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MGT230 v6Nordstrom Case Study AnalysisMGT230 v6Page 2 of 2.docx

MGT/230 v6 Nordstrom Case Study Analysis MGT/230 v6 Page 2 of 2 Nordstrom Case Study Analysis Nordstrom—“High Touch” with “High Tech” How does Nordstrom stay profitable despite dips in consumer spending, changing fashion trends, and intense competition among retailers? One answer: Acute attention to detail and well-laid plans. All in the Family The fourth generation of family members that runs Nordstrom has brought the store’s time-honored and successful retail practices into a new era. “Nordstrom, it seems, is that rarity in American business: an enterprise run by a founding family that hasn’t wrecked it,” says one business writer. The company provides a quality customer experience via personalized service, a compelling merchandise offering, a pleasant shopping environment, and increasingly better management of its inventory. Secret of Success The secret of this company’s success lies in its strategic planning efforts and the ability of its management team to set broad, comprehensive, and longer-term action directions, all of which are focused on the customer experience. The current generation of Nordstrom family members was quick to spearhead an ultramodern multimillion-dollar, Web-based inventory management system. This upgrade helped the company meet two key goals: (1) correlate purchasing with demand to keep inventory as lean as possible, and (2) give customers and sales associates a comprehensive view of Nordstrom’s entire inventory, including every store and warehouse. Demand Planning Instead of relying on one-day sales, coupon blitzes, or marking down entire lines of product, Nordstrom discounts only certain items. “Markdown optimization” software assists in planning more profitable sale prices. According to retail analyst, Patricia Edwards, this helps Nordstrom calculate what will sell better at different discounts and forecast which single items should be marked down. If a style is no longer in demand, the company can ship it off to its Nordstrom Rack outlet stores. It’s all part of Nordstrom’s long-term investment in efficiency. “If we can identify what is not performing and move it out to bring in fresh merchandise,” says Pete Nordstrom, “that’s a decision we want to make.” Inventory Planning Although inventory naturally fluctuates, Nordstrom associates can easily locate any item in another store or verify when it will return to stock. Customers on their smart phones and associates behind sales counters see the same thing—the entire inventory of Nordstrom’s stores is presented as one selection, which the company refers to as perpetual inventory. “Customer service is not just a friendly, helpful, knowledgeable salesperson helping you buy something,” says Robert Spector, retail expert and author of The Nordstrom Way. “Part of customer service is having the right item at the right size at the right price at the right time. And that’s something perpetual inventory will help with.” The upgraded inventory management system was an .

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MGT/230 v6
Nordstrom Case Study Analysis
MGT/230 v6
Page 2 of 2
Nordstrom Case Study Analysis
Nordstrom—“High Touch” with “High Tech”
How does Nordstrom stay profitable despite dips in consumer
spending, changing fashion trends, and intense competition
among retailers? One answer: Acute attention to detail and well-
laid plans.
All in the Family
The fourth generation of family members that runs Nordstrom
has brought the store’s time-honored and successful retail
practices into a new era. “Nordstrom, it seems, is that rarity in
American business: an enterprise run by a founding family that
hasn’t wrecked it,” says one business writer. The company
provides a quality customer experience via personalized service,
a compelling merchandise offering, a pleasant shopping
environment, and increasingly better management of its
inventory.
Secret of Success
The secret of this company’s success lies in its strategic
planning efforts and the ability of its management team to set
broad, comprehensive, and longer-term action directions, all of
which are focused on the customer experience. The current
generation of Nordstrom family members was quick to
spearhead an ultramodern multimillion-dollar, Web-based
inventory management system. This upgrade helped the
company meet two key goals: (1) correlate purchasing with
demand to keep inventory as lean as possible, and (2) give
customers and sales associates a comprehensive view of
Nordstrom’s entire inventory, including every store and
warehouse.
Demand Planning
Instead of relying on one-day sales, coupon blitzes, or marking
down entire lines of product, Nordstrom discounts only certain
items. “Markdown optimization” software assists in planning
more profitable sale prices. According to retail analyst, Patricia
Edwards, this helps Nordstrom calculate what will sell better at
different discounts and forecast which single items should be
marked down. If a style is no longer in demand, the company
can ship it off to its Nordstrom Rack outlet stores. It’s all part
of Nordstrom’s long-term investment in efficiency. “If we can
identify what is not performing and move it out to bring in fresh
merchandise,” says Pete Nordstrom, “that’s a decision we want
to make.”
Inventory Planning
Although inventory naturally fluctuates, Nordstrom associates
can easily locate any item in another store or verify when it will
return to stock. Customers on their smart phones and associates
behind sales counters see the same thing—the entire inventory
of Nordstrom’s stores is presented as one selection, which the
company refers to as perpetual inventory. “Customer service is
not just a friendly, helpful, knowledgeable salesperson helping
you buy something,” says Robert Spector, retail expert and
author of The Nordstrom Way. “Part of customer service is
having the right item at the right size at the right price at the
right time. And that’s something perpetual inventory will help
with.”
The upgraded inventory management system was an immediate
hit. As of launch day, Nordstrom found that the percentage of
customers who purchased products after searching the website
for an item doubled. It also learned that multi-channel
customers—those who shop from Nordstrom in more than one
way—spend on average four times more than one-source
customers. This profit more than offsets the cost of hiring
additional shipping employees to wrap and mail items from each
store. Now Nordstrom doesn’t have to turn away the customer
who spied a red Marc Jacobs handbag but found it out of stock
in her local store. She can buy it online or at the store counter
and it will be shipped to her, even from a store located across
the country.
Keeping It Lean
By displaying stock both on its website and in its stores,
Nordstrom has realized some very meaningful sales and
customer service results. Items don’t stay in stock very long.
The chain turns inventory about twice as fast as its competitors,
thanks to strong help from online sales.
Fast-turning inventories are a sign a retailer is well managed,
making it more attractive to investors. “The old, classic
Nordstrom way is that if you sell more stuff, that compensates
for any deficiency you may have in terms of technology,” says
Robert Spector. “They didn’t want to replace the high touch
with the high-tech. The challenge, not only for Nordstrom, but
for other retailers, is how you strike that balance between
having up-to-date systems and giving that personal service.”
“Traditional retailers have traditional ways of doing things,”
echoes Adrianne Shapira, Goldman Sachs retail analyst, “and
sometimes those barriers are hard to break down.” But
Nordstrom’s commitments to planning are paying dividends.
Source: Schermerhorn Jr., J.R., Bachrach, D.G. (2016)
Nordstrom—“High Touch” with “High Tech”. In Exploring
Management (Cases for Critical Thinking).Case Analysis
Questions
Answer the following in up to 350 words each.
1. Determine the specific planning objectives and measures
Nordstrom could use to assess the success of its Web-based
inventory integration.
Click here to enter text.
2. Explain how Nordstrom could make use of participatory
planning for continuous improvements in areas such as product
purchasing, floor displays, and sales associates’ job
satisfaction.
Click here to enter text.
3. Nordstrom wants to grow in a number of different areas.
Research one of its strategies and project it into the future.
Click here to enter text.
4. Refer back to one of Nordstrom’s strategies for growth. What
changes, revisions, or updates would you plan for the company?
What stretch goals come to mind?
Click here to enter text.
Copyright 2019 by University of Phoenix. All rights reserved.
Copyright 2019 by University of Phoenix. All rights reserved.
IMPORTANCE OF CRTICAL THINKING
Critical thinking for Managers (01/13/2020)
INTRODUCTION
Critical thinking means ‘making clear, reasoned judgments’ -
Beyer (1995).
Critical thinking is the art of analyzing and evaluating thinking
with a view to improving it.
Critical thinking is based on the substantive approach developed
by Dr. Richard Paul and his colleagues at the Center and
Foundation for Critical Thinking over multiple decades.
It entails five essential dimensions of critical thinking:
1. The analysis of thought.
2. The assessment of thought.
3. The dispositions of thought.
4. The skills and abilities of thought.
5. The obstacles or barriers to critical thought.
ESSENTIAL DIMENSIONS OF CRITICAL THINKING
BECOMING A CRITIC OF YOUR THINKING
HOW SKILLED IS YOUR THINKING?
WHAT QUESTIONS DO YOU HAVE IN YOUR MIND?
STEPS IN CRITICAL THINKING
Responding successfully to the questions in your mind is the art
of thinking.
For successful thinking, the foll: steps are followed
1. Identify the problem/question
2. Gather data, opinion, & arguments
3. Analyze & evaluate the data
4. Identify assumptions
5. Establish significance
6. Make a decision/Reach a conclusion
HOW TO MAXIMIZE QUALITY OF THINKING?
Make learning about thinking a priority
Ask Unusual questions
GOOD VS. BAD THINKING
ARE THERE WAYS TO DISCOVER GOOD & BAD
THINKING?
VARIETIES/STRUCTURE/TYPE OF CRITICAL THINKING
12 Forms of Critical Thinking:
1. Global critical thinking - multidimensional, interdisciplinary,
transdisciplinary, generalizable
2. Specialized Critical thinking - intradisciplinary, non global,
partial
3. Socratic critical thinking - fair-minded, ethical, strong sense
critical thinking
4. Sophistic critical thinking - unethical, selfish narrow-minded
critical thinking
5. Explicit critical thinking - conscious awareness to improve
skills & develop strategies for that purpose
6. Implicit critical thinking - without conscious awareness
VARIETIES/STRUCTURE/TYPE OF CRITICAL THINKING
7. Systematic critical thinking (integrated) use all concepts &
principles
8. Episodic critical thinking (occasionally, not systematically,
consistently, unintegrated critical thought)
9. Emancipatory critical thinking (flexible, not lock into rigid
set of assumptions)
10. Constrained critical thinking (trapped, not entertain other
possible viewpoints)
11. Critical thinking based in natural languages (ordinary rather
than specialized language)
12. Critical thinking based in technical languages ( extensive
vocabulary of terms & concepts)
HIGHLY RECOMMENDED TYPES OF CRITICAL THINKING
Global (any discipline or domain)
Socratic (fairness in reasoning, thinking)
Ad

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MGT230 v6Nordstrom Case Study AnalysisMGT230 v6Page 2 of 2.docx

  • 1. MGT/230 v6 Nordstrom Case Study Analysis MGT/230 v6 Page 2 of 2 Nordstrom Case Study Analysis Nordstrom—“High Touch” with “High Tech” How does Nordstrom stay profitable despite dips in consumer spending, changing fashion trends, and intense competition among retailers? One answer: Acute attention to detail and well- laid plans. All in the Family The fourth generation of family members that runs Nordstrom has brought the store’s time-honored and successful retail practices into a new era. “Nordstrom, it seems, is that rarity in American business: an enterprise run by a founding family that hasn’t wrecked it,” says one business writer. The company provides a quality customer experience via personalized service, a compelling merchandise offering, a pleasant shopping environment, and increasingly better management of its inventory. Secret of Success The secret of this company’s success lies in its strategic planning efforts and the ability of its management team to set broad, comprehensive, and longer-term action directions, all of which are focused on the customer experience. The current generation of Nordstrom family members was quick to spearhead an ultramodern multimillion-dollar, Web-based inventory management system. This upgrade helped the company meet two key goals: (1) correlate purchasing with demand to keep inventory as lean as possible, and (2) give
  • 2. customers and sales associates a comprehensive view of Nordstrom’s entire inventory, including every store and warehouse. Demand Planning Instead of relying on one-day sales, coupon blitzes, or marking down entire lines of product, Nordstrom discounts only certain items. “Markdown optimization” software assists in planning more profitable sale prices. According to retail analyst, Patricia Edwards, this helps Nordstrom calculate what will sell better at different discounts and forecast which single items should be marked down. If a style is no longer in demand, the company can ship it off to its Nordstrom Rack outlet stores. It’s all part of Nordstrom’s long-term investment in efficiency. “If we can identify what is not performing and move it out to bring in fresh merchandise,” says Pete Nordstrom, “that’s a decision we want to make.” Inventory Planning Although inventory naturally fluctuates, Nordstrom associates can easily locate any item in another store or verify when it will return to stock. Customers on their smart phones and associates behind sales counters see the same thing—the entire inventory of Nordstrom’s stores is presented as one selection, which the company refers to as perpetual inventory. “Customer service is not just a friendly, helpful, knowledgeable salesperson helping you buy something,” says Robert Spector, retail expert and author of The Nordstrom Way. “Part of customer service is having the right item at the right size at the right price at the right time. And that’s something perpetual inventory will help with.” The upgraded inventory management system was an immediate hit. As of launch day, Nordstrom found that the percentage of customers who purchased products after searching the website for an item doubled. It also learned that multi-channel customers—those who shop from Nordstrom in more than one
  • 3. way—spend on average four times more than one-source customers. This profit more than offsets the cost of hiring additional shipping employees to wrap and mail items from each store. Now Nordstrom doesn’t have to turn away the customer who spied a red Marc Jacobs handbag but found it out of stock in her local store. She can buy it online or at the store counter and it will be shipped to her, even from a store located across the country. Keeping It Lean By displaying stock both on its website and in its stores, Nordstrom has realized some very meaningful sales and customer service results. Items don’t stay in stock very long. The chain turns inventory about twice as fast as its competitors, thanks to strong help from online sales. Fast-turning inventories are a sign a retailer is well managed, making it more attractive to investors. “The old, classic Nordstrom way is that if you sell more stuff, that compensates for any deficiency you may have in terms of technology,” says Robert Spector. “They didn’t want to replace the high touch with the high-tech. The challenge, not only for Nordstrom, but for other retailers, is how you strike that balance between having up-to-date systems and giving that personal service.” “Traditional retailers have traditional ways of doing things,” echoes Adrianne Shapira, Goldman Sachs retail analyst, “and sometimes those barriers are hard to break down.” But Nordstrom’s commitments to planning are paying dividends. Source: Schermerhorn Jr., J.R., Bachrach, D.G. (2016) Nordstrom—“High Touch” with “High Tech”. In Exploring Management (Cases for Critical Thinking).Case Analysis Questions Answer the following in up to 350 words each. 1. Determine the specific planning objectives and measures Nordstrom could use to assess the success of its Web-based inventory integration. Click here to enter text.
  • 4. 2. Explain how Nordstrom could make use of participatory planning for continuous improvements in areas such as product purchasing, floor displays, and sales associates’ job satisfaction. Click here to enter text. 3. Nordstrom wants to grow in a number of different areas. Research one of its strategies and project it into the future. Click here to enter text. 4. Refer back to one of Nordstrom’s strategies for growth. What changes, revisions, or updates would you plan for the company? What stretch goals come to mind? Click here to enter text. Copyright 2019 by University of Phoenix. All rights reserved. Copyright 2019 by University of Phoenix. All rights reserved. IMPORTANCE OF CRTICAL THINKING Critical thinking for Managers (01/13/2020) INTRODUCTION Critical thinking means ‘making clear, reasoned judgments’ - Beyer (1995). Critical thinking is the art of analyzing and evaluating thinking with a view to improving it. Critical thinking is based on the substantive approach developed by Dr. Richard Paul and his colleagues at the Center and Foundation for Critical Thinking over multiple decades. It entails five essential dimensions of critical thinking: 1. The analysis of thought. 2. The assessment of thought. 3. The dispositions of thought. 4. The skills and abilities of thought. 5. The obstacles or barriers to critical thought.
  • 5. ESSENTIAL DIMENSIONS OF CRITICAL THINKING BECOMING A CRITIC OF YOUR THINKING HOW SKILLED IS YOUR THINKING? WHAT QUESTIONS DO YOU HAVE IN YOUR MIND? STEPS IN CRITICAL THINKING Responding successfully to the questions in your mind is the art of thinking. For successful thinking, the foll: steps are followed 1. Identify the problem/question 2. Gather data, opinion, & arguments 3. Analyze & evaluate the data 4. Identify assumptions 5. Establish significance 6. Make a decision/Reach a conclusion HOW TO MAXIMIZE QUALITY OF THINKING? Make learning about thinking a priority Ask Unusual questions GOOD VS. BAD THINKING ARE THERE WAYS TO DISCOVER GOOD & BAD THINKING?
  • 6. VARIETIES/STRUCTURE/TYPE OF CRITICAL THINKING 12 Forms of Critical Thinking: 1. Global critical thinking - multidimensional, interdisciplinary, transdisciplinary, generalizable 2. Specialized Critical thinking - intradisciplinary, non global, partial 3. Socratic critical thinking - fair-minded, ethical, strong sense critical thinking 4. Sophistic critical thinking - unethical, selfish narrow-minded critical thinking 5. Explicit critical thinking - conscious awareness to improve skills & develop strategies for that purpose 6. Implicit critical thinking - without conscious awareness VARIETIES/STRUCTURE/TYPE OF CRITICAL THINKING 7. Systematic critical thinking (integrated) use all concepts & principles 8. Episodic critical thinking (occasionally, not systematically, consistently, unintegrated critical thought) 9. Emancipatory critical thinking (flexible, not lock into rigid set of assumptions) 10. Constrained critical thinking (trapped, not entertain other possible viewpoints) 11. Critical thinking based in natural languages (ordinary rather than specialized language) 12. Critical thinking based in technical languages ( extensive vocabulary of terms & concepts) HIGHLY RECOMMENDED TYPES OF CRITICAL THINKING Global (any discipline or domain) Socratic (fairness in reasoning, thinking)
  • 7. Explicit (identify problems in his/her reasoning) Systematic (approach complex problems in a systematic/integrated way) Emancipated (minimize bias, prejudices) Natural Languages ( using natural language to analyze/assess) TOP CRITICAL THINKING SKILLS 1. Analysis - ability to collect & process information & knowledge 2. Interpretation - concluding the processed information 3. Inference - assess the knowledge is reliable & sufficient 4. Evaluation - ability to make decision on available information 5. Explanation - communicate your findings & reasoning clearly 6. Self Regulation - constantly monitor and correct your ways of thinking 7. Open mindedness - taking into account other possibilities & points of view 8. Problem Solving - ability to tackle unexpected problems & resolve conflicts TEST YOUR KNOWLEDGE (SITUATIONAL ANALYSIS - CLASS EXERCISE) Identify which critical thinking skills (from the above slide) applies to each situation: 1. Describe a situation where you challenged the way you and your colleagues did their jobs? 2. Describe a situation where you saw a problem & took steps to fix it. 3. Tell about a time you had to persuade to see your side of things.
  • 8. Education, Disrupted FrontiersEssay January 27, 2020 Reading Time: 11 min Michael B. Horn Frontiers, Innovation, Leadership, Management Innovation, Leadership Skills, Talent Management Confronting sizable skills gaps, companies have stopped waiting for higher education to meet their rapidly shifting competitive needs. advertisement MIT SMR FRONTIERS This article is part of an MIT SMR initiative exploring how technology is reshaping the practice of management. Image courtesy of Richard Mia/theispot.com Employers are confronting sizable skills gaps in all parts of their operations, at all levels, and they can’t seem to fill them by simply hiring new people. In today’s tight labor market, there are about 7 million open jobs for which companies are struggling to find qualified candidates because applicants routinely lack the digital and soft skills required to succeed. In the face of rapid technological changes like automation and artificial intelligence, helping employees keep pace is challenging. And companies are wrestling with how to retain top talent — a critical differentiator in a hypercompetitive environment. No wonder a staggering 77% of chief executives report that a scarcity of people with key skills is the biggest threat to their businesses, according to PwC’s 2017 CEO survey. As a result, companies can no longer afford to wait for the traditional “system” to supply the workers they hope will help shape their future — the need is too acute and too urgent, particularly given that many higher-education institutions remain in denial. We must change how we educate both traditional college-age students and adult learners. Last year, when 4,500 people gathered at the ASU GSV Summit
  • 9. in San Diego to discuss innovation both in education and in talent development writ large, it was clear that the companies in attendance were eager to find alternative paths. At this conference, political leaders and policymakers join CEOs and VCs to discuss the imperative of investing in human capital. Entrepreneurs in attendance work fervently to sell their wares or make deals, the likes of which have fueled a sharp increase in global mergers and acquisitions of education and talent development companies, up in total value from $4 billion in 2008 to $40 billion in 2018.1 Executives from leading companies like Apple, Google, Facebook, Workday, and Salesforce.com attend to share ideas and learn about new ways forward. Top of Form Bottom of Form The annual event provides a regular check-in on the state of corporate learning. In part, it’s meant to coax companies to focus their efforts, because there’s still a fundamental mismatch between how much they say they want to strategically invest in their current and future employees and what they actually do. On a keynote panel last year, Leighanne Levensaler, the executive vice president of corporate strategy at Workday,
  • 10. bemoaned a great lack of investment in human capital despite all the buzz around the topic. Michelle Weise, the senior vice president of workforce strategies at Strada Education Network and the chief innovation officer for the Strada Institute for the Future of Work, has written that although 93% of CEOs surveyed by PwC recognized “the need to change their strategy for attracting and retaining talent,” a stunning 61% revealed that they hadn’t yet taken any steps to do so.2 Employees seem to agree. According to a recent survey by Harvard Business Publishing Corporate Learning and Degreed, nearly half of employees are disappointed in their employer’s learning and development programs.3 But there are some notable exceptions to this prevailing trend. For instance, in July 2019, Amazon announced that it would “spend $700 million over six years on postsecondary job training for 100,000 of its soon-to-be 300,000 workers.” For now, Amazon says it intends to outsource that training to traditional colleges and universities. But once Amazon has begun to provide the bridge for that training, it’s not hard to imagine that it will be well positioned to create that training itself — without the “middle man” of colleges and universities — in the future.4 Although Amazon’s competitors will undoubtedly keep a close eye on its training moves, perhaps the education industry ought to keep an even closer eye, given that those moves may herald a total transformation in the landscape of learning, from college through retirement. To put this development into perspective, it’s worth stepping back to consider how learning has already evolved in recent years before situating Amazon’s announcement within the broader opportunities and challenges facing employers. What’s next for adult learning? Education is in the midst of digital transformation. That this is true is no longer hotly debated. Online learning emerged over two decades ago as a technology category that enables a range of potentially disruptive business models. No longer do students need to convene at a central location to enjoy
  • 11. a real-time, interactive experience with a teacher and peers. They can instead participate from anywhere in the world, in a more affordable and convenient fashion. This trend is growing rapidly in postsecondary education. Today, roughly a third of students in the United States take at least one online course as part of their accredited higher-ed experience, and over 15% study exclusively online.5 Many of these students are adults who are employed while they learn. Countless more workers take supplemental courses on platforms like Coursera, Udemy, and edX. Indeed, online learning has led to the creation of numerous organizations and offerings that support companies’ talent development efforts. For example, Pluralsight, LinkedIn Learning (built on the acquisition of Lynda.com), [email protected], and Udacity help employers re-skill the workforce in myriad areas, often in specialized or cutting-edge fields. Startups like Guild Education and InStride allow companies to work with colleges and universities to offer learning as a benefit. Degreed has emerged to measure and help assess the learning and skills inside an organization. Coding and engineering boot camps like General Assembly and Galvanize, and other so-called last-mile education providers (many of which offer blended or fully online programs), are increasingly working directly with enterprises. And universities like Arizona State, Bellevue, Southern New Hampshire, and Ashford, as well as schools like Ultimate Medical Academy, are partnering directly with companies such as Starbucks and Walmart to offer education to employees. The pace of innovation in corporate learning is frenetic — and highly uneven. As providers compete to serve enterprises, there is not one monolithic answer for what corporate learning will look like in the future. Just as companies have always patched together a variety of learning solutions to support their needs, they will most likely continue to do so. But what this abundance of new approaches and players has led to is the same thing that disruptive innovation has wrought in
  • 12. countless other fields: far more affordable and convenient options. In the case of learning and talent development, such offerings have the potential to allow companies to make more significant investments in their greatest asset: their employees. Which companies will leverage this opportunity to improve both their bottom lines and the welfare of their people? The answer to that is not yet clear, although it will be interesting to see whether a critical mass of organizations will follow Amazon’s lead. advertisement An interdependent solution to training. In many ways, Amazon’s announcement shouldn’t have been a surprise. The need for better-trained talent is clear in companies across the globe, and Amazon is taking a somewhat predictable path. Amazon’s efforts resemble what we’ve seen happening in other technology arenas for decades, bearing out Clayton Christensen’s Theory of Interdependence and Modularity. The theory tells us that in the early years of a new paradigm, in order to succeed, product and service providers must integrate across all the unpredictable and performance-defining elements of the value chain. Think of how, in the early days of mainframe computers, IBM integrated hardware manufacturing with the design of interdependent operating systems, core memory systems, application software, and so on. IBM recognized that to thrive, it had to do much more than make machines that would play nicely with modular components created by others. It had to own the whole value chain. We are now entering a similar moment in workforce education. The status quo that existed in the industrial economy and the early years of the knowledge economy — in which the links between companies and the educational institutions that fed them were predictable and good enough — is no longer adequate. In the case of Amazon, the step in the value chain that’s not good enough is the education that colleges and universities provide. Because the subject matter Amazon’s employees need
  • 13. to know is changing rapidly and building the curricula through traditional higher-ed faculty and processes would be too cumbersome, Amazon has concluded that it will in essence take a much more active role in the education and training of 100,000 of its employees. What may be equally interesting to monitor is where Amazon goes with this development. The company was its own first customer for Amazon Web Services before opening up that offering to others. It’s not hard to imagine Amazon doing something similar for corporate learning. Will Amazon shape the future of the global workforce through its own education programs? The company’s timing, it would seem, couldn’t be better. A focus on ROI. For corporations to invest in learning solutions in a sustainable way, there will most likely need to be a clear and compelling return on investment. As Allison Salisbury, a partner and head of innovation at education venture studio Entangled Group, has observed, companies can take at least five different angles when investing in human capital: providing on- ramp programs, upskilling, re-skilling, outskilling, and education as a benefit.6 Some of these approaches may be more sustainable than others, but each one has a distinct ROI. For instance, on-ramp programs bolster the quality and diversity of candidates for hard-to-fill roles by offering short-term training that creates a direct pipeline for employers. Outskilling programs, which are growing, help employees who don’t have a future at a company build a skill set to change careers. Companies offering such services become more desirable places to work and enhance their reputations in the labor market. In today’s economy, where there are more job openings than there are unemployed Americans, the imperative to invest in many, if not all, of these categories is evident for employers. Companies are competing for a scarce resource: people qualified to execute mission-critical tasks. Hence the Amazons and AT&Ts of the world are announcing major half-billion- dollar-plus bets on training.7 But are these just fair-weather investments? When the economy
  • 14. inevitably turns south, which of these categories will companies abandon? If the past is any guide, the most vulnerable categories will be those where the returns are the least direct — areas such as outskilling, perhaps, where the immediate benefits to the company are more reputational than financial. Even upskilling will probably be at risk — despite its obvious economic upside, given the widely acknowledged skills gaps that businesses urgently need to fill — unless employers can show a clear ROI that is better than other potential investments in automation and the like, as Mike Echols, formerly the director of Bellevue University’s Human Capital Lab, has written.8 The measurement challenge. The biggest challenge for companies that want to invest sustainably and heavily in human capital may lie in figuring out what kinds of people they need. For all their apparent sophistication in data analytics, few employers have a clear sense of the underlying skills, competencies, and habits of their most successful employees — never mind their future workforces. As a result, they don’t know what to look for when they post jobs, interview candidates, and hire new employees. A key sign of the imprecision of the hiring process is that nearly 50% of newly hired employees fail within 18 months.9 And that failure has significant costs — $15,000 on average, according to a CareerBuilder Survey.10 Why do employers struggle to understand what is important to succeed in certain positions? Partly, it’s because experts are notoriously bad at knowing what they know. According to the book How Learning Works,11 as individuals gain expertise in a particular role or field, they go through stages, from novices who don’t know what they don’t know to novices who do know what they don’t know to experts who know what they know to experts who don’t know what they know. The reason is that automating knowledge — essentially moving it into an individual’s subconscious as background information — is critical to freeing up space for the complex and creative tasks
  • 15. that an expert performs. As a result, though, asking top performers in a company to write a job description, for example, or to say precisely what skills are at the heart of correctly doing a job, is not as simple as it sounds, because the experts literally don’t recall. They are good at their jobs because much of their knowledge has been automated, so they aren’t able to easily articulate what skills are essential. What’s the solution to this problem? For years, one of the most trusted ways to identify key competencies was cognitive task analysis, a process of observing and documenting the underlying activities involved in performing a job. But cognitive task analysis is relatively costly and time-consuming, so most employers don’t do it. Herein lies an opportunity — and so a wave of providers is sweeping in to offer new ways to measure the skills of employees. Degreed, for example, has built a platform that records all the learning employees do, in an effort to understand their various learning pathways. It also offers a range of skill assessments to certify experts in various domains. LinkedIn Learning offers similar assessments, along with learning software to help people upskill, and tracks people’s self- reported skills and their connections to various jobs. If players like these are successful in capturing the real skills at the heart of work and measuring their attainment, that could translate into more precise measurement of the return on investment in human capital. And that could, in turn, lead employers to take far better advantage of the emerging slate of disruptive tools dedicated to helping people learn in a sustainable and strategic way rather than an episodic and ad hoc way. advertisement
  • 16. ABOUT THE AUTHOR Michael B. Horn (@michaelbhorn), coauthor of Choosing College (with Bob Moesta), is the chief strategy officer at the Entangled Group, an education venture studio, and cofounder of the Clayton Christensen Institute, a nonprofit think tank. He has worked closely with some of the companies mentioned in this article, including several that have been clients of Entangled.REFERENCES (11) 1. “Fast Facts,” ASU GSV Summit, accessed Nov. 18, 2019, www.asugsvsummit.com. 2. M. Weise, “Re-skilling Me Softly: Why Are American Companies So Bad at Re-skilling?” Quartz, Oct. 1, 2019. See also “17th Annual Global CEO Survey,” PwC, 2019. 3. C. Westfall, “New Survey: Nearly Half of Workers Unsatisfied With Learning and Development Programs,” Forbes, Oct. 8, 2019, www.forbes.com. 4. P. Fain, “Amazon to Spend $700 Million on Training, Mostly Outside College,” Inside Higher Ed, July 12, 2019, www.insidehighered.com. 5. D. Lederman, “Online Education Ascends,” Inside Higher Ed, Nov. 7, 2018, www.insidehighered.com. 6. A. Dulin Salisbury, “As Pressure to Upskill Grows, Five Models Emerge,” Forbes, Oct. 28, 2019, www.forbes.com. 7. S. Caminiti, “AT&T’s $1 Billion Gambit: Retraining Nearly Half Its Workforce for Jobs of the Future,” CNBC, March 13, 2018, www.cnbc.com. 8. M.E. Echols, “ROI on Human Capital Investment,” 2nd ed. (Littleton, Massachusetts: Tapestry Press, 2005). 9. M. Murphy, “Why New Hires Fail (Emotional Intelligence vs. Skills),” Leadership IQ, June 22, 2015, www.leadershipiq.com. 10. “Nearly Three in Four Employers Affected by a Bad Hire, According to a Recent CareerBuilder Survey,” CareerBuilder, Dec. 7, 2017, http://press.careerbuilder.com. 11. S.A. Ambrose, M.W. Bridges, M. DiPietro, et al., “How Learning Works: Seven Research-Based Principles for Smart Teaching,” 1st ed. (San Francisco: John Wiley & Sons, 2010).