Institutional Learning (Part 1/2)

It makes you wonder: the market for traditional consulting services in Germany, Austria, and Switzerland has grown steadily in recent years – most recently to the incredible sum of roughly 60 billion euros! For comparison: estimated revenue in the automotive market over the same period was around 120 billion euros across the three countries.

The question is: if so much money is being spent on consulting, why has the earning power of companies in these three countries not developed noticeably better? In 2024 the trend was in fact clearly negative. After all, consulting spend corresponds to about 50% of the cumulative profits of the 200 largest companies in Germany. In Austria and Switzerland the ratios are likely similar.

Something is going terribly wrong here.

To put it bluntly: instead of equipping their own leaders and employees to solve problems on their own, companies prefer to call in consultants who are supposed to "fix" the problem.

Roughly as if you went to an orthopedist for every little ache instead of to physical therapy or the gym. Yet it is obvious: building muscle and trained mobility are the best means of avoiding visits to the orthopedist.

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What are the alternatives?

Let us stay with the health analogy: companies need trainers who accompany their leaders and employees in their concrete work context – that is, where the problems actually arise. The goal is to solve them in a structured and lasting way.

This has nothing to do with traditional seminars or workshops, in which content is delivered to a randomly assembled group of participants and is, at best, half relevant. Not to mention the frequently poor implementation back at the workplace – whether due to a lack of support or simply the inertia of everyday routine.

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Institutional Learning takes a different path

Just like a personal trainer in physical therapy, our Learning Agents accompany teams directly on the job. They demonstrate, hands-on, how tasks can be completed more precisely, more efficiently, and more sustainably.

It begins by clarifying a decisive question: what are you – dear leaders and employees – personally responsible for? And that does not mean what is printed on your business card or written in your job description.

The manager's profession is defined by the obligation to achieve measurable results – that is exactly where their responsibility is reflected.

Example: the head of finance and accounting is responsible for delivering, as promptly as possible, the most objective picture possible of the company's financial position and earnings, so that risks can be flagged early.

The reality? Most executives cannot name their actual responsibility in concrete terms – and that often starts at the C-level.

So how do you expect your leadership team to act with personal ownership when responsibilities are not even clearly defined?

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Making responsibility visible: with KPIs

As soon as responsibility has been clarified, concrete key performance indicators (KPIs) must be defined that describe it. In our example, these might be:

• After how many working days is the monthly close available, including analysis and forecast?
• When is the audited annual financial statement available, including its evaluation?
• How large are the deviations between the monthly result, the forecast, and the annual statement?
• How accurate is the liquidity plan compared with the actual situation?

Achieving benchmark performance here requires a finely tuned system – a delicate piece of clockwork – that makes it possible to live up to the responsibility. Fast but wrong is just as bad as correct but too late. The right trade-off between speed and precision must be found.

What applies to the head of finance applies equally to the head of sales, the head of production, the head of marketing, the HR manager. In many companies it is unclear what exactly these people are responsible for – and with which metrics their performance can be measured.

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Institutional Learning in practice

Once this foundation of responsibility is laid, the next step is to capture the relevant metrics. This can be done with IT-supported tools or manual methods. What matters is: responsibility expresses itself in numbers.

A monthly close after 25 days with a 45% forecast deviation at company A is simply something entirely different from a close after 5 days with a 4% positive deviation at company B.

Now the actual learning begins: what exactly does the responsible person at company A have to do to reach, step by step, the performance level of company B?

No seminar can deliver that. The framework conditions are too individual: IT systems, employee qualifications, culture, and discipline.

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The project plan is created inside the company

A central step in Institutional Learning: the responsible person creates a detailed project plan for performance improvement themselves, supported by a Learning Agent. This creates genuine identification with the task – because all the insider knowledge flows in that no external consultant can bring.

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The challenge: day-to-day business

Many good initiatives fail because day-to-day business absorbs all resources. This is where the Learning Agent comes in: helping to remove blockages, create attention, and secure progress.

As soon as the first measures take hold, successes quickly appear – the famous low-hanging fruit: for example, a reduction of the closing time from 25 to 19 days with more stable figures at the same time.

Now the real "learning" begins: ambition rises, the metrics improve, processes are standardized, transparency grows.

The Learning Agent now makes sure that motivation is sustained, expert knowledge is deepened, and problem-solving capabilities are built up for the long term.

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Conclusion: Institutional Learning works long term

The decisive difference: the leaders learn how it is done. They increase their ability to solve problems on their own. Pride in what has been achieved emerges – the best precondition for a lasting increase in performance.

A traditional consulting project such as "accelerating the closing process while improving forecast accuracy" cannot achieve this effect. Because no real learning process takes place. And because a relationship at eye level and personal ownership are often missing.

Many consulting projects fizzle out because, in the short, expensive project period, the people are not brought along, involved, and developed.

The example shows this too: company A managed to shorten its closing time from 25 to 15 days during the project – a year later it is back at 18 days. No sustainability, no progress.

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Institutional Learning takes time – but creates real value

Yes, Institutional Learning takes longer than traditional consulting. Depending on the maturity of the organization, it may also cost somewhat more. But the value it creates is lasting.

Only companies that solve more problems than new ones arise are successful in the long run. Because only then is enough energy left to seize opportunities.

Given the rising complexity of global markets, the number of challenges will grow exponentially. No company will be able to afford to buy in a consulting team for every problem – already today, consulting costs amount to around 50% of the profits of the largest companies!

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Tomorrow's competitive advantage: problem-solving capabilities in-house

The true competitive advantage of the future is the ability to solve problems independently and permanently. This requires Learning Agents who build up this capability and thereby secure the company's future viability.

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Further articles:

• Institutional Learning 2 (link)
• Restructuring: turning a problem into opportunities (link)