LinkedIn Learning Hub – So Many Questions
Posted on Wednesday, April 21st, 2021 at 4:56 PM
It really comes as no surprise that LinkedIn Learning is jumping on the LXP bandwagon. As organizations have begun the trek from “you’ll learn what I darn-well tell you to learn” to “Look! It’s Netflix for learning!” to, finally, “Let’s help you build skills – it’s good for you and it’s good for the company”, it makes logical sense that LinkedIn would eventually go here. Read their announcement.
Here’s what we know:
It’s free (for some, and for now).
LinkedIn Learning is offering LinkedIn Learning Hub for free to existing LinkedIn Learning Pro product customers for 1 year. We’re assuming this is a way to quickly build market share and allow those orgs that are thinking about dipping their toes in the LXP market to experiment.
This is particularly savvy as organizations are thinking more broadly about learning – no matter how good LinkedIn Learning content is, it’s likely not enough on its own for any organization. LinkedIn Learning Hub gives LinkedIn Learning the chance to offer more value to existing customers by creating a new product in a hot category.
This move may cost LinkedIn a bit of money upfront in customer service and integration unless they have an incredibly easy interface to connect both content, data, and employee information and expect it to be turnkey. But it also provides them with further opportunities to connect with and build relationships with existing customers.
What we’d like to know:
- What will be the cost after the first year?
- What services will LinkedIn Learning add to accommodate their new LXP customers? Even the simplest LXP is significantly more complicated than a content portal.
- Will they leverage customers using the product to further develop the product to better compete with existing platforms?
It’s for learning.
LinkedIn is offering LinkedIn Learning Hub as an addition in LinkedIn Learning. That fact, and the name, “Learning Hub”, lead us to believe that LinkedIn is thinking about this product as firmly planted in the learning space. As such, it can easily find a line item on the L&D budget and also has the opportunity to be a fairly big disrupter to the LXP market.
While this is seems like a logical move, it could also be shortsighted given that other big LXP players (like Degreed or Edcast) are endeavoring to increase their footprint outside of L&D as they realize that “skills” isn’t just a learning problem; it’s a strategic problem that affects almost every people aspect of an organization.
Other players are increasingly emphasizing that learning happens everywhere, and not just as a result of consuming content, to build skills. Other ways of developing skills, most notably through experiences, are being developed and tested. (Incidentally, if you’re interested in the skills discussion, check out our podcast, Workplace Stories: The Skills Obsession.)
What we’d like to know:
- How does the product accommodate (and connect with) other technologies that are increasingly involved in developing/tracking/reporting skills and experiences?
It touts its data.
Not surprisingly, LinkedIn Learning Hub is touting data and insights from their Skills Graph, “the world’s most comprehensive skills taxonomy, with 36K+ skills, 24M+ job postings, and the largest professional network of 740M+ members.” LinkedIn has got some fantastic data – one of the very big advantages it has over others playing in this space.
However, how LinkedIn indicates it’ll used use that data is underwhelming. According to their introductory post by their Sr. Director of Product, James Raybould, all that lovely data will be used to “empower customers with richer skills data insights, personalized content, and community-based learning.”
These things are important – but at this point, we don’t see the ability to provide incrementally better recommendations for content as a game changer in the LXP space.
What we’d like to know:
- What do the richer skills data insights look like, and what can LinkedIn Learning Hub do with those insights beyond these basics in the near future?
- How will those insights be leveraged for some of LinkedIn’s other offerings? (e.g., we see how skills information could be really valuable to LinkedIn proper and their support of recruiting).
So far its data appears to be for the adults.
Data and insights about skills are touted as available to L&D functions through the admin portal so they can “identify skills gaps, pin key skills and track trends over time, benchmark themselves against similar companies, get insights on skills interest and learning activity, and track skill trends across content sources.”
One of the really powerful advantages we think LinkedIn has is their history of providing data to the employees themselves – those most empowered and most motivated to do something with it. We’d love to understand what kind of skills data LinkedIn Learning Hub will provide individual employees and how it can enable employees in their careers. With the strong focus many organizations have on employee experience these days, this seems like a no brainer and a pretty big selling point.
What we’d like to know:
- What information will be pushed down to individuals?
- How is this tool designed to help guide employees to new opportunities for growth and career?
It (like everyone else) has a skills taxonomy.
One of the biggest arguments about skills is what to call them and how they relate to each other. Many organizations lack a common language about skills, and one of the biggest frustrations is the lack of consistently between departments, businesses, and even technology. We don't know how to talk about skills. To solve this problem, many organizations either create skills taxonomies or adopt ones and tailor them to their needs so – at least internally – everyone is using the same language.
The LinkedIn Learning Hub's skills taxonomy may help some organizations create the consistency they crave. It also provides a way to more accurately benchmark against industry and/or regional norms for skills and skills development. Many providers of skills frameworks are moving towards ontologies (structures that show concepts and their relationships relationships and adapt to new information) rather than taxonomies (structured, formalized, hierarchical organizations). Although we haven't seen it, we're assuming LinkedIn may lean more toward ontology than pure taxonomy – important to their ability to do more cool stuff later.
What we’d like to know:
- How does the taxonomy stay current and valid given rapid changes most orgs are facing,
- How can it align with taxonomies that have already been adopted by organizations?
It appears to duplicate some of Viva’s offerings.
Less than 3 months ago, Microsoft, LinkedIn Learning’s parent company unveiled its new Employee Experience Platform, Viva. This tool “brings employee engagement, learning, wellbeing, and knowledge discovery directly into the flow of people’s work.” See our take on Viva here.
As a part of that offering, there is a native player for LinkedIn Learning content. Other things it does?
- Identify content that may work for individuals.
- Provide insights to individuals, managers, and leaders
- Connect information and experts across the organization
Clearly, there is overlap. It is unclear how these 2 systems play with each other, if at all. Given the overlap, it appears that there could be some cannibalization. Further, Viva will integrate with other LXPs – rendering LinkedIn Learning Hub even more redundant.
What we’d like to know:
- How does LinkedIn Learning Hub interface with Microsoft’s Viva?
- If orgs have implemented one, is the other necessary?
- Are there plans to create a massive experience platform that uses all data that Microsoft and LinkedIn have? Cuz that would be cool.
To sum up:
LinkedIn Learning Hub is an interesting move by LinkedIn Learning – one that allows it to increase its offering to existing content customers – likely necessary because while content has value, it is increasingly becoming only a small piece of the overall L&D picture. It’s also not a move completely without precedent. Skillsoft purchased SumTotal for the same reason years ago.
Offering it to existing Pro customers for free may increase market share quickly, allowing those experimenting with LXPs for the first time to see if it’s for them, and get them used to a product that will likely increase in functionality and polish in future. It may be a very good move for small and midsize organizations or larger organizations with constrained L&D budgets.
Two final observations: 1) LinkedIn Learning Hub is pretty basic. Nothing about this LXP is extraordinary – yet. That could change. 2) While Viva made one heck of a bang when it hit the market, LinkedIn Learning Hub entered with more of a whisper. Some of our friends at other LXP providers say there isn't yet much disruption to deals in their pipelines. LinkedIn Learning Hub may not yet have the heft of existing options.
We’re very interested in your opinion – what are your thoughts?
What We’re Reading at RedThread
Posted on Monday, April 5th, 2021 at 11:53 AM
We read a lot at RedThread—both to directly inform our research and because we’re reading junkies. We also listen to a lot of podcasts. (In fact, in this piece, we use “reading” as shorthand for “consuming content,” regardless of whether we’re consuming a podcast, book, audiobook, or article.)
Part of our mission at RedThread is to accelerate the flow of ideas through the marketplace—and one way we do that is by sharing what we’re doing / thinking as soon as we’re doing it. In that spirit, we want to share what our team members are reading these days.
We’ve divided the list into 4 sections:
- Reading that directly informs our research
- Reading that keeps us up to date in the field
- Reading that broadens our horizons
- Reading that we plan to do
Throughout this post, all titles and images are hyperlinked to the source. Let’s dive in!
Reading That (Directly) Informs Our Research
These books, articles, and podcasts help drive our thinking on the specific topics we’re writing about currently—topics like purpose; diversity, equity, inclusion, and belonging (DEIB); people analytics; learning; and skills. Here are our top things to read in this category.
The Enlightened Capitalists
In this book, author James O’Toole gives a fantastic historical perspective on how businesses have approached purpose. We’ve been doing a lot of research on the topic of purpose—individual, team, and organizational—and found this book remarkably enlightening (pun intended). It helped us understand how our collective concept of purpose has changed over time and why purpose is such an important component of a business’s success, now more than ever before.
Reimagining Capitalism in a World on Fire
Also supporting our purpose research, this book’s author Rebecca Henderson describes how capitalism is on the verge of destroying the planet and destabilizing society. Capitalism is destabilizing the climate, driving human deaths and mass species extinctions. Wealth is increasingly unevenly distributed and many institutions that have historically provided stability—families, faith traditions, governments—are “crumbling or even vilified.”1 What can org leaders can do to change the path we’re on? A lot—and this book offers a practical roadmap for how businesses can build a kind of capitalism that works for everyone.
Caste: The Origins of Our Discontents
A number of people recommended this book to us, including Deborah Quazzo, Managing Partner at GSV Ventures and one of the guests on our “Is Purpose Working?” podcast season. Isabel Wilkerson writes about the existence of a invisible caste system in America and how that system influences us all. She shows how a rigid hierarchy is embedded in our society and institutions, feeding racist policies and beliefs in ways we often do not see. The book supports the research we’re doing on DEIB.
How to Be an Antiracist
This powerful book reshapes the reader’s notions of what it means to be racist. Starting from the idea that there are very few people in the world who think, “Yes! I’m racist!”, author Ibram X. Kendi helps readers understand that racism is fundamentally a problem of systems, policies, and institutions that foster inequity and invite individuals to (sometimes unconsciously) hold beliefs and commit actions that also foster inequity. The book paints a compelling picture of how we can all be antiracist by actively and continuously pushing ourselves, our communities, and our institutions to promote equity. This book supports our research on DEIB.
Reading That Keeps Us Up to Date in the Field
We love these sources—none of which, you’ll notice, are books—because they reflect some of the most leading-edge thinking on the topics we care about. If you like RedThread’s research, then you’ll probably find these resources helpful, too.
Articles by Matthew Daniel
Matthew is a longtime learning leader who writes about skills, talent, and learning. One of our favorite quotes:
Ultimately, we in L&D may be robbing our organizations of some of the greatest potential in talent, because they sit in the frontline and they're non-exempt employees—and so they just don't get access to content, or the systems, or the programs, or the mentoring, or the class.2
Matthew is a very forward-leaning thinker in the talent and learning space. He’s a regular contributor to CLO Magazine and posts valuable content regularly to LinkedIn.
Learning Tech Talks
This podcast, hosted by Christopher Lind, gives one of the most comprehensive (and entertaining!) perspectives around on learning tech—vendors, challenges, opportunities, ecosystems, and more. Each episode features a learning tech vendor talking about the problems they’re trying to solve. We like it because it’s not salesy, it’s always informative, and Christopher has an amazing ability to synthesize what’s going on in the space.
David Green’s Monthly Roundup of People Analytics Articles
Every month, David Green posts on LinkedIn a summary of the top articles published that month on people analytics and related topics. Each post contains a dozen or more articles, each summarized in at least a paragraph, often with helpful charts and graphics. This single monthly post is a great way for us to keep up to date on what other people are saying in the field.
HRTech Weekly Podcast
Stacey Harris and John Sumser at the HR Examiner host a weekly podcast, “HRTech Weekly One Step Closer.” They cover topics ranging from HR tech trends to analysis of tech vendors, recent mergers and acquisitions, and the implications of senior leaders’ movements between orgs. This weekly show is another fantastic way we stay current on others’ thoughts in the field.
McKinsey & Company Research on the Future of Work
McKinsey has been publishing a lot on skills, reskilling, upskilling, and the future of work. The company’s findings are well-researched and highly informative. These articles help keep us current on others’ work on the topics of skills and learning—for example:
Learning itself is a skill. Unlocking the mindsets and skills to develop it can boost personal and professional lives and deliver a competitive edge.3
McKinsey Quarterly, August 2020
Reading That Broadens Our Horizons
Curiosity may have killed the cat…but it sure makes us better researchers! We read a lot of stuff that’s not directly related to our research projects or even our areas of focus. These books, podcasts, and Facebook groups (yep) help us stay on our intellectual toes and keep us growing, learning, and thinking.
More: A History of the World Economy from the Iron Age to the Information Age
Author Philip Coggan writes the weekly Bartleby column for The Economist. Here, he’s provided a sweeping history of trade, industry, and growth in the global economy from ancient Rome to the 21st century. We enjoy his style of putting complex information about management and the world of work in an easy to comprehend and interesting format that’s very appealing.
Prediction Machines
We’ve been talking about how AI will disrupt our lives and work for some time now—but how, exactly, will that happen? Authors Ajay Agarwal, Joshua Gans, and Avi Goldfarb explore the economic implications of the price of AI, which is declining in a way that’s similar to how the price of computing declined in the 1980s and 1990s. The book was recommended to us to truly understand AI disruption.
Profiles in Courage
In 1954, then-Senator John F. Kennedy decided to write a book profiling 8 of his predecessors: Senators from history including John Quincy Adams and Daniel Webster. The book won a Pulitzer Prize in 1957 and became a classic on courage in the face of difficulty and pressure. It’s an exceptional view into leadership in different times—with real implications for today.
The Rise: Creativity, the Gift of Failure, and the Search for Mastery
This book is an amazing exploration of failure—what it is, what it isn’t, and how failures are part of the journey to successes. Author Dr. Sarah Lewis, an associate professor at Harvard, has a background in art and culture—and uses these lenses in her lyrical, insightful, and practical exploration of the true nature of failure. (Hint: It’s not what we tend to think.)
Raising Kids with a Growth Mindset
This resource isn’t a single article or book—it’s a private (though very large) Facebook group of parents learning to live and parent with a growth mindset. Although most of the discussions focus on how to help children, the lessons and insights that group members share are often equally—if not more so—relevant to adults. We’ve found it to be some of the most helpful self-awareness and growth content available anywhere.
Reading That We Plan to Do
You probably won’t be surprised that we have long lists of things we want to read, but haven’t yet. Here are the top few.
The Making of Asian America
Given current events, we think it’s tremendously important to better understand the history of Asian-Americans in our country. Asian immigrants and their descendants have played a major role in U.S. history, but much of this influence has been overlooked or forgotten. This book by Erika Lee, a professor, author, and historian at the University of Minnesota, was recommended to us as a comprehensive, engaging, and fascinating way to learn something we should already know: how Asian-Americans have shaped the history of the United States.
The Remote Work Revolution: Succeeding from Anywhere
Looking ahead to post-pandemic life, we’ve recognized that work—like life—will never look the same. In this new environment, employees want to know how to stay connected while maintaining work-life balance; managers want to know how to lead remote teams; and orgs want to know how to enable great work to be done. We’ve heard that this book by Tsedal Neely answers many of these questions. It’s a practical guide for leaders, managers, and teams as they figure out what works best for them and their organizations.
You Are Your Best Thing: Vulnerability, Shame Resilience, and the Black Experience
We are looking forward to reading this product of a collaboration between Tarana Burke and Brene Brown—something that combines Brown’s work on vulnerability with Burke’s work on shame resilience. They bring in Black authors, artists, activists, and more to share their stories—resulting in a “stark, potent collection of essays on Black shame and healing” within a space where we can “recognize and process the trauma of white supremacy…be vulnerable and affirm the fullness of Black love and Black life.”4
Brave New Work: Book & Podcast
This resource started as a book and has continued on as a podcast about the way we work. Author Aaron Dignan explores the “operating systems” of organizations—the things that comprise organizational culture—and how we can improve the ways we work.
The Making of a Manager: What to Do When Everyone Looks to You
There’s increasing research that, to improve performance, employee engagement, and other key metrics, orgs should focus on helping their managers become better managers and leaders. This book by Julie Zhuo is a practical guide designed to do just that. Each chapter focuses on a specific aspect of management—for example, holding effective meetings (and canceling unnecessary ones)—and offers specific advice to new managers learning the ropes.
More Reading
For more sources related to our current research agenda, check out these lit reviews:
- Learning Content in the 2020s: What the Literature Says
- Choosing Learning Tech: What the Literature Says
- The Changing Perspective on Mobility
- Competencies vs. Skills: What’s the Difference?
- Skilling: 5 Themes in the Conversation
- The Purpose-Driven Org: What the Literature Says
What Are You Reading?
You might have noticed from this article that we love reading. We want to hear from you: What are you reading these days? What questions are you trying to answer for yourself?
Share your favorites with us at [email protected]!
Microsoft Crashes the Employee Experience Party: Brings Together Glint, Workplace Analytics, and Others to Disrupt the Market
Posted on Thursday, February 4th, 2021 at 9:05 AM
Last Friday, we suggested that February would provide us with another strong next segment of HR tech market watching (did you take that popcorn out of the microwave like we advised?!). And wow, do we have a good one on our hands!
Today Microsoft announced Viva, a single employee experience platform “designed to empower people and teams to be their best.”
This announcement fundamentally reshapes the employee experience and people analytics tech market.
Those of you who know us well know that we don’t throw that type of language around lightly — and thus had to write a long blog to share our thoughts (#Sorry #NotSorry).
We’re going to explain what this new product is, why it’s such a big deal to the employee experience and people analytics tech market, and the implications for Glint (the engagement solution Microsoft bought 2.5 years ago).
What is Microsoft Viva?
For those of you who have been following along, you know we've predicted Microsoft would enter the employee experience market for years, especially following its acquisition of GitHub, LinkedIn, Lynda.com (now LinkedIn Learning), and Glint. That day has finally come.
Built on top of Microsoft 365 and Teams, Viva offers four modules (see Figure 1), which combine existing Microsoft offerings into a single solution:
- Connections – Creates a “digital campus” where all policy, benefits, communities, and other centralized resources are available. (Available this summer.)
- Insights – Combines Microsoft Workplace Analytics, My Analytics, and Glint to provide employees with insights on how they work, and gives managers and leaders information about their teams, burnout risk, after-hours work, etc. (Available now.)
- Topics – Leverages Project Cortex to identify knowledge and experts across the organization, generating topic cards, topic pages, and knowledge centers (including people – not just information) for others to access – a “Wikipedia of people and information” for the org. (Available now.)
- Learning – Integrates LinkedIn Learning (formerly Lynda.com), Microsoft Learn, and other external sources (including LMSs or LXPs such as Cornerstone and Skillsoft) into a single location within Microsoft. (Available this summer.)
For the newbies here, let’s clarify a few things: What is employee experience and how does tech support it?
Let’s take a step back here and provide a definition, as folks like to throw around the term “employee experience” like a magic eight ball (shake it and a different definition comes out each time!).
We define employee experience as:
Employees’ collective perceptions of their ongoing interactions with the organization1.
Within that definition, there are some nuances, which we illustrate in Figure 2. The main point is this: employee experience encompasses the entire experience – not just tech.
However, tech vendors – who have been largely responsible for popularizing the term – have only generally focused on a subset of employee experience:
- Improving and measuring employees’ tech experiences
- Measuring employees’ collective perceptions, primarily (though not solely) through surveys
Until a few years ago, vendors tended to stay in one of those two boxes. However, we’re seeing more overlap than we used to, such as employee experience vendors moving more into employee engagement (e.g., Qualtrics or Medallia) or HCM vendors offering employee surveying solutions (such as what we talked about last week with the Workday / Peakon acquisition).
Despite all the great things about employee experience vendors, many of them face 3 important challenges:
- Surveys are limited in scope. Surveys can only report on the specific items in the survey, only measure employees’ perceptions (vs. what actually happened), and can only be done with limited frequency (#surveyfatigue).
- Experience data are incomplete. Even in vendors that extend beyond survey data, they are often still limited in terms of the data available: the data necessary to truly understand how employees work exists outside these vendors’ solutions.
- Integration and analytics capabilities are limited. Many (though not all) of these solutions are not built to integrate varied data types at scale or to conduct deep analytics, limiting their ability to explain employee experience outside of the data they capture or integrate.
As a result of these challenges, many employee experience vendors partner with multi-source analysis platforms (e.g., Visier, Crunchr, OneModel, SplashBI, HCMI Solve and others in our people analytics tech tool), which specialize in data integration and deep analysis. Those tools’ core capabilities are integrating varied data sources and deriving meaningful insights from a lot of data. A prime example of this is the announced partnership between Visier and Medallia.
In sum, employee experience vendors, to date, have only covered part of employee experience – leaving open space for someone who can (at least claim to) do it all.
Why is Viva – and Viva Insights in particular – such a big deal?
Microsoft Viva has the potential to do three really important things:
- Cover nearly all digital aspects of employee experience, unlike any other vendor on the market
- Integrate expansive amounts of passive, continuous behavioral employee data with perception data (only for Glint / Microsoft / Workplace Analytics customers)
- Seamlessly provide deep analytics and insights of these larger data sets via Glint and Microsoft Workplace Analytics
These three capabilities are why we think this announcement fundamentally reshapes BOTH the employee experience and the broader people analytics tech market.
Let’s start with the first two points about the breadth of employee experience and data types. Through its combination of offerings, Viva will have access to continuous, passive, behavioral data in the areas that most of the other employee experience and people analytics vendors do not:
- Work Relationships: LinkedIn (who you know, inside and outside your company), Office 365 (also who you know, but combining that with email, calendars, Teams, Yammer, SharePoint interactions, etc.)
- Work Environment: Office 365 — including SharePoint — products (where work is getting done), but also Connections (the central hub) and Topics (the “Wikipedia of the org”)
- Org practices: Office 365 (how work is getting done and with whom), Topics (where and with whom information resides), LinkedIn Learning (what people are learning), and Glint’s performance development capabilities (360s, anytime feedback, development goals, and manager nudges)
Viva Insights will also be able to address the other areas existing experience vendors cover, such as improvement and analysis of highly repeatable experiences and employee engagement / experience surveys (Glint).
Finally, Viva Insights will provide an integrated, deep analytics platform with the combination of Glint, Workplace Analytics, and My Analytics (for employees). There will be no need for customers to marry two different vendors and hope they can sort out data integration challenges. Viva Insights should do all of this, seamlessly, and then integrate it into Teams and Office 365. It is important to note that all of the above is only possible if companies are customers of the relevant products (e.g., Glint and Workplace Analytics), but there are no additional integration costs.
With this offering, Viva has the potential to fill the gaps left in the employee experience market, and thus fundamentally change it.
What does this mean for Glint?
First, it is critical to note that Glint will continue to operate as a standalone offering, in addition to being integrated into Viva. The integration of Glint into Viva – and the inherent integration of Glint with Workplace Analytics that comes with it – means that Glint’s aperture of employee experience is much bigger, and moves beyond employee engagement (perception) data to include passive, continuous behavioral data. Glint, through these integrations, will be the only vendor that will be able to do this at such scale.
The primary benefit of this is leaders will be able to connect how people feel to how people work.
The specific types of questions they will be able to answer are things like:
- What work patterns and habits correlate with specific employee perceptions?
- How do those sentiments influence how people work and collaborate?
Practically speaking, that means leaders can tell if manager 1:1s, large team meetings, or growth in after-hours work is impacting employee engagement as well as other perceptions.
Given the recent (and critical) focus on mental health and wellbeing, this connection of data sources – and literally being able to see what people are doing and how it is affecting them – could be a game changer for many customers, and thus for Glint, as well. Customers will be able to access this analysis either within Workplace Analytics (Figure 3) or Glint (Figure 4).
Glint is very likely to get a super-charge to their business as a result of this announcement.
There are numerous reasons for this:
- Glint gets more looks. Existing Microsoft and Workplace Analytics customers looking for an employee engagement solution will be more likely to look at Glint due to the integration.
- More actionable data. The integration with Viva and Workplace Analytics will give Glint customers the ability to access data that tells leaders which behaviors (as measured by all these passive data sources) are resulting in different outcomes, and as such those data will be highly actionable.
- Data where people will use it. The integration of Glint data into so many other Microsoft products means customers won’t have to step out of the apps they use to access the data. It will be presented in the course of the normal workday, enhancing the likelihood of action and thus impact.
Also, looking forward, there are many future product offerings Glint could develop as a result of gaining access to this richer data set (e.g., organizational network analysis (ONA), targeted manager offerings based on more relevant, real-time data).
It all sounds so good. What could go wrong?
The sections above outline what could be. We all know that the reality can be harder.
First, much of the success of this product requires the different parts of Microsoft to collaborate with each other effectively. We all know that large companies don’t always do that. Further, much of this product involves successfully stitching together existing products and, again, that is often easier said than done, due to tech debt, tech limitations, and in some cases, egos.
Second, one of the big selling points here is that all the data actually integrates and everyone has access to what they need. Even though Microsoft is one company, it is highly unlikely that much of this data is on a similar architecture (especially when you factor in the number of acquisitions being pieced together here – oy vey!). I imagine that a lot of this data alignment work has been done, but we all know the devil is in the details when it comes to data integration. Further, a company has to be customers of all these various solutions in order to reap the benefits of data integration.
Finally – and this is the elephant in the room – there are issues of data privacy and ethics. All these data together – especially data coming from work productivity apps – presents some really thorny issues. We’ve been told that the following data privacy steps have been taken:
"Leaders and managers using Viva Insights in Glint—currently in pilot—can see only aggregated, de-identified results based on the confidentiality thresholds built into Glint. The Glint dashboard will never display Viva Insights information about an individual's work patterns."
While these are all real and meaningful steps to take, there will likely remain other questions, such as:
- Will employees be told that these types of data will be collected and what will be done with them?
- Will employees have the ability to opt out?
- What are the ethical implications and unintended consequences of looking at all these data together? (Perhaps the most important question of them all.)
What does this mean for the broader employee experience, people analytics, and HR tech market?
There are a lot of broader market implications of this announcement, but we have space for just a few:
- Passive / continuous data is now a must for employee experience vendors. Employee experience and engagement vendors that don’t have a way to access continuous data need to figure it out and FAST.
- Multi-source analysis platforms may be the next area of acquisitions. Given the pressure this puts on seamlessly combining lots of data with platforms that can analyze it, we may see some of the multi-source analysis platforms be purchased by bigger HCM or employee experience providers.
- Big money is here for real in the employee experience market. In case you needed more convincing after last week’s heady news of the $27 billion valuation of Qualtrics and the Workday acquisition of Peakon, this deal should reinforce one thing: BIG money is now here in employee experience and HR tech. And it is going to crash plenty of other parties.
As we all know, the proof will be in the pudding when it comes to how well this new offering serves customers. However, it has all the pieces to be truly transformational for our industry, and we expect it to drive some quick responses from competitors. The next segment of HR Tech watching should be another good one.
Until next time, stay well and safe — and please, don't forget the popcorn!
The Qualtrics IPO: What Really Just Happened
Posted on Friday, January 29th, 2021 at 5:26 PM
As many of you can see from the headlines, yesterday’s Qualtrics IPO was incredibly successful, with the stock closing 51% above its initial price, and the end of day stock price on Thursday valuing the company at $27.3 billion.
What we wanted to think about, though, is: What does this really mean for Qualtrics, SAP, and the broader employee engagement / experience market?
Let’s start with Qualtrics.
For those of you who have been following the story, you know that SAP bought Qualtrics for $8 billion before its intended IPO in 2018. They held the company for roughly 2 years, and then, as of yesterday, raised approximately $27 billion from the public markets. While that is a phenomenal return on investment for SAP (more on them later), Qualtrics also got a lot out of this little detour on its journey to IPO.
First, Qualtrics achieved a scale it would have struggled to reach on its own. SAP took Qualtrics leaders under their wings, expanded Qualtrics’ international offerings and capabilities, brought Qualtrics into verticals (e.g., supply chain) they were not in previously, and generally taught them the ropes of being a public company. This mentorship – if we can call it that – of Qualtrics leaders means the company is likely more prepared to execute at scale than at least some of its competitors.
Second, the last 2 years have given Qualtrics an opportunity to broaden its strategy and focus on being much more of a platform player across the entire process of designing and executing customer or employee experience, as shown by Figure 1. We imagine that the SAP experience has encouraged Qualtrics to dream bigger when it comes to knitting together their platform with a combination of partners who can deliver the services aspect of their work.
Finally, SAP’s obvious focus on human capital (among other factors) may have influenced Qualtrics to focus more on their people experience business (which they call EmployeeXM) moving forward. While Qualtrics has been saying they were making this shift to focus more on EmployeeXM for some time, the reality of the shift was most recently exemplified by the move of Jay Choi, formerly leader of EmployeeXM, to Chief Product Officer over all Qualtrics products (CX, EX, PX, and BX).
Critically, the last two items underscore why it was increasingly important for Qualtrics to become more independent. If the company was going to make a broader platform play and focus more on employee experience, it needed to build beyond the SAP ecosystem and expand to a broader set of potential partners (including SAP competitors such as Workday, Oracle, and some of the HRIS systems targeted at SMBs).
Net-net: the road through SAP to IPO gave Qualtrics scale, a broader experience management strategy, and a greater focus on employee experience — plus a ton of cash.
But the big winner in all this is SAP.
First, there’s the crazy amount of money SAP just made from this IPO. We couldn’t find a public source for their exact profit, but given that they bought the company for $8 billion and it just got valued at north of $27 billion, we think SAP did more than just *alright*.
But here’s where SAP was really smart.
SAP gets to pocket those billions AND it retains financial control over Qualtrics. “Wait…WHAAAT?!?” you might be thinking (especially after having read above about the importance of Qualtrics’ independence).
Yeah, right at the top of their S-1 (the financial document a company has to file to go public), is the statement that Qualtrics was offered with two levels of stock: Class A and Class B.
“SAP will own all 423,170,610 shares of Class B common stock…Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes…This means that, for the foreseeable future, investors in this offering and holders of our Class A common stock will not have a meaningful voice in our corporate affairs and that the control of our company will be concentrated with SAP.”
Buried on page 47, the S1 states:
“As a result, SAP will have the ability to control all matters affecting us, including:
- the composition of our board of directors and, through our board of directors, any determination with respect to our business plans and policies;
- any determinations with respect to mergers, acquisitions and other business combinations;
- our acquisition or disposition of assets;
- our financing activities;
- […a whole bunch of other things, omitted for brevity…] and,
- the strategy, direction, and objectives of our business.”
So, SAP made a ton of money and it still – in legal terms, even if not in day-to-day operations – maintains control over Qualtrics.
Is this (not so tiny) distinction going to matter? We give it a cautious “maybe.”
As we wrote about before, we’d been hearing that Qualtrics already had an incredible amount of autonomy for an acquired company before this spin-out. Further, we’ve also been told that the primary reason for this spin-out is a need for greater independence.
However, things can change fast. The spin-out was at least partially due to leadership transitions, initially precipitated by former SAP CEO Bill McDermott leaving (now CEO at ServiceNow) and reinforced by the sudden departure of SAP’s American co-CEO, Jennifer Morgan. While founder Ryan Smith plans to remain as executive chairman and Zig Serafin as CEO, they can’t stay forever. Should SAP leadership change or become dissatisfied with Qualtrics’ leadership, they could certainly make significant changes.
Change is not the plan for now, but plans change.
In short, SAP made a ton of money and still has the keys to the castle, though they say they aren’t involved in the running of the kingdom.
Perhaps the biggest story is how much money just got put into the EX tech market.
Perhaps the biggest news here, though, is that through this IPO, BILLIONS of dollars just got put into the hands of SAP and Qualtrics – and they will use them. Sure, there will be product innovations and maybe customer service improvements. But what is most likely to happen?
You guessed it: acquisitions.
(Read here for more on our thoughts on why acquisitions are going to be the name of the game for the people analytics tech market in 2021.)
Let’s just focus on Qualtrics (SAP is too wily a beast to make these types of predictions). If we look at where we place them on our people analytics tech 2×2 (see Figure 2), you can see there’s still quite a bit of room for them to move to the right on our “continuous analysis” axis. In short, this means we think there’s still a lot of opportunity for Qualtrics when it comes to using digital exhaust and unstructured data to understand employee experience. Qualtrics have themselves called out (in Figure 1) their intent to focus heavily on continuous listening (#surveyfatigue).
Given this, I’d expect Qualtrics to potentially push into the always-on employee listening space or passive organizational network analysis (ONA) — which could be paired nicely with active survey-driven ONA (again, see Figure 2).
Another area they might go into is the multi-source analysis space. These vendors pull in data from a very wide set of sources and provide detailed and complex analysis capabilities, primarily for people analytics practitioners and HR business partners, but also HR leaders, business leaders, C-suite execs, and employees. Given Qualtrics’ desire to be a data hub – and to understand the entire employee experience – we could see this as another reasonable direction.
Finally, the employee experience starts with talent acquisition. Labor market analysis capabilities would fit nicely into Qualtrics’ overall focus on end-to-end employee experience. Both of these latter two areas would jive really well with Qualtrics’ social science-heavy roots.
Despite all our conjectures above, it is worth noting that Qualtrics’ strategy is very much an ecosystem play. Therefore, Qualtrics may choose to invest instead in collaborating with a system of partners in these areas – or at least do that before acquiring or building the tech themselves. But invest they will – this money has to go somewhere to continue to fuel their growth.
What now?
Well, as observers of all this stuff, this is when we break out the popcorn and watch the show. Because we’re certain it WILL be a show in 2021. What do we expect to see?
- This IPO will allow Qualtrics to be MUCH more competitive in the employee experience / engagement market, as they invest this money into their product and services
- The employee engagement / experience tech ecosystem is likely to change, either via acquisitions or through intentional partnerships
- We’re going to see even more institutional / external investors in the HR tech space, given how well Qualtrics performed – which will fuel more growth in the broader HR tech vendor market – starting the cycle anew
For now, let’s all have a good weekend… and take that popcorn out of the microwave as we look to February to provide the next segment.
Workday’s Acquisition of Peakon: No Big Surprise
Posted on Thursday, January 28th, 2021 at 1:55 PM
Just yesterday, we presented at the People Analytics & Future of Work Global Conference, and told the audience: “In 2021, we are going to see a lot more market consolidation.” And here we are, with example number one: Workday’s announcement today of its acquisition of Peakon (a Danish employee engagement provider).
Though smart, this is an unsurprising (and not market transforming) move on Workday’s part. Why?
Let’s start by examining why we expect market consolidation.
First, there have been huge investments in HR tech over the last decade – one estimate is that investors put nearly $5 billion into the industry last year alone – and that’s resulted in a highly fragmented market of specialized players across our entire HR tech industry.
This is nowhere more prevalent than with employee engagement and experience – the single largest (36%) and fastest growing category in our people analytics tech study. And that isn’t going to change: due to COVID-19, social justice movements, remote work, etc., employee engagement and experience was by FAR the most in-demand people analytics area last year, with 63% of people analytics practitioners telling us they focused in this area in 2020 (a number we expect to see rise in 2021). Highly fragmented, lots of external investors, and quick growing = market ripe for consolidation.
Second, across the last year, we’ve recognized that we need more and higher quality data on our people. That requires that the data be easier to integrate. That can be done through an ecosystem that plays nicely with each other (similar to what Visier, Medallia, EMSI and others are doing with their “People Intelligence Alliance”) or by acquisition.
Right now, employee engagement / voice solutions are amongst the easiest to buy and implement (despite what some might tell you), as evidenced by the fact that a lot of these vendors went to a freemium model during the earlier parts of the COVID crisis and allowed potential customers to just turn the tech on themselves. However, what isn’t easy is the data integration piece: connecting engagement / experience / voice data to other data that can tell you something more meaningful.
So why did Workday acquire an employee engagement provider?
The most obvious reason is that Workday needed an employee engagement solution. As you can see in our people analytics tech 2×2, Workday has solutions in most of the other areas we cover, but it didn’t have an explicit employee engagement solution. (As an aside, to my knowledge they also don’t have an organizational network analysis solution – so you ONA providers might want to see if there’s any more Workday M&A budget available for 2021!)
But why wouldn’t Workday just build out their existing capability, instead of buying a company? A few reasons:
- High-quality engagement solutions are deceptively hard to build;
- There are a lot of really good independent engagement vendors open to being acquired (even after this acquisition!); and,
- This allows Workday to meet customers’ needs now, not in a few quarters’ time.
Further, the acquisition enables Workday to reinforce their single data model approach, as opposed to doing the ecosystem play – which we all know isn’t their main jam (though Prism allows data integration from external sources). By purchasing an engagement provider, they can ensure a single source of data truth when it comes to engagement data, which will make all the rest of their data offerings stronger.
There are lots of employee engagement vendors. Why Peakon?
Many of you may not know who Peakon is – I didn’t until about 18 months ago – but there’s a lot to like about them. First, Peakon is a high-quality platform, with engaged customers and devoted employees (similar to Workday).
Second, in addition to the engagement capabilities, Peakon brings two other offerings that will bolster the Workday toolbox: Grow (a performance solution) and Include (a diversity, equity, inclusion & belonging (DEIB) solution).
Let’s start with Grow. As we’ve written many times (such as here and here), we see performance and engagement becoming ever-more intertwined. Peakon’s solution is a primary example of how performance development and engagement can be bundled together effectively. This offering will surely bolster Workday’s performance solution, which is lacking in some of these capabilities.
Include will also strengthen Workday. This solution allows leaders to integrate DEIB analysis with the engagement offering. In some ways, these capabilities mirror Workday’s recently announced VIBE Index, which is a good thing, as there is overlap in vision. However, Peakon supplements Workday’s existing offerings in important ways:
- In-product features to safely report misconduct;
- Flagging of sensitive (including violence, criminal behavior, safety and wellbeing, etc.) comments for anonymous follow-up by HR; and,
- In-product links to micro-training on building more inclusive teams.
Finally, Peakon checks other important boxes:
- Financial: They completed a roughly $36 million Series B just under two years ago, which means they had significant funding, but not nearly as much as some of their competitors – and so were relatively affordable at the $700 million price tag. Given Peakon’s pricing, customer numbers, and growth rate, I imagine that the ROI on this investment will be very strong for Workday.
- Technical: Peakon is roughly 6 years old (depending on when you start counting) and thus has a modern tech stack and likely less tech debt.
- Cultural: There’s strong cultural and values alignment.
So, to sum it up, this is a good – but entirely predictable – buy for Workday. It doesn’t signal significant shifts in the market. It doesn’t fundamentally change things for the other engagement providers.
This deal is sound. It is smart. Well done, Workday and Peakon. We look forward to seeing how this works in practice.
Why Is SAP Selling Qualtrics?
Posted on Monday, July 27th, 2020 at 8:31 PM
SAP announced that it plans to take Qualtrics public at some nebulous date in the near future. This is after SAP spent $8 billion in cash to acquire the company in late 2018, just days before Qualtrics was due to IPO.
Why sell (some of) Qualtrics?
This is rare. Buying and selling companies on short-ish timeframes is usually the domain of private equity firms. But even those firms are typically operating on 3-5 year time horizons, after making significant changes to the company. SAP is selling Qualtrics after 18 months – and the only meaningful change we can see is a significant increase in Qualtrics’ revenue.
Three plausible reasons we can think of for the IPO are:
- Financial
- Change in leadership
- Post-acquisition blues
Today, a lot of ink has been spilled about the potential financial upside of selling Qualtrics – this article and podcast from Tech Crunch are especially good. Essentially, Tech Crunch is saying that, with Qualtrics’ run rate of ~$800 million in annual revenue, SAP could reasonably expect a 17.3 times revenue valuation of Qualtrics – putting it at about $13.8 billion on an IPO.
Therefore, even with the eye-popping cash investment of $8 billion, SAP could stand to make a lot of cash just for having bought and held Qualtrics for 18 months (kind of like if you bought a house in 2009 and sold it last year, but on an even shorter timeframe). SAP will remain the majority stakeholder in Qualtrics (at what percentage, we do not know), so it won’t be getting all that cash – but the potential IPO still represents a significant cashflow infusion to its business.
This is all great and good, but we have to ask – Why does SAP want to sell Qualtrics now?
Financial
The first reason could be that SAP wants the cash. In today’s earnings call, the company mentioned a significant focus on cashflow in the midst of the pandemic (who is not looking at cashflow?!?). Selling part of Qualtrics generates a significant cash bunker for SAP.
It may also be that SAP thinks that we’re in for a significant long-term economic downturn, but that cloud-based businesses are still highly valued, so this is a good time to sell if they are ever going to. They may also, as they said, want to invest in other "strategic initiatives" (like S4/Hana), so are looking to free up some money.
No matter the reason, SAP can get a lot of cash – and everyone likes cash when the economy is tight.
Change in leadership
Another reason could be a lack of leadership alignment. When SAP bought Qualtrics, it was very much a meeting of the minds between Ryan Smith, Qualtrics’ founder, and Bill McDermott, SAP’s CEO. Since McDermott left SAP last October for ServiceNow, there’s been volatility at the top: SAP moved into a co-CEO model with Christian Klein and Jennifer Morgan, with Morgan moving on this past April.
It’s possible that the vision shared by Smith and McDermott for Qualtrics was fundamentally different than what has come to pass in the Klein era. Smith clearly still has a strong vision for Qualtrics, as reinforced by the fact that he’ll become the largest individual owner of the company (though, as stated above, SAP will be the largest institutional owner).
Post-acquisition blues
Finally, it may be that the realities of post-acquisition integration were just a harder road than anyone wanted to hoe. We all know that most acquisitions fail, and ones with significant cultural differences, even more so. SAP is a large, traditional organization. Qualtrics is a cloud-based start-up, with a very different culture. Those types of differences can lead to difficulties in everything, from alignment around customer integration to how they manage the partnership landscape to software and services integration.
While I don’t know the details of what has happened, as analysts we can say that the integration of Qualtrics into core SAP SuccessFactors’ offerings has been slower than we would have expected, given SAP’s overriding focus on creating a “human experience platform.”
Bottom line
Throughout the last 18 months, Qualtrics has remained remarkably independent – a point Smith reinforced in the earnings call today. It may make more sense to cut Qualtrics loose now instead of forcing a post-acquisition integration that may not have been working as some in top leadership seats hope.
What now?
SAP reinforced that it’ll remain the majority owner of Qualtrics, and that it intends to continue investing in the “human experience platform,” marrying operational data with experience data (which it neatly calls X+O data). SAP also stated that it’ll remain Qualtrics’ primary R&D partner, which will benefit both organizations. Qualtrics may especially benefit, as there are some innovative start-ups in SAP’s start-up ecosystem. Therefore, we still expect to see a tight and beneficial relationship there, and hope that SAP is able to leverage some of the innovation Qualtrics can offer.
Near term for Qualtrics
The IPO of Qualtrics will allow it to operate more independently, which may allow it to get back into important partnerships with either Oracle or Workday (depending on how close the relationship remains with SAP). It should also allow it to revert to its start-up cultural roots, in terms of how it attracts and retains talent, and how it operates on a day-to-day basis.
Qualtrics’ partnership with SAP’s sales teams likely fueled some of its strong growth over the past 18 months, so the company may face some headwinds as it transitions back to its own salesforce. That said, Qualtrics developed a strong set of COVID-19 resources for customers and has cited those offerings as part of its success in the last few months. Qualtrics is likely to continue building on those successes as, unfortunately, the need for COVID-19 support is unlikely to go away soon.
Further, as we have noted in blogs across the last year, employee experience is a hot market. It’s now even hotter than before, with so many CEOs and senior leaders recently seeing the importance of understanding employee sentiment in light of the pandemic. Qualtrics is a market leader in this space. Even though it won’t have SAP directly behind it anymore, based on today’s earnings call, it seems that Qualtrics will retain some significant cash from this IPO to fuel its future growth. Therefore, we expect to see it continue to do very well in the future.
Net-net: This seems like a good, though unusual, deal for all.
Finding More from COVID-19
Posted on Thursday, March 12th, 2020 at 11:40 PM
The steady drumbeat of COVID-19 news is reaching ever-greater levels – so loud that it seems to be deafening out almost anything else.
It would be hard for it not to. Here in the Bay Area we have the highest concentration of identified cases in California (and the 3rd highest in the country). Gatherings of more than 250 people have been banned. In-person classes at many local universities have been cancelled. Most of us parents are just waiting for school closures. My family has made the decision to avoid most public places (and you should hear how good my kids have gotten at the ABCs as they wash their hands). In many ways, these are scary times.
Focusing on the positive
But they are also times of opportunity, and I am trying to appreciate some of the unexpected good things that have resulted from these times. I thought I’d share them, as they might help you, too.
Here are some of the things I've gotten more of since the outbreak of COVID-19:
- Time with my family. You should have seen the pure joy and hugs my children gave my husband when he told them he’d be working from home for at least the next two weeks. And when I told them I wouldn’t be traveling for the foreseeable future? It was the most excited screaming I’ve heard in months. Social distancing is bringing us closer together.
- Thinking space. The spring is conference season, which means I tend to be on the road a lot. That isn’t going to be the case this year. It’s giving me some time to do deep thought work on some new and important research we’re doing on gender and performance management, how to create a responsive organization, using people analytics to create organizations of the future, and the talent experience at purpose-driven organizations.
- Genuine connection. This might seem counterintuitive. But since everyone is going through this pandemic together, more of my calls start out with conversations about how people are doing, how their families are holding up, and how they are managing through the difficulties. I think we collectively need more of this, and less “business as usual.” At RedThread, we already have a culture of video calls, but this need for connection has only reinforced that tendency.
- Time to breathe. Since I am not on the road, I’m actively taking that time that was booked on my calendar for “travel to airport” or “flight time” and going for walks or working out. So some of that breathing is heavy breathing, but all of it is making me more healthy.
- Reflection. Most specifically, I’ve been asking myself, do I need to be on as many planes as I have been for the last few years? What are the tradeoffs I’ve been making in terms of my health, the environmental impact, and my family? And are they worth it? My eyes were really opened by Hacking HR’s Global Online HR Innovation and Future of Work conference last week, and specifically the power of technology like hopin. There is so much more we can do virtually if we are open to it.
COVID resources
For many of us, COVID-19 also provides an opportunity to show steady leadership in a time of instability. It is through strong leadership that we can help our teams, organizations, communities, and families manage effectively. We continue to see (and will continue to add here) resources that we think might be particularly useful to leaders during this time:
- Harvard Business Publishing: Resources to Effectively Lead Amid COVID-19
- Qualtrics: Here to Help
- Limeade: Care in Crisis
- Pluralsight: The Remote Work Guide
- Lars Schmidt: Coronavirus HR Comms & Resources Guide
- Gartner: Respond, Manage and Prepare for the Impact of Coronavirus
- i4CP: The Coronavirus Employer Resource Center
- MeQuilibrium: Coronavirus Uncertainty – Respond with Resilience
- Cornerstone: Cornerstone Cares
- Skillsoft / Sumtotal: Business Continuity Learning Center
A few articles to peruse
Finally, there are obviously a lot of articles out there on COVID-19 and your most reliable data source is the CDC and your state or county department of health. However, we've also done a lot of reading on this topic and were especially struck by the high-quality data analysis and insights in these 3 articles:
- Why Outbreaks like the coronavirus spread exponentially, and how to flatten the curve (Washington Post)
- Coronavirus: Why You Must Act Now (Medium)
- How Bad Is the Coronavirus? Let’s Run the Numbers (Bloomberg)
Final thoughts
We hope our reflections are of some use to you as you try your best to navigate these challenging times.
One final thing – while you are looking after your physical health, don’t forget your mental health. It’s quite possible we are in for a marathon, not a sprint, with this one. Good luck and now go wash your hands.
Springing Forward: Thoughts on IAMPHENOM 2020
Posted on Tuesday, March 10th, 2020 at 4:00 PM
Phenom People, a global HR technology company, recently hosted its 3rd annual talent experience conference in Philadelphia, PA. Outside the venue, there were signs of change and growth that constantly reminded me that springtime was just around the corner; trees were budding, flowers were blooming, and birds were chirping.
Inside the venue, there was a similar sense of excitement and forward movement. With its purpose “to help a billion people find the right job,” Phenom has been on an upward spiral since it was founded 9 years ago.
Our Take: Phenom Conference 2020
This year, Phenom hosted over 1,000 CHROs, talent leaders, and HR practitioners, which was double the number of attendees from last year. And its growth extends beyond the conference, with a $30 million boost from its latest venture capital round earlier this year, it recently hired around 250 employees increasing its workforce to just over 500 across the U.S., the U.K., Israel, India, and the Netherlands.
For Phenom, it all comes down to talent experience management (TXM) with a focus to simplify, personalize, and scale four types of experiences (see Figure 1):
- CX: Candidate experience – includes touchpoints during the recruitment process
- EX: Employee experience – facilitates access to career paths and development opportunities
- RX: Recruiter experience – offers tools to recognize and engage potential candidates
- MX: Manager experience – provides visibility into relevant talent information and analytics
Now let’s dive more deeply into the 4 product announcements that Phenom shared at the conference:
- Phenom Gigs
- 1-to-1 Personalization
- Frontline Hiring Manager
- Phenom Scheduling
Phenom Gigs
Phenom Gigs is an internal talent marketplace (see Figure 2).
It uses artificial intelligence (AI) to match short-term projects to internal employees. This is Phenom’s answer to the subject of skilling (also known as re-skilling or up-skilling), and of course to other large players with similar offerings. It looks like Phenom Gigs benefits both managers by suggesting a potential resource to fill a project need, and their direct reports by linking them to projects to further expand their knowledge and skills.
Phenom Gigs reminds me of some of the common themes we heard in our learning tech ecosystems study on the importance of providing employees with choices to learn and develop that focus on building relevant skills. But like in other talent marketplaces, the sophistication of its AI capabilities – and the opportunity to develop lagging skills – remains to be seen.
I am particularly excited to see that Phenom is helping organizations think differently about their talent. Phenom Gigs offers them another way to fill project needs without having to look outside the organization. It also sends a compelling message to internal employees that the organization cares about their growth and development by providing them with learning opportunities.
1-to-1 Personalization
1-to-1 Personalization provides personalized recommendations to candidates on relevant jobs, benefits, and perks based on their unique profile and interests (see Figure 3).
Phenom calls this a “true” AI-based personalization because it delivers an individualized career site experience, which may be the first time a candidate encounters an organization’s brand. In our recent report on employee experience, we mentioned that employee experience is based on “employees’ collective perceptions of their ongoing interactions with the organization.”
Phenom recognizes that employees’ journey begins when they are candidates, which impacts their experience with the organization from the get-go. By personalizing recommendations to candidates, it gives potential future employees opportunities they may not have found or considered on their own. Like Steve Jobs used to say, “…people don’t know what they want until you show it to them,” and Phenom seems to be taking this to heart.
In my opinion, this feature is not only beneficial to organizations, but to candidates as well. Most of us have searched for a job at some point in our lives, and know how cumbersome the process can be at times. So any feature that promises to ease the pain associated with searching and applying to a job, may go a long way in providing a good first impression for candidates. As customers leverage this new feature, I’m curious to find out how many candidate leads get converted to actual hires because they found the job recommendations truly personalized to their background, interests, and needs.
Frontline Hiring Manager
Frontline Hiring Manager provides recruiters and frontline hiring managers at retail or franchise locations with access to Phenom TXM (see Figure 4).
Recruiters and frontline hiring managers can manage their own jobs, pipelines, and candidates. It also provides large organizations with a consistent brand messaging across locations. It basically streamlines the recruiting and hiring process at the local level.
This approach to empower managers aligns nicely with the tendency of forward-thinking organizations to foster a positive employee experience. I believe that granting TXM access to frontline hiring managers will enable them to make quick and efficient decisions. I can see how this particular feature can be attractive to those on the frontlines, especially in industries with a higher than average turnover rate and numerous positions to fill. It basically takes the middle-person out of the equation.
Though I wonder if frontline hiring managers may find it tedious as it is one more thing to add to their “to-do list.” So I look forward to seeing how many organizations use this feature, the overall adoption rate by frontline managers, and if there is a significant reduction in the time-to-hire of frontline workers.
Phenom Scheduling
Phenom Scheduling is a recruiter-initiated scheduling feature that is integrated with calendars and preferences (see Figure 5).
We all know how frustrating back and forth emails can be when trying to schedule a meeting. Phenom Scheduling allows candidates to self-select available time slots to schedule interviews. It integrates with most calendar systems: Google, Outlook, Microsoft Exchange, Office 365, and iCloud.
This seems like a commonsense offering to add to recruiting software. But you may be surprised to learn how many organizations and recruiters still use a standard way of scheduling interviews, and how much time and energy they waste in the process. So what seems like a simple recruiting feature can go a long way in providing a more positive candidate experience and recruiter experience in the often long recruitment journey.
Final Thoughts
In my opinion and to wrap this up, 3 overall themes stand out from this year’s conference:
- A focus on simple, yet meaningful features
- An interest in scaling such features to key stakeholders during the talent acquisition process
- A targeted effort to enable access to relevant information and empower decision-making
So with Phenom’s recent announcements, it looks like our clocks aren't the only ones springing forward.
Note: This article is based on my attendance at IAMPHENOM 2020 on March 3-5. Phenom People paid for my airplane ticket and hotel room at the event. This article represents my opinions, and no one at Phenom reviewed or approved this content.
Cornerstone buys Saba. What's in it for them?
Posted on Tuesday, February 25th, 2020 at 1:50 PM
Judging by the number of analysts who were on the announcement call with less than ½ hour warning, the news that Cornerstone OnDemand (CSOD) was purchasing Saba for $1.4B came as a surprise to pretty much everyone. In chatting amongst ourselves (and water-coolering it with Stacey Harris), maybe it shouldn’t have come as such a surprise. Why?
Big Picture
Human capital management (HCM) markets aren’t what they used to be. Many of the big players have failed to adjust to new market conditions and gone the way of the world. And, whereas it used to be possible to count the major players on one hand, smaller, more nimble point solutions now have more power as ecosystems become more common and integrations become easier.
Not only that, CSOD made an interesting decision a few years ago to focus heavily on content, and while this has been a decent move in the short term, it's a risky long-term move – as content becomes more ubiquitous, and AI and algorithms get better at helping people curate it. And, just feeding content to employees more efficiently falls short of where the market is headed: understanding the skills a workforce has, helping them develop those skills that will help them personally and move the organization forward, and tying skills and development to career opportunities.
In short, the acquisition makes a lot of sense to keep CSOD a viable player into the future, helping it compete – both with the ERPs that have been encroaching on the HCM space, and with the young whippersnappers that threaten the larger platform play. The Saba acquisition gives CSOD both market heft and revs its innovation engines. Let’s break it down.
Market heft
The acquisition of Saba increases CSOD’s heft in the market. Most obviously, it acts as an accelerator. Alone, Cornerstone’s ARR (annual recurring revenue) was $575M. With Saba, that number jumps to $818M. Additionally, Adam Miller, CSOD’s Founder and CEO mentions that the deal frees up cash by finding synergies in their data centers, operations, and administration.
Even more impressive is the increase in number of customers. This acquisition makes CSOD arguably the largest cloud company in the world. According to our mad scramble for data from many yearly reports:
The HCM market has been experiencing a bit of fear as of late, as some of the larger ERPs have made strategic investments and acquisitions that allow them to play in the HCM space. Workday, for example, recently launched Skills Cloud, which competes directly with several talent management platforms. And it is having an effect. One leader we recently spoke to told us that he is being asked to “make Workday work” for a learning and skills solution, instead of investing in other more specific solutions.
But, the acquisition of Saba by CSOD puts them in a position to become sort of a “super” talent management system – one that provides deep expertise in talent while still being open to partnering with the HRIS or ERP that companies are currently using. Because they are now one of, if not the biggest, cloud players, it may protect them from some of the encroachment.
Finally, acquiring Saba, who recently acquired Lumesse, a leader in talent management software in Europe, increases their global footprint, which was already sizable (with CSOD being in 25 countries currently).
Innovation
We don’t think there has been a time of greater innovation in the HCM space. Ever. CSOD’s acquisition of Saba allows them to jump-start their innovation efforts in a few ways:
Data, data, data
The majority of new features and functionality in modern HCMs require a solid set of data to be valuable: who sits where, who does what, who knows what, where they want to go, what they've learned, what skills they'll need, etc. This data has the ability to help organizations vastly improve their people strategies – from who to hire, to who to develop, to how to form teams, to retention, and on and on.
The holy grail of talent management right now is successfully tying development subjects to skills and ultimately to positions – and everyone’s in a race for a viable solution – including ERPs which have not traditionally played in this space.
However, people development is easier with people development-specific data – something that ERPs likely lack; while they may claim similar functionality, specific talent management data helps tremendously in developing people. ERPs are often built on platforms focused on resource allocation and process automation – both noble causes, but maybe not the focus when developing workforces to help organizations compete.
The combined CSOD / Saba datasets of 75MM users (assuming they can quickly figure out how to merge and use them) provides a treasure trove of data that can likely help them provide a much richer, personalized talent experience than their ERP counterparts.
Talent
Workday is an innovation machine – they spend roughly 30% of revenue on R&D efforts (if we interpreted their annual report correctly). Which is why it has been able to effectively challenge HCM providers in their own backyards. Additionally, as we mentioned above, smaller point solutions often innovate as a matter of course – through implementations and partnerships, and their continuous improvement mindset and simpler structures often make them more agile and able to pivot more quickly.
CSOD spent roughly 14% of revenue on R&D activities in 2018 (slightly below average). Good engineering talent is difficult to find, and with the Saba acquisition, CSOD now has access to a much bigger pool of talent who can do more R&D. This gives them the ability to maintain Saba products as it makes sense while also borrowing that talent to upgrade CSOD and integrate the best from Saba.
Hungry mindset
Finally, and this one is probably a bit more opinion than the other areas we have covered, but one we think is important: When Saba went private in early 2015, some of us were taking odds on whether or not it would survive. But it did. Saba has not only done a fair amount of innovating since then, they’ve gotten into the habit of innovating. Granted, some of the stuff we’ve seen in the last couple of years has been a bit unconventional, but it indicates that they’re taking a fresh approach to the HCM space.
CSOD now has access to not just great engineering talent, but talent that has been approaching the market in a slightly different way. We’re excited to see what they do with it.
So to nutshell: We think this acquisition was a decent move by CSOD. We're interested to see what they do with the bigger footprint, the data, and the talent. As with any move, it all comes down to execution.
All of this leaves us with just two questions: How long will our Saba swag still be cool, and can we still hang out with Phil?
Degreed / Adepto. We like it.
Posted on Wednesday, January 8th, 2020 at 10:22 PM
I’ve been following Degreed since it was only about 30 people big and the development team was basically squatting in borrowed space in downtown Salt Lake City. Their approach to the market was different enough to make me sit up and take notice. From the beginning, they have had a very distinct vision: to make sure that no individual – or company – becomes irrelevant due to lack of new skills.
Over the years, I’ve kept a close eye on Degreed. They've made it easy by being very frank with us analysts about their roadmap, and they’re consistently one of the most focused technology vendors I talk to. As the LXP market has grown up around them, they've managed make a name for themselves in the space while still retaining the focus and vision they started with – something I admire, particularly given the market and investor pressures they surely must face.
So I wasn’t surprised at all when they acquired Adepto. Adepto, like-minded and mission-driven, provides functionality that complements and even rounds out Degreed’s skill measurement offerings by helping organizations both see knowledge and skills of their employees and by providing additional skill information through jobs and projects details, not just courses. This acquisition gets Degreed closer to their vision.
I sat down with Chris McCarthy (CEO of Degreed) to talk about his plans for Degreed’s latest acquisition. As always, it was a frank and enlightening discussion that clarified a lot. It also reinforced my initial reaction to this acquisition: I like it.
Degreed’s virtuous employee development cycle (our words, not theirs)
Degreed’s purchase of Adepto rounds out their ability to do 2 things: acquire more data about the employee and contractor skills, and tie that data to opportunities (jobs, gigs, projects). We think that this additional functionality has the ability to create a virtuous employee development cycle – something we haven't seen elsewhere.
Today, approximately 30-40% of employees access existing learning technologies at least once a month. This is hardly consumer grade, and it indicates passivity in learning – learning for learning’s sake, as McCarthy puts it. While learning for learning’s sake isn't a bad thing, in a world where needed skills change rapidly, employees accessing learning once every 2 months (if we’re being generous) likely doesn’t develop the skills organizations need to compete.
Dipping into learning every couple of months also doesn’t help organizations (and the tech that serves them) understand what employees are trying to learn, which makes it harder to direct them to resources and activities that will help them learn and grow.
Degreed is addressing this in a couple of ways:
User Interface: With Adepto’s functionality that ties skills to projects and jobs, the user interface is being redesigned in a way that will bring the reason for learning to the forefront. Instead of a “Netflix, eat what you want” mindset, the new interface focuses on the goals the employee may have. For example, addressing skills gaps for a job you may want; being considered for a project; or switching careers. The new design will put the employee's goal front and center, and the system will recognize it and provide help and guidance for achieving that goal.
will be one single experience for the employee; you can actually go in and define your learning goals. All of the learning content and things that can help you are in one place, personalized to you. You can measure your skills as you improve on them and represent them so that they are being surfaced for potential opportunities. They’re tied to jobs, projects and other opportunities on the basis of your skills.
Chris McCarthy
To put it succinctly, Degreed’s new interface aims to answer the question all employees have: “What’s in it for me?"
Data: A strong interface and personalized experience encourages employees to use the system, which in turn creates more data points, which in turn are fed back into the system to make it better, more personalized and more useful.
It also puts Degreed in a good position to actually become a system of record for skills data. Its acquisition of Adepto, along with the work it has been doing on integrating with other sources for skills data (HRISes, social networks, LMSes, and external content and certification providers), will make it, if it’s successful, a perpetual and virtuous cycle for collecting and using data on an organization’s skills and knowledge.
Degreed is also investing in increasing the size of their data scientist team, and improving their reporting and analytics functionality, making the data even more useful.
Degreed as a next gen talent platform
Stacia and I have been talking about learning, career, performance, even engagement, converging in the hearts and minds of people leaders. Why? It turns out that it is difficult to develop someone until you understand their career goals, how well they’re performing, and if they even want to learn and grow. While many of the talent platforms we see contain these pieces, some of them fail to provide a logical, helpful, cohesive experience, and we think the market is ripe for next generation ideas – ones that are data-driven and employee (rather than HR) focused.
With the acquisition of Adepto, Degreed moves past serving the L&D market exclusively. It has assembled the functionality to be that next generation talent platform. They have a strong LXP; they have partnered with LearnUpon to provide LMS functionality to their clients; and they have upgraded their skills measurement capabilities. If the world of HR truly is converging on itself, these pieces will allow a different kind of talent management – one that likely serves the employee and the organization better.
With the Degreed LXP, the LMS partnership , and now the skills measurement products we now have this complete skills product which is inclusive. It really is a talent product. All three of those things work tightly together, but any one of them could be the entry point into a new client that we choose to work with, which earns us the right to be able to expand the relationship with them over time.
Chris McCarthy
Frankly, I am interested to see what’s next.
Degreed as a grown-up
Despite almost 7 years in business and just over $153 million in funding, Degreed is still considered a start up by many. While funding and longevity are by no means a guarantee of future growth, Adepto helps them grow up some more. How? Two ways:
First, Adepto, based in Australia and the UK, increases their global market presence. While Degreed has done a lot to increase its global foot print (according to McCarthy, Degreed grew business outside of the US from 3-4% to over 30% in just a few years), the Adepto acquisition adds visibility, client service and technical resources on the ground to service local and global clients, a little gravitas, and maybe some new channels to tap worldwide.
Second, the Adepto acquisition moves Degreed from a single product to two products. While Degreed has experienced ridiculous growth (100% a year) in recent years, McCarthy rightly points out that that kind of growth is unsustainable without a second offering. Adepto not only provides them with a second offering, but also new entry points into the human capital tech market – something that will facilitate growth and ready them for a talent platform play (assuming I’m right).
When you add to that the care with which Degreed appears to both choose and handle its acquisitions, the company probably has legs.
We got so lucky with Pathgather, to compete against somebody so ferociously head to head and actually really like each other is kind of cool. And I give them a ton of credit. Our client retention from the Pathgather acquisition was 140% and the employee retention is pretty high, I think it's like 70%.
The reason I flew to Australia last week and back in two days is because I wanted to have one on ones with every single person in office and get to know them and tell them they could hold me personally accountable if we screw them up or don't do what we say we can do.
Chris McCarthy
Nutshelling it, we don’t think Degreed is going anywhere.
Degreed’s challenges
Despite how much I like this acquisition, I still see potential challenges. The first is that Degreed once again finds itself in a situation where they need to educate the market. Leaders don’t necessarily think in terms of virtuous employee engagement circles or skill measurement software. The fact that they are new concepts means that Degreed will need help leaders understand what it can do for them, how their organizations will need to change to accommodate them, and what line item in the HR budget should be allocated for them. They can do it; they did it for the LXP market. But I think it will be equally as challenging.
Secondly, as Degreed goes about redefining what a talent platform is and what it should do, they’ll be fighting quite a bit of momentum. Business has largely been done the same way for the last 100 years, and most technology accommodates and perpetuates those systems and processes. While we’re already seeing work being done differently, people doing the work handling their careers differently, tenure in organizations shrinking, overall careers becoming much more flexible and elongated, all of which challenges current systems, the momentum is great. We imagine that Degreed will be fighting against a pretty strong current.
Finally, this is Degreed’s second acquisition in the last 18 months and they continue to grow quickly. That’s a lot of change for an organization of this size to handle. It brings to mind potential questions about focus, differing priorities.
Despite these challenges, we like this acquisition. We think it’s good for the human technology space in general, we think it’s good for Degreed’s clients, and we also think it’s good for the future of Degreed.
We’d love to hear what you think too!