We All Need to Think Much Harder about Human Capability Development

I participated in the first Human Capability Initiative conference in Riyadh this week – an event designed to encourage a global dialogue on the challenges and opportunities for developing human capabilities.

I joined Anas Al Mudaifer - CEO Human Capability Development Program | ?????? ????? ??????? ??????? of Saudi Arabia, Jeff Maggioncalda - CEO Coursera, Dr Sharmla Chetty - CEO Duke Corporate Education and Sallyann Della Casa - CEO GLEAC, on a panel session. Dr Della Casa moderated the panel and had put together a thought-provoking range of questions for us to consider. (I include them here as I found them to be a great set of questions to consider on this broad topic of Human Capability development).

The conversation explored the impacts of technology- and more specifically, automation and artificial intelligence,?on learning, continuing professional development and the need to continue to upskill and reskill. I have summarised my high-level take aways below. This whole topic of capability-building interests me a lot and I plan to delve into this more during the rest of the year.

The core implication for companies and individuals is that they need to better develop, and hone, the skill of reskilling.

?1. Context- There are multiple forces acting on the development of human capabilities

Current generative AI and other technologies have the potential to automate work activities that absorb 60 to 70 percent of employees’ time today however these technologies have not yet been fully adopted.

In 2017, McKinsey’s automation adoption scenarios suggested 50% of time spent on work activities would be automated by 2053. The updated automation adoption scenarios released in 2023 suggest that 50% of time spent on work would now be automated by 2045 – almost a decade earlier due to the rapid developments in generative AI (The Economic Potential of Generative AI: The Next Productivity Frontier, McKinsey, June 2023)

Through the accelerating development of artificial intelligence and automation, organisations and individuals are seeing a big need for reskilling.?

For individuals – ‘the average half-life of skills is now less than five years, and in some tech fields it’s as low as two and a half years’ (Reskilling in the Age of AI, Tamayo et al., HBR September – October 2023) This is compared to a skills half-life of 26 years – a generation ago (Help Your Employees Develop the Skills They Really Need, Satell et al., HBR, 6 October 2023).

For organisations – A recent report from McKinsey found that 87% of organisations expect a skills gap in the next five years with 30% of organisations expecting that 25% or more of the organisation’s current roles will be completely disrupted by the market or technology trends by the mid-2020s (How companies are reskilling to address skill gaps, McKinsey, 2020). In addition to this disruption, organisations must also fund the reskilling and upskilling – one estimate from HBR suggested corporations would spend $380 billion on learning and development programs in 2023 (Satell et al., HBR, 2023).

Demographics will also play a significant role – people are typically living longer – with the expectation that many of Gen X (people currently aged 43 – 58) will live to 100, and likely work into their 70s. This will require additional career changes when compared to careers of previous generations.

?2. Our focus in Education is much too narrow

?Most of our formal education is focussed on the importance of ‘hard’ knowledge- eg science, mathematics, technology, history, business, etc and to some extent ‘hard’ skills- vocational skills in manufacturing; sales, and marketing; etc.

?We have very little education on 'soft' skills such as emotional skills- eg self-knowledge; building and relationships; culture; resilience/dealing with setbacks; etc.

?And, we have next to nothing on practical life skills- eg financial planning and budgeting; selecting a career/job; selecting a life mate; dealing with life’s different phases, managing oneself eg ‘personal operating model’- prioritisation; time management; energy management; rituals (eg reading, exercise, philosophy).

?3. Actions taken by organisations

Organisations are approaching reskilling in different ways. Below I offer one example from a mining company and one from a professional services firm.

The global human population mines more iron ore than any other metal on the planet eg a 15-megawatt wind turbine has over 800 tonnes of steel in it.

Rio Tinto has been mining iron ore in Australia since 1966.

A decades long, $1.7B project to automate over 200 Rio Tinto locomotives used to haul iron ore was completed in 2020. Automation of trucks and drills has also taken place. Automation delivers production and safety benefits as material is moved from mine to customer.

Operator roles have moved from the locomotives and the cabs of mining equipment, to a Remote Operations Centre in Perth, 1,500km away from the mining operations. To give a sense of scale: 16,000 people in Western Australia produce over 330 million tonnes per year from a network of 17 mines, nearly 2000km of rail network and 4 seaports. Each train of iron ore is 2.4km long and carries about 28,000 tonnes of iron ore.

Automation can create uncertainty for employees. Early in the project, in regular conversations with the workforce, people shared how they were fearful of what automation meant for them and for their career pathway.

A specific individual example is that of Dave, a Drill and Blast operator, who had worked on manual mining equipment in the Pilbara for 8 years. He was a Fly-in and Fly-out worker, away from his family, on shift pattern, for up to two weeks at a time. When Rio Tinto automated their drills, Dave chose to upskill and work at the Operations Centre in Perth. The upskilling was a composite effort including on-the-job training, additional formal courses and training via equipment and systems partners. This blended learning approach enabled Dave to learn and apply his developing knowledge while working, and progressively prepare and build confidence in his new role.

Many organisations are applying the ‘70 / 20 / 10’ development model for management level roles. In this model an individual learns 70 percent of their skills on the job, 20 percent through social interaction – exposure to others in the organisation, and only 10 percent through formal training courses or education. In a world where rapid reskilling or upskilling this blend of 70% experience / 20% exposure / 10% education can be applied to all roles in the organisation.

A continuous and strong focus on personal development has always been part of the culture at McKinsey and many other professional services firms. I experienced this blended approach to development for myself in my career. At McKinsey this starts on hiring with an intensive "Introductory Training Program", and for those who don't have an MBA (like myself) with a ‘mini-MBA’. This formal training continues every year (ranging from 1-3 weeks a year) throughout one's career. At the core, is learning on the job- the industry, the function, and most importantly, the problem-solving approach. Reskilling is a constant as analysts, associates, managers, and partners work on new assignments, with new clients and in new sectors. The on-the-job learning is supported by coaching and social interaction within the firm.

4. Concluding thoughts

The discussions and insights from the first Human Capability Initiative conference, combined with real-world examples of reskilling in action, underscore the need for a comprehensive approach to human capability development. As technological advancements continue to reshape the workplace at pace, the ability to adapt through continuous learning and skill development is critical. I hope the real-world examples from Rio Tinto and McKinsey demonstrate possible approaches to personal development and highlight the importance of a blended approach to learning that incorporates practical experience, social interaction, and formal education.

Individuals and organisations must prioritise a commitment to lifelong learning. This commitment to developing human capabilities will be crucial in navigating the challenges and seizing the opportunities presented by the evolving landscape of work.

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The thoughts provoking questions from the panel are:

?1. In the push for better skills and training worldwide, who ensures that people not only learn but also know how to apply what they've learned at work? And how have you made this process more reliable for everyone involved, especially the employer and the learner?

2. Sustainability roles are forecasted to remain within the top three job family vacancies for the next five years, signaling a robust demand in the green job sector. Concurrently, we're at a pivotal moment for Generation X—individuals aged 43-58, who may live up to 100 years and may be required to work well into their 60+ 70s. This demographic possesses invaluable leadership, decision-making, and other critical skills essential for these roles. However, they often lack the skills and their approach to learning may not align with the digital-first strategies prevalent today. This presents a unique challenge. How do we bridge this gap?

3. Considering the recent announcement by Deputy Prime Minister Lawrence Wong regarding the 2024 Budget, which includes measures like the SkillsFuture Level-Up programme and a $4,000 SkillsFuture Credit top-up for Singaporeans aged 40 and above to enhance employability through selected training courses, how effective do you believe government subsidies are in achieving their intended outcomes, particularly in terms of upskilling and facilitating their transition into new career paths?

4. Outcome-based funding agreements are structured so that the content provider or trainer is paid a portion of the agreed-upon fee upfront, but the remainder is contingent upon achieving certain predefined outcomes, such as the beneficiary securing and maintaining employment for a set period (e.g., 6-12 months). This model aligns the incentives of the training provider with the success of the participants, ensuring that programs are focused on delivering employable skills and job placement assistance that lead to actual employment. Argue for or against outcome-based funding in the Kingdom as a key driver of achieving Vision 2030.

5. In an era where upskilling and reskilling are crucial across all professional sectors, how have you ensured that your content reflects the integration of hard skills, soft skills, and AI-enabled capabilities?

6. With GPT and AI co-pilots now a standard feature in many learning platforms, how do you tackle the challenge of promoting independent, contrarian, outlier thinking, and deep contextual understanding among your learners? How do you ensure they develop a critical and comprehensive thinking approach, avoiding the trap of adopting the 'sheep thinking' prevalent among the masses?

7. What are CEOs telling you are the biggest dilemmas for developing leaders and driving change for the future?

8. How agile is your organization able to adapt to the changes in demand from learners? Give us an example.

9. What role does culture play a role in a skill-based economy? What role does it play in the Arab region?

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