learning Enabler is responsible for organising the intake, analysis, implementation, and evaluation processes of learning solutions. The Learning Enabler engages in dialogue with the client to analyse the target groups needs. But also, to establish whether a formal or other learning solution is the best response to the challenge.
In practice, the L&D departments operating as the Learning Enabler usually cannot answer requests from clients with a clear yes or no. The Learning Enabler also tends to be dependent on the client’s decision as to whether to go forward with the recommended learning solution.
As well as maintaining a professional learning catalogue, the Learning Enabler often works within learning landscapes or a learning and performance ecosystem. In practice, the main strength of the Learning Enabler lies in the provision of professional, formal online and offline training. The focus is clearly strategic, ensuring that the learning provision reflects the organisation’s overall priorities.
It is difficult for the Learning Enabler to demonstrate business impact in more than 20% of the learning solutions offered. For this reason, senior management also regards the Learning Enabler as a cost centre.
Business model 3: The Performance Enabler
The Performance Enabler primarily implements the operational priorities of the business. The services provided focus entirely on helping teams and individuals to work better and make continuous improvements. This comes from adopting a perspective on working and learning that is not purely educational. The Performance Enabler does not regard learning solutions as the only response to business problems or opportunities.
The Learning Enabler is less effective in changing and tracking performance than The Value Creator (Business model 4). Hence, they cannot always demonstrate business impact. However, senior management regards the Performance Enabler as on the way to being a revenue centre.
Business model 4: The Value Creator
The Value Creator implements management’s strategic priorities, offering more than formal learning solutions, and co-creates solutions with management and best performers. The aim is to make a measurable contribution to improving organisational performance. The Value Creator acts fully in line with the 70-20-10 model. This model describes five roles and the 70-20-10 methodology, i.e. the processes and approaches that enable the roles.
Everything the Value Creator does demonstrates measurable business impact in the form of business cases or quantified ROI. The Value Creator is a profit centre for management, with income and value-add exceeding expenditure.
L&D business models: blended
In practice, there are blends of the above four L&D business models. These L&D business models are not intended to be prescriptive. L&D leadership may make a deliberate choice to remain within the Order Taker model for one or two years while it reviews options for change. An Order Taker may also move immediately to the right, either directly to Value Creator or indirectly via the Performance Enabler.
There is no fixed path, profile, or sequence with respect to these L&D business models. However, becoming an integrated part of the business and a recognised profit centre is recommendable.