Events

I guess it’s true: having $42 million dollars really does burn a hole in one’s pocket.

Or at least this was the case with Degreed, who, fresh off its March Series C funding round, purchased “frenemy” Pathgather last week. These two companies (plus EdCast, which has now been relegated to third-wheel status), have furiously competed for years, while at the same time building up the new product category that we now call the Learning Experience Platform (LXP). And now, they’ve dropped the enemy part of their relationship and become “more than just friends.”

If you’re just getting caught up on this acquisition, you can read the basics in the company’s press release and thoughts on what it means for the overall category by folks such as Josh Bersin, David James Clark IV, Ave Rio, and Bersin by Deloitte. I don’t want to duplicate others’ work, so instead focus here on how this acquisition could create opportunities for Degreed in the talent management space.

As many of you know, Degreed shifted in the last year to a much bigger mission: enabling people and organizations to more effectively build, measure, and communicate the skills people need. This shift, plus the Pathgather acquisition, could open up opportunities for Degreed in the following areas:

• Performance management: Performance management is hot right now, and Degreed’s updated mission fits right in with the modern coaching and development-focused approach. With the acquisition of Pathgather, Degreed has a head start on many of the technology vendors looking to jump into this market. Think about it: Pathgather has a way to set goals within its system and Degreed already has a tool that allows manager and self-assessment of skills (with some exciting skills verification offerings coming down the pike). Blend the capabilities from both companies together, add in a feature that enables continuous conversations and a rating (not everyone’s going to abolish them) and… BAM you have a performance management offering. Ok, we all know it is harder than that, but you get my point – many of the pieces are there. And speaking of being there, so, too, are competitors Cornerstone and Bridge, which each have a performance management offering. So, adding this capability would allow Degreed to better compete against them.
• Coaching / Mentoring: Another, adjacent, opportunity would be for Degreed to expand its reach into coaching. There is a host of new coaching technologies (BetterUp, Pluma, Sounding Board, etc.) that are trying to use technology to more effectively connect individuals to coaches – Degreed could enter into some sort of partnership with them. Perhaps an even better opportunity, given the new data that the Pathgather acquisition will provide, would be for Degreed to move into the mentoring space. Degreed is getting more and more insight into who knows what and to what extent, and creating more formalized opportunities for mentoring and coaching would also align with Degreed’s mission. Companies like Chronus, River, and Everwise already offer this, but Degreed could help employees tie their coaching / mentoring discussions together with timely and relevant content (based on insights from Degreed’s now-extended data set).
• Career Management: And speaking of data, I could see this acquisition accelerating Degreed’s foray into career management. Degreed wants to understand the skills people need and when they need them. The Pathgather acquisition will provide more data on people’s skills and learning habits, making their existing data set more robust. Thinking forward, though, I wonder if an acquisition of a career management technology might be a wise move. More granular information similar to that provided in offerings such as Visier’s recently released Career Journeys, Fuel50, RallyTeam (oops, Workday just bought them) Cornerstone’s succession tool, or the one that PageUp People has had in place for years, would make the data from the current acquisition even more powerful.

So, these are some really exciting potential talent management-related opportunities that result from this acquisition.

There are, of course, some concerns to flag, too. First, as we all know, acquisitions take up a lot of time. In this instance, we have two teams with very strong perspectives coming together and I bet (and hope) that there will be many meaningful discussions and passionate debates on topics ranging from product direction to user experience to overall strategy. The end product will hopefully be better, but no matter what, these discussions take time. And remember, the failure rate of acquisitions is somewhere between 70% and 90%.

Second, Degreed will need both to integrate Pathgather and continue to compete in its super hot LXP market. In terms of competition, there is EdCast, which I can only imagine will remind its current and prospective customers that it is the only dominant LXP not busy with an integration (take that, third-wheel status!), and will therefore be able to give “undivided” attention to customers. Then, there are the learning providers (Cornerstone, Skillsoft’s Percipio, Fuse, Valamis, etc.) who are already competing in this space, but also offer other capabilities. Further, it’s possible that the large HCM players (SAP, Oracle and Workday) will get into this space, since a market growing at 200% year-over-year won’t go unnoticed (some thanks for having slogged all these years to create a new market, eh?).

Third – and related to the second point – I really like that Degreed had turned its focus toward skills verification, but that is already a hot market, too. Vendors such as LinkedIn, HiQ Labs, ProFinda, TeamFit, and EdCast are competing here. Degreed will have to figure out how to execute its skills verification technology and compete with incumbent players, while also managing the integration.

So, to wrap this up, I see a huge amount of potential in Degreed and Pathgather tying the knot. This opens up lots of new opportunities for Degreed, as long as they can manage the concerns. The teams on both side of this acquisition have proven themselves to be extremely smart and tenacious, so it should be a good show. I, for one, will be tuning in regularly to see what happens.

Disclosure: I/we have no positions in any companies mentioned and no plans to initiate any positions. We have no information beyond what is publicly available on Degreed’s intentions and are not receiving compensation for this post.

Through the first, second, third, and even to this point in the fourth industrial revolution, organizations have focused on efficiency – doing more with less, faster.

In fact, with the advent of the assembly line, humans became a part of the system – acting much like machines and performing tasks in a prescribed way.

That isn’t all bad. This focus on efficiency has yielded some incredible productivity gains in the last century, and with those gains, a lot of innovation and prosperity. Unfortunately, productivity growth is slowing and has been slowing for the last decade. There is only so much a system can be standardized or automated. Which means that how we think about the next century will necessarily be different than how we thought about the last one.

Interestingly, the focus on efficiency and automation doesn’t leverage the uniquely human characteristics that put us on top of the food chain in the first place. We believe organizations that tend to be more forward-thinking and/or evolved leverage humans in ways other organizations do not.

Why do we think this? In the last month, we’ve spent some time in the psychology research trying to figure out what makes a human a human – what unique (or infinitely more developed) characteristics are responsible for our success as a species. It turns out, being a human is pretty great. The opposable thumbs are a bonus for sure, but research indicates that there are other, perhaps more important traits. Also of note, while conversations about AI and robots replacing humans abound, the traits that make humans uniquely “human” are things that robots cannot do either (yet, anyway).

So what are these human traits? Our initial lit review points to four:

• Storytelling and Episodic Memory. Humans tell stories. They have developed “episodic memory,” or what some refer to as time travel memory. This memory is essential to our “humanness” because it doesn’t just help us recall dates and events, but how we feel about those events and what we learned from those events. Marketing functions are making great strides in utilizing storytelling to evoke memories and feelings that motivate us. Human capital functions should do the same.
• Picturing a different future. Humans have the ability to imagine things that never have been, and because of that, we are better able to change our circumstances. What’s more, we have a greater ability to innovate and create. While chimps react to their environments and robots iterate, humans can dream futures for themselves that currently don’t exist, and then work toward them.
• Collaborating. While other animals collaborate, humans collaborate far longer than it is beneficial to them personally. Altruism is mostly a human trait. Humans have an innate desire to share information, help their fellow humans, and work together toward something greater, even if they personally won’t see the benefit.
• Using tools. While other species use tools, humans perfect the art. We use tools to change our physical space, but we also use tools to change our mental spaces – tools for learning and creating things that don’t exist.

So. Let us know if you’re effectively leveraging humans in your organization. Tell us we’re crazy. Your feedback makes us smarter.

Last week, Microsoft acquired GitHub, a software development / code-sharing platform with a community of 28 million developers, for $7.5 billion.

Beyond all the obvious “synergistic benefits,” there are some less apparent but, for our talent management space, much more intriguing potential opportunities, which lead me to ask:

Does Microsoft’s acquisition of GitHub, when combined with LinkedIn, herald the era of a new type of talent management system?

Stay with me on this one.

As this article points out so well, Microsoft now owns two vertical networks (LinkedIn: professionals (generally speaking); GitHub: software developers). Using LinkedIn data today, an organization could have insight into people’s networks (so who knows whom), the skills / knowledge of the people in those networks (so who knows what), and what people are learning in those networks (so who is learning what, via Lynda’s online learning capabilities). If you look at GitHub, there are even better insights on someone’s skills (as the network assesses developers’ code, versus the generic endorsements of someone’s skills on LinkedIn) and the types of projects they work on. Further, GitHub is used to actually get work done – which means that any learning recommendations, communication suggestions, etc. could actually be done in the flow of work.

So, what could this new type of talent management system look like? Gone would be the days of talent management systems acquiring data from other places about employees’ knowledge, skills, and connections – and requiring people to go to that separate system to “manage” people. Rather, this next generation of systems would likely be fully integrated into those other systems (e.g., LinkedIn and GitHub) that people already work in. The existing talent management data is what would be “sucked in” to those new systems. I would imagine this new technology would include new features such as:

• More credentialing (à la the approach currently being pioneered at Degreed) to better understand who truly has what skills and to what extent
• More tools to enable people to signal their reputation more clearly (badging, blogging, upvoting, etc.) and career intentions (prioritized skills / knowledge to acquire next, desired next career steps, willingness to move, etc.)
• Greater ability to combine feedback on work product (e.g., code, for GitHub) with other performance enablement activities(pulling together that information for check-ins, integrated learning)
• Deeper network insights to understand skills and knowledge across an organization, information flows, points of collaborative overload, succession readiness, etc.
• A hundred other features that we haven’t been dreamed up yet, plus many of the ones already in existing talent management systems…

This new combination of data and capabilities would enable a much deeper understanding of people, information, the network, and how work is getting done. Further, this new system could enable personalized and curated learning in the flow of work, provide feedback on work in the moment, and enable people to have better and more timely conversations about the work, people’s capabilities, and their career trajectories. Is this not the nirvana that talent management systems have been trying to achieve for more than a decade?

The good folks over at Starr Conspiracy point out in this thoughtful report that the talent management systems market is ripe for disruption and posit that either the incumbents must innovate or the myriad new employee engagement providers will add capability to expand more effectively into the talent management space. This combination of acquisitions points to a third way forward: that non-talent management-centric software systems may come together in interesting ways to re-envision what talent management systems will be in the future.

Of course, none of this is to say that building the next-generation talent management system is Microsoft’s intent (quite unlikely), that the vision I’ve laid out will come to pass (even more unlikely, especially given how bad people are at predicting the future), or that the existing talent management systems will become obsolete in the near future (nigh impossible). But this set of acquisitions should get everyone’s mind moving on the value proposition of talent management systems in the future and how we should all be thinking about them differently.

What do you think? We will be kicking off a new talent management systems report later this month, so would love to hear your thoughts.

In particular, if you’re a talent management system vendor, let’s make sure we talk soon! If you’re a talent management system buyer, let me know what is on your mind in terms of what you’re looking for in future systems. I can be reached at stacia at redthreadresearch.com.