The news out of China this week about the break up of Alibaba into six separate companies was startling and exciting for investors and followers of high-tech companies with high valuations. The e-commerce giant said Tuesday that it would split into six business groups, which will each be managed by their respective CEOs and follow a holding company structure. Each CEO will report to a board of directors and assume full responsibility for company performance.

At Advantexe, we have had the privilege of working with dozens of large companies that have made the decision to break up into smaller companies. Much of our work uses business simulations to help the new leaders and contributors adjust to the new environment by providing the business acumen and business leadership skills needed to thrive. Based on years of experience and working directly with hundreds of executives, senior leaders, and the managers and contributors who do the work, here are five insights into why breaking up is good for business:

One of the most interesting elements of designing Business Acumen training programs for business leaders is to engage with them about their challenges and opportunities and how to build the organizational capabilities to move forward.

Over the past few years, having an Environmental, Sustainability, and Governance (ESG) strategy has been at the forefront of thought for many leaders. During this time, Advantexe has been approached on numerous occasions to either integrate ESG into our existing business simulations or create new ESG simulations for specific clients in specific industries. Our Solution Architects who design simulations and learning journeys always get excited and start to integrate new ideas into the simulations including packaging, production, transportation, materials management, and much more.

And then “it” happens…

We present great ideas about integrating ESG into the simulations and then it becomes obvious very quickly that yes, sure we need more ESG, so let’s throw money at it because it’s “just a simulation,” “it’s not our money,” and “I guess they want us to spend money on ESG anyway.” At this moment, a noble idea turns into “greenwashing” meaning that it has morphed from being real and practical into an extension of Marketing.

Obviously, that doesn’t make for good learning and doesn’t build any capabilities.

Which raises the question, what does?

Over the past six months, something profound has happened to the ways employees perceive and consume training. “It” feels like it started at the end of last summer and continued through the fall and into the winter. I thought things would be different in the New Year, but it doesn’t feel that way. Maybe it is the virtual burnout syndrome of working 18 hours a day in front of a computer with little to no socialization. Or maybe it is higher expectations for corporate goals and objectives because Wall Street always wants more and for many companies, the last few years have been exceptional from a financial perspective. Or, maybe it is that some of the training that has been put out there which was forced upon unwilling employees was really bad. In reality, “it” is probably a strong dose of all three things.

What I have observed is that too many employees don’t seem to have the desire or time for training even though there are more choices than ever to develop the skills and capabilities needed to achieve short-term and long-term success. Eventually, if too many employees become disengaged there will be a significant erosion of skills and capabilities that will impact the long-term success of businesses around the world.

The longtime Advantexe client’s email seemed urgent, and when we got on the Teams call, he was quite agitated. The client, a senior c-suite executive at a large global chemicals company, wanted my opinion.

“Can I ask you something? My HR team wants to run a collaboration training session at an upcoming global leadership conference which I think is great. It’s been such a long time since we were together in person, I think it is important. But, what has me concerned is the exercise is something called an ‘escape room’ and from what I understand, small teams work together to answer questions and solve a way of getting out of some room in some distant castle and the implication is they are being held in against their will. In this day and age, I don’t think it’s very appropriate and I don’t think they will be able to take the lessons back to the business world. Do you have anything similar or any ideas that will teach them how to collaborate and do it in a realistic scenario like a business environment?”

Over the past several weeks, I have noticed that a significant number of our clients have or are about to put a freeze on non-essential business travel. It almost feels like the early days of the pandemic, but the reasons are very different. Back then, it was a health issue, today’s travel freezes are to save on travel expenses and decreased productivity. 

In 2023, there are several categories of business travel including internal meetings at headquarters, customer meetings, training programs, product launches, recruitment and hiring, and HR-related meetings such as the retirement of a valued employee. 

From a purely business acumen perspective, let’s take a look at the travel costs of 3 unique scenarios. The costs are standard averages: 

Travel to Headquarters 

• Flight - $700
• Hotel (2 nights) - $600
• Food – 2 days - $200
• Miscellaneous - $100

Total - $1600 

This expense doesn't include travel time which is non-productive 

Typical Sales Meeting (big customer out of town) 

• Flight - $700
• Hotel (2 nights) - $600
• Food – 2 days - $500
• Miscellaneous - $200

Total - $2,000 

This expense doesn't include travel time which is non-productive 

Typical Training Event 

• Flight - $800
• Hotel (3 nights) - $900
• Food – 3 days - $600
• Miscellaneous - $300

Total - $2,800 

This expense doesn't include travel time which is non-productive 

Continuing with the math, think about these assumptions of a “typical” 40,000-person organization: 

• 4,000 people travel each month at an average expense of $1,800 = $7,200,000 a month
• Annualized, that is equal to about $86,000,000

That’s right, conservatively, a typical large organization can save over $86,000,000 just for travel, lodging, and miscellaneous expenses.