Beyond Knowledge: Why Companies Miss the Real ROI of Talent Development

Each year, companies in Germany invest significantly in talent development, averaging €1,236 per employee, our around €10B nationally. This commitment isn’t just a gesture of generosity; it’s a strategic move with substantial opportunity for benefiting the company. However, the true value of these investments isn’t always fully realised. Without a balanced approach that includes both horizontal and vertical development, companies may miss out on the full potential of their L&D initiatives. The bottom line comes down to the performance of each employee, each team, department, and ultimately the performance of the entire company. This oversight can lead to an opportunity cost—resources spent without achieving lasting behavioural change.

The Biggest Challenge: Over-Reliance on Horizontal Development

Most companies approach talent development in a one-sided way. They focus heavily on horizontal development—the acquisition of knowledge and skills through books, courses, training modules, and workshops. While valuable, knowledge alone rarely changes behavior.

Reading a book won’t necessarily alter how someone leads a team. A workshop won’t automatically shift how someone handles conflict. Learning a new software tool may not improve team collaboration if habits remain unchanged. Training provides tools, but without the capacity to apply them—knowing when, why, and how—they often go unused.

Personal development is the result of having new tools to deal with a situation (horizontal development) and the ability to use them judiciously (vertical development).

The Allure—and Limits—of Horizontal Development

Horizontal development dominates because it’s easy to measure. Did the employee complete the course? Did they earn the certification?

It’s attractive for budgeting, reporting, and HR dashboards. But here’s the opportunity cost: every dollar and hour spent on horizontal development without vertical reinforcement is an investment that could have generated far greater returns.

The result? Employees gain knowledge but don’t change behavior. Teams stagnate. Organizations fall short of transformation. The real cost isn’t just wasted money—it’s the missed opportunity for growth, innovation, and competitive advantage.

The Missing Axis: Vertical Development

Vertical development is about how people think and act—not just what they know. Without it, even the best training initiatives fail to produce meaningful change. on mindset, perspective, and behavioural capacity.

Vertical development is harder to measure (and often backfires when you do!), requires ongoing support, and demands a culture open to change. But it is also where the true leverage lies. Leaders who grow vertically don’t just know more—they lead differently, inspire differently, and deliver differently.

At every stage, this is important. Personal growth. Team development.

To successfully integrate vertical development in your personal company

Two Examples: Same Investment, Different Outcomes

Success Story: Clean Code
In one of my projects, engineers were trained on writing clean, maintainable code. Everyone read “Clean Code” by Robert Cecil Martin and attended a workshop to discuss how we could implement some of the ideas to reduce But this time, horizontal development was paired with accountability and a community of practice. Engineers reinforced the behaviors, sustained the practices, and the payoff was clear: reduced technical debt, avoided costly rework, and accelerated project delivery.

Failure Story: Agile Training
Many companies invest in Scrum certifications without vertical development or follow-up. Employees learn the rules but quickly revert to old habits because underlying behaviors don’t shift. Without strong agile coaches—often undervalued or under-resourced—initiatives collapse. What could have been a transformation becomes wasted time, frustration, and political infighting.

The lesson is clear: the opportunity cost of skipping vertical development is enormous.

Why This Matters for Transformation

True business transformation requires entertaining the possibility of outcomes the company can’t conceive or doesn’t yet know how to achieve. That almost always means behavioural change. Unless external pressure forces it, internal growth must create it.

Vertical development is the crux of organizational progress. Without it, companies remain stuck in the cycle of “training as a checkbox”—investing in horizontal programs, reporting completions, but missing the deeper opportunity: lasting behavioral change that fuels performance and transformation.

Leaders and organizations willing to embrace both axes of development—horizontal and vertical—unlock far greater returns on their investments. They not only gain knowledge, but also the capacity to apply it, and that’s the difference between stagnation and transformation.