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In the past, companies had no choice but to heavily invest in formal training methods. Classroom-based sessions, lectures, and theoretical instructions were the go-to solutions for scaling employee learning because they were the only scalable options available. In 2023, U.S. companies spent over $101 billion on employee training, with an average of $1,207 per employee. However, despite this massive investment, formal training typically delivers only about 10% of the expected results.

Stunning Facts:

• Companies dedicate over 30% of their training hours to traditional, formal methods, yet these efforts only account for a mere 10% of actual performance improvements.
• Despite significant spending, 31% of organizations report ongoing challenges with learner engagement, and 7% struggle to see any meaningful return on investment from these training programs.

The Problem with Formal Training

Formal training relies on passive learning methods like lectures and reading, which lead to low retention rates. Studies show that learners retain only 10% of what they read and 20% of what they hear, compared to 75-90% retention from active, experiential learning. Historically, this was the best option available, but it comes with significant drawbacks:

• Limited Impact: The heavy investment in formal training results in only 10% of the expected improvements in employee performance, which is a poor return on investment.
• Delayed Feedback: Traditional methods often involve delayed feedback, which prevents immediate correction of mistakes and reinforces bad habits.
• Scalability Issues in Sales: As sales teams grow, the ability of managers to provide personalized, on-the-job coaching diminishes, leaving reps with theoretical knowledge but little practical application.

The Shift to High-Efficiency, AI-Driven Learning

With advancements in technology, especially AI, we no longer need to rely solely on these outdated methods. Companies are now shifting their focus to the 70% experiential learning component of the 70/20/10 model, which is far more effective. AI-driven platforms like Peak Mojo provide real-time, personalized feedback and allow for practical application of skills in simulated environments.

Why This Matters:

• Better Retention and Application: Experiential learning supported by AI ensures that knowledge is applied and retained, bridging the gap between theory and practice.
• Immediate Feedback: AI enables instant feedback, allowing learners to correct mistakes on the spot and accelerating their skill development.
• Cost Efficiency: By reducing reliance on traditional formal training, companies can reallocate resources to more effective learning methods, improving ROI.
• Scalability: AI-driven learning platforms offer consistent, high-quality training at scale, easing the burden on sales managers and ensuring that all team members are well-prepared.

Conclusion

The heavy investment in formal training made sense in the past, but it is no longer the most efficient use of resources. With the advent of AI, companies can now focus on more effective and efficient training strategies. By shifting away from low-impact formal training and embracing AI-driven solutions like Peak Mojo, businesses can maximize their training investments, delivering real, measurable improvements in employee performance and overall business success.

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