Surviving and thriving in the training provider market
I'm a survivor, I'm not gonna give up,
I'm not gonna stop, I'm gonna work harder,
I'm a survivor, I'm gonna make it,
I will survive, keep on surviving
It’s almost too obvious to say…but running a successful apprenticeship provider is a tough gig. The new and ‘beefed up’ apprenticeship accountability framework, launched in April, and coming into place from June 2024 will only make it even tougher. And if you’re a large provider in the market, the use of volume-based measures to identify potential provider performance issues could feel like a fairly direct target.
The impacts of challenging market conditions are clear to see. Several prominent large providers have either wholly exited the market over recent years, or wound down their apprenticeship provision, as the market has become too challenging and risky to sustain. Key Training had been delivering apprenticeships for over 45 years, with a solid Ofsted rating of ‘Good’ - but even that wasn’t enough.
The apprenticeship levy promised much ahead of its launch in 2017. I vividly remember the energy in the provider market as the levy pushed employers to invest in apprenticeships, put them at the heart of their colleague development plans, and grow the market. In reality, it’s all gone the other way. Starts, achievement rates and SME engagement have all decreased. According to a recent CIPD report employer investment in learning and development has fallen by nearly 10%.
A tougher smaller market…
Transitioning from frameworks to standards was a journey – and tougher than many perhaps anticipated, but we are now starting to see their benefits. Achievement rates are trending positively, which indicates we are on our way to embedding the delivery models and working practices needed to make these a success. The drive for quality is showing positive impacts with 85% of the top 20 providers by starts volume in 2022/23 are rated good or better by Ofsted. But all of this comes at a cost.
Since the introduction of the levy almost 50% of the top 20 providers have seen EBITDA fall, whilst starts on apprenticeships programmes for the same providers have increased. Client acquisition is increasingly competitive. Large employers now know their power in the market, and how attractive and valuable their business is. Increasingly solutions need more and more ‘bespoking’ to land the sale, and with it comes delivery cost and, operational complexity and inefficiency – which can all have an impact on the bottom line.
It is perhaps the case that employers see the largest providers as a more resilient and durable choice in tough market conditions, helping the largest providers to grow when those around them have shrunk. But it remains the case that differentiation and growth in a crowded, heavily regulated and competitive space is hard to deliver – and often expensive.
With an election looming, the government and opposition are already talking about changes to the levy system to drive volumes, quality and employer responsiveness. As a sector, we shouldn’t be scared of that. We will all already be thinking about what the Lifelong Learning Entitlement (LLE) will mean for us, and what opportunities it might present? If being in this game has taught us anything it’s that we can handle change. We pause, reflect, plan, pivot and continue to deliver. So is now the time to wait and see how it all pans out? Or be bold, and deliver growth by relentlessly focusing on those things that will always matter – whatever the rules of the game on any given week? At MH&A we have a team of experts who have worked in and with providers extensively. When we got our collective heads together we agreed on six key things we think providers should focus on. Put these at the heart of your strategy to enable growth, sustainability and a vision for the future you can unite your teams around.
Be led by data…
Be led by data. Identify your markets, targets and offerings through a data science led review of employment and skills data trends. Use this to set your strategy, your target markets, your products and offers. Review the data regularly, identify the micro-trends, and use these to support product development, customer engagement and differentiation.
Your product list and offer is your shop window. Its what you are telling the market you are all about. It’s critical to have well-considered answers to the following questions. What are the trends in national and regional skills demands? What are the national high volume and high growth sectors? What sectors do you want to specialise in? From this insight, what specific standards / groups of standards does this mean you should focus on? How competitive are the markets you want to address? How are you going to differentiate your service offer?
Being clear, considered and intentional in your markets, products and target customer types is critical to creating the organisational focus that is required to deliver sustainable growth. We strongly advise to deviate from this only with great caution and a clearly defined business case – and advocate getting comfortable with saying no to business that isn’t on strategy.
But, I have worked in providers who have done this good work – perhaps not with data science approaches that our Jack Marks and Ciara Sowerby would use – but good work all the same, and what I have observed however is that it doesn’t always translate into what actually gets sold and therefore delivered.
The relationship between strategy and delivery is too often strained or broken – leading to deviation from agreed markets and product sets, target customer types and delivery models. Ask yourself, how many times have you been faced with the opportunity to deliver something off strategy – but been told it’s worth it because the client has a volume that you can’t turn down? I’d encourage you to reflect on some of these moments, and see if they really did bring the benefits you hoped, or whether the distraction they created diverted efforts from your real areas focus.
So, simply put – we think you should invest in the deep data analysis that helps you to focus your business, then build your products, services, market position and expertise around this. Be really clear about what your business is and stick to it.
Be a specialist…
The time for generalists is over. We are advocates of focus and specialism. Combined with the sector focus and targeting, as outlined above, this enables providers to develop deep domain specialism and expertise.
We don’t know why an employer would not want to work with a specialist with deep technical expertise? Employers are experts in their own domains, and any apprenticeship programmes must add to this to be worthwhile. Choosing a generalist provider in this market, where price competition is rare, is the skills equivalent of choosing the supermarket loaf over the artisan sourdough – they were both the same price. You just wouldn’t do it.
Being a specialist makes good commercial sense too. If you are a respected and credible expert in your apprenticeship domains you can leverage this into adjacent spaces, like commercial training programmes that free you of funding rule constraints and regulator scrutiny. This allows you to focus solely on delivering impact for the learner and employer. Simply put, being a specialist allows you to get deeper into the your market and diversify your revenue streams.
Once you have defined your areas of specialism you should stray from them only intentionally and with great thought. Tesla have done pretty well out of focussing on one thing, and being the best at it and in recent years we have watched some new providers excel in terms of delivery performance and growth by channelling this approach. Corndel’s tight focus on leadership and management, and digital and data, has seen them rapidly transform from new market entrant in 2016 to boasting a client list which includes Visa, M&S and BP. Their turnover and EBITDA in 2022 were £29.8m and £3.4m respectively, that’s a success story that stands out in a challenging market.
Keep it simple…
There is a lot to be said for keeping your business simple. We work with lots of clients in many sectors who over time have allowed complexity and deviation from standard processes to creep into their operations. It happens so easily, and is incredibly difficult to eradicate. Each time a new or additional process is created you create an operational overhead to understand it, manage it, govern it and execute it – all of which comes at a cost.
Those costs come in a range of forms. The most obvious cost - monetary. Someone has to do all of the things I’ve just laid out and that doesn’t come for free. Other costs can be more insidious though. What is the cost of the additional compliance risks the process complexity introduces? What risks to consistency in the quality of your programmes might new ways of working introduce? It may be hard to quantify the costs of these risks, but if they crystalise they can incur significant monetary costs to mitigate or unpick.
It all starts with really knowing and documenting your processes. You might be surprised at how many variations you have of processes that deliver ostensibly the same outcome. Wherever possible you should make your processes work in the same way across all of your products and services, and only deviate from these consciously and where absolutely necessary.
When we support clients to design new processes we always start with the learner and employer, and their experience. Thinking about their journeys and touchpoints is critical to managing their overall customer experience with you. Next, it’s the educator / trainer - who must be able to easily and efficiently execute the processes – without being distracted from what matters – delivering an outstanding learner experience at each and every interaction. Processes should be intuitive and logical to sustain their engagement and compliance. We then programme in compliance with relevant funding rules and your quality management approaches and standards. Process design can and should prevent non-compliant or poor quality delivery from taking place.
When well considered and implemented, a focus on simplicity can drive efficiency and clarity for all about their roles and responsibilities in delivering brilliant learner and customer experiences, and help to control costs.
Leverage tech…
We have all got our heads around how technology can help us to deliver our programmes. We were well on our way pre Covid, and post Covid we have mainstreamed these practices to make our delivery more efficient and accessible on demand. But, digital innovation has so much more to offer than a fancy learner management system (LMS) and online classrooms.
Embrace technology – but think bigger and bolder than LMS and online learning. Yes, it should make your business more efficient – but it needs to do more. We can draw some lessons from other parts of the education system – and beyond.
A learner’s sense of belonging can often be overlooked amongst the range of other priorities – even though we know it’s a core driver of both motivation and retention. For example, with tools like Engageli, universities are adopting software that provides all the online classroom benefits while also building community peer relationships and peer support. In apprenticeships, Multiverse have done strong work in this space – and their Community Hub platform is a key differentiator of their offer.
Adaptive learning has long held significant promise and we’re starting to see signs of that promise manifesting in real learning situations. We are watching organisations like Century Tech and Obrizum with interest, not just because they’re effective learning delivery tools, but because of the data they present around both competence and confidence. This opens the door to teachers and tutors being able to see and spend time on areas each individual student is struggling with, enabling scalable progress tracking – and lending another data point to providers’ duty to protect learner’s mental wellbeing.
We know adding “more” in is challenging in any situation. So think strategically about what you want for your learners and your business, and then start making programmatic progress to that vision – not everything needs to get done tomorrow!
Focus on the learner…
It sounds really trite, doesn’t it? How many times have we all read ‘putting the learner first’ or ‘putting the learner at the heart of everything we do’, but actually it is what it’s all about and we shouldn’t ever forget this.
By now, we have established that being a deep domain expert and delivering simple and well considered learning journeys is essential – but what else really matters to learners and employers? We are passionate about the holistic development of learners outside of the core technical specialism of an apprenticeship standard, and looking wider than the knowledge, skills and behaviours to be an exceptional watch maker or whatever the relevant discipline is. The world we live in today is complicated, and full of challenges that learners need support to traverse. We think it is all of our responsibility to help learners do this effectively. Ofsted care too. Personal development is an inspection theme. Providers generally do pretty well in this area – with 85% of the top 20 providers being rated good or better in this area.
So we propose a healthy focus on delivering exceptional careers advice and guidance, supporting learners to access progression opportunities and extend their learning into new and adjacent areas. Be cognisant of their emotional and physical wellbeing and overall development – and programme this into your learner journeys. It's essential, not additional and also critical to retention and achievement. Happy and well learners go on to succeed in their apprenticeships and careers.
Be bold…
We don’t often shy away from being bold here at MH&A. You just need to look at some of the merch we have bought the team over the years (the neon orange hoodies did really stand out in every imaginable way). But we think it’s right for training providers too. If you have an ambitious growth strategy then you are going to need to recruit and retain the capability and talent you need to deliver it. Be bold. Take the decisions. Back yourselves to deliver.
Change happens all the time in our market. An election will certainly deliver some change for us all to adapt to – but you will need the best brains, best operators, best strategists and best advisors to help you manage it and, more importantly, take advantage of the opportunities the change presents. And let’s be honest, is the change ever that radical? It’s much more likely to be tweaks than widespread reforms and tearing up the rule book. I’d be prepared to bet you a box of the above mentioned neon hoodies that all the things we have said are important in this piece will continue to be the things that really matter on the other side of an election and system changes.
So we think you shouldn’t let potential change on the horizon deter you from developing, investing and making decisions to set you up for success.
Conclusion
We know the training provider market is tough, and achieving sustainable growth is hard. But it can be achieved. You need a great product, great people, a clear identity and specialism, a focus on the learner and technology that helps to make learners and employers lives easier, better and more fulfilling.
When you have all of these things in place then back yourself to deliver. Go after your targets, be relentless in your pursuit of excellence and do everything you can to stand out for all of the right reasons. Don’t be tempted to change course at the promise of 200 starts in basket weaving…..they will never come, and even if they do, they won’t bring you the strategic advantage and positioning you want and need.
At MH&A we have helped a number or large providers to develop and review their organisational strategies - leveraging our understanding of the political, policy, regulatory and competitor landscapes, and help them to review their current operating models, processes and curriculum quality. If what we have written about here resonates with you, then please get in touch. We would love to talk to you about your current challenges, and how we may be able to help.