Lessons from Yahoo: Enduring Organizations Manage Executive Succession

Posted on November 19, 2008. Filed under: Leadership Development, Succession Planning, Talent Management | Tags: , , , , |

This week we witnessed another vivid lesson in the value of executive succession: Jerry Yang steps down as the CEO of Yahoo!. Yang replaced Terry Semel, who spent years trying to build Yahoo! into a media company, only to see it lose market share to the more innovative, technology savvy Google. Yang presided over an indecisive decision not to merge with Microsoft, and watched the Yahoo! stock drop from $33 to around $11, effectively trimming billions of dollars off the company’s value.

Now we find that yes, in fact, Yang is a great visionary, but not a strong leader – his inability to change the consensus culture at Yahoo! and make rapid decisions (the Microsoft merger seemed pretty logical to me) are now considered out of favor. The board is looking for an internet-savvy leader who can make decisions, drive execution, and build alliances.

Companies do not have to go through this. In fact, Enduring Organizations®, companies that build brand value over decades of business cycles, rarely if ever go through such tremendous soul-searching to find CEOs. They build strong leadership models, capturing the essence of their business and talent strategy in a set of leadership capabilities. Then they identify high potential leaders throughout the company, using well understood approaches to succession management. And they develop leaders internally through a wide variety of approaches: developmental assignments, internal projects, executive coaching, external education, and 360 assessments.

Look at companies like GE, IBM, Procter & Gamble, Textron, McDonald’s, and Goldman Sachs. These companies have deep pipelines of leadership talent, always being developed and assessed for future top positions. When a change needs to be made, 90% of the time it can be made internally.

Sometimes, of course, a company loses its way and an outsider is needed: Lou Gerstner at IBM and Ron Williams at Aetna. But these situations are rare in these companies, they work hard to constantly re-evaluate their leadership needs and build new leaders as business cycles change. IBM, my alma mater, has completely changed its “profile of leadership” in the last 5 years to reflect the company’s new business model of global services, team based consulting, innovation, and expertise development.

In many ways companies like Yahoo! are still young, so these “old-fashioned” processes have not yet taken root. But that’s no excuse: if Yahoo! wants to become an Enduring Organization®, it’s high time they took the executive succession process seriously. It may be too late, time will tell.

Bersin & Associates defines an Enduring Organization® as one which develops long term business value over decades, through many business cycles, and through many transformations. These companies outperform their peers over consistent periods of time. Our research focuses on identifying the proven principles of enduring organizations to help younger companies embrace these proven approaches to managing talent.

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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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