Enterprise Social Software: A New Category

Posted on October 2, 2008. Filed under: Enterprise Learning, HR Systems, Learning 2.0 | Tags: , , , , , , , , , , , , , , , , , , , , |

This week we introduced some important and groundbreaking research on a new, important category of enterprise software:  the market for corporate Social Software platforms.   Traditionally our research has focused on identifying the strategies, processes, and systems which help corporate HR and L&D drive effectiveness and business value.  But as we continued to study the market for Talent Management and Learning Management software, we found that almost every software vendor was building features for internal social networking.

As we talk with corporate HR and L&D leaders they tell us that more and more of their focus is moving toward strategies and systems which support and create internal social networks, internal collaboration, content sharing, and informal learning.  So naturally we asked ourselves, how is this all going to come together?

Our research found several things.  First, today most companies are experimenting with many forms of social software in the areas of employee expert directories, customer service, customer community management, sales force collaboration and knowledge management, and technical communities of practice.  In fact, more than half the companies we talked with have active, highly sophistocated communities of practice in many of their customer facing and technical roles.  

Second, we found that very few companies have found a way to apply these tools and solutions to enterprise-wide HR, learning, and talent strategies.  Some, like IBM and Cisco, have invested heavily in this area and are well along on implementing what we call “learning on-demand” solutions internally.  But most companies are still bringing together teams from IT, HR, L&D, sales, and service and trying to figure out how an enterprise-wide social networking strategy would work.

Third, we found that this new application segment has spawned a large and very fast-growing segment of software providers.   While the jury is still out on whether these companies will grow into billion dollar companies or be subsumed into the likes of Oracle, SAP, Microsoft, IBM, and others, we believe that for the next 3-5 years these companies will become very important in the development of strategies and solutions for enterprise-wide learning and talent strategies.  The market is already over $270 Million and we expect it to grow to over $400 Million by the end of 2009.

These new, fast-growing companies like Atlassian, Jive Software, LiveWorld, Mzinga, and Telligent have built highly functional systems which implement the four major categories of “Social Software” – conversations, connections, collaboration, and content.  While most are not uniquely targeting the market for HR and corporate training, all are moving in this direction and they warrant a good look by your organization.

Does this mean that the market for Learning Management Systems (LMS) and content management systems is going away?  No, not at all — but it clearly means that a new “category” has been created, and this new category will challenge LMS providers and corporate buyers to think hard about how they build their next-generation HR and Learning systems architectures.

I encourage our clients to learn about this space – it is transformational.  Our upcoming research bulletin on the role of Social Networking in Enterprise Learning and Talent Management will help you learn more.

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Social Networking in Talent Management: Where are we?

Posted on July 2, 2008. Filed under: Enterprise Learning, HR Systems, Learning 2.0, Learning Programs, LMS, LCMS | Tags: , , , , , , , , , |

Whew.  Earlier this year we embarked on a major research effort to understand the growing role of social networking in enterprise learning and talent management.  The results are amazing.   Let me give you a brief preview of some of our initial findings:

  1. Organizations are working mightily to figure out how to leverage social networking (blogs, wikis, presence awareness, messaging, expert directories, communities of practice) in all forms of corporate training, customer education and support, and talent management.  For example, 77% of all L&D organizations believe that younger workers (under 25) have significantly different learning styles than older workers, yet only 16% feel they have developed some level of expertise in the implementation of collaborative learning.  In our most recent Learning On-Demand research, even the most advanced companies tell us that only 14% of companies are using blogs or wikis, and fewer than 4% feel highly successful with these solutions yet.  One big surprise:  28% of our research respondents are not even using Instant Messaging yet, illustrating how long it takes for collaborative solutions to reach broad adoption (and support from IT).
  2. Learning platforms are being “re-examined.”  Most of the companies we talk with are significantly rethinking their entire learning platform strategy (LMS) to understand how to evolve or add new systems which support collaboration.  And today’s LMS is not as successful as one would believe:  across all the organizations we studied (approximately 900 different organizations), on average only 51% of employees use the learning platform at all.
  3. Sophistocated, large, global companies are moving fast.  Almost 1/4 (24%) of organizations now have some concept or strategy for “learning on-demand” (the term we have coined to describe the next era of corporate e-learning), and larger organizations (those with more than 10,000 employees) are twice as far along as small to mid-sized organizations.  The reason, of course, is that large organizations have no choice – without collaborative solutions they can no longer scale their L&D programs.
  4. Social networking software companies are sprouting up like weeds.  We identified 90 such companies in our research, and more than 35 of them are somewhat focused on the corporate internal employee market.  Our initial research clearly shows that these companies fall into four categories:  (A) software providers focused on corporate learning, HR, and collaboration systems and solutions (e.g. IBM, Microsoft-Sharepoint, Jive, Mzinga, Awareness, Q2 Learning, and others), (B) providers focused on external customer and public-facing collaborative networks like a company external blog (e.g. Lithium, Ning, Communispace, Telligent) (C) providers focused on content management systems, who have added on systems for collaboration (EMC, OpenText,  Ektron, Alfresco) and (D) true application software companies who are adding collaboration and social networking to their systems (SuccessFactors, Saba, CornerstoneOndemand).
  5. I firmly believe that this new form of software-enabled collaboration is a revolution, not an evolution.  Like many of the software innovations that I have personally witnessed over my career (e.g. the first color graphics PC, the CD-ROM, the web-browser, Flash, SaaS architectures, and others), social networking is really going to shake things up.  The reason is that these systems are both complex, data-rich, and require a new type of software architecture.  A system which supports 200,000 employees and customers with in-depth employee and customer profiles, active communication and blogging, tagging, content management, custom branding, and tracking each and every communication is quite a complex software solution.  As we examine these vendors we are finding some very significant new areas of functionality which are going to change and upset the traditional HR software companies.
  6. The jury is out on what our ultimate HR software architectures will look like.  Small and mid-sized companies will likely adopt social networking through their SaaS application solutions.  Enterprises are more likely to develop IT standards eventually.  And many companies will implement departmental, divisional, and application-led solutions while the market evolves.  While most enterprises would like to have a corporate “architecture” in this area, it will take time for this to occur and it often takes a few years for the “safe, corporate-approved” solutions to emerge.  (None are there yet.)

We also recently hired David Mallon, our newest analyst covering this area – who is actively involved in identifying case studies and product solutions in “learning on-demand” and the applications of social networking to corporate talent management. 

Research Available:  A Primer on Social Networking in Talent Management

We recently published “Social Networking for Enterprise Learning and Talent Management:  A Primer” which is available to anyone who would like to register at our website. 

Note:  we are actively seeking input on your experiences and organizational strategy in this area – you can participate in this study by clicking here.

An exciting area and we look forward to giving you more information as we learn more!

 

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Are you an Enduring Organization?

Posted on April 20, 2008. Filed under: Enterprise Learning, Learning Programs, Performance Management, Succession Planning, Talent Management | Tags: , , , , , , , |

As we continue to study best practices in the implementation of corporate learning and talent management, we find that high performing organizations fall into two categories:  those who endure and prosper over long periods of time (decades), and those who rapidly rise to prominence, then falter during a major business challenge, and often become acquired (or disappear).

The former are what we call “enduring organizations” – and they typically become iconic brands which provide tremendous returns to shareholders, employees, and customers.  (These are the types of companies that Warren Buffet likes to invest in.)  The latter are exciting companies to read about, but often disappear and become historic roadmarks in the highway of progress (one could call them “roman candles”).   Fast-growing, trend-setting companies (e.g. Google) set trends and create tremendous excitement, but they are not truly tested until they endure broad economic and business cycles.

Characteristics of Enduring Organizations

These enduring organizations have several things in common.  First, they have an uncanny ability to grow and prosper under a wide variety of economic and business conditions, and survive for many decades.  Second, they survive wrenching upheavals in their markets and somehow learn to reinvent themselves over time.  Third, they become iconic brands, which last long beyond their product lifecycles.  And fourth, they provide extraordinary returns to shareholders, employees, and customers.

An excellent example of such a company is IBM. IBM was founded in the early 1900s and originally built IBMrifles for the US military.  It turned into a “tabulating machine” company which developed systems for the US census, and then later developed the first mainframe computer.  IBM dominated the mainframe computing era for more than 20 years, reaching such market monopoly that the US Department of Justice forced the company to unbundle its services from its technologies. 

In the 1980s the computing industry shifted – from one of vertical integration (one company making the chips, computers, operating system, and application software) to one of horizontal integration (many compaines making chips, many companies making computers, many companies making operating systems, and many companies making application software).  IBM helped create this market by launching the IBM PC, the first open systems computer.  But the company suffered a painful transformation in its business as a result, almost being forced to split itself up into seperate companies. 

Demonstrating its ability to deal with change, IBM transformed itself again – and thanks to Lou Gerstner and Sam Palmisano (the current CEO), IBM re-emerged as the most trusted and profitable IT services and consulting company in the technology industry.

During this period of time, many innovative and well-run companies emerged, grew, and disappeared.  Tandem computers, Digital Equipment, Compaq, SiliconGraphics, and many more.  Somehow they never seemed to build the processes and staying power of IBM.

We can think of dozens of examples of companies that have created such enduring brands:  Caterpillar, UPS, GE, Procter and Gamble, Clorox, AIG, McDonald’s, Goldman Sachs, and many more.  If you take a “long term view” of stock market value, you will find that these enduring brands generate far greater returns over the longrun than many “high fliers.”

What makes thes Organizations Endure?

As we have studied these organizations, and their underlying business and talent processes, we have found that one of the most important things these organizations have in common is their ability to manage talent.  In a sense, these organizations have learned over time that they are not really “product” companies or “service companies” but rather they are “talent companies.”  They have built processes, systems, and strategies to hire, develop, manage, and coach people to build an adaptable, accountable, and value-driven organizations.

Enduring Organizations Adapt Well to Change

If you consider the biggest challenge most companies face, it is change.  Once you build a unique and value-oriented product or service, the biggest challenge you run into is the fact that the world never sits still.  Change occurs on a relentless and continuous basis:  competitors copy your product;  customers demand new capabilities;  the economy stalls or goes into a tailspin;  your market segments change and demographics shift;  and sometimes even bigger changes are taking place.  Today, for example, the environment has become a major driver of buyer behavior (more than 40% of US corporations consider the “green movement” as a fundamental threat or opportunity to their business).  Many of these changes are rapid and unpredictable.

The question we consider is not how to adapt to one of these changes in particular, but rather to learn how organizations create enduring strengths which enable them to adapt successfully.  My personal belief is that the ability to understand and adapt to change is one of the biggest strengths in these enduring organizations.  Many companies develop monopoly positions with their products and services, but they often find that these monopolies are attacked quickly. 

Consider Motorola in the cell phone industry.  Motorola invented the mobile phone, and hit a home run withMotorola the RAZR.  But the company has been unable to adapt to the relentless progress in this market, losing market share again and again to Nokia, Apple, Samsung, and other competitors.  Enduring organizations find ways to continuously move “up the value ladder” by changing their products, services, and strategies.

There are dozens of examples of such organizations:  consider UPS, which originally was a company that delivered messages via horseback.  It moved into automotive transportation, then global shipping, and now global business logistics — all with the same focus on business productivity and value.   UPS has a strong, end-to-end focus on hiring, developing, and managing the right talent.  They have well-developed, clear competency model for success and they reinforce it throughout their people processes.

What we find is this:  These companies do not define themselves by their products and services, but rather by their talent.  It is their “talent machine” that enables them to adapt their strategies, move up the value ladder, and execute well in the face of continuous and relentless change in their markets.

The Five Essential Elements

It’s not enough to say that these companies have “good people strategies” or “strong cultures.”  They actually have much more.

When we dissect what makes these companies endure, we have found five keys — each of which requires a strong focus on talent.  We call these five keys the “five essentials” – they are business essentials which are supported by strong talent management.   Your job as an HR professional is to understand how to implement these five essentials in unique and long-lasting ways.

As I prepare to present this information at our upcoming research conference (IMPACT 2008:  The Business of Talent®), let me briefly highlight them here.   We will be publishing more detail and examples in months to come:

  • Strategy:  The first essential is strategy.  Enduring organizations have developed strong and focused value-add strategies for their markets.  They clearly understand how they add value.  There are three core value add strategies in any market:  product innovation, customer intimacy, and low-cost production.  Enduring organizations select a strategy and stick with it – enhancing it over time.  They codify these strategies into their talent management processes:  who they hire, how they manage people, who they promote, and how people grow in the organization. 

    For example, in technology, one could argue that Apple is the product innovator, IBM is the customer intimacy company, and Dell is the low-cost producer.  Each must staff, manage, and incent people differently because of these different value strategies.  

  • Management:  The second essential is management.  Enduring organizations focus on alignment, transparency, accountability, and trust.  Management is all about making sure people know what to do every day — and that they have the tools and support to be successful.  Management must be tied directly to strategy, hiring the right people and incenting people to do things which support the strategy.  HR professionals can and must play a major role in building these management systems, and we have many examples of amazing management processes which drive these enduring organizations. 

    For example, our research shows that organizations which build strong, strategic competencies from which to manage their employees have almost 4X the return on the ability to build a high performance culture.  We also know that high performing companies in different industries manage people very differently (e.g. financial services companies focus much more heavily on service and quality;  technology companies focus much more heavily on innovation and engineering.)Your job in HR is to help the organization craft and implement its management process, and rigorously and extensively train and coach managers to use the process.  

  • Leadership:  Third, and perhaps most importantly today, enduring organizations have an amazing focus on leadership.  (The #1 issue on the minds of corporate leaders today is strengthening their leadership pipeline.)  Enduring organizations understand the core competencies of their leaders, they vigorously identify and build new leaders, and they move leaders throughout the business.  They know that only by hiring and developing excellent leaders can they build and develop excellent employees.  They understand the need for continuous focus on succession management, as both a tool for growth and a way to hedge against business risk.   

    Here our research clearly shows that organizations at level 4 in our leadership maturity model are generating almost 6-fold higher returns on business outcomes and bench-strength.  Unfortunatley fewer than 10% of organizations have reached this level today, but we see tremendous focus on improving this critical area and we are committed to helping others understand best-practices here. 
     

  • Learning:  The fourth essential element is learning.  Enduring organizations realize that organizational learning is a fundamental to success.  These companies spend 1.5-2.5X more on training per employee, and they focus on a wide variety of strategies to build organizational learning:  career development, coaching, mentoring, as well as strong skills development.  Most importantly they implement a “learning culture” which encourages risk-taking, innovation, and continuous improvement.

    An interesting example:  during the 10 years that I worked at IBM I was involved in the rollout of some of the biggest flops of the decade.  There was the IBM PC Junior, the RT-PC, the 9370 Minicomputer, and many more.  These products, often the results of years of R&D, were announced with flourish and fanfare.  When they failed, IBM was clearly disappointed.  But the leaders of these products were not fired or demoted — rather they were forced to “learn from these mistakes” and go on and make them better.  The PC Junior became the IBM Thinkpad.  The RTPC became the IBM RISC System/6000 and the SP2 supercomputer.  And the 9370 eventually re-emerged as a family of high powered mid-sized mainframes which are still in the market today.  This is an example of an organization that really learns.   

  • Systems:  Finally, enduring organizations build systems.  Systems (processes, not software systems) create scale, consistency, and provide information for decision-making.  These systems become the backbone of the organization and they create a focus on quality and continous improvement.My best example here is McDonald’s. One may believe that McDonald’s is a hamburger company, or perhaps a fast-food company.  But actually, if you truly understand how McDonald’s works, you would realize that this company is an amazing combination of systems.   More on this later.

We will be discussing these topics in detail at our upcoming research conference, and giving you examples of how enduring organizations implement these solutions for business value. 

The Role of HR and Talent Management

Today’s “talent management” is all about implementing these five elements.  Talent management is not an “HR strategy” – but rather it is a “business strategy.”   The talent processes and systems which HR managers implement (employment branding, recruiting, competency assessment, performance management, succession management, leadership development, career development, and on) directly support these five elements.  HR leaders are the architects and craftsmen of the systems and processes which create such enduring organizations.  Business leaders should think about “building a talent engine” in support of the organization’s goals, rather than just building products and selling them to customers.

Jack Welch, ex-CEO of GE, put it well.  He stated that the #2 most important person after the CEO is the VP of HR.  Why?  Because the VP of HR identifies and develops the pipeline of leaders which will run GE in a profitable and adaptable way.

Your job as an HR or L&D professional is to take your skills and expertise and apply it in these five areas, remembering that as you craft expert solutions, the implementation of these solutions will be performed by the business leaders, managers, and employees in your organization.  In a sense you are the “master carpenter” who builds a long-lasting house.  The house you are building will be inhabited by executives, managers, and employees – not only you – and you have been entrusted with a large part of its design.  And your role is dynamic:  you must monitor the house to make sure it is continually being enhanced and improved as needed.

This is what we call The Business of Talent®, and it is the focus of our research.  I hope these thoughts are helpful and welcome your feedback.

 

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Five Talent Management Strategies for a Business Downturn

Posted on February 9, 2008. Filed under: Enterprise Learning, Leadership Development, Performance Management, Talent Management | Tags: , , , , , , , , , |

We are clearly entering some form of economic slowdown.  Our most recent index of talent management executives (January of 2008) showed some significant changes from May of 2007:  21% greater interest in cost-reduction, 18% lower focus on product introductions, and a significant increase in focus on building new leadership (18% increase).  So let’s assume your business does see a downturn (and if you are in financial services or housing-related industries, this is already happening), what should you do?

First, a little history.  I lived through severe downturns in several companies.  I worked for IBM in the 1980s (1981-1992) and saw the company start to disintigrate as the computer business shifted from one of monolithic providers (IBM) to one of seperate product and software companies (Dell, Compaq, Microsoft, Cisco).  The company had become far too complacent with its “deserved market share” and watched its businesses rapidly decline.  For almost three years the company issued multiple early retirement programs, restructurings, sold off businesses, and lost many of its best and brightest.  Luckily Lou Gerstner arrived in time to remind IBM that the company had strong core values in its customer service, innovation, and employee focus.  In the subsequent years the company shed its money-losing technology businesses and emerged stronger.

I also worked for Sybase, one of the fastest growing companies in Silicon Valley.  Sybase rocketed to almost $700M in revenues during my tenure, and became a magnet for many of the smartest, brightest minds in technology.  One day Sybase woke up and realized that Microsoft and Oracle had “figured out” client/server computing (Microsoft had the benefit of actually licensing Sybase technology), and in a few quarters this fast-growing company ground to a halt.  Sybase had beem through a torrid pace of acquisitions (one company a quarter for almost four years) and had done little to build the talent culture it needed to weather the downturn.  When the tornado hit, there were tremendous layoffs (several waves of them), and the company whittled itself down to a core — losing many of the innovators who built the company.  As the new management team entered they focused on one thing:  making a profit.  To do this the new Sybase leadership team continued to cut products, reduce sales commissions, and lose people.  Eventually the company did become profitable, and only then could they start to implement a growth strategy to re-emerge.

A third company I lived through was DigitalThink.  This company was also a high-flyer.  When I entered the company it was a 300 person fast-growing developer of e-learning solutions.  It felt like Sybase and IBM in the early days:  the best and brightest were all there.  The leadership team had big goals and the company was run like a huge rugby team:  everyone took to the field, banged into each other, and marched down the field.  Many of us had conflicting opinions about what strategy to pursue, but we had a big market ahead of us so we all focused on the areas we felt were most important.  But the company had little or no real talent management program.  When DigitalThink hit the wall, the company woke up one day and found itself in shock.  Again, layoffs occurred, and again in painful stages.  And the strategy which seemed so brilliant only a few months ago was in question.  Today DigitalThink is gone, having been acquired by Convergys.

As I have studied many companies and talent management strategies over the years, I have learned many lessons.  As we enter a rough spot in the economy, let me try to share a few of them here.

 1.  Downturns should be expected, so plan for them.  Do not be surprised or panic.

The first lesson is simple:  prepare now for a downturn.  What would you do if you lost 20% of your revenue next quarter?  What programs, organizations, and people would you cut?  What program would you maintain?  Would it challenge your business strategy?  Or would you see it as an inevitable cycle?  Where would you cut and where would you invest?  Think about this now.

Every business and every market is dynamic.  You must constantly expect challenges:  new competitors, product cycles, buyer changes, and economic downturns.  Plan now.  And when the downturn occurs, pull out the plan and implement it.

One of the funniest quotes I ever read was this:  “Only when the tide goes out do you know who has been swimming without a bathing suit.”  (Warren Buffet I believe.)  Dont swim naked.  You should constantly investigate the weaknesses in your business and find the areas of long-term strength.  Invest in them during good times and bad (Merck invested heavily in R&D during its recent downturn, HP invested heavily in its imaging technology during its hard times, and IBM never stopped its R&D labs throughout its tough times) — these are your “bathing suit” – you’ll need them when the waters thin.

When a down turn occurs, rather than cutting across the board, focus on building your strengths and cutting your weak areas.  Invest in your strengths during a downturn, and cut the areas which were already weak, failing, or were perhaps propped up by the “good times.”

2.  Maintain and invest in your talent programs.  A downturn will remind you that “talent is all you have.” 

We have studied hundreds of companies and constantly look at the maturity of their talent management strategies.  Again and again I comment to people that the most well-developed talent management strategies happen to reside in companies that endured terrible economic or business cycles.  These organizations have been forced to search their souls, and what they found (if they survived), was that “talent is all we have.”

Consider the rapid product cycles in almost every industry.  Your organization’s success is totally dependent on your workforce’s ability to innovate, reinvent itself, provide excellent customer service, and remain loyal and dedicated when tough times come.  You cannot build this culture during a crisis.  You must build it before the crisis, and use it to weather the storm.  IBM had an enduring culture far before its downturn hit.  Sybase and DigitalThink did not. 

This means several things:  do not sacrifice your values, principles, and people.  If you do need to lay people off, do it surgically – focusing on the people, projects, and organizations which most need change.  Across-the-board layoffs will dramatically impact your employee loyalty and engagement.  And the process of downsizing can be humane.  I’ve lived through two unhumane examples and one humane example.  When and if layoffs do occur, you do not want the “survivors” to worry.  It must be done in a positive way.

And do not forget to reward your high performers.  Even during a downturn you will find many people performing a high levels of performance.  In fact you are likely to find that many people “rise to the occasion” and perform at greater levels during stress.  Operations managers cut costs and improve productivity.  Sales teams find new approaches to solving customer problems.  Internal personnel find waste and manage internal projects aggressively.  You should recognize and reward these people.  Give bonuses and rewards.  Recognize tremendous achievement.  Such an approach will build an enduring culture, one which will help you survive a downturn and grow when the good times come back.

3.  Continue to search for great talent.  Consider this an opportunity.

If we do have a real broad downturn, the job market will soften.  This means that many of the best engineers, sales people, marketing people, managers, and executives will be looking around.  Rather than “freezing all hiring,” you should use this as an opportunity to upgrade your own organization.  During the last economic downturn in my career (2000-2001), many of my most talented friends were looking for work.  These were people who were “proven winners.”  Keep looking for these people and hire them wherever you can.  Consider it an opportunity to “upgrade” your workforce.

4.  Communicate honestly and clearly.

One of the most powerful things that happens during a crisis is that people pull together.  They talk to each other a lot.  They look for leadership.  They want to know what is happening.  And if you are not communicating clearly and realistically, they will worry.  This is your organization to clearly explain your “rainy day plan” – where you are going to invest – and how you plan to bring the company out of the problems it is in.

I have found that people are actually very loyal to their organization.  If you clearly state the truth, and provide a clear, well-developed plan for survival and growth, most people will get on board.  If people have been well managed in the past, they will rally to the cause. 

This is when leadership is tested.  Can you leaders clearly communicate a plan?  Can they convince people to come together in the interest of the organization?  Do they really understand what and where to cut, and where to invest?  This is when your leadership development programs, culture, and core principles will really be important.

When IBM went through its dark days, I do remember that the company continued to invest in its people.  Even though the company lost money, it did not eliminate its employee development programs or its R&D labs.  The company’s strong culture of customer service remained.  It took a new strategy to turn the company around, but once this strategy was clear, Lou Gerstner communicated it vigorously and clearly.

5.  Turn outward, not inward.

Avoid spending time standing around the water cooler.  When a downturn occurs there is a natural tendency to spend a lot of time and energy on internal efficiencies.  While this must be done, you should make sure you spend even more time focusing on customers.  Now is the time to remind youself what business you are in.   What products and services are doing well?  Which are not?  How has the economy affected your customers?  What are their new needs?

When we saw a downturn at DigitalThink, we rapidly shifted our product mix from “growth-enabling” solutions to “efficiency-producing” solutions.   If you stay close to your customers they will tell you what to do.

In my personal experience this is often the hardest rule of all.  When a company starts to lose money or market share there is an immediate reaction to “fix things.”  While this must take place, it should also be an opportunity to “see new opportunities” and move into new markets.  And if a broad economic downturn is affecting your customers, it is important to see this quickly, so you can adapt your business to go in different directions.

During the 1980s Intel, one of the most successful high technology companies in the world, went through a major upheaval.  The company suffered major losses through its investments in the memory business and the delay of a major new product.  It was a tough time, and several of my friends worked there.  The company implemented what they called the “10% solution.”  Every employee took a 10% pay cut and was asked to work 10% harder.  The company buckled down and reinvested in its core.  It spent even more time with customers.  And it identified new strategies, eventually creating the Intel Pentium, one of the most successful products in the company’s history.

Five simple lessons: 

  1. Plan ahead.  Don’t swim naked.  Cut strategically.
  2. Continue to invest in talent.  Reward high perfomers.  Keep the culture in tact.
  3. Look for great hires.  Dont freeze all headcount.
  4. Communicate clearly and honestly.
  5. Turn outward.

Living through a business downturn is not always fun, but it can be a tremendous opportunity.  Consider this an opportunity focus on your core, strengthen your talent programs, identify weaknesses, and reinvent your company.  As HR or business leaders, you can use these proven approaches to help your organization thrive if times get tough.

 

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HR Technology Conference 2007 – A Recap

Posted on October 14, 2007. Filed under: HR Systems, Performance Management, Talent Management | Tags: , , , , , , , , , |

Leighanne Levensaler and I just finished a week at the HR Technology show in Chicago. This conference represents one of the biggest meetings of HR technologists and HR software vendors each year.  As always, this conference was an opportunity for most of the HR and learning technology providers to announce new products and offerings.

Here are some of our major findings after two days of in-depth meetings.

Talent Management is the Rage, But Different for Each Organization

There is no more discussion about the words Talent Management vs. Human Capital Management – everyone has adopted the talent management term. In fact, there is widespread consensus that every company needs a talent management strategy.

As our research has shown, however, the actual implementation of talent management varies widely from company to company.  In the Vice-President of HR talent management panel, the five attendees actually discussed very different definitions about what the term means. Liviu Dedes from Aramark talked about the need to provide scalable and consistent processes across many different organizations and talent pools. Valerie Norvell from Luxottica expressed the need to create dramatically different behaviors among their sunglass retailers to meet the needs of different brands. Andy Ortiz from HealthNet mentioned the need to improve workforce performance and skills across the organization. And Mary Ruiz from Yahoo mentioned that talent management forms the basis of capital value in our economy.

Talent management means different things to different organizations.  As you define your strategy and select your systems, it is important to tie this solution to your own unique business challenges.  Our research tells us that talent management is a specific strategy for each organization which drives high performance, agility, and engagement in the workforce.  For more details, please read our High Impact Talent Management® research.

Talent Management Suites are Really Here.

There is no question that there is new software “category” in HR called talent management suites. Every major HR systems vendor now offers a suite of some kind, including some combination of recruiting, performance management, competency management, compensation, succession planning, career planning, and learning management. The financial community is also fueling this: Authoria, CornerstoneOnDemand, GeoLearning, SuccessFactors and Workstream have all recently received major rounds of venture funding.  One of the financial analysts we spoke with told us “we have plenty of money to invest in this space, help us figure out who the winners will be.”

Our principal analyst, Leighanne Levensaler, presented her breakthrough new findings on the market for talent management suites, showing the complexity and immaturity of this market. As you will see from the notes in this posting, almost every company in this market now has a performance management system – but how integrated are all these modules? We’re not quite there yet. For an executive overview of this research, please click here. The final report will be available in November, and you can purchase it now at a discount.

One of the things we’re seeing in the software market is an increased focus on real integration and improvement of user interfaces. While the suite market is still very new, and most organizations cannot adopt an entire suite, vendors are moving beyond the simple “four packages from the same vendor” toward a truly integrated solution which uses a common user experience.

Workstream 

We met with the executives from Workstream, who launched their next-generation talent management 2.0 product with much fanfare. The product looks fantastic, and in fact the dashboard interface is so sexy and appealing to business people that many people crowded around the Workstream booth just to see how it worked. We believe that Workstream has done an amazing job of integrating the products from four acquisitions into a seamless product set. While there is still much work to do behind the scenes, we believe Workstream will pick up speed and gain market momentum in the next 12 months.

SHL Group

The topic of competencies came up a lot in our meetings. As strong advocates of competency management as a foundational process for talent management, we found ourselves very well aligned with the thinking of many companies. In particular we had several in-depth meetings with SHL Group, one of the largest (but not well know in the US) talent management solution providers in the world. SHL, a $155M company, provides a deep research-based solution for psychographic and skills-based competency assessment. Such competency assessment, built upon many years of behavioral research and the company’s well-developed competency model, can be used for many high-value talent management problems:

• Assessing candidates for hire

• Assessing skills during restructuring, mergers, and acquisitions

• Assessing high-potential managers for leadership positions

• Assessing highly skilled professionals for succession planning.

The value of solutions like SHL Group and Vangent (a similar company which has just entered the US market with excellent solutions) is tremendous: huge increases in the quality of hire, rapid assessment of candidates for organizational transitions, and tremendous efficiency improvements in hiring.

While these companies (SHL Group and Vangent) tend to compete with Taleo, Kenexa, and other software providers, in many ways they are complimentary – by focusing intensely on providing world-class assessment solutions, they greatly increase the value of any talent management system.

Kenexa

We had an excellent meeting with Rudy Karsan, the CEO of Kenexa. Kenexa, a company which most talent management solution providers emulate, thinks about talent management the way we do – as a business solution, not an HR solution. Rather than focus on increasing speed and reducing cost, Kenexa’s solutions (software, content, and consulting) focuses heavily on improving the quality of hire and quality of management – focusing on helping people “hire the best” and “retain them.”

Our discussions focused on many strategy issues, including the company’s 2006 acquisition of leading recruitment software provider BrassRing and its inevitable march into the talent management software market. While Kenexa’s total go-to-market strategy focuses on business-driven consulting and organizational design strategies, the company is now generating more than $100M in revenue through software and platforms, making it a very important player in the talent management systems market.

As Kenexa continues its global reach and expands its talent management solutions, we believe the company is likely to enter the important market for learning solutions. All our discussions with HR managers at the show confirmed our findings here – all talent management strategies are dependent upon strong strategies for competency management, learning, coaching, and employee development.

Vurv

Vurv, a fast-growing and increasingly important player in the market for talent management suites, introduced Vurv Perform 4.0, highlighting the company’s new performance and succession planning system. Vurv now has an integrated suite with strong features for recruiting, compensation, performance management and succession planning (available in 2008). Through its acquisition strategy the company has completely transformed itself from Recruitmax to a provider of complete talent management software solutions. We have always been impressed with Vurv’s heavy focus on ease-of-use and the company’s integrated offering of 70,000 different content objects: competencies, job descriptions, behavioral indicators, interview questions, and coaching ideas – for use in recruiting and in performance management. Armed with a strong new Senior VP of Global Sales, we believe Vurv will also be growing rapidly in 2008. The company truly demonstrates its “Vurv” through its enthusiastic and positive approach to this confusing market.

Lawson

We met personally with Larry Dunivan, Vice President of Products for Lawson, to discuss their newly announced strategic human capital management suite. Larry introduced us to two of Lawson’s new customers – Sitel and CommerceBank. Both customers were very pleased with Lawson’s collaborative approach to HCM software product development – one had switched from Oracle to Lawson and the other was going through a major expansion to HCM due to organizational growth.

Because Lawson is an ERP software provider (the company offers an HRMS and complete financial application, similar to Oracle, SAP, and Workday), the company’s HCM software can be totally integrated into its other applications. (See our research bulletin on Building an Integrated Talent Management Systems Architecture for more details on this issue.) The company’s performance at the “HCM Battle” against Oracle and Workday was excellent – almost all of the viewers rated Lawson far above Oracle in its ability to deliver an integrated HCM suite. While Lawson is not a fast-growing company, it has more than 4,000 existing customers who are now excellent prospects for the company’s integrated HCM suite.

Taleo

I had the pleasure of flying to Chicago with two key Taleo employees from the product management organization. As we have written about earlier, Taleo’s newest product, Performance 2.0, takes a groundbreaking new approach to performance management, with a very user-centric “Facebook-like” user interface which avoids the typical screens of data entry fields, tabs, and pull down menus. While the product is not in general availability yet, we believe Taleo’s offering will “make waves” in the performance management market because it helps companies understand how these systems can truly move from “performance appraisal automation” systems to “employee management support” systems.I firmly believe that the performance management software market is going to change rapidly in the next few years, and quickly morph into a platform for all aspects of management – far beyond appraisals, 9-box grids, and development plans. Taleo sees the same potential in this segment.

Salary.com


One of the bigger eye-openers to me at this event was our meeting with Salary.com. This is a publicly traded company with very strong momentum (a market capitalization of $245M, on sales of about $30-35M, a very high multiple – almost 5-times higher than LMS companies, for example). While the company is most widely known for its large database of compensation data and its compensation analysis system (which is used by more than 7,000 organizations), the company also has built a talent management suite. Salary.com’s TalentManager® is designed to implement performance management and tightly link it to the company’s compensation management and analysis system. Such a system is very well positioned in the market for “pay-for-performance” solutions.In addition, Salary.com recently purchased ITG Competency Group, a well positioned company with one of the largest databases of skills and competencies in vertical and functional job areas. ITG is a small company with deep competency models which have been developed over many years. The combination means that Salary.com has the ability to build out a complete talent management system with world-class competency libraries included. ITG also works with every other software vendor and will continue to offer its content in partnership with other solution providers. Ultimately Salary.com is assembling an excellent software solution – we just believe the company needs to focus its marketing emphasis on driving higher awareness of these products.

StepStone


Another interesting and important player in the talent management software market is StepStone. StepStone, a $175M public company, is one of Europe’s largest providers of job portals. In fact, in Europe the term “StepStone” has become a noun to signify a job website.

Earlier this year the company acquired ExecuTRACK, a complete HRMS and HCM system used widely by mid-market companies in the US and Europe. This summer the company rebranded the product StepStone ET Web Enterprise. The product is well known throughout the world, with customer such as Lufthansa, McDonald’s Deutschland, DHL, Cadbury Schweppes, Statoil, and others. The company has just set up their US sales and service organization in Austin, Texas and we expect them to start an aggressive push on the US market. StepStone’s system is discussed in detail in our Talent Management Suites research, available in November.

Workscape

Workscape is a very interesting and increasingly important company in this market.  Workscape’s core offering is a rich, enterprise-class compensation, benefits, and incentive system.  The system is one of the most sophisticated and enterprise-class systems we have seen.  In fact, IBM uses Workscape to manage compensation plans and budgets for more than 300,000 employees (imagine the complexity) – and the company also recently signed an agreement to provide compensation management for another similarly sized global consulting firm.  Workscape introduced their performance management application, which gives the company one of the most integrated and configurable solutions for pay-for-performance on the market.

Authoria

We spent a few hours with Authoria at the show as well. We have always considered Authoria one of the most knowledgeable and forward-thinking talent management systems vendors. The company developed their suite strategy years ago, and through the acquisition of highly capable companies, has developed an integrated solution for recruiting, performance management, salary and incentive compensation, and benefits communication. The Authoria 2007 platform, the company’s new integrated technology platform, is now becoming available.

Authoria had two particularly notable announcements at this conference. First, the company released a new version of its recruiting product. This new release focuses even heavier on helping organizations manage “quality of hire,” by taking advantage of an improved employee profile (“job model”) which integrates pre-hire questionnaires with resumes and other candidate information. As we discuss in our bulletin on selecting a talent management architecture, these types of “employee profile” extensions are critically important to understanding how to focus on hiring the “best” people, not just improving hiring speed or reducing hiring cost.

The second, and probably more interesting news, is that Authoria won the “Performance and Recruiting Shootout” – competing against HRSmart, SuccessFactors, and Vurv. Authoria’s well-developed recruiting application (a very mature system purchased from Hire.com) and the company’s elegant user interface stole the show. Our principal analyst Leighanne Levensaler, worked closely with Bill Kutik, show chairman, to develop this script. You can see this script demonstrated by other vendors at our IMPACT 2008: The Business of Talent™ conference in April. (www.bersin.com/impact) .

IBM

Let me make one mention of a company we all know well, IBM. As many of you know, I spent 10 years of my career at IBM and continue to have admiration for this amazing company. I spent several hours with Tim Ringo, IBM’s new Global Leader of Human Capital Management services. The company has clearly “woken up” to the market for talent management systems, processes, and business consulting. Tim has effectively convinced IBM that this market is real and transformational – and is now actively recruiting around the world to grow the consulting organization. I will not disclose any of IBM’s strategies (I am sure they will be visible to many of you), but suffice it to say that IBM has a unique ability to bring business and technology expertise, software, and an extensive internal experience in talent management to this market.

The LMS and Performance Management Systems Market

I had the privilege of giving an in-depth presentation on the market for LMS and performance management systems. Even though the session competed with one of the shootouts, we had more than 250 people in attendance. The LMS market continues to be big, evolving, and confusing to many companies. For more details on this presentation, you can view an online version of this presentation by going to our website.

Client Discussions

We had many conversations with research clients at our reception, including Starwood, The Gap, Molex, ING Bank, OwensCorning, Wachovia, and many others. In general we found that most organizations are quite baffled by the wide range of options, multitude of possible technology strategies, and rapid changes in the HR systems market. To help organizations sort this out, we are publishing a separate research bulletin, “How to Build an Integrated Talent Management Systems Strategy” which highlights the important issues to consider. 

One of the things which come up regularly with clients is the tension between IT and HR. In today’s rapidly changing HR Systems market, it is important for both teams to get on the same page and build a 3-5 year strategy for these systems, with contingency plans for various market changes. With the landscape changing as rapidly as it is today, it is impossible to predict where the market will go – so please read this bulletin if you are in the middle of this process.

Bottom Line

While much of these comments discuss software and vendor services, this conference grew to over 1,000 paying attendants this year (biggest ever). This tells me that talent management and technology has moved to center stage. We will continue to focus our research in this area, giving our readers and research members the most business-oriented, pragmatic, and high value advice and services in the market. 

PS:  Remember to register for our WhatWorks® in Talent Management newsletter, which reaches more than 90,000 HR professionals around the world.

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