What have I learned today?1

Overview of Caterpillar University: Learning Organization Structure, Governance,

Strategic Learning, Metrics and Evaluation

Dave Vance, President

Caterpillar University

September 23, 2004

Corporate University ExchangeCLO Exchange Forum

What have I learned today?2

Outline

• Background on Caterpillar

• Origin, mission, structure of Caterpillar University and learning community

• Key Cat U initiatives

• Enterprise Learning Plan and Division Learning Plan

• Learning metrics and Evaluation

• Looking ahead

What have I learned today?3

Caterpillar Inc.

• 72,000 Caterpillar Employees– 38,000 inside U.S.– 34,000 outside U.S.

• 246 Caterpillar facilities around the world

• 90,500 Dealer Employees– 34,400 inside U.S.– 56,100 outside U.S.

What have I learned today?4

216 Skid Steer Loader:

Manufactured in Sanford, NC

Operating Capacity: 1,400 lbs.

797 Mining Truck:

Manufactured in Decatur, IL

Operating capacity: 380-ton nominal payload

Machines Range From…

What have I learned today?5

Engines Range from

• 9 horsepower for small machines and generators

• To 600 horsepower for on-highway trucks, transit buses, fire trucks

• To 3000 horsepower for the large Caterpillar equipment

• To turbines with over 18,000horsepower for oil, gas andpower generation industries

What have I learned today?6

And More than Big Yellow Machines

• Cat Logistics—one of the world’s largest contract logistics providers, customers include Harley Davidson, DaimlerChrysler, Sprint, and Ford Motor Company

• Cat Financial—manages a portfolio of $18 billion, serves nearly 80,000 customers

• Cat Power Ventures—develops, owns, and operates power plants

What have I learned today?7

The Origin of Caterpillar University

Marketing Distribution Team recommends that Caterpillar must become a continual learning organization to succeedAn eight-member Continual Learning Team makes specific recommendations for continual learning and creation of Caterpillar University– Cat University to focus on common learning needs,

culture, leadership, knowledge sharing– Transcend 25 autonomous business units– Funding model for ongoing operations not addressed

Economy slowing; recession begins in early 2001

1998

2000

2001

What have I learned today?8

Caterpillar University

Established January 2001__________________

Enterprise Learning VisionTo be recognized as one of the best continual learning

organizations in the world.__________________

Caterpillar University Mission Improve the performance of Caterpillar employees, dealers,

suppliers and customers.

In a Shared Beliefs Environment

What have I learned today?9

Enterprise learning strategy Development of new learning/redesign or retirement of existing learning Design control for learning Enterprise learning budget Enterprise metrics and measures

Global Product Managerfor Learning

Working across the enterprise to ensure the investment in learning is linked to Caterpillar's

strategy and provides maximum value.

Working across the enterprise to ensure the investment in learning is linked to Caterpillar's

strategy and provides maximum value.

What have I learned today?10

Learning at Caterpillar

• Knowledge Sharing• E-learning• Leadership development (coaching, workshops,

facilitation)• Classroom training• Competencies• Career development• Change management• Systems support, such as Learning Management

System and Knowledge Network

Managing our intellectual capital and development

Managing our intellectual capital and development

What have I learned today?11

Caterpillar University Governance

• Board of Governors, which includes the CEO and senior executives- Approve learning budgets and priorities- Determine policy

• Advisory Board for each college, which includes senior leaders from “user” groups- Members represent different business units

- Geographic and subject matter mix

What have I learned today?12

Partnership in DevelopingStrategic Learning

• Lead Learning Managers, one from each business unit‑ Dual solid line reporting to Cat U and Business Unit‑ Monthly teleconferences

• Global Teams‑ Lead Learning Managers and Subject-Matter Experts‑ Serve as consultants on key initiatives

What have I learned today?13

Role of the Cat U Managers

• Meet common, global learning needs

• Meet local and regional needs

• Ensure customer satisfaction with Cat U services

• Enable learning partnership ‑ Work with lead learning managers‑ Work with advisory boards

What have I learned today?14

Lead Learning Managers at Business Units

Immediately established dual solid line reporting relationship with a Lead Learning Manager at each of 26 Business Units

Learning Manager

Business Unit

HR Mgr

Caterpillar University Manager

Corporate Governance to

Ensure Alignment

What have I learned today?15

How Cat U Delivers Learning

Enterprise learning programs for classroom delivery

Business Units

E-learning,Knowledge Sharing,

Leadership development

OR

Learning Managers in Business Units

What have I learned today?16

Marketing & Distribution

ProductSupport

Technology • Manufacturing • Engineering • IT • Safety

Business Processes

Business

General Studies

Leadership

DeanAlice Barbour

Adm. Asst.Mary Jenkins

DeanChris Arvin

DeanRuud Kronenburg

DeanBen Tien

DeanSheryl Tipton

University PresidentDavid L. Vance

VP – Human Services DivisionS. C. Banwart

6 Sigma

ManagerPerformance Improvement

Fred Goh

CompetenciesCareer DevelopmentRegional Center CoordinationVendor ManagementMaster SchedulingCommunicationMetrics

E-learningKnowledge SharingCLMSPerformance Support/Usability

ManagerTech Enabled Lrng.Jayne Henneberg

What have I learned today?17

• College of Leadership‑ Caterpillar leadership programs

• Colleges of Business and Business

Processes‑ Performance management curriculum‑ Change management‑ Business Acumen

Key Strategic Initiatives

What have I learned today?18

• College of Marketing and Distribution‑ Sales effectiveness and certification program for dealers

• College of Technology‑ Engineering curriculum and guides‑ Safety curriculum‑ Ergonomics e-learning

‑ Assembly e-learning

‑ IT curricula

Key Strategic Initiatives

What have I learned today?19

• College of 6 Sigma‑ Manage 6 Sigma training plan

‑ Develop internal Cat MBBs

‑ Train dealers and suppliers

• Performance Improvement‑ Enterprise and Division Learning Plans

‑ Career Development

‑ Competencies

‑ Learning processes

Key Strategic Initiatives

What have I learned today?20

• Technology-Enabled Learning‑ Caterpillar Learning Management System

‑ E-Learning More 600 e-learning courses, 175 of which are available in multiple languages

‑ Knowledge Network

‑ Performance Support and Usability

Key Strategic Initiatives

What have I learned today?21

Division Learning Plan

• Needs assessment initiated at the division level‑ Lead learning managers identified learning needs within

their respective divisions through discussions with Vice Presidents and Directors/Managers

‑ Learning needs linked to Division and Corporate Critical Success Factors

‑ Resource requirements identified to meet needs ‑ Division business leaders consulted in setting priorities

• Vice President approves their Division Learning Plan which is the business plan for learning that address both strategic and operational learning.

What have I learned today?22

Enterprise Learning Plan

• Enterprise-wide learning strategy developed based on the 25 divisional learning plans and Senior Management/Board of Governors input

• 15 high priority, global learning initiatives identified and organized by Cat U college or area

• Each learning initiative linked to one or more of Caterpillar’s business CSFs

• The Board of Governors reviewed and approved the learning strategy and investment requirements

• Included discussion of metrics and ROI

What have I learned today?23

Tie Learning to Business Goals

What have I learned today?24

Metrics

• Enterprise Learning Plan translated into prioritized goals with volume and level 1-3 targets

• Progress against plan measured every month in vital factor meeting

• Year-end forecast updated monthly; focus on deviations from plan.

What have I learned today?25

Evaluation

• Started in 2002 with need to show value proposition for learning

• 162 page Business of Learning was our first effort

• Nine detailed ROI studies conducted to date‑Dollar benefits, costs, net benefits, ROI‑Tried to improve in productivity, quality or reduction in cost

• Three state approach to ROI‑Estimate ROI at development, forecast after pilot, complete ROI at close‑Learn, modify, improve

Learning Initiatives

Process Owner

Current YearBusiness Plan

YTD Actuals

Current Year-End Forecast© Caterpillar Inc.

Caterpillar University

ROI Forecasts

Cumulative Metric

Monthly Metrics Review

2000—Desire for continuous improvement and continual learning

Spending on learning not reduced disproportionately in downturnLearning embedded in all tactical and strategic plans

Self-perpetuating learning culture

Very high level of knowledge creation and sharing, innovation, creativity, engagement and risk-taking

True Continual Learning OrganizationP

RO

FIT

CO

NT

RIB

UT

ION

FR

OM

LE

AR

NIN

G

Training Focus Courses Sharing Learning Learning Focus

TIME

THE JOURNEY

6 Sigma initiated

Caterpillar: Confidential GreenCaterpillar University 2002© Caterpillar Inc.

Cat U EstablishedProvide existing training at lower cost

Identify and meet common global learning needs with courses

Focus on leadership

Focus on knowledge sharing and e-learning

Commit to become a continual learning organizationBegin to develop metrics and ROIs

Systems thinking, change management used extensively throughout enterprise

Formally tie learning to business goals

Needs-assessments indicate where learning is needed to achieve business goals

Mistakes viewed as opportunities to learn

Leaders champion learningBegin to tie learning to business goals

Learning viewed as an indispensable part of culture

Extend learning to entire value chain

Establish enterprise-wide learning strategies

2001-2002

2003-2004

What have I learned today?28

Keys to Our Success

• Burning platform established by original study team

• Excellent foundation provided by the Continual Learning Team

• Partnership with our independent business units‑ Lead Learning manager concept‑ Dual-solid line reporting of business unit learning manager to Cat U

• A great team of dedicated individuals committed to transforming Caterpillar

• Knowledgeable resources‑ Consultant for ROI

• Upper management support

What have I learned today?29

Keys to Our Success (contd.)

• “Journey” chart to convey vision• Extensive use of volume metrics, Level 1

evaluations• Focus on strategic learning• Business of Learning• Enterprise Learning Plan

What have I learned today?30

Lessons Learned

• On-going funding model should have been established up front

• Business of Learning was an excellent exercise‑ We learned a lot in writing it‑ The discipline, alone, was worth the effort‑ It established the basis for our ongoing metrics and

evaluation work‑ Established credibility with many‑ Excited the learning community and sponsors‑ But did not sway the “die hard” skeptics

What have I learned today?31

Desired State

1. Right balance between strategic, operational and personal learning

2. Greater appreciation for bottom line benefit of learning

3. Metrics and evaluation embedded in all learning

4. Process owners who plan for and integrate learning from the beginning and who can work to ensure sustainability of improved performance