Why buy equipment and ignore the skills?

I have given talks on skills all over the world and I use a particular slide frequently. On the left, there is a photo of an 11 year old and on the right a Stradivarius violin worth over $5 million. Then, I ask the audience a question – should our budding 11 year old musician learn to play on this valuable instrument? Plainly – no. So, why do we persist in undervaluing training on all sorts of expensive and ever more complex machinery in all sectors.

The skills agenda is massive. Over 5 million workers in the UK have no qualifications at all. One in six adults do not have the literacy skills of an 11 year old – the age of our musician. Almost half don’t have functional numeracy skills and half of these can’t find work in any case. And yet, as the Leitch Report (2005) made plain – jobs for unskilled workers are being eliminated year by year. Think of the impact that these figures have on productivity and on the chances for the UK to compete on the world stage. It is estimated that by 2020 at least 4 million adults will not have the literacy levels of an 11 year old and 30 per cent of adults will not have numeracy skills at this level. Open up the radar screen and look into the Emerging and Developing world and we see a huge challenge. The lack of skills is now a serious constraint on sustainable growth in all economies. We have to get real.

Take India. It is estimated that India will need 500 million skilled workers by 2022. This means upskilling workers that are already in post and, introducing skills and new skill sets from new industries to youth coming onto the labour market. This is where skills translate into livelihoods.

Take Africa – localisation is key to sustainability and moving workers in to complete major Infrastructure projects is not the recipe to develop local skills and build skills that remain. We are talking of billions of workers to be trained as the population shifts from 6 to 9 billion by 2050 all over the world. This fact should shape the skills agenda going forward. It is not enough to build a sophisticated career path that moves people out of vocational roles and into Further Education or University style courses that all too often are taken as a passport out of the home country and away from livelihood and into developed world lifestyles. There needs to be a more realistic view of what people need to learn and where, when and how they can learn. First, let’s look at the markets that need the skills. Here’s three:

  1. Emerging markets. Just look at the billions allocated to infrastructure and all sorts of industrial sectors in countries with dynamic growth. Think of the BRICs  and how their entire social profile is being transformed in a consumption revolution fuelled by the money coming from livelihoods with ever more skilled jobs. Livelihood is the key to building skills not coursework.
  2. Developing markets. Again, skills translate directly into sustainable livelihoods – not lifestyles. How can these be developed – at all levels. We need to understand the specifics of urban and rural needs – ensuring that technology is deployed to
  3. Dislocated markets. Then, there are the skills needed by the indigenous population to build sustainable growth. In many cases this is an extension of the Humanitarian effort that has had to deal with an Emergency. More needs to be done to see this phase in more market led terms. That is, how can international companies be brought into the market faster; how can other types of firm, like cooperatives, be encouraged? What skills are in place if and when they do? How can an economy that has had to fall back on the informal economy to survive build up its skills base – without which jobs cannot be created and inward investment will stall? And, how will micro firms as well as multinationals generate cash flow and retain enough to invest for the future?

Then, there are the mechanics of skills development and delivery. For example,

  1. Skills provision. Fundamentally, this means a revolution in skills provision. A classroom is no longer relevant to all learning regimes. The scale of the need is far too great. In India training capacity can generate no more than 3.5 million students per year. Are they job ready? And to meet the 500 million goal this will have to increase to over 46 million per year. An impossible task if the training approach is not overhauled. Courses need to be high on impact and low on bureaucracy. Standards need to be globally relevant and, be modular. India may well have more than 50% of the population under 25 years of age and a huge domestic skills need. However, Indians are a highly motivated and mobile nation and can become the trained capital of the world.
  2. Course content and proof of reaching a global standard. The global skills shortage demands short courses on issues that improve operational performance. It could mean a mix of on the job training with technology enabled follow up in the field. How else can we reach people in remote rural areas? What about exploring mobile applications?
  3. A sector based strategy. Recently, I bought a leather briefcase made by Fabindia. Not too long ago, I would not have considered buying any leather goods from India. The designs were poor and, even where the leather quality was good the accessories were cheap and poorly executed. Not any more. Fabindia is one company that has worked hard to raise the standards on design; on quality and, on the tell tale accessories. Suddenly, they can compete with leather goods from Italy or wherever. No, think through the supply chain that delivered this brief case and explore the skills agenda – at all levels from designer to leather production and, despatch.
  4. Future proofing the workforce. They say that over 50 per cent of the jobs of the future have yet to be invented. How many people were predicting a boom in renewables? What next? Above all, what are we doing to ensure that our workforce can meet the challenge of global competition.
  5. Affordability. This means a focus on the needs of the local market and, a transformation of delivery and the ability to meet the scale requirements. This will be a revolution in training.

Technology is the only way that needs can be met. There are simply not enough teachers and not enough classrooms and not enough conventional teaching materials and tools to meet the demand and few governments are keeping pace with this need. Take simulators. It is simply not possible to train all the truck drivers needed worldwide in a real truck on the road. And it is not advisable for those that do get the chance to experience adverse driving conditions or, what to do in a crash on such scarce and expensive machines. In the US every truck that crashes triggers costs of over $1 million and the Coca Cola company estimate that a truck load of their products that is delayed for a few hours for whatever reason can wipe out the profit on the load. Simulation technology can reduce the costs associated with fuel and tyres but more significantly eliminates the opportunity cost of taking trucks out of commercial use to conduct training. This is significant in the developed world but vital elsewhere where trucks are scarce and, truck fleets small. Think of the impact that the use of simulators can have in frontier markets.

Affordability. If the insurance industry could be more closely associated with the benefits generated by technology led training momentum on simulation, simulators and other training technologies would gain ground.

Elsewhere, simulators can have a significant impact on operating performance in the Ports. Before privatisation, badly trained port crane operators in Sao Paulo were moving no more than 6 containers per hour. In Europe a similar approach moved performance from 18 to 48 boxes per hour. After privatisation and a productivity drive, this performance climbed to over 25 boxes an hour. Think of what this does to the value of the assets. These days, simulators can explore training needs and deliver corrective actions far more effectively than the real thing.

There is more to this than simulators. There are a whole raft of training technologies that can be deployed to deal with this agenda and the need to scale up learning access and delivery. Avatars can be used in specific training contexts allowing the innovation of a Pixar movie to build performance; 3 D visualisation could be deployed to enable maintenance workers to “see” the mechanics of an engine and, be “directed” to the solutions – take this screw out; check that valve.

We need to trigger a complete overhaul of our approach to improving performance in supply chains all over the emerging and developing world. It is not just about capital investment in the narrow sense of equipment. It has to be about human capital and this extends to making sure that the link between health & safety and performance is known and acted upon. Wreck a machine; wreck a life and you wreck overall performance. Build the skills, use equipment effectively and efficiently and, profitable and sustainable growth will follow.



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