S02E10 - The perfect storm: Skills, competencies and training mgmt in the age of AI and Decarbonisation (Transcript - unedited)

These are the Supply Chain Dialogues, Season 2, Episode 10.

Let me ask you something. Did you, or your company change the skill and competency framework based on what we all have seen on the AI front? And I'm not talking just Chat GPT this is just the tip of a gigantic mushroom cloud of new applications. Innovation job provides that emerged in just the last 12 months. Do you think I'm overstating this level of disruptive change?

Well, then just wait until your competitors bring products out in half of the normal cycle time in the industry, or at 30% less of the cost. And how about the engineering skew you have defined in your R and D and manufacturing departments? Have they been adopted based on the need for new solutions that we need with goods and materials, science, manufacturing, techniques, and transportation models? Due to the need for de-carbonization of your operations and that of your supply base. If not you are right now, still, probably in good company, but this will change very quickly. So, how do you address this? How do you figure out which skill levels might already exist in your organization? That you so far did not clock since the changes were coming from left field from outside. To give you a potential solution to address this.

I have the pleasure to be joined by Kais Luizi. The managing partner and co-founder of edligo. Now what edligo is, we will get into details in our discussion today.

Hi, Kais. It's nice that you join us today.

Good morning, Daniel. Thanks for having me.

Now, Kais, we both met at a conference and we were sitting together at some lovely dinner somewhere in Frankfurt, I think it was,

Yeah, it was in the centre of Frankfurt.

You and I were just getting started and talking about competencies and HR.

I was, Blown away, by what your software and your company are doing. So therefore, I'm very happy that you have the time today to, talk with me So, if you allow me, let's, let's just get started Easy

Share with me a little bit of your background before we really get into that and, and why you choose the activity that you're now involved in?

So, a little bit about my background. I studied computer science about 20 years ago and worked about 10 years in consulting. And during my consulting experience, I think the most important thing of what we have been doing is producing documents, producing ideas, and producing insights for decision-makers.

And we're doing that in many industries. Including the telecommunications industry, which was really very well equipped in terms of products that made them maintain their networks, and their equipment in a very good way and also predict what's going to happen in the future. And based on these predictions, Do the right things so that the network keeps operating in the best possible way.

Customers are served in the best possible way. I learned a lot from that. Then I worked for 10 years in the software industry and I saw the power of software products and how they can really help organizations deliver much more value when they're put into work in a proper way.

Yeah. Now, after this career, I decided with some colleagues to create Edligo, to found Edligo, and the idea behind Edligo was very simple. We wanted to help decision-makers at the beginning in the learning industry make better decisions in learning. Right. So we thought the way we were learning a few years back was still very archaic.

So we were teaching everybody the same curricula, et cetera. We were asking everybody to run at the same speed and so on. And we thought we can change that. If we made better use of data, we made better use of algorithms, then we can, create better learning plans for students.

We can achieve better learning outcomes and so on. So actually, what we learned in telecommunications, what we learned in the consulting industry, we tried to put it at work for the sake of better, learning results. That is the idea. Now we run that journey with learning institutions for K 12 for universities, for some ministries, etcetera.

And then we wanted to position the same idea for corporations. We told corporations you're learning journeys for your employees are not really optimized, and we could optimize them for you.

That was a nice problem to solve, obviously, right?

But then we when we started interacting with some of these corporations, we realized there was a more fundamental problem to solve. And this problem was most of the corporations Do not even know what their employees should learn, and you have been many years working for corporations. Did you face the same challenge?

Absolutely, all the time. As you mentioned, you work with universities. I've seen you work with Microsoft, Oracle, the European Commission, Capgemini, the United Arab Emirates Ministry of Education even.

So let's, enlighten us, what do you do for them? And, then I think you talked When we met about skill based organization, how do you work with them and what can companies accomplish if they become one?

Right? So for public institutions, and education institutions, the challenge is about really capturing data about the learning process off the students and optimizing that learning journey. So that's essentially what we do for them. And the objective for that is really to achieve better results in education. That's very simple as a use case for the corporate world. The use case is more challenging. And the use cases we can summarize it in two or three words build skills based organization.

What does that mean? It means think about people no longer in terms of job roles and job descriptions, but think about them in terms of skills and competencies. And that's a fundamental shift in the way CEOs, C. H. R. O. C. Their people. So we think That , organizations learn more about the competencies and skills of their employees, they can improve the outcomes of what their employees do. day in day out, but they can also improve the performance of the entire organization,

Hmm. Interesting. I have to say that most of my corporate life , we were definitely not a skill based organization , and I got at some point in time that it's needed to, to have much better tools to actually do this.

Kais. One of the topics that probably most executives right now think about is what impact AI has on the world of work. , from your perspective, what do you see are the main trends and what are the things that we should think about when it comes to learning organizations and training?

That's a very important question. , so we see many trends impacting the world of work. Not only AI, AI is very important one. There are others. I will mention a few. The World Economic Forum says that 25 percent of jobs Worldwide will be disrupted over the course of the next five years.

Now, whether this is going to be 25 percent 35 or maybe 50 percent we don't really know because history has proven that our forecasts when it comes to technology disruption are never very accurate. And no one could have predicted that Chad GPT would disrupt the world of work like it has been doing over the course of the past year.

So a is disrupting jobs. I is increasing the automating many jobs. Which is making many tasks better done by machines than by humans. And obviously that's making some, jobs redundant, but also AI is creating many, many jobs, so that's one factor.

The second factor that is disrupting the world of work is decarbonization. We are all trying to move. to carbon neutrality. And that means two things that we have to produce in an entirely different way. But it also means that new fields and new business opportunities are emerging for companies.

So that's trend number two. Trend number three is talent scarcity. In many areas, many places off the world, organizations, companies cannot access talent as easily as they could do it 10 years back. Demographics is one factor, but also skills is the other factor. And so there are people, but not the people that you would like to hire for your organization.

Many cases. So these are three trends that are impacting the world of work. We see also some internal trends and this is what's the external view. If you like the internal view that CEO, CHROs have to deal with. Are Number one, skills obsolescence. Skills. Obsolescence means the skills that I need to do my job today are different from the skills I needed three years back.

And they're going to be different from the skills that I will need in three years. And the. Pace of change is really accelerating the second trend or issue. Actually, the organizations see levels have to deal with is skills visibility. So within all these trends, what you would like to do is to turn into organizations and manage skills.

Probably most organizations are not equipped with tools, with platforms that give them visibility. And the third internal trend that CHRO CEOs need to deal with is the evolving requirements of employees to make a choice to work for a company or not. So if we ask people, or if we had asked people for before COVID, what are your most important criteria according to which you, uh, pick an organization compensation, for instance, was very important career aspirations, et cetera.

If we ask people today, you would be amazed that more than. two thirds of the workforce think that ESG values are very important to make a choice on which organizations to work for. I was amazed by that number myself. You would find also that flexibility is very important for people. You would also see that an organization that values skills more than degrees and experience is also very important.

So the employees requirements to an organization is Are changing and all that is making, let's say, the life of C. H. R. O. Is not very easy. These days. And this compounds actually the external problem that is coming from a I from decarbonisation and from talent scarcity.

Yeah, it's a, it's a perfect storm, isn't it and, , you have to have the right software to manage this going forward. Now when you look at your software overall, how does it help to create the skill based organization for your customers?

So the first step to create a skills based organization is obviously to go and capture all these breadth of skills that you have in your organization. So, it's about. Knowing the skills of every employee and we help organizations do that in two ways.

One, we can make very good use of AI. To capture data that is existing already on the organizations, be it in CVS, be it an existing HR management systems or any other systems that have captured skills in a way.. The other way we do it is we engage into a conversation with the employee and capture as many information as possible on the skills that the employee has.

So these are two ways to capture the skills. Now, before that, there is an essential step that needs to happen, which is probably the most important step. We need to agree with the organization on what is called the competency model or competency framework. And that requires discussions.

Thinking and obviously a very solid software product that can capture that competency framework and take decisions based on that.

Fully understand. And what I loved what you mentioned before, that you actually utilize AI to draw through the information about employees to gather what competence is already available. I always found it amazing that we ignored nearly completely

all the information that our employees had in their CVs, for example, there was a treasure trove of information available, but we just basically were stuck in what was happening inside of the company linked to just what we were having in our learning curriculum. You provide the whole spectrum of everything that employees have to offer for the company. And then later on, you say, look, here is now the competence framework and let's see how that fits. Is that, is that right?

Absolutely. We agree with our customers on a competency framework that reflects their thinking about what is really good for them. Right now. And what is going to be good for them in the future? Three years, five years, et cetera. That should be a reflection, obviously, of their strategy.

So if we are taking the topic decarbonisation, and we would like to become a company that respects the environment in an entire way, like carbon neutral, let's say by 2030, that Goal has to be reflected in the competency framework. If we are a company that thinks we need to be leaders in the industry they're working in. So we need to have kind of that leadership. Aspiration into the competency model, right? All areas or all goals of the company that are extremely important have to be reflected in the competency model. On top of that, there have to be, obviously, more functional, and technical. Competencies that are captured in the competency model and the CEO, CHR has to be very comfortable with that. They would think, okay, if I have these competencies within my organization, then I can be competitive now, I can be competitive in the future. And so it has to be really a reflection of the C level thinking.

So that is on the competency model. Now, what we try to do is. Capture the skills from these different sources of data, and most of the time, these are unstructured data. We call that in technical terms, meaning data that does not, that is not captured in databases, but in, in files, these can be a set of CVs.

It can be a policies. It can be regulations, right? If we are working in a heavily regulated industry, we need to go capture data from these regulations and establish the competency model, but also a competency profile of every employee. And then. We start seeing things in a much clearer way. So if I give an example, if I'm working today as a consultant in a professional services organization, then the organization expects that I am, mastering problem solving at level three.

And if I only master problem solving at level two, then we have identified a gap that needs to be closed. And then we would need to do something about it . This is just to give an example.

Kais, I'm always fascinated of how fast solutions not only provide data and information, but as well now more and more real insights. If you don't mind, let me throw something at you. Let's just assume that I would still be in charge of the thousands of employees in my former jobs.

And you and I would have a discussion about whether or not I can utilize your software. I would, I would ask you something like this. Kais, I like your solution to draft a voluntary turnover chart using the data of our HR information system, then annualize it. And then create three scenarios about turnover for the rest of the fiscal year.

And once done, break down the data by gender and hierarchical level to help me understand where we are probably going to lose people in certain groups more than others. And then create a summary in plain English and make action recommendation , for me. Is that functionality that your software provides?

Yeah, we do provide that. Actually, that's one of the easiest I use cases, and it's 11 of the easiest machine learning exercises. And the reason is very simple, right? Uh, looking into historical data. Of employees who have left certain organization. The algorithms will learn in a very fast way.

The patterns of employees who have been leaving. And these are quite simple patterns that someone who has been usually doing the same job for a very long time has not been promoted, has not seen pay raises, etcetera, etcetera. And these group of people can be identified quite easily. We have done that with many customers.

We see, let's say, accuracy rates exceeding 90 percent for this use case. That's not an issue at all. Now, there are some use cases that are more challenging, but in our view, much more interesting. I will give some of them. One of them is related to workforce planning. So we obviously know how many people are working in our organization today, and we probably know how many people we would like to hire the next two or three years,

but we probably do not know the skills that we will need to know the next three and five years to remain competitive. Now, with the help of data and A. I. We could model this workforce planning exercise not at job level, but at skill level,

So

we can tell organizations there is a certain skill in the market that is going to be extremely important the next five years so that you continue thriving and you're not doing anything about it today. You need it. to deploy substantial efforts to gain these skills. Then the hiring exercise becomes a hiring exercise for skills and not for CVs and not for job roles.

That's one use case. Another use case that is very interesting, I would think is related to organizational design.

Statistics show that more than three quarters of re org initiatives fail.

You have been working in large, very large organizations at highest level.

You've probably seen some of this happening, right?

Absolutely. Yes.

Right? And we believe that has been happening because these initiatives are made without making use of good data. These initiatives are made based on experience based on what is called the gut feeling, . We think that's all. All that is good, but it's much better if you do it based on data and the eye and the beauty of AI today is that You can use it to do scenario planning.

You can say, Okay, what if I cut my organization in different way? What if I reorganize it in different department? What should I do to increase the performance of a certain team? What if analysis, right? Causalities and technical terms. I will deliver the answer. I can tell you the best performing team in consulting, for instance, is a team that is composed of An individual of this type and then another individual with this skill and so on and so on.

So these are decisions that are impossible for us to make just relying on our brains, but if we Put a I, , tools to work for us. Then we can deliver these insights and they can be very impactful. I'd like to talk about another use case the way we do training today in organizations.

You usually have training departments that have a very challenging task to deal with, which is

Thousands of people to a catalog that has thousands of trainings, right? And that's a very challenging exercise For us, this is like making decisions on the airline traffic or trains.

Yeah, you don't do that based on Excel or you don't do that with pen and paper. You have to put tools to work for you. And We believe it's very similar tools that we need to use to optimize training budgets to optimize training journeys for employees. And our software also does that. So essentially what we deliver at the end of the day is an individualized learning path for every employee based on their current position, their current competency gaps, but also based on their aspirations.

So if I say I would like to be the next director in my company, then I can help me achieve that goal.

Interesting. Since you're already talking about training, let's go there a bit further. So training, especially elective training targets, employees, career aspirations, as you as well mentioned before, and this is all good, but how do you align that with business strategy?

How do you ensure that you're not just training what employees want, but as well the company needs?

I think what the company needs needs to be reflected in the competency model . I come back to this very important point. So whatever our aspirations are, need to be captured in this competency model. And if we say that in our company Three years down the road, we need, managers who master, generative AI.

Then it has to be put in our competency model, and our training should take us that way. It should allow us to have managers who master gen AI. And it's only by Putting these objectives in the competency model that your training plans can be delivered in an optimized way. Of course, I can always do the work.

I will do the heavy lifting for us when it comes to thousands, millions, billions of data records. I can deal with that in a very easy way. We've seen the example of Chad GPT, one of the large language models with a variety of use cases being trained on billions of records.

So that's not an issue. But we need to tell a I what our aspirations as and we need to capture that on paper. In this case, competency framework.

Competency frameworks were for me, the real life hack. And it was amazing that most of the companies that I've worked with had competency models, which were more generic, uh, the most soft skill based.

But when it came to functional competency frameworks, I had to create that more or less by myself and, and utilize trainings to get this done. Now, just taking the topic of trainings, a step further, in my whole life in corporate environments, I unfortunately have to say that probably 90 percent of all trainings I received was done in a.

cookie cutter style. And it was, in my view, a waste of time. Even interesting topics, which you actually looked forward to, to get were done subterranean in the way they were delivered. Hence, most of My peers and I seldom actually used employee training records as a decision criteria for selecting employees because we knew that the trainings were not that good.

Anyhow, this is a dilemma . Do you see a way out of this?

Yes, before I answer the question, I'll tell you a little anecdote about that in my Earlier career, when I started working on consulting, I was picking the trainings based on location, ? So if the training was in Barcelona or somewhere very nice, close to the sea, then I would go there. If it's in Frankfurt, then I would probably think twice if I go there or not, right?

So, so this is, this is just to give you an example on how to optimize training budget, right? I mean, this is obviously anecdotal, but it happens all the time. So training budgets are not spent in a way that is really good for, people and good for organizations. Now we see a way out of that,

if we manage to Take the training catalogs and digitize them in a way to say this training will allow our manager to go from, let's say, leadership level three to level four, and this training will allow our senior consultant to go in, problem solving, from level three to level four. Then that's a very nice foundation for edligo platform for AI to do its work to generate for us individualized learning plans that help the individual grow. But that also helps the organization achieve better results.

We have talked about training. We talked about competency models. Now, many potential customers of yours in your field use solutions such as Workday, SAP, Oracle, Udemy, Degreed, and whatever is available. How do you work with these HCMs and LMS platforms together?

Yeah. So traditionally, when we look at an HR landscape of our customers, we see these systems, ? We see human resources, management systems, very important. cornerstone off the H. R. Landscape. We see also learning management systems also very important. These are systems of records. System of record means, these are systems that store employee data.

We know a lot about our employees there, including,, the job position they're currently occupying. Probably pay great, probably where they live, etcetera. On the LMS is off the world. We see What these employees have been learning over time if it's done properly,

but these systems are usually not interconnected. Right. And edligo bridges this gap between the system. So edligo is a system of intelligence. We call it means it analyzes data from the HR management system. It analyzed data from the learning management system and optimize the journey of the employee navigating data from these two systems.

We will also rely on. The data that edligo captured by itself, like the skills data or any other data that is available there in an unstructured way, ? So we think of edligo as an analytics platform and intelligence platform that sits on top of the existing HR landscape to make better decisions on different HR topics and allow.

Employees to make better decisions on career development, learning, etc.

That's really interesting. Let me just ask in this context, something else.

Now you provide these data or you do the data bridge between the HMS systems and the learning development systems and your own software. Now, when you sit on the corporate side, you clearly think about data integrity and security. So are you ISO certified and how do you look at the GDPRs related topics?

Yes. So there are two important aspects here. Um, so there is data protection aspects on. There's another aspect about information security,? Data protection pertains to GDPR regulations, and they're very important in European countries. And we are GDPR compliant. And so we go through yearly certifications that ensure that everything we do respects GDPR.

And it's very important to the customers we work with. This is the first topic. The second topic is about information security and to demonstrate information security within edligo we have been going through an ISO 27001 process that is very important to show that everything is done internally and externally for our customers, according to standards that respect highest levels of security.

There is one more thing that we do for our customers that are worried about their data being stored somewhere in the world where they're not sure if that data is very safe. So. When you Install applications. You can do it in three ways. One is can install on prep. So in the data center of the customer. The second way is to install the software in what is called the customer tenant. So every customer today we talked to have their own tenant cloud tenant.

These customers will work with one of these hyper scalers and have their own tenant so we can deploy there. That makes customers very comfortable that the data is not going anywhere. The third way is obviously the pure SAS model. We offer also that model and our servers are hosted in Germany.

So, uh, that gives a lot of confidence for European customers that the data is not leaving European boundaries.

Kais, when you look at what we discussed today, if you would have the superpower to write this one sentence on all billboards in front of all large corporation entrances, what would it be?

It would be our vision, which is build your skills based organization and elevate your people to their highest potential.

Excellent. All right. So now we talked about all the wonderful things that your software does and Adligo can do. So when Customers would like to get in contact with you. How would they do this best? And who in the company should be the one who's approaching you? Should it be the HR head, CEO, department heads, or CIOs?

What, in your view, works best?

So that's a very good question, actually. I think edligo caters for the needs of different stakeholders within our customers, right? So obviously the HR organization, the CHRO is one of our main customers. Every CHRO that is. Considering building a skills based organization, trying to find the best possible approach of how to do that.

We are probably one of the best addresses to do that. The other role that could be one of our customers and would be interested to talk to us is the chief operating officer. Chief operating offices are concerned about mobilizing their people to do their job in the best possible way every day.

So the skills topic is also very interesting for them. If we think about consulting, for instance, what consulting organizations do day in, day out is to staff 100, 000, sometimes 10, 000 people on different projects, and that's an operations aspect. That's not an HR aspect. That's an operations aspect, and doing that based on skills can reduce costs drastically and increase revenues also drastically because you can staff projects in a faster way.

The chief operating officer is one of our target customers. The CEO himself, an organization that really value people where people are the most important assets. And as we move to this more and more digital economy to this knowledge economy.

People become by design the most important asset for organizations, obviously, and manufacturing. And you've been working for some of the largest manufacturing companies in the world. There are the other assets that really matter, but people are becoming more and more the most important asset for all these organizations.

So the skills topic skills management topic becomes also a CEO topic. To summarize, it's the CHRO, the chief operating officer, and the chief executive officer that are our typical customers.

Kais. Thank you very much for taking the time today and to talk with me on this excellent, software that you have and as well, your company . Thank you very much.

📍 Thank you, Daniel, for having me.

I hope that you enjoyed today's episode of the supply chain dialogues. Please check out the edligo webpage at edligo.com. And if you find something that interests you, which I'm pretty sure you will. Reach out to these folks

so, what remains to be said is stay safe, be bold and see you in two weeks. These are the supply chain dialogues produced and copyrighted by helmig advisory AG

NOTE: From now on the cadence for the podcast is fortnightly, due to the increase in research needed to produce a quality content episode.