Episode Transcript
[00:00:00] Good morning, everybody. I've got two big pieces of news to discuss today. I'm in New York City this week for a bunch of meetings.
[00:00:08] And the first is a very significant announcement from Cornerstone, who I'll talk about in a minute. And the second is a significant announcement from us on the frontline labor market and the frontline workforce. Let me talk about the frontline workforce first and then I'll talk about Cornerstone.
[00:00:26] So there's this very, very large discussion in the world about frontline work.
[00:00:31] And this word frontline tends to indicate the employees who work directly in the customer facing roles of our companies. But this includes truck drivers, nurses, firemen, warehouse workers, salespeople, fast food workers, restaurant workers, people who deliver packages, and many, many other roles which you may or may not called front of office because sometimes they don't actually talk to customers directly, but they're using their hands. They're often hourly, they work shifts because they sometimes have 24 hour operations. They're scheduled, they have licenses, some of them like electrician or a plumber or an airline pilot or even a flight attendant. Or they might be unskilled. Where you could get this job from for just having, you know, the ability to walk.
[00:01:28] And this might be a temporary job, so you change jobs every couple of months. And I suppose you could even categorize Uber workers as frontline workers.
[00:01:36] And the challenge we've had, you know, in understanding this part of the work, this is 75 to 80% of the workforce, by the way. This is most of the people in the world work in these kinds of jobs. Those of us who are white collar people, you know, are in the minority. So they have a huge impact on the economy, on the standards of living of our countries, the well being of our lives. Because if the frontline workforce is unhappy, we as customers get poor service and poor quality experiences in our lives. If the nurse is unhappy with her hospital for the way she's being treated, maybe she's not going to take the best care of you because something else is going to be on her or his mind. So we really need to optimize this workforce. And then of course, frontline first companies, which is basically almost every company. But if you're an airline or a healthcare provider or a restaurant chain or a manufacturer or a retail retailer, you want these people to be energetic, highly trained, customer centric, prompt, efficient, great people serving you on the phone or face to face. So, you know, the HR people that run these functional areas really want to optimize this part of the workforce. And then of course, part of the frontline workforce issue is that some of these jobs are just high volume, high turnover jobs where people don't work there for their whole lives. They work there when they're in high school or college and then they leave and then they come in and out for different periods of time based on what they need financially. Sometimes people work overtime just to make some extra cash. And a lot of the frontline workforce is underpaid for a variety of reasons. Some of it's lack of minimum wage laws and some of it's just exploitation. So they want to work extra shifts and they're always switching shifts and sharing shifts. So there's a lot of operational issues. And then of course, if you're a restaurant chain or a healthcare company and there's a massive activity in the market that creates huge amount of demand, maybe a big car crash for a hospital or change of weather or a whole bunch of people rush into your restaurant chain, you gotta staff up quickly. So there's also, you know, some dynamic labor market optimization issues here too. So anyway, all these years we've been doing HR stuff and all these years we've been studying the workforce and there's very, very little data that segments this workforce adequately. You go to the Bureau of Labor Statistics and every now and then they write a report of some kind on quote, unquote, frontline. But they don't really segment it, they really segment it by industry. And industry is not the right categorization because in every one of these industries there are white collar workers and frontline workers. So you can't just say healthcare is a frontline industry because there's lots of it and white collar people in healthcare too. So it's. Especially if you're in the insurance part of it. So anyway, so what we did, we've been working on this a long, long time, is we said, look, we know what the issues are, we know what the problems are. They have to do with hiring, retention, pay optimization, scheduling, employee experience, training, certification. We know those are the problems that companies are dealing with and trying to optimize. What if we take this massive, you know, multi billion people space and we categorize it into a new set of categories? And so we did that very carefully. Nahal Nandja, who leads this area for us. Nahal's worked for us for a long, long time. I've known Nihal at least a decade, maybe longer. And we came up with five categories. And what we did is we tested the five categories against the occupational taxonomy at the Bureau of Labor Statistics and at LightCast, which are the two largest providers of labor market data. And it works. And what you find is when you take the word frontline and you group it into five categories, all of a sudden you, it's very, very clear what you need to do to optimize and improve each category. And so we've published this, we took the Onet database of 6, 7, 800 jobs that are frontline related and we categorized them into the five categories and we also put it into Galileo. So Galileo now knows about these categories of frontline work. So when you go into Galileo and say how do I optimize or reduce turnover in my all my healthcare workers? It says, well, you know, let me break your workers into five groups and we'll show you what the optimization options are for each. The five workers are. The five categories are customer facing associates, low skilled, front of house entry level jobs like retail, fast food, call centers, restaurant servers, hotel attendants. Number two is back office associate. Again, low skilled, back of house. This is back of house entry level jobs like warehouse packers and kitchen prep staff, laundry attendants, stockroom clerks. The third is highly skilled specialists. This is experienced non licensed operational or technical roles, retail managers, pastry chefs, wind turbine technicians, repair people. So they're really quite specialized, but they're not necessarily licensed. Number four is licensed specialists where you have to have a license, which means the constraints on hiring are very, very different. That might be vocational nurses, truck drivers, H vac technicians, hairstyl by the way, who are also licensed. And then number five is credentialed professionals which might be a doctor, a pharmacist, a pilot or an attorney. Now I'm not saying an attorney is a frontline job, but it could be. So what you can do now with this research and read the research, it's coming out, there's a press release on it is you can take your frontline workforce or your optimization workforce optimization team and you can look at the best practices in each of these five areas and we'll give you very, very specific recommendations. And we're going to do benchmar in all five areas and create basically guides to help you optimize this part of your company.
[00:07:36] And it's not just about your company. It's also about giving these people a better work experience, paying them fairly and as I talked about with Jen Morgan from UKG a couple of weeks ago, about making our economy better and making our lives better so that these people get optimal experiences at work and in turn give us the greatest experience as consumers. Okay, so take A look at that Now, Cornerstone. Now Cornerstone is a really interesting company. They've been around a long time. 27 year old company founded by Adam Miller, who's now, by the way, running for mayor in Los Angeles. A really amazing leader. I've known him for a long, long time.
[00:08:15] And originally came to market as an online learning platform which we used to call lms. They pioneered the introduction of talent features into the LMS in the mid 2000 and turned its online learning LMS into a robust enterprise LMS and then a talent management system. They were a very shrewd and effective sales and marketing and technology company. He built the company largely himself with a small team of people who are still kicking around to various places, and then started buying companies. Bought up some of the competitive LMSs, competed very effectively on the sales of this stuff, got into the content market and really dominated the corporate learning, technology and infrastructure space. Went public, had a mixed experience as a public company because the public market doesn't like companies that aren't super profitable or super high growth. And it was neither super profitable or super high growth because the learning and development market isn't really a high growth market, it's just a big market. So you can't. It's not a market that's growing, it's. It's really more of a company issue. So the public stock did okay, but not great. And then they went private and I don't know, six, seventy years ago for about five and a half billion dollars. And the private equity firm that bought them brought in a new management team. Adam had sort of had enough. He wanted to go into politics and do some other things. So Himanshu Pilasale came in and brought in a new management team. And I've been consulting with them for a long time. They acquired Edcast to get into the LXP space. They acquired Skyhive to get into the skill space. They acquired Tailspin to into virtual. They acquired a couple of content development factories and content companies. And lo and behold, here we are, a $1.1 billion recurring revenue company, privately held 7,000 customers. Almost every major company in the world has a relationship with Cornerstone because they bought up a lot of the core learning infrastructure that's been around for a long, long time.
[00:10:16] And they're trying to figure out what's next. And so this week in New York, they're introducing the next big thing, which is called Workforce AI. And I'm about to publish a very large article about this. And it's a fascinatingly interesting space because Every company has training, Every single company has sales training, IT training, leadership development, many, many other things, operations and so forth, safety, all that stuff. And the training and learning function is a federated operation.
[00:10:49] And it became very powerful in the early 2000s and late 1990s and then basically got disintegrated over the last 25 years. And the reason it became disintegrated is we thought elearning was going to do everything, and it didn't.
[00:11:03] And we got involved in skills projects and job taxonomies and job redesign and we just left the learning guys alone. And this $400 billion market became fairly stagnant from a technology and best practices standpoint. And I got bored with it. I've told you this before, we did a lot of research on it many, many times. But it's still vital because you can't run a company without training people. You just can't. Everybody who joins your company needs training, and that's thousands and thousands of tens of thousands of people. And then there's this sort of religious debate about how do you train them? And this is an instructional design discussion that goes on forever. Well, we should do this, we should do that, we should do a simulation, we should do a video, we should do a face to face, we should do a webcast, we should do blended learning, we should do cohort based learning. I've been involved in all this stuff and I've tried most of it. And we've had our own academy for a long time and so we've experimented with all these things. So anyway, you've got this very complicated area and a huge demand because skills development is massive, including around AI and Cornerstone's right in the middle of it. But they can't really grow much because the market is somewhat stagnant. The only way Cornerstone could grow is is to take away learning technology deals from other companies, or try to go into smaller enterprises or renew the clients they have who come up for renewal every three to five years. Well, all of that is being changed by AI. And if you read the article on publishing and you've seen our research, our new definitive guide on L and D is really just completely nails this issue, is we're moving from a model of publishing courses to dynamic content. And we believe the new paradigm is not instructional training, but dynamic enablement. Dynamic enablement means I'm a worker, I'm a new employee, I'm a professional trying to get promoted, I'm a new manager, and I want to learn how to do my job better dynamically. I might want to take a course, I might want a 15 minute overview, I might want some help, I might want a mentor, I might want to try an assessment or I have a challenge that's very specific and I just want to know what to do. Teach me enough so I can go back to work and be more productive. I don't want to spend a week in a course or go to an executive education program for $8,000 and fly somewhere for a week unless I just want to meet a bunch of other people. And maybe I can do that once every few years, but I can't do that, you know, every quarter or every, maybe not even every year because it's just too expensive. And yeah, I'd like to go to Face to Face training too because maybe I'm a consultant and I want to see what other people are doing and I want to share and learn more about things going on in the company. But in those episodic events, I want to learn on a regular basis and I've got an AI agent of some kind, maybe I've got the co pilot and I just want it to just be there when I need it. I don't want to have to go to some training portal, browse around, do a search, get frustrated, I can't find what I want and then when I click into it, I find out it wasn't really quite what I needed anyway. And then I just lost interest and went back to work. All of that is getting fixed and optimized by AI. And I am not joking. This is real. We do it in Galileo. If you buy Galileo for yourself, you will see all of this in real life because Galileo is a dynamically generated learning and agent together in the Galileo suite. And we use sana, as you know, but there's other tools as well. So Cornerstone knows all about this. They've got this massive customer base and about a year ago hired a guy from Amazon, you can read about him in the article, and he came in and said, great, we're building an AI fabric and AI platform that will slowly upgrade and replace and greatly enhance all of these things we've done over the years. And it's called Workforce AI. It's being introduced today in New York. They have nine large customers using it now. I talked to three of them yesterday. I know most of them pretty well. It's exceptionally interesting technology with many, many features. It's not completely built out yet, but it essentially gives you personalized dynamic content.
[00:15:11] Very, very open skills, inference. So you could take data from your company project database or recognition database or performance management system or anything else, and stick it in there. And it will give you information about every worker that you've never seen before in an integrated way to help with their upskilling and enablement and their professional development or their leadership development, which you can then decide to solve those problems through content of your own, through licensing content, or through the dynamic content generation of AI.
[00:15:46] And we have, for example, in Galileo, almost 800 courses on leadership management, HR and HR technology that are available in Sana, which is not yet Cornerstone, but it can be moved around and can be dynamically imported into your AI platform. So the learning content business, the publishing companies, Coursera, skillsoft, pluralsight, all of them, they're going to have to move in this direction to accommodate this shift. Now, Cornerstone's a big company. They have a lot of employees, a lot of customers. They're not going to move on a dime. But we talked to them a lot yesterday. I talked quite a bit with the management team. They're going to move as fast as they can. And so for those of you that are Cornerstone customers, and I know many of you are, you really need to look at this. It's not everything you need yet, but it's highly customizable. And so they are building a forward deployed engineering team to work directly with clients. So if you're, you know, an oil and gas company or a retailer or professional services company, you're running Saba or one of the Cornerstone products and you're like, wow, we really would like it to do this and we'd like an agent that does that and you should talk to them or talk to us and we'll help you. And you might find that they can get you where you want to go into HR 2030. So read about that. It's very interesting. They're a privately held company, but, you know, very well run, so you don't have quite as much information about them in the public market. But there are a lot of people who work there, have been around a long time and they know the space extremely well. And you know, there's all these edge cases in L and D and they know, they know all the edge cases because that's what they've been doing for 27 years.
[00:17:26] Third thing really quick, we're two and a half weeks away from Irresistible 2026 at USC. We've got more than 400 people signed up. There's about 30, 40 seats left. If you want to come, I invite you to come. I'm going to introduce three things there, very big things. Number one, I'm going to go through HR 2030 for all of you guys. We're going to publish our blueprint. You will be able to get the blueprint if you have Galileo or you're a corporate member, and you'll be able to get an overview of the blueprint. If you're not, we're going to be announcing our directions with HR 2030 and how to engage with us on HR 2030, which is all about redesigning HR around the world of AI. Number two, we're going to launch our HR certification program.
[00:18:11] And we're going to launch what we call the Josh Burson Institute. I'm giving you a sneak preview. Stay tuned for that.
[00:18:18] All of you that have been following us over the years and supporting us and helping us and being great collaborators with us, you will be able to get certified as a global HR Excellence professional starting this summer. And we're going to take you through the world's best training and experiential learning in hr. And then we're going to give you tools like Galileo to use in your job. So stay tuned for that. And then there will be a leadership version of that coming next year. And then the third thing we're going to be launching is a new vision of Galileo itself. And I won't tell you a bunch about that yet, because that's coming. We have amazing HR leaders coming. It's at usc, which is one of the most beautiful campuses in the world. We have a lot of experiential learning and activities planned. It's not a huge conference, so you will meet everybody there. You'll basically get to know everybody else who comes. We have HR execs from all over the world coming, so I really hope you can join us.
[00:19:17] And that's kind of it for this morning. Lots of more things I want to talk about, but I don't want to waste too much of your time today.
[00:19:24] By the way, I want to thank you all for listening to the podcast. You know, I started this podcast as a little bit of a hack job and it's become very, very successful from my standpoint in reaching out to you. We don't do ads on it. I'm not interested in monetizing it. I want to use it as education and communication for all of you. I don't want to waste your time with a bunch of silly ads. If you're a vendor and you want us to talk about you on the podcast, just call us up and we'll work with you directly and we will tell people about your clients as examples, but we're not going to sell sell a bunch of ads here because I don't want to waste your time and I want you to get value out of this. So this is becoming more frequent. As you know, I'm doing it multiple times a week now, but it's one of the more productive ways that we can reach you. And all of the podcast material we create goes into Galileo, so you don't have to scroll through your podcast player to find stuff. If have Galileo, you can find it all instantly. So stay tuned for more on all of the world of hr.
[00:20:23] And there will be more coming later this week that I'll tell you about later. Thanks for now.
