Week 50, 2018
Feedback Loops: Learning, Added Value, and Operational Costs.
Each week I share three ideas for how to make work better. And this week, things get up close and personal. Because this week, I’ll share some of the mental models that my colleagues and I use when making business decisions at MAQE — the digital consultancy we run out of Bangkok, Thailand.
The models come from an internal presentation dated circa 2016. And whereas the models focus on learning and development, the presentation itself addressed reinvestment more generally. This is just an excerpt — an example of applied Systems Thinking.
If you’re unfamiliar to Systems Thinking, you might want to check out w472018 before you venture furher.
1. The (Positive) Learning Loop
The more we invest in learning and development, the more capable our workforce becomes. That capability directly translates into a competitive edge that help us secure work and grow our revenue which, in turn, allows us to invest further in learning and development. Thanks to our increased competitiveness, we enjoy more price elasticity as clients are willing to pay more for our services. And as a result, our profitability improves.
2. The (Positive) Added Value Loop
The more we invest in learning and development, the more engaged our workforce becomes. That engagement translates directly into productivity and value creation, helping us to meet (and exceed) customer expectations. And because happy customers tend to stick around, we enjoy sustained revenue over the long-term — allowing us to invest further in learning and development. What’s more: the longer we work together with our customers, the better we understand their business. And the better our understanding, the more value we can create.
3. The (Negative) Cost Loop
The more we invest in learning and development, the higher our operational expenses become. Partly because training is expensive, but mostly because higher skilled staff deserve higher pay. To offset these expenses, we must increase prices. And when we do, we risk pricing ourselves out of otherwise good business. And as we can only afford to take on high-value projects — projects that are usually few and far between — our business grows more volatile. And as that happens, our ability to reinvest in learning and development decreases.
Despite positive and negative feedback, the presentation gave a solid argument for investment more in learning and development, raising operational costs notwithstanding. The benefits very clearly outweighed the costs. And the models gave us a language and an opportunity to talk about how much to invest and, also, how we might preempt possible issues.
I’m still very much a student of Systems Thinking. And the above models does not really give justice the discipline as such. But they were valuable — largely because they helped visualize things otherwise intangible. They are communication tools. And used wisely, they can help build consensus and shared understanding.
That’s all for this week.
Until next time. Stay calm.
