In response to this month’s question on LCB –
There is not much to predict when recession is written on the wall – It is rather etched there in BIG & BOLD. This is particularly true when my area of interest is business prediction- and today it can be predicted in one word i.e. “RED”.
Though there is an established viewpoint that businesses should use this low phase as an opportunity to build human capital through increased L&D activities, this is an ideal strategy which is less practiced than thought and talked. Practically, such sanity is feasible only during moderate and short lived recession. This recession is certainly not a moderate one neither will it be short lived (I see pain to persist over next 18 months).
Persistent recessionary conditions leave no room for building long term value such as human capital as fear and pessimism takeover the control over strategic decision functions. At this phase organisations’ start behaving instinctively in the short term interest-to placate shareholders sentiment and ensure survival. Only action then is to reduce the budgets on all non urgent activities (even at the cost of long term value).
L&D suffers such onslaught of instinctive pessimisms. How much of it will affect eLearning consumption will depend on a deeper analysis.
Impact of recession on eLearning consumption will not be uniform across global corporate world. It will be different for various industry verticals across geographies and sizes.
I am choosing to predict eLearning consumption for the different classes of companies based on their eLearning maturity levels:-
To predict the impact on eLearning, a deeper analysis of constituents becomes important. For simplicity let us divide the eLearning market into four classes:-
- Leaders – This class comprises of organisations having established eLearning practices over many years. There is a learning culture governed by the top management. eLearning infrastructure is in place and eLearning department is fairly structured with key learning team in place. Most importantly top management has realised the advantage of eLearning and remains committed for it. There is a strong ‘buy-in’ from learners, administrators and mentors. There are efficient systems in place for learning content development.
- Early Followers – This class comprises of organisation which have adopted eLearning in last 2-3 years. Though they have eLearning infrastructure and practices in place, they are still away in terms of required maturity. This may be because of nascent learning culture, less than desired buy-in and wavering management commitment.
- Late Followers – This class comprises of organisations which are late entrants – typically less than a year. Learning infrastructure is there but learning material is getting built. Stakeholders buy-in is yet to happen. Management is yet to see the complete cycle to realise the benefits of eLearning.
- First Timers – As the name suggest these players are the once who will try eLearning for the first during 2009.
Overall business impact of recession on eLearning can be estimated by predicting individual impact on all these classes. Here, I need help from industry experts to provide authentic data in terms of % of eLearning revenue contribution by these classes. Sum of weighted impact will provide business prediction for the year 2009.
I predict that Leading players are likely to enhance the eLearning activity level in the year 2009 due to the following reasons:-
Having realised the advantages these players will continue to consume more rapid content, and also continue to accent on value curve with innovative and dynamic content. This category will be interested in the eLearning vendors who can offer high value propositions. They may listen to innovative business models to their advantage, volume discounts, and staggered payouts. This category will be the substantial consumer of any new experimentation- informal learning, use of mobile platform, simulations and virtual environments. Though, every single dollar will be spent with caution.
In my views this category will not reduce the eLearning consumption and net effect on revenue will be marginally higher say 15% or so.
Now guess what % of total eLearning revenue comes from this segment?
Middle category is likely to remain shaky because of the internal challenge of low ‘buy-ins’ and relatively less committed management. I predict this category may show moderate weakness on overall basis. Consumption here may go down by up to 25% in revenue terms.
Bottom category is where the most worry would be. This segment may dry much earlier than the other two. Because of the lowest management and employee buy-in, cost reduction drive will slash substantial L&D and budgets in absolute terms. This category may reduce the eLearning consumption by up to 40%.
There is a 4th category the “First Timers”, who will be the fresh eLearning consumers in 2009. This will be the biggest causality from future potential perspective. Addition of new players will become extremely difficult. In my views contribution of first time eLearning consumers in 2009 revenue will at the lowest ebb compared to last 3 years.
I need relative contributions of these segments to predict the overall business impact on eLearning revenue. My broad guess is that it may not be a positive growth. Though for vendors who are committed to long terms value and serving leading players will be impacted the least with those having greater exposure with Late Followers suffering the most. If I were to have a wild estimate based on certain assumptions of revenue weights, business impact on eLearning for 2009 will be negative to the extent of -15%.
% of Revenue contribution by Leaders : 50%
% of Revenue contribution by Early Followers : 25%
% of Revenue contribution by late Followers : 15%
% of Revenue contribution by First Timers : 10%
Focus on value creation will ensure the survival and growth for eLearning vendors in Year 2009. Probably this is the year when learning experts would need to learn the best techniques and method to achieve the optimum value for the global eLearning consumers. This is going to be the year of new paradigms.
May industry see great times after this onslaught as the foundation for new inventions is set during this period! I believe it will happen as “Necessity is the mother of all invention” and there is no question about the greater necessity for “cost effective-high learning impact solutions” right now.