Kieran Levis uses indepth research to answer the vexed question of why e-learning has been successful in one sector and not in another.

Kieran is the principal of Cortona Consulting and the author of The Business of (e)Learning, published by Screen Digest. The report is based on a strategic analysis of the e-learning industry and a detailed study of the development of corporate and university markets in North America and Europe. This is the second of four articles which draw on the study.

Part One: Why e-learning often fails

Part Three: How big are e-learning markets?

Part Four: Has e-learning caused a learning revolution?

Our research was primarily about marketing and strategic issues, and one of the most important questions our study sought to answer was - why is adoption of e-learning much higher in some sectors than others? This is superficially similar to a question of great interest to all those professionally involved in training - why have a handful of users been so much more successful than others?

One answer to the second question is that they have learned the lessons described in the first article in this series, Why e-learning often fails. They have simply approached it much more effectively:

- designed programmes that put the overall needs of learners first,

- used technologies for what they’re good at in an intelligent blend, not simply as a means of making savings in training costs,

- developed engaging, relevant content, which enables learners to simulate real-work situations and practice skills,

- provided social support for learners and opportunities to learn with others,

- integrated learning with everyday work and access to company information and knowledge.

This is certainly true, but it does not explain why the outstanding successes are all to be found in the handful of industries that have adopted e-learning enthusiastically, nor why there are such variations within those industries.

We have concluded that the key to understanding the mixed pattern of adoption is:

- The market drivers for adoption of e-learning vary significantly in intensity between different market segments

- There are two distinct forms of adoption – a radical, systematic approach, favoured by a few, and a more tactical approach typical of the vast majority.

- The radical approach is confined to early adopters, who are unlike other kinds of customers in several important respects.

Market Drivers

Three main factors have driven the adoption of e-learning to date are:

- the rapid growth in information that knowledge workers need to handle, particularly in relation to new products and processes;

- the rapid rate of change in knowledge and skills, especially in ITC;

- the promise of savings in training costs.

Shortage of time to take conventional training and competitive pressures to improve performance have also played a part, but it is these three that are present in nearly all large corporate implementations. Cost pressures are of course universal, but the information and knowledge explosion applies with particular force to a handful of industries, and it is precisely these which have invested most heavily in e-learning: IT and telecommunications, banking and financial services and the consulting industry.

What distinguishes these from other industries that have been fairly big adopters like automotive and energy is that they are highly knowledge and IT intensive and have rapid product cycles. Manufacturing industries on the whole are much less likely to adopt.

- The ITC industries and the sectors that make intensive use of IT (notably financial services) have been under most pressure to update their IT skills more cost-effectively. They are also of course are the companies that have the basic infrastructure in place (an important pre-condition).

- Industries with large dispersed sales forces and rapid rates of new product launches have a particular need for ways of rapidly updating people in the field. Both of these conditions apply to the ITC and financial services industries - and also to the automotive and pharmaceutical sectors.

- Industries which have automated large parts of their customer service operations with call centres and CRM systems are also receptive - telecommunications and financial services again, and also notably airlines.

- Industries for whom the systematic management of knowledge and intellectual capital is important have also been early adopters, notably consulting and, once again, financial services.

Radical v Tactical Adoption

When we look a little closer at how companies have approached this we find a major divide those who take a systematic, strategic approach to learning and knowledge-sharing, and the majority of corporate users - two very different kinds of adoption.

Most large American companies now use e-learning in some way - typically by installing an LMS and putting self-paced learning programs online. However, for the most part, this is a tactical approach, driven by the need to solve a specific problem of time or cost. They want to reduce training costs, or train a lot more people more quickly, or both.

The systematic, strategic approach is really about a shift of mind, a different way of thinking about learning and knowledge. The distinction between what is e-learning, what is information dissemination and what is collaboration, becomes rather blurred. The kinds of companies that have most notably taken this are Cisco, Dell, HP, Merrill Lynch, Skandia and Shell. These companies have achieved not just savings in how they train people, but major productivity and performance improvements.

We have found the systematic approach only happens where:

- IT is mission-critical, and is used as a strategic weapon;

- knowledge sharing is critical to competitive success;

- large numbers of people need frequent briefings on new products and processes.

Even in those industries where all three conditions are present, most notably IT, financial services and consulting, the integrated approach is confined to early adopters. It is far from universal. However, a few old economy companies, like GM, Dow Chemical and Shell have taken a fairly systematic approach, and the competitive pressure to adopt it is going to be irresistible in all industries where knowledge and intellectual capital are key strategic assets.

Early Adopters and the Mainstream

The radical approach is confined to early adopters, who normally make up less than 10% of any eventual market. Early adopters are unlike other kinds of customers in several important respects. They identify benefits for themselves and are in much less need of references from others. It is generally difficult to “cross the chasm” between adopters and the majority, because customers in the majority take time and like to have the reassurance of seeing other customers like themselves taking the plunge first.

These principles clearly apply in e-learning markets, most strikingly in the case of life long learning. In the industry sectors where e-learning has seriously penetrated, the benefits of a systematic approach appear so strong, that in our view, this is likely to be come the norm eventually, though it may not happen quickly. Given the enormous gains in productivity, speed of movement and accumulation of intellectual capital, companies in these sectors which do not operate in this way will be at a serious competitive disadvantage. This is also likely to be the case for businesses in other sectors where the key conditions apply.

Overall then, we can say that in the short-term:

- the (addressable) market for strategic approaches is confined to a few hundred (mainly large) companies.

- there is a much broader, more diffuse market of companies which will make some use of e-learning.

- All these markets are still at an early stage of development.