Customers can exert a powerful influence on the level of competition and the power of the customers depend on the following factors:

• When the industry has only a few customers, the influence each customer has or impact on the industry is substantial.
• There are a few customers whose purchasing power in term of quantities, may have a substantial effect on the industry.
• Customers who have a wide ranges of sources for a standard product, will be in a position of power to call the prices from suppliers.
• Customer has access to the industry's costs and level of demand
• Big customer has the resources to take over the suppliers if they want to.
• Customer can switch from one supplier to another easily without much difficulty.

All of the above factors will give the customer the ability to exert great influence on the industry in terms of pricing and product development and to the overall industry's competitive nature.

Today’s economic reality is that all businesses are extremely cost conscious. This consciousness is forcing training managers to either make the business case or face the consequences. A recent article published by the ASTD in its Training and Development Magazine pointed out that in order “to ensure future success” learning leaders must:

• Understand the organization’s business, its business model, and how it makes money in the industry. The measurement of the training must mirror the philosophy of the company.

• Speak the language of the business to gain credibility. The training evaluation must be done in the language of business, that is in terms of profitable return on investment spent.

• Understand the balance sheet and how it relates to business success measures. At the end of the day, the money spent on training and evaluation must return profit in multiple amount so as to cut down the return time period as short as possible.

Training professionals, who were attendees at the Conference Board of Canada’s Annual Learning and Development Conference in 2003, unanimously agreed that global economic factors were forcing them to find alternative options for measuring learning success.

The end result was a dissatisfied customer who had the impression that the training group either did not truly understand or was unable to meet the business requirements. This occurred in most cases, although there was a genuine attempt (on the part of the training manager) to show the business impact of training. The setback was that the methodology used to determine business needs was a training methodology, not a business methodology.

Training methodologies do a good job of identifying issues that are important to training professionals, but are not equipped with the tools necessary to sufficiently capture business requirements. In order to accurately capture issues that are critical to all process stakeholders, a business methodology (with business tools) must be used. In order to effectively communicate with business professionals, a business language must be spoken, the return on investment.


-David L. Hallowell

Managing partner, Six Sigma Advantage, Inc