Underinvesting in Training Impacts Corporate Innovation

By Sarah Sedgman

In times of uncertainty or financial strain, companies often reassess their budgets and make tough decisions about where to allocate resources. One of the first areas to feel the impact is expenses not directly tied to day-to-day operations.

Among these expenditures, training programs are frequently seen as a lower-priority cost and, therefore, an area to be reduced or eliminated, depending on the company’s size. A recent training industry study (2024 Training Industry Report, Trainingmag.com) indicates this outcome, finding that economic uncertainty was cited for 74% of U.S. companies reporting training budget decreases.

However, this approach comes with a significant long-term cost. Cutting back on employee development can ultimately hinder innovation, productivity, and the ability to adapt to changing business environments.

TRAINING = GREATER ADAPTATION TO INNOVATION

Rapid innovation, digital disruption, and the rise of technologies like AI are hallmarks of today’s business environment. Whether aiming to scale operations, adopt new technologies, increase innovation, or transform your customer experience, your people need to be equipped with the knowledge and ability to apply it correctly. Training is how you bridge that gap between intention and execution.

As Jörg Dersch, chief people officer at XPAY, said in a recent broadcast (Are You an Innovative HR Officer? Hear from Jörg Dersch of XPAY, Josh Bersin), “At the end of the day, you win with the right people strategies—and you lose with the wrong ones.” This statement underscores a fundamental truth: No matter how compelling your vision or advanced your tools, progress will stall if your workforce lacks the capability or mindset to support your direction.

Take AI as an example. According to Dersch, if you invest in a skill today, AI may cover that skill in six months. But investing in adaptability and learning means you’re future-proofing your workforce. Organizations that thrive in the age of AI are not those with the flashiest tools, but those with the most resilient, agile, and continuously learning teams.

That kind of adaptability doesn’t happen by accident—it is built through intentional, ongoing investment in training and development.

EMPLOYEES WANT TRAINING TO DELIVER VALUE

Investing in training is not just important for corporations to meet their goals. Employees are increasingly eager to be trained on innovation, especially around technologies such as generative AI (GenAI), because they see it as a pathway to delivering greater value at work.

Employees and executives report that nearly 40% of their time (Global Workforce Hopes and Fears Survey 2024, PwC) is spent inefficiently on administrative tasks, so the appetite for innovation is high.

Following up on our example of AI, workers recognize that GenAI has the potential to eliminate much of that friction. The same PwC survey found that more than 80% of daily users expect the technology to increase their efficiency significantly in the coming year. But innovation with AI isn’t just about efficiency—it’s about transformation. Employees don’t just want training that helps them do the same tasks faster; they want the freedom and tools to reimagine how work gets done. They’re asking for training not only to understand how GenAI works but also to apply it creatively, ideate, iterate, and solve business problems in new ways.

By underinvesting in training, organizations are missing out on employee-led innovation, which can be one of the most powerful levers for learning new skills, being more creative, and improving output.

DON’T UNDERINVEST IN LEADERSHIP TRAINING

Too often, organizational training efforts focus predominantly on frontline employees, assuming innovation and adaptation will emerge from the bottom up. While empowering employees is crucial, this view overlooks a critical truth: Managers and leaders need training too, especially in today’s fast-moving, unpredictable environment.

Competitive advantage today is no longer rooted in static strategies or defensive posturing. The real edge comes from thoughtful, agile leadership that knows how to steer teams through change, ambiguity, and complexity.

To move strategic thinking from a boardroom function to a core leadership capability at every level, you need trained leaders to shape how strategy is interpreted and executed. This means managers and leaders must know how to think proactively, not just reactively.

When organizations invest in training, they don’t just develop stronger leaders—they cultivate leaders who stay connected to the organization’s pulse, understand shifting market forces, and know how to adapt to change. These leaders also become champions of thinking better together—using strategic thinking, collaboration, and cross-functional alignment to keep innovation moving forward and avoid unnecessary roadblocks.

Another benefit of being trained to think strategically is moving away from busywork. Many organizations equate constant activity with progress, but real progress comes from intentionality. Leaders need to be taught how to shift from “outworking” (working harder, faster) to “outthinking” (solving problems, creating value, and driving change)—a skill that’s rarely innate.

A LACK OF TOP-DOWN GUIDANCE

A bottom-up approach is vital for generating ideas, but it’s not enough on its own. While employees are close to customers and operations, their ideas don’t always align with broader organizational goals.

Without top-down guidance and clarity from trained leaders, ideas from frontline employees can lack direction and strategic coherence. Innovation must be cultivated, filtered, and aligned with long-term objectives—and that’s a leadership responsibility.

Another risk is idea fatigue. Many organizations collect ideas from the ground up but fail to act on them, leaving employees disillusioned. A 2015 Harvard Business Review article notes that companies often struggle to evaluate or scale grassroots innovations because leadership hasn’t created the necessary support (“You Need an Innovation Strategy,” Gary P. Pisano). Without trained managers who can identify and prioritize ideas, even the best ones can fall flat.

Bottom-up innovation may also lack the market context or strategic foresight to drive true differentiation. Employees typically focus on immediate problems or process improvements, not long-term shifts in market dynamics. Top-down leadership is necessary to provide the big-picture perspective, clarify the strategic outcomes the organization is trying to achieve, and support the choices required to get there.

When thinking about training leaders, it’s not enough to encourage creativity. Managers must be equipped to evaluate, guide, and scale ideas in alignment with strategy. A 2022 Center for Creative Leadership report (Transforming Your Organization) found that leadership development improves an organization’s ability to respond to change, with trained leaders being significantly more effective at managing innovation and transformation. Without this, organizations risk creating a culture that encourages innovation without the capacity to support it.

INVEST IN THE RIGHT TRAINING FOR INNOVATION

To be clear, not all training and development is created equal. It must be strategically aligned with business outcomes to deliver real investment returns. This means designing learning journeys that focus on actual application through real work, coaching, and feedback, not just theory.

Consider using methods that move from lecture-style instruction to hands-on, immersive team experiences. For example, assign your team cross-functional projects that require input from multiple people with different skills and viewpoints. Don’t focus on completing a task but rather on practicing how to think together.

Another powerful method is leading group brainstorming or problem-solving sessions. Follow it up with collaborative refinement, where ideas are merged into one cohesive solution. Over time, these nontraditional approaches create a mindset where collaboration is how your team naturally approaches innovation and solves problems.

Finally, don’t forget that you should measure the impact of your activities not by how many hours were logged in a classroom or meeting but by whether behaviors changed, performance improved, or strategic goals were achieved.

THE ROLE OF HR

CHROs and HR leaders have a crucial role in elevating the importance of people topics at the executive level. According to Dersch, HR must shift from a support function to a strategic partner—one that helps define the roadmap for business success.

This requires HR leaders to speak the language of the C-suite, present data-backed insights, and guide discussions around capability-building with clarity and accountability. CEOs, in turn, must ensure that the people strategy is not just discussed. It must be embedded in the organization’s priorities, budget, and leadership conversations.

If there is one clear message for any executive team looking to scale, evolve, or transform, it’s this: Your company can only go as far as your people are prepared to take it. Training is not a cost—it’s a growth engine. It is how you unlock the potential of your workforce, align them with your strategy, and build a resilient, high-performing organization ready for the future.

Ultimately, when you underinvest in employee training, you diminish their ability to drive results through innovation. Empowering the workforce to explore and experiment, and giving yourself the chance to grow alongside them, is the fastest way to adapt to new technologies.

Sarah Sedgman is CEO and founder at LearnExperts.