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11 May Managing Foreign Currency Exposure (...risks make speculators...)

This "Daily" references the literal risk of currency exchange as well as the loss of sales in both foreign and domestic markets.

Drucker's suggestion is to "hedge your exposure." I understand what this means when literally referring to currency exchange. What does it mean to "hedge your exposure" in relation to training?

Hedging means to invest in two strategies with negative correlations. This creates a form of "self-insurance" and has a cost associated with it.

So with currency exchange this means rather than having all of your assets in one currency (e.g. the dollar) that some would also be invested in Euros or Yen?

With professional training services it may mean that rather than having all of your IP in one delivery format that your "hedge" by also investing in "competing" formats? If you offer your learners classroom training, elearning, social learning and self-paced learning are you hedging your investments vs. putting all of your investment in one category?

I've seen many companies do this and fail. What has been your experience with "hedging" in the business of training?

Replies to This Discussion

Permalink Reply by Paul Terlemezian on April 23, 2011 at 8:18pm

As the leader of a training organization would you rather have great training in one format only (e.g. classroom, online, or social) or adequate training in multiple formats. One may clearly win awards but the real goal must be to improve performance. The hedge comes from not placing all your bets on the same horse (i.e. format of learning.)

Our challenge as an industry is to cover all format with less expense per unit of success measurement. Another challenge will be to agree on what constitutes a success measurement!