Handbook of Organizational Learning and Knowledge Management, Second Edition

Learning Portfolio Management

Managing a learning portfolio requires a sensitivity and appreciation for outcomes; and traditionally in most business environments, outcomes or outputs are examined in the light of inputs. Return on investment, or ROI, has been a key measure that reflects the ratio of outputs to inputs. Since business people aim to maximize the returns on their investments, they make management decisions about their investments using ROI as a guiding indicator.

Using ROI as a singular criterion for making management or investment decisions is a limiting approach. To determine the value of outputs and expected returns assumptions must be made about the future; and these assumptions can turn out to be invalid. Assumptions are also made about linear associations, that an investment (usually financial resources) will be converted to some measurable amount of inputs (material, labor, process technology) that will be converted to an expected set of outputs (products, services, benefits). Over time unanticipated events or circumstances occur which thwart the realization of the presumed causal linkage, as when the cost of material or labor increases. Consequently, many management decisions end up being based on projections that turn out to be inaccurate.

This problem is especially prevalent with learning investments since the period during which the returns from learning are realized can be quite lengthy; and the lengthier the period of returns to be gained from an investment, ...