Episode Transcript
Speaker 0 00:00:01 Hi, this is Josh Buron. Welcome to Research-Based Perspectives on the Ever-Changing World of Work, leadership, learning, and HR with a heavy dose of insights on the exciting world of HR technology. Hello. This week I want to spend some time on vendors, which I don't usually do on this podcast, but there's so much going on. I really feel it's important. And the biggest piece of news is Microsoft. Microsoft is a fascinatingly important company in business. My personal experience with Microsoft goes way back to the 1980s. I was actually a working professional when the first PC was launched and we had Doss and Windows, and Windows 3.1 and then Office. And the proliferation of things Microsoft has done. It's a very tenacious software company that has radically changed over the years and is really, really hitting its stride. What Microsoft introduced this week is a groundbreaking platform called Viva.
Speaker 0 00:01:01 Viva is a platform built on Microsoft teams that is positioned as an employee experience platform, and it basically has all sorts of features built into it because of its platform, nature of teams and the Azure services behind it. And as connections to Microsoft Office and four initial apps, uh, Viva Connections, which is an employee portal and employee communications app. Viva Learning, which is a learning experience platform and learning management, light learning management system. Viva Insights, which is an actually quite extensive system for analytics, wellbeing, and productivity measurement. And Viva Topics, which is a very powerful indexing technology that allows you to find documents, identify experts, and makes sense of the corporate infrastructure. It is being packaged as an employee experience platform. I've written a lot about this category. It's an emerging category. I think it's gonna be very clearly defined now that Microsoft has jumped in.
Speaker 0 00:02:04 And what that means is that it's a platform that any company can use to sit in front of employees to make their, uh, many, many, many interactions easier at work. Now, employee experience as a topic has grown exponentially in the last two years. It started as a design domain in HR around building journeys to make the HR function a little more relevant. But now it's really a massive strategy, which ranges from wellbeing, safety, back to work, scheduling, workplace systems, IT support, H programs, pay rewards, wellbeing benefits and so forth. Virtually everything that happens at work is part of the employee experience, and we're gonna be introducing a framework that shows you 24 elements of the employee experience and how they all fit together, which we've done a big research study that'll be out later this quarter or early next quarter. Now, the reason Microsoft's getting into this is really historic.
Speaker 0 00:03:05 The company for many, many years, primarily sold to it and business people didn't really sell to HR learning people at all until they acquired LinkedIn and when, when Microsoft acquired in for the low low price of 26 billion, which seems like one of the biggest bargains of the world now, they basically got access to a massive business selling recruiting services and professional development services through HR to employees. And so under the covers, while Microsoft's been building out Azure and all sorts of applications on the Microsoft Seattle side, LinkedIn has been growing and growing and growing and increasing its penetration into many aspects of hr, introducing an applicant tracking system greatly expanding LinkedIn learning, acquiring Glint. Glint is a leading provider of employee engagement surveys and feedback and performance management applications. And so what was happening is while that was going on, the Microsoft people were building more tools and they were meeting with LinkedIn and beginning to see, oh my God, there's a big market here for technology to not only automate hr, but make employees' lives easier.
Speaker 0 00:04:12 So Viva is a result of a lot of thinking. I've been advising Microsoft for probably three years now on this. And we've brought chief learning officers and chief HR officers up to Microsoft multiple times. And usually their reaction is, holy smokes, you guys have a lot of stuff we could use, but we didn't even know we have it. It was, it was sort of in it and we weren't even aware that our company already owned it. So Viva is a reflection that this is a real market and a very serious commitment by Microsoft to build out these four applications and also work with third parties because the employee experience problem is very, very complex. And so Viva will not only be a collaboration system and a video conferencing system, but it'll be a platform for many, many other applications. Virtually everybody who sells tools for hr, performance management, project management, wellbeing, engagement, feedback surveys, employee communications, are really going in the same place.
Speaker 0 00:05:09 They're trying to reach employees directly, either through hr, through it, and Viva in some ways will be the perfect gateway to do that. Now, the reason I'm so high on Microsoft is not only am I, you know, incredibly impressed with the people there and their ability to execute, but the company is, is very, very successful in the market. When we first went home for the pandemic and everybody started using Zoom, my company was playing around with Slack and I didn't like Slack. I couldn't quite figure out how to use it. I'm not a big fan of it. Well, we started using teams and all of a sudden I realized that almost every communication with large companies started to take place using teams because companies have so much Microsoft technology, it's way more integrated and way more advanced than what Google offers. Uh, there's obviously Cisco's WebEx and Zoom and Workplace by Facebook, which is an extremely powerful product, but nobody really that I know of can take all of that video conferencing, video indexing, translation, and other features yet to be announced and connected to all of the documents, portals, feedback systems, and IT security and directory services that Microsoft offers.
Speaker 0 00:06:25 So, you know, whether you like Microsoft or not, they used to be called the Evil Empire, but as Satya is anything but evil, he's actually a great guy. This is a great company with great products. So the Aviva product line to me is probably gonna impact every buyer of HR technology and every vendor. Well, lemme talk about vendors now for a couple minutes. Well, the other thing that's happened in the last two weeks is Qualtrics spun off from SAP was immediately worth more than $20 billion, 35 times revenue, which is astoundingly high valuation. I don't understand that valuation because as much as I like Qualtrics, it's basically a survey company and they compete with lots of other companies, including Medallia, Glenn, who's now owned by Microsoft I mentioned earlier, and Perceptyx and lots of other great companies. They've done an incredibly good job of sales and marketing.
Speaker 0 00:07:19 Uh, they position it as an ex platform that's a really interesting, uh, idea to instrument employee and customer feedback, use the data to create triggers and alerts, and then use that feedback to improve the employee and customer experience. And they've done a really good job of defining that end-to-end experience and selling into it. The reality is that the other vendors can do it too, maybe not quite as well as Qualtrics, but I, I know for sure Medallia can. I think all the other vendors are gonna move in that direction, including Culture Amp and some of the smaller ones. So that was a big deal because of course that validated the employee-centric part of the market. Although Qualtrics gets a lot of revenue from the customer side. And the same day they went public, Workday announced the acquisition of Pecan. Now, Workday is a company I know very well and spent a lot of time with them over the years.
Speaker 0 00:08:13 And I was telling Workday for many years, they should buy or build an employee engagement tool because employee feedback is so central to all the aspects of management and responsiveness and agility in an organization. And these systems are quite sophisticated. They don't just send out surveys and then create reports. They give you real time data that can go to managers, they can find alerts that go to compliance officers, they can identify safety problems, they can inter identify harassment and legal issues and theft and all sorts of things. Well, Workday got the religion and acquired Pecan. Pecan. P E A K O N is a really cool company. They're Danish. Their product is exceptionally well designed and very compelling when you see it. They really didn't have a lot of presence in the United States, but they're about a 30, 35 million company, very solid engineering team. I spent quite a bit of time with them and, and they're now part of Workday.
Speaker 0 00:09:05 And Workday doesn't buy companies revenue. Workday tends to buy companies for engineering and teams. And so this is a team of developers that will probably be responsible for not only the ex types of products that the Qualtrics offers, but other things. One of the things Peak was working on is something called Pecon Grow, which was an employee development and performance coaching system based on feedback. Imagine you did an employee survey maybe once a month, and then one of the managers got really low scores on empowerment. Well, the system could send them a little nudge and say, Hey, your team is scoring you lower on empowerment than your peers. Here's a set of developmental coaching tips on how to be a little more of an empowering manager. And they basically built that. Then Workday doesn't have anything like that. In fact, Workday's performance management capability is often criticized as not really being enough.
Speaker 0 00:09:57 And so companies oftentimes add the things to Workday for performance management and feedback. Well, I have a funny feeling that stuff's gonna start get built in the pecan group and then come out as part of the Workday suite. So that was a big deal. Now the other thing that is important under all of this is this incredibly massive topic of skills, inference engines, skills taxonomies, job architectures, and the talent marketplace. So let me take a couple minutes on that while we're talking about vendors. But for the last really 15 years, companies have been slowly inching away from the linear two, three year at a time career development paths that I experienced when I was young where you kind of waited your turn and you did your job and then somebody came along and said, okay, you're ready for a promotion, you're gonna get a new title and uh, here's a 5% raise and we're gonna give you a little more responsibility.
Speaker 0 00:10:52 That doesn't work anymore. It's too slow. The organizations are flat, people have multiple roles, and oftentimes managers are individual contributors and managers. So we've opened up this world of mobility. And of course during the pandemic, every company did a lot of this because roughly 40% of Americans at least changed roles, jobs or managers last year with or without a plan. The question is, how do you make those decisions and how do you determine who's qualified for the next role, which gets to the bigger issue of what skills do we have in the company and where are they and what skills do we need? So every CHRO is now grappling with this, and what they're basically finding is that the original idea of mapping competencies to jobs is dead. So without being too controversial, let me sort of explain what I mean by that. So if you go back 20 years, when I got into HR stuff, there was this idea that you would define a job, and in the job description there would be a lot of tasks and responsibilities, and then there would be competencies when there was a competency model that was affiliated to each job.
Speaker 0 00:11:55 So you end up with thousands of jobs, tens of thousands of competencies, and then you wanna say, okay, well let's see if we're gonna write all that down. Let's use those competencies to assess people to see if they're capable or prepared for this job, to develop them through training and then also to determine when they're ready for a promotion. It's a giant mess. It's a hugely complicated academically good idea that never really seem to work very well, except for very operational jobs like people that have to fix things, repair things, and work in manufacturing where you absolutely have to know certain skills. So to have this big mess going on with companies trying to figure out what to do next. And then the vendors have built skills engines, a degreed in EdCast and Workday and sap, uh, and Oracle. And you know, virtually everybody, eightfold and gloat, they all have software that will basically crawl through your job description, your performance ratings, and all sorts of other artifacts about your work and make a pretty good guess about what you're good at.
Speaker 0 00:12:58 No, they're not really that accurate, but they're better than nothing. And what companies are now doing is they're looking at all these skills taxonomies, these, these ontology creators, and they're saying, well, how do we make sense of all this? And what they're finding is, first of all, the market is very fragmented. There is no one system for skills that works for all of the applications in the company from recruiting through development, through succession, through tele mobility. And they're finding that they have to have skills engines in each application. There's a skills engine in the recruiting tool, there's a skills engine in the learning tool, there's a skills engine in the tele mobility tool, and then if you go by workday, they have one too. And the engine is reasonably good at picking up semi obvious stuff, but it's not that intelligent. And so what I'm advising companies, and we're working with actually quite a few companies right on this right now, is there's really two things you need to do.
Speaker 0 00:13:50 Number one, you need to look at your job architecture because if you have what, most companies have many, many levels and many, many job descriptions and many job titles, you oftentimes have more job descriptions than you. You do human beings in the company. So that's a lot of baggage to drag around. So companies like Verizon and p and g and many others are radically simplifying the job architecture with much less detail because, but people don't work in fixed jobs anymore. We have roles and responsibilities, but we tend to do many different things over a year or two. And so the job descriptions and job tax economies are getting simpler and fewer levels, and we have some methodologies to help you with that if you're interested. And then they're saying, okay, before I just turn on all this software and try to figure out what skills we have, why don't we sit down and have a strategic conversation about what skills we know we need?
Speaker 0 00:14:41 And that gets into the whole topic of strategic capabilities. And one of the things we're gonna be introducing later in February is our capability project for hr, which you're gonna find fascinating, I guarantee you. But the basic message is that only you as a business person or an executive know what the strategic capabilities are for your company. No two companies have exactly the same capability needs at the skill level. Yes, we need to know Java, we need to know how to write code, we need to know how to use Excel, we need to know how to balance the books. Those are operational or to some degree tactical skills. But the capabilities that they make up which are higher level business capabilities are up to you. And I'll give you an example of this. One of our clients is a technology company, been around a long time, very successful, very profitable.
Speaker 0 00:15:33 They've lost some of their technology edge, they've lost some big deals lately, they're concerned about their technology direction, and they did a lot of soul searching and they realized that most of their capabilities were focused on scalable manufacturing and they had not been focused on advanced technology market scanning, competitive intelligence. Those are business capabilities. So they are formally making a decision to create a new set of skills, power, skills or business capabilities so that they can formally push the organization towards new sets of skills and new sets of capabilities. And then they are going to take these tools and use them to aggregate the underlying skills that are needed. We're going through the same thing with another very successful software company that's trying to build more advanced skills on accountability and psychological safety and more soft skills. So the reason I mentioned this in the world of vendors is every vendor in the market seems to be preaching that they have the best skills taxonomy and system in the world.
Speaker 0 00:16:37 And I would just warn you look at that with your eyes wide open and reflect on the fact that this is early days and most of these tools are very underdeveloped and and unproven, and you will be working with these vendors to make this all come together, which gets me back to Microsoft. Well, Microsoft is obviously new to the HR space, and all of these things that are coming out in Viva are gonna be big new areas for Microsoft technology and Microsoft sales and channel people to work in. But one of the things Microsoft's really good at is indexing. If you've ever used Outlook or any of the office products, you realize how fast it searches things. And of course Project Cortex, which makes up the topics app in Viva, is a massively intelligent search engine that not only searches through documents to find topics, but searches for who authored documents.
Speaker 0 00:17:29 And it looks through the metadata of all the Microsoft documentation and can find people and say, this person seems to be the expert on this topic because he or she authored many of the most widely used or widely read, widely accessed pieces of content in your company. That's a pretty important thing. Imagine if Microsoft took that technology and attuned it towards skills. They're basically doing it already. So I think there's a big possibility that the skills problem that we're all trying to solve with many, many tools may eventually fall into the hands of Microsoft too. So I just want to throw that out there. The final thing I want to get you to think about is why is XP really a category and not just a marketing term? And here's my perception of this, based on my experience of working for 40 years in business, if you go back to the 1970s and 1980s when I worked at ibm, there were a bunch of companies that built e r P systems.
Speaker 0 00:18:29 E R P was a very radical idea. SAP really made the biggest success in this. Oracle did it. And there were a bunch of companies that are now gone and been acquired. And the idea of E R P was in a manufacturing economy where most companies built and sold products. There was an opportunity to integrate the finance system, the general ledger, the p and l with the manufacturing system that keeps track of everything that's manufactured in the value added process of manufacturing and the supply chain system where you go out and get all your parts and product and and product features and bring them together. And that became E R P. And when SAP did this, it was earth shattering. Most of you aren't as old as I am, but I remember when SAP hit the market, everybody wanted it. I mean, every company and every industry wanted it.
Speaker 0 00:19:19 And over the years, SAP not only integrated all these pieces, but they integrated them by industry. So S A P became experts at retail, experts at telecommunications, experts at oil and and energy experts at pharmaceuticals. And all of these companies built integrated E R P systems with the help of S A P and then Oracle and then others, Infor and other companies. Then sometime in the 1980s and 1990s, there was a wave of interest in customer systems. And I remember first reading when I was at cybase, the book on pinpoint marketing, and it was about basically that marketing is about really a market of one. Every individual customer and consumer has its own characteristics. And how do we take this massively broad approach to marketing and selling and make it more intelligent? Well, there was a lot of work going on in customer data warehouses to analyze who was buying what.
Speaker 0 00:20:13 And there was always this famous story about a Walmart discovered the people that buy beer also buy diapers, and I won't take you through that, but, but that was the beginning of it. And then along comes Siebel Systems and Salesforce and a few other companies that were building Salesforce automation tools that didn't really work in the early days. And somebody had the brilliant idea of maybe all this goes together, let's call it C. And so CRM became the integrating theme that took the customer revolution, the marketing revolution, and then of course the online advertising revolution and the online marketing revolution, the digital marketing revolution, and put it into one platform. So Salesforce became a multi-billion dollar company. Companies like HubSpot became giant companies, a Marketo got acquired. It all became part of this end-to-end integration platform just like E R P did in the seventies and the eighties CRM did in the nineties and the early two thousands.
Speaker 0 00:21:10 Well, here we are now well into the the next decade, and we are living in the service economy. 80% of the jobs in the United States are service jobs. And I don't mean professional service. I mean selling, designing, managing, serving, caring for people, consulting with people, providing customer service. Most of the stock market capitalization in the United States is intangible assets. Even software engineers or service people, because they're designing things based on input from others, of course, managers or service people. The number of manufacturing jobs who are actually doing manufacturing dropped 20% in the United States in the last two decades. And it's slowly being automated. So given that employees are now basically defining the value of your company, since your company is a service organization and their skills, their alignment, their engagement, their health, their wellbeing, their sense of energy, their sense of purpose, their sense of commitment are basically all your company really has anymore, then we need a similar system to manage all of that stuff that makes employees happy, productive, and successful.
Speaker 0 00:22:25 And so I think there's an argument that the E X P is a similar integration platform that E R P was in the sixties and seventies and eighties. C R M was in the eighties and the nineties and the two thousands. This is where we are, and both Microsoft is successful, which I really believe they will be. There will be others, there will be other companies. ServiceNow, for example, is moving this direction to some degree. Qualtrics is hinting about it. Oracle, Cisco, uh, even Facebook with Workplace are seeing the need for an integration platform that has an application layer, a layer of services, and then a layer connecting it to backend systems and service delivery organizations to make employees more productive. And we can just look at what happened during the pandemic and get a sense of how important this was. You all sent employees home and gave them new computers and bought them furniture and gave them access to Zoom or teams and they came back and said, Hey, I need, I need help on wellbeing, I need some coaching, I need some entertainment.
Speaker 0 00:23:30 Can you give me a little bit of more help on my kids? Maybe you guys could teach me some classes. By the way, can we have a little more fun around here? We learned a lot about what employee experience was all about last year, and we learned that employee experience isn't just hrs problem, it's it hr, finance, legal, facilities, safety. It's all of the supporting functions in the company coming together to create the best possible experience for each employee. It isn't the same for a retail worker and a store as it is for a truck driver as it is for a white collar worker as it is for an executive or a mobile salesperson. So we need a platform that manages all that and brings it all together and accommodates this innovative market of new systems. And I think it's pretty similar to what happened in E R P and what happened in crm.
Speaker 0 00:24:16 So I would argue that this X P thing is not just a marketing phrase, it's a really big change in the way we think about business, the way we think about technology and the way products will be purchased. And that means that for every vendor in the market, you have to sort of decide, you know, are you a an end end solution? Are you a component of an exp? And what will be your relationship to Microsoft? Uh, and I think most companies have ignored Microsoft and hr, but maybe not so much now, now that Viva comes out. Anyway, a lot of this is covered in the article I'm publishing about Microsoft today. It is also discussed in detail in the HR Technology 2021 report. You can get that report on the Kindle right now. It's virtually free if you use Kindle Unlimited. And then the big beautiful PDF version of it'll be coming out in the next couple weeks and we'll send you some information how to get it. As always, I am very interested in your comments, your feedback, and any debate you'd like to have about any of these topics. And I hope this has been a good informational podcast on what's going on in HR technology, employee experience, and Microsoft. Thank you.
