The Intangibility and Measurement of Learning


An important aspect of learning is its intangibility. Learning is non-observable; it takes place within people and can only be inferred from actual behavior. For this reason, it is called an intervening variable. Because it must be inferred from behavior, it is often difficult to measure: other factors influence behavior, and it is sometimes difficult to distinguish what part of the behavior is attributable to learning. Two men may be assigned a task and given instructions on how to accomplish it. One may achieve much better results than the other, but that does not necessarily mean he has learned more. He may have had more ability to begin with, or he may have had a greater motivation to succeed than the other.

Performance is the result of learning, ability, motivation, and a variety of external factors. One man may produce more even having learned less because his ability or motivation enables him to perform more effectively. A student who works hard in a course and learns a great amount may see another student work less hard, appear to learn less, but receive a high grade. Such situations are common both in school and in the business world. The factor sometimes overlooked is the initial degree of skill or knowledge brought to the task, and the resultant effect on performance. Often it is performance that is observed, judged, and rewarded.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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The Profit Economics


The following information is required, at a minimum, to understand the profit economics of a business:

  1. How many dollars of assets are committed in each stage of each product/market business (e.g., R&D, materials, plant and equipment, finished stock, post-sale support)?
  2. What is the fixed/variable cost relationship for each product/market business, that is, for each dollar of sales, how many cents are attributable to bedrock fixed costs, how many to structured or discretionary costs, and how many to out-of-pocket costs?
  3. How do costs and profit change with swings in volume?
  4. What is the break-even point at current volume and what actions could be taken to bring that break-even point down should volume potential decline?
  5. What is the rate of incremental profit on each added increment of volume? What are the volume points where new increments of structured cost must be added?

A net profit and loss statement (after all allocations) and a balance sheet for each product line are essential for generating answers to these questions. Despite their claim that “we know all that,” very few managers actually have this information readily available.

Actually, most accounting systems are not designed to provide these kinds of statements and the accountants will argue that you can’t get them because many products run over the same machines, a lot of indirect costs can’t be allocated, and so on. To which we say, baloney! Shared fixed and indirect charges often represent the most serious cost problems in business situations where a cost disadvantage exists. And they are impossible to attack in the aggregate. They must be broken down and assigned to a discrete business unit even if done arbitrarily. Then a manager with hands-on responsibility can argue about fairness and whether there is value received for the costs involved. Although this is obviously not a precise exercise, it is effective and essential. Without full cost profit and loss and balance sheet statements managers cannot really understand the profit economics of their business. Further, they can’t make the types of intelligent business decisions and plans so important in today’s environment.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight