McKinsey Quarterly

Learning at the speed of business

| Article

Corporate universities are entering their second century, just as the businesses that rely on them are transforming themselves for the digital age. When pioneers such as General Motors and General Electric began offering standardized in-house training programs, about 100 years ago, they focused on imparting lower-level, day-to-day skills. Back then, it may have seemed fanciful to imagine the full-fledged academies that would emerge in later decades. But emerge they did: GE’s Crotonville leadership center, in 1956; McDonald’s Hamburger University, in 1961; and today’s true learning institutions for global corporations such as Apple, Boeing, and Danone.

Now a new phase is unfolding at these organizations, which must grapple with tools and platforms that facilitate knowledge sharing and employee interactions on an almost limitless scale, challenging—and sometimes appearing to sweep away—the old brick-and-mortar model (exhibit).

Learning at the speed of business

Where the findings lead

In 2014, we queried some 1,500 global executives about capability building. Last year, we sharpened our focus, surveying approximately 120 senior learning-and-development (L&D) officers to gain a more in-depth understanding of the present state and probable trajectory of corporate academies.1 We also conducted multiple benchmarking visits at best-in-class organizations and interviewed more than a dozen chief learning officers (CLOs) with experience at some of the largest, most successful companies around the world. Our findings derive, moreover, from insights we’ve gleaned through practical experience with corporate academies globally. That includes McKinsey Academy, this firm’s digital offering, which serves not only our consultants but also our clients, to help develop leaders and build functional capabilities.

The great majority of our respondents expect corporate learning to change significantly within the next three years—both the capabilities imparted and the new agility required to match the faster pace of business. Most also acknowledge that these developments will probably have a material cost: over that period, more than 60 percent of the respondents’ companies plan to increase their learning-and-development spending and 66 percent to increase the number of formal-learning hours per employee.

What’s worrying is the level of dissatisfaction with the status quo. Only 57 percent of the respondents believe that their academies are “very or fully aligned” with corporate priorities. Even fewer (52 percent) reported that these institutions enable their companies to meet strategic objectives. About 40 percent of CLOs say that their initiatives are either “ineffective” or “neither effective nor ineffective” in assessing the capabilities and gaps of employees. These shortcomings are most pronounced among midlevel managers and senior leaders—reflecting, in our experience, how difficult it is to instill new attitudes, particularly at the higher levels of a company.

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Many respondents also think that these organizations don’t sufficiently deploy the full array of learning tools, methods, and approaches now available. They report that classroom training, experiential learning, and the on-the-job application of skills were in regular use. But less than half of the organizations avail themselves of peer and self-directed learning, educational initiatives that take participants outside their comfort zones, or risk-free learning environments. About one-third of the respondents reported that their organizations lack systems to share learning among employees. And the surveyed CLOs overwhelmingly think that their organizations’ digital capabilities are too low.

The digital learning opportunity

Digitization offers a huge opportunity to transform learning and address some of its current deficiencies, though it bears noting that digital learning tools are not new. What is new—and disruptively so—is the fact that the content of learning is moving to the cloud, becoming accessible across multiple devices and teaching environments and often being generated, shared, and continually updated by users themselves.

Unsurprisingly, our research indicates that younger employees—millennials and postmillennials, or Generation Z—feel the greatest level of comfort with digitization. At China Fortune Land Development Company (CFLD), Han Qing, the head of CFLD University, explains that “deploying digital learning and using technology is part of our strategy because there are more and more young people joining the workforce. They are used to mobile phones and PCs. And they demand more digital learning.”

Integrated cloud-based platforms enable more than just new computer programs or nifty smartphone apps. Sophisticated organizations are now expanding their use of cloud-based learning to run such personalized applications as MOOCs (massive open online courses), SPOCs (small private online courses), instructional videos, learning games, e-coaching, virtual classrooms, online performance support, and online simulations.

One global Asian original design manufacturer we know offers a digital 3-D learning environment at its virtual model factory. This system lets employee participants “see” and “feel” complex equipment deployed at many of the company’s plants. Danone—long committed to encouraging professional and individual development through means such as more than ten learning facilities around the world—successfully rolled out its cloud-based Danone Campus 2.0 in 2014. Easily accessible and continually updated, this innovative approach to learning involves Danone employees in their own development by providing a digital, user-friendly space to share best practices, to highlight the latest internal and external knowledge, and to foster a culture of collaborative learning and networking.

Unleashing the power of collective intelligence is especially critical to the digital-learning transformation. Increasingly, the learner and the learner’s inner circle—colleagues who send each other articles or recommend content through a central online-learning system—act as curators. In large global companies, HR or L&D can’t own (or even share ownership of) detailed knowledge about the existing and emerging skills a diverse workforce must have to improve the performance of each business. But employees themselves can be empowered to share knowledge across the company, an approach that also helps solve the perennial problem of who will be the trainer. When training is automated, consistency improves and C-suite messages go straight to the front line, avoiding potentially distorted “translations” passed on at a company’s middle levels.

Flattening the knowledge hierarchy not only sharpens the messaging and broadens the pool of available content but also enables faster delivery and, potentially, more sophisticated performance measurement. We expect L&D and HR personnel to become less the authors of what gets taught in digital formats and more the facilitators who ensure that employee-generated content can be seamlessly dispersed throughout the company. Our respondents rated their companies highly on designing and delivering learning programs—more than 75 percent said they were effective on both counts. But digitizing education effectively requires the additional, more technical capabilities that a wired-in world demands.

For make no mistake, it really is a new world, learning at the speed of business. Since there is less need to wait for scheduled training sessions, “pull” can complement “push,” as employees empowered to upskill and reskill themselves log on to user-friendly learning platforms. Much as Amazon makes books instantly available anywhere, any time, on its Kindle and other devices, the digitization of learning can provide unprecedented access to relevant knowledge, a lot of it at relatively low or even no cost.

The impact of today’s best systems and tools can be just as profound as Amazon’s, even if the results aren’t always precisely measurable. As an executive at one leading global company noted, investing in modern learning-and-development platforms is so fundamental that it transcends simple metrics—akin to building a house and then trying to measure the ROI of the plumbing. Despite the ability of digital platforms to make the collection, analysis, and scoring of data more sophisticated, the full measure of impact can’t be captured to the decimal.

The enduring case for (at least some) bricks and mortar

Similarly, for all of the notable advances that digitization promises, comprehensive learning cannot be based on the cloud alone. Companies still have compelling reasons to locate significant elements of corporate learning in tangible, specialized educational facilities—increasingly, with ergonomically designed furniture, plenty of light, and interior design geared specifically to learning. In our experience, any successful educational program allows employees to unplug and enjoy a respite from an always-on, 24/7 tempo.

The importance of this physical separation from the daily grind should not be underestimated. If employees have no opportunity to step away from their working environments, the same old behavior, for good and ill, is constantly reinforced, and the chance for more reflective, committed learning is lost. Harvard professor Ronald Heifetz calls this a “balcony moment”: the imperative for leaders to leave the “dance floor” periodically and reflect on the patterns and movement below.

Dedicated learning facilities also befit the gravitas of a professional function. However virtual business may now seem, we still belong to a physical world; even Amazon recently established its own physical bookstores. It’s worth noting, as well, that millennials benefit from high-touch learning no less than workers from previous generations do. Younger employees may spend more time online and be more comfortable with mobile applications. But they should not be forced—and, in our experience, don’t desire—to engage solely with digital learning tools.

Indeed, corporate academies provide an unparalleled opportunity for employees to share experiences with fellow participants and to connect with company leaders. Many best-practice corporate academies deploy their top executives as visiting faculty; GE, for instance, has long used its most senior leaders in many learning programs. A major Asian oil and gas company we know includes the number of days senior executives spend in such teaching capacities in their performance evaluations. The value of this interaction is particularly high for companies that operate across businesses and geographies.

That said, learning is an expertise, no less than disciplines such as marketing or finance. It’s therefore critical to maintain a core learning-and-development team with professionals in that field. We’ve observed that too many L&D organizations are led by employees from other company functions who “graduate” to managing L&D a few years short of retirement. Companies that are serious about modernizing their skill-building efforts as digitization transforms corporate learning must attract and develop leaders with deep experience in this unique function. Some global organizations are even sending senior personnel to a new executive doctoral program, launched by the University of Pennsylvania, designed specifically to prepare CLOs and other senior executives for success as educational and talent-development leaders.


Winning hearts and minds in the 21st century

Tying it all together

Ultimately, we believe, the future of corporate academies lies in blended learning, which combines classroom forums, in-field applications, personal and results-oriented feedback, and online engagement. There is no magic number for allocating time between digital and in-person learning; different industries, and different companies within them, must determine the mix that makes the most sense for their circumstances and capability-development priorities. Connectivity allows organizations to meet many of the most important learning objectives: avoiding disruptions in day-to-day business, delivering content consistently (as opposed to in-person training with different facilitators), and sustaining learning for employees (who review the content after the end of each lesson and then update and share their new knowledge in real time).

It’s critical, too, for an organization to express its commitment from the very highest levels. Just as the digital and physical elements of learning must fit together in a rational way, L&D should collaborate with the C-suite to ensure general agreement on educational priorities and the required funding. “If L&D is not a strategic partner for the important initiatives of the company,” noted the CLO of one European telecom we interviewed, “you’re just working reactively with the other businesses. In our company, there is a strong alignment between learning and our overall business strategy. But that’s because of a strong push from the CEO.”

Farsighted corporate leaders understand the value proposition. When critical training programs became mandatory, a leading financial institution we are familiar with boosted its level of engagement and morale and halved its absentee rate for key positions. Across many dimensions, the effects of corporate learning—especially in the digital age—will find their way to the bottom line.

Corporate academies are poised for change on the order of magnitude experienced a century ago, when they developed from low-level workshops into mature institutions. The disruption now underway is remarkable, representing a transformation even when compared to what had been standard practices at the end of the 20th century, when the focus was largely on classroom-based learning. Achieving the next level of change—akin to the revolution that Amazon brought to retailing—will require a nimble balance between digital and physical platforms, cultural messaging and technical content, and real-time and actively shared learning. The sudden emergence of a more digitally engaged generation and the stepped-up pace of technological change suggest that time is of the essence. Successfully navigating the coming transformation will require not just a shift in tools and approaches but also an agile, engaged organization.

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