Digital learning market analysis with David Wilson

Listen above or read the full transcript beneath, which has been edited for clarity.

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Jon Kennard: Ok, it gives me great pleasure to welcome to UNLEASHcast today, CEO and founder of Fosway group, David Wilson. Thanks so much for joining us, we’re going to be talking about digital learning primarily. But first, just for a bit of scene setting, and some context for those few people who don’t know, give us a quick overview of your 9-Grid system.

David Wilson: Hi Jon, nice to speak to you again and always happy to do so. So the 9-Grid for us is something that has existed for quite a long time in the background. But as a public product, if I can put it like that, probably since 2013, [and it] originally started in learning.

It’s a way of distilling the view and the inputs that we get around vendor capability and performance against a range of different segments. So, we have five 9-Grids. We’re going to talk about digital learning, but we also have a separate one for learning systems, which is obviously very focused on platform and software proposition. We also have others for talent, recruiting, and cloud HR as well. Each one of those comes from thousands of inputs in terms of distillation, typically from our corporate research network.

So Fosway, from an analyst point of view, focuses on European headquartered enterprise type organizations, typically multinational, medium- and large enterprise companies, or the EMEA end of global companies. And so we we do a lot of research with those organizations, pretty much trying to understand, what are they doing, who they do it with, what works, what doesn’t. What do they think of them, really – if I can put it in those terms. And we’ve been doing that for a long time, 20-plus years. And obviously, the process around that is a bit of a monster for each of those 9-Grids. Ultimately, for each of the sources, or each of the segments that we’re focusing on, we get lots of inputs around that.

What we also then do is lots of public research surveys; we do customer satisfaction surveys, we do lots of vendor briefings. So we also go to the vendors themselves and understand their view of capability, including functional capture around what they’re doing, what the roadmap is, what their performance is, customer referencing off the back of that, and so on. So this huge monster that is behind each of the 9-Grids ultimately gets distilled down into five dimensions that we then measure graphically and put together in a report split with a lot of market and solution trends really talking about how the landscape is changing.

So every year, it’s zero based, we redo it every year. And often the capability and the functional capture around that process changes as well, as the market changes, and new types of solutions and innovations come in. And then what we’re trying to distill it through to, as I said, is those five dimensions, which is performance; potential; presence; total cost of ownership; and trajectory. And so effectively ‘performance’ is their market and customer performance. And the key thing we’re looking for there is, who’s getting bought, are they delivering and what’s the customer advocacy picture around them? The ‘potential’ really looks at their capability to support increasingly large enterprise organizations. So that’s not just functional complexity and scope and things like this. But it’s also about who are their primary customer DNA? Where’s this sweet spot? Who do they operate with? And what’s their service ecosystem that surrounds them? Or are they able to execute globally or only in certain markets, and so on.

So each 9-Grid is slightly different, because obviously, the type of organization you’re dealing with is slightly different for digital learning – which is what we’re going to primarily focus on here – so we’re looking at typically organizations that historically would have been led by content or service.

So, bespoke vendors, off-the-shelf content vendors. So they offer a range of capability, pretty much most of those will offer some platform, some content, some service capability, and really, it’s around, ‘how are they able to be almost like a digital learning partner for you more strategically?’ So that’s what we’re looking for in terms of criteria. That’s quite a deep description, but hopefully that gives you a lot more context around it.

JK: Right, absolutely. Perfect. You mentioned just then – let’s try and go a bit deeper on this – that there are several separate Grids, there are separate grids for digital learning and also learning systems. Would it be fair to say that digital learning takes a more circumspect view of vendor solutions rather than just how it uses its platforms – is that the difference?

DW: So the key thing is typically [that] a vendor will be on the learning systems 9-Grid if their primary go-to-market proposition is a software platform. So it’s an LMS, a learning experience platform or whatever – the primary part of their business is to be a software company effectively selling a solution around it. So it’s much more of a systems buy. Digital learning, as I said originally was – and it’s actually evolved quite a lot over the years – originally, we started looking at what we call bespoke e-learning producers, so people who would produce custom e-learning content for somebody on a service basis. Then that morphed into looking at bespoke content and solutions. So that would typically include platforms and portals and other related things as well, and then the service piece comes in around providing maybe a service aggregator, they might be a managed service partner, they might help you with administration of learning and processes and things.

So digital learning is more diverse. Typically it’s led more by content and service, with platform being part of the proposition. Pretty much every digital learning company, even the small niche bespoke e-learning companies from the past, they all had a platform, because if a customer didn’t have one, they had to have it to deploy their content, right? So that’s one of the things where platforms is part of the mix, but we’re not judging them based on the platform. We’re judging them, as you said, more holistically based on that wider capability set.

JK: I’ve got it in my head now. Obviously, we’ve been through extraordinary times, it’s been covered many times, and probably will be for a long time, because it’s changed everything so much but even given that, are there any results and trends that you’ve seen in your research that have surprised you? Some of it may have been predictable; a move to companies pivoting digitally, obviously. But is there anything that has really been remarkable in spikes or trends or things like that, that you’ve seen?

DW: Well, I think first of all the pandemic was a massive game changer, obviously, for most companies, even companies that were quite mature in their use of digital learning had a massive acceleration in the switch to it, because effectively, there was no other game in town – you weren’t going to run classroom training, right? So either it was done digitally, or it wasn’t done at all. So that transition, I think, has accelerated the whole market.

And to some degree, we’re still seeing that reflected in growth, and you see that on vendor growth, and you also see it in terms of obviously the proportion of corporate spend that ultimately has been done digitally. And I think the key thing, the key point, which is really important is the majority of that won’t go back. So even though now we’re in hybrid workforces, and hybrid workplaces, the majority of stuff has still got to be supported or led digitally, especially with the hybrid workplace – you don’t know anybody’s in the office, right? So you have to be able to still engage with them. And that transition has been really a game changer. And it’s moved digital away from just the low hanging fruit around compliance and mandatory stuff and then libraries of content that could support things to it becoming almost the main game in town. So that’s a really big shift.

And for the vendors, that’s been a bit of a boom time shift. I mean, other than maybe March, April 2020, when nobody really knew what was going on. From that point, you’ve just seen really solid growth. And a lot of the vendors have been growing very quickly. There’s a lot of private equity money floating around in the background being invested in these companies as well. So you’ve also seen an acceleration of mergers and acquisitions. And that’s really, really driven it forward. I think one of the key points, though, to come back to what’s ‘surprising’, if that’s the right term, is that a lot of the solutions that have been done with what I would call lowest common denominator stuff, or fairly base level solution. So, push content online, do it that way instead, run what was a face-to-face workshop on a zoom or team session without really re-engineering it or checking that it’s effective. So I think the challenge for organizations now is really stepping up and doing higher value learning in a higher value way.

And one of the reasons they need to do that is there is also massive digital fatigue, right? Everybody has been sat working from home or whatever, everything’s been online, we spend a half hour on Zoom calls and Teams calls or whatever it is. There’s real digital fatigue, that’s really a factor. And it influences how effective the content and the appropriate learning activities are as well. So how do we move away from that.

The other big piece I would say is around skills. The skill story is everywhere. And that’s not just limited in learning. We see it massively within recruiting, we see it massively within HR and talent and so on and things like that. Skills is the lingua franca now of talent, but it’s also about – how do we reskill and upskill organizations? It’s about business agility, and how do we really make the business more resilient going forward, so that’s having a massive impact in terms of how people are looking at what learning is. So is learning as much about opportunities to develop as it is about doing courses, for example, and things like that. So how do we do that well, so the underlying landscape around this is changing quite significantly.

JK: I’ve got a couple more questions. I think the move from learning towards performance, if we can call it that, there are obviously lots of LMSs (learning management systems) out there, LXPs (learning experience platforms) etc. But will you see yourself doing some sort of performance management-based grid?

DW: So we already looked at performance management within what we call talent and people success. So the original two 9-Grids were learning systems and then digital learning. And then we added talent, what we originally used to call ‘talent management’, and then we rebadged a couple of years ago to talk about talent and people success because talent has got really disrupted, partly because the HCM (human capital management) suites have sucked the top off of the talent lifecycle story, but also because it’s getting massively disruptive from inside.

So performance management, which was probably for a lot of companies in their early days was the anchor of how they looked at the talent story. But in reality, I think development is actually really the anchor of talent.

And that’s really important for L&D, but actually the problem is, it doesn’t really own that story completely. And as I said, the skills part of it, the land grab around skills from HR, for example, is a good example of this. So we look at performance as a specialism area, if you like, within our talent and people success story.

The other thing is, when you look at learning, we talk about three primary contexts that overlay learning. So one is around building strategic capability. The other one is around driving operational performance. And the third one is what you might call ‘being the best me’ – what do you want to know about? What do you want to do? How are you trying to develop? Which might be aligned to the company, or it might just be it’s personally orientated, in terms of the goals. So the focus within learning, and therefore within digital learning, within the learning systems, and so on, [is] how do you really support operational performance well, is a really important thing. And what we’ve seen is fragmentation within digital learning, of the solution types. So we used to have classroom training, we had e-learning, maybe we had some video, whatever. Now we have hundreds of different things, we have micro learning, spaced learning, branch learning, collaborative learning, social learning, video learning, mobile learning, etc.

And I think what’s really interesting when you look at all these different approaches, and all these different things – what are they really supporting well? When you come back to your lens around operational performance, how does that drive the way that we engage and support that? And I know it’s very trendy to talk about learning in the flow of work, for example. And we’ve talked at Fosway for the last 15 years around the integration of learning and work and how those things coexist. But actually, what’s really interesting is – I don’t know about you, but I don’t want somebody doing important tasks for me if they’re one video ahead of me in the YouTube list, right? So I think we need people that are competent to do jobs and perform well. But there is an opportunity to also have real time top-up around that, but that’s much more focused on operational performance, how do I fix this specific problem today, etc, as well. So I think performance plays in that wider talent and people success story. And it’s been very disrupted there, the traditional performance management lifecycle got pretty discredited and was much more around dynamic real time feedback, and coaching, and so on.

JK: So much to say on this, but I’m gonna go for one final question, which is, you’ve got an incredible amount of data and research, and it’s been collected over, as you said, about 20 years odd, when you started the 9-Grids and similar. Are you confident that you could predict where anything’s going or are you always led by the data? Are you are you able to say, what’s coming down the pipe in six months time? Or how are these things going to change? Does the market ever surprise you? Or can you look at what historically you found and make confident predictions about the next 12 months for learning or talent?

DW: I guess it depends on macro context, right? Would you have predicted a pandemic and the impact that had on the market? Would you have predicted a war in Ukraine? I suppose you could have predicted the climate and the whole ESG agenda and how that will change the way that companies look at things and so on? So we’re very data led in terms of the the underlying analysis and ultimately what backfills in is a synthesis of that view.

I think we’ve been pretty good at predicting certain things, and also puncturing some of the hype; one of the things that I remember, someone like Nigel Paine said talked about us as a mirror, [that] we hold the mirror up to the industry a little bit to try and keep it accountable, because it gets very hype-y around a lot of topic. Go back to what I said around the corporates; who are they using, what they’re using for, what works, what doesn’t? What do they really think of them? And when you think about that, that actually gives you a really strong basis to both view the reality of today, but a little bit of ‘where are they trying to go’. And a lot of our research process is trying to predict that and we want to be both an advocate and an evangelist for that, for those future paths, but also a critic as well – we want to be that critical view that to some degree says what is real and where’s the substance here?

JK: Well, I think that’s a great way to wrap things up. Every time a 9-Grid comes out, I’m always fascinated by what’s going to be uncovered. I know that we’re going to be seeing each other at events at some point soon. And that’ll be a great thing because it’s been a long, long time. So David, thanks a lot for your time today and I will speak to you very soon.

DW: Thank you very much, Jon.

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