The Flourishing, Surprising, And Badly Needed Market For Online Coaching

December 26, 2021 00:18:30
The Flourishing, Surprising, And Badly Needed Market For Online Coaching
The Josh Bersin Company
The Flourishing, Surprising, And Badly Needed Market For Online Coaching

Dec 26 2021 | 00:18:30

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Show Notes

In this podcast, I discuss the billion dollar+ market for online coaching. It’s an amazingly successful, fast-growing space with four distinct categories. Coaching on-demand, driven by AI matching, Leadership development for all, democratizing coaches...
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Episode Transcript

Speaker 1 00:00:10 Today I want to talk about the flourishing and surprising explosive market for online coaching. It's sort of a funny paradox that with all of the fake news, political animosity and negativeness that's been created from social media, that something as positive and constructive as online coaching would emerge as a huge new market, and it has. So what I'd like to do for a couple minutes is talk to you about what's going on and point out what I believe are the four business models and some of the companies that are really setting the pace here. First of all, as you all probably know quite well, any form of education and development for business or your career or even your personal life can benefit from a coach. You can take a course online, you can go to an e-learning program, you can watch videos, you can take a regular course and learn something. Speaker 1 00:01:01 But after you've learned it and you start to apply it, you need somebody to help you. And particularly in management and leadership, coaching has been established as a massive benefit and support system for managers. In fact, in most corporations, coaching or an executive coach is considered to be a mandatory part of your executive development. It's often used when somebody has a problem, but we know from our personal lives and all of our leadership development that a coach is someone who can listen, diagnose a problem, and using, sometimes psychology teach you how to be aware of something and learn something that you couldn't do yourself. And there are tens of thousands of coaches all around the world, many of whom have been certified by the International Coaching Federation, but many of whom are not. They're just senior executives or experienced people who want to help others. Speaker 1 00:01:54 Maybe they're psychologists or they studied psychology and they're offering their services to people in various forms of their career or their business life or their life in general. Now, this massive cottage industry has been around for a long time and their work coaching networks 10 years ago, 20 years ago. In fact, I've met entrepreneurs who tried to build coaching platforms before the last few years, and most of them failed because companies didn't really want a network of coaches. They wanted highly selected coaches. They wanted to manage the coaching program using internal people as coaches, and they knew that the coaching experience was expensive, so they bought it in a fairly rarefied way for selected individuals. Of course, the internet has changed all that. Now that you can create a coaching network online, it can be as simple as logging into a website or an app, taking an assessment. Speaker 1 00:02:51 And a coach can be recommended to you based on your age, your gender, your problem, your experience, your nationality, your language, your culture, pretty much anything. And so if you apply AI to this and you match a good coach to your needs, you might find somebody really, really unique and special, somewhere out on the internet to help you for an hour or maybe even for just a half an hour. That is exactly what you need, and that is why this industry is so explosive. Now, there are essentially four models to this, and I'll explain the models and I'll talk about some of the vendors. By far, the gorilla Company in the space is a company called BetterUp. BetterUp is a very fast growing pre i p O company. The founder, Alexi Roba show is a very creative, smart, hardworking guy who I met quite a few years ago. Speaker 1 00:03:43 And when he first explained to me what he was doing, I was a little bit skeptical and later realized that it was working extremely well. What BetterUp did is they built a whole person model, which is essentially a psychological model of leadership, and they allow people to assess themselves against the model. And then using AI and assessment technology, they go out into their network of coaches, all of whom have been trained, and they find you a coach that's appropriate for your needs. And because the business is so scalable, this can be done for a couple hundred dollars or less per session. So the cost of implementing a coaching program for a large company can be very low and companies can offer it to all of their employees. In fact, one of better's largest customers, Chevron has talked to me about this quite a bit, and they have democratized coaching for all of their supervisors and all of their managers. Speaker 1 00:04:36 Almost two thirds of the leadership and management team in Chevron around the world now have used coaching. And the results have been really amazingly positive in many ways, not only for leadership development and general skills, but also just for stress reduction and endurance. Now, that's the first model of coaching is essentially what better OP has done from the beginning, which I call coaching on demand. I'm an individual, I would like somebody to help me with something. Maybe it's a leadership program, maybe it's something else. I go online, I get some intelligent recommendations, I get a scheduled activity, I meet the person, and the coaching session happens. And I've actually been through this when I was at Deloitte, and it works really, really well. And by the way, there are other companies similar to BetterUp that do this now. One of the biggest is a company in Europe called Coach Hub, which is a conglomeration of a bunch of coaching networks, essentially threatening BetterUp in the European market with a fairly similar offering. Speaker 1 00:05:37 The second market for coaching is coaching, specifically designed for leadership development. Leadership development is a domain of HR that is very big, very widely adopted, and there is usually a senior person in HR who's responsible for building the leadership pipeline. You can't run a company without leaders, and you're always developing leaders and building leaders and assessing leaders and improving leaders. And so the leadership development team is responsible for doing that. The leadership development industry is a little bit of a mess, to be honest. We're gonna be doing a lot of research on this next year. It's filled with training courses and classroom courses and books and articles and blogs and websites and experts and pundits. Some of the bigger players include Harvard Publishing, which has a pretty good size business selling something called Harvard Managed Mentor. There are new startups like Hone Franklin. Covey DDI is one of the biggest players in this market, well known in the corporate space. Speaker 1 00:06:41 So these are companies that provide a wide range of education and developmental experiences, and they mostly focus on general management. However, there are some very specialized domains. Sales management, for example, is different from general management, sales management is management, but it's also management of sales and the sales process and the sales team. So that's a unique part of it. There's management of customer service, there's management of technology projects, there's project management on and on and on. So this is a big, big domain. So the second domain for online coaching is coaching and mentoring, designed as a leadership development solution. The two companies here that I wanna highlight are a company called Torch and a company called Sounding Board. Torch is particularly interesting because Torch was founded as a leadership development platform using coaching, not a coaching solution used for leadership development. And so the Torch Platform basically is an online learning experience with assessments, content, collaboration, community and coaching included. Speaker 1 00:07:48 And Torch acquired a company called Everwise that had built a pretty good size business in mentoring. Mentoring is different from coaching in that a mentor is someone who's probably not paid to help you, and they may not be a professional coach, but they have volunteered their time to help you with your career or with a particular problem. We're all mentors to others, and a lot of us have mentors and fine mentors just in our daily life. So what everwise did, and that's now part of Torch, is they built a pretty good sized network of mentors. And many companies, for example, Salesforce would provide mentors to say their woman managers or diverse leaders, people in different groups and say, why don't we find you a mentor who has been through exactly the journey you're going through to help you figure out how to evolve and improve your career performance in a unique way? Speaker 1 00:08:40 And so what Torch now does is offer online coaching, leadership development, mentoring, collaboration and assessment in an integrated platform. And I'm a big fan of Torch, and I think they're gonna be very successful. Sounding Board is a similar company. Sounding board is also a relatively small coaching company that was founded by an entrepreneur and an executive coach. And so sounding board has a deep understanding of the coaching process and the actual work that coaches do and the tools that coaches need. By the way, the other two companies I mentioned are not founded by people who have ever done coaching. So sounding board provides tools for coaches and a platform for leadership development using coaching in a very structured and predictive way. And I think sounding board has a pretty interesting model too. The third marketplace for coaching is coaching for mental health, behavioral health and wellbeing. Speaker 1 00:09:37 And this is a massive industry in its own right, A little bit different from the business coaching world because it includes exercise coaches, diet coaches, mental health coaches, psychologists, psychiatrists, and all sorts of other healthcare professionals. But it's a big market. And the company there that I think is really interesting is a company called Spring Health. I met the founders of Spring Health when they were a pretty small startup. It was a couple people from Yale who basically tried to solve the problem of identifying a psychologist. When you have a problem, if you've ever had a family issue or a personal issue and you've had to try to find a psychologist, it's really hard. There's big networks online, but you can't tell who's good at what, and you have to meet with people, and it takes a long time to find somebody that feels the right person. Speaker 1 00:10:26 And there's all sorts of specialty areas of mental and behavioral health. Spring Health basically solves that. Spring Health is also a billion dollar plus unicorn pre i p O company, and they have a network comparable in size to better up. I don't think it's quite as big of psychologists that have been specifically assessed and organized around the mental and behavioral health issues people have in their lives. And of course, in their business worlds. BetterUp launched a product in this area called BetterUp Care, specifically designed to address the issues of corporate wellbeing, BetterUp positions, BetterUp care to the health and benefits Department of Corporations. So BetterUp essentially has solutions for executive and management coaching, and then a solution for wellbeing. Spring Health is primarily focused on wellbeing, mental health, and all sorts of other behavioral health applications in and outside of business. The fourth category, and to me future state of this whole big multi-billion dollar online coaching industry is what I would call general coaching. Speaker 1 00:11:36 In many forms of it, and particularly in the business world, if you look at the 350 billion market for corporate training, there's technical training, there's professional training, there's compliance training, there's supervisory training, executive education, on and on and on. There's many, many what I call tributaries to the online learning and general corporate training market. And in every one of those domains, there is a need for a coach. If you're a software engineer and you're going to Code Academy or Udacity or Udemy and you're taking a course on Python and you're trying to build a new data science solution and you get stuck, where do you go for help? Most of those online platforms have discussion boards, but you're kind of guessing that you're gonna find somebody there to help you. Why wouldn't you want to have a coach for that? Why wouldn't you have a coach as a sales rep? Speaker 1 00:12:32 Maybe you're not a sales manager, but you're a sales rep and you'd like a coach on selling. You could use BetterUp for that, but there could be a network of coaches available for SDRs and salespeople. So in every domain of learning, I think there will be a coaching element that will be developed by some vendor or a series of vendors in the market. In our particular case, in our academy, in our professional development for hr, we've built a network of what we call senior faculty who are available to coach individuals going through all of our courses in the various domains of hr, and we're expanding that, and we're gonna make it much bigger in something we're gonna be doing next year. I would argue that probably every single training problem you have has a coaching tributary that could be created on top of it. So that to me is the fourth domain here. Speaker 1 00:13:24 And as these big companies like BetterUp and Coach Hub and Torch and other ones go public and become very, very successful, people are gonna realize, wow, I need a corporate learning solution that has coaching built in. In fact, I know for a fact that there are startups working on this, and I know that most of the big online learning vendors are looking at some way to bring professional mentoring and coaching into the network. Now, the reason I think this is such an interesting space is not only that it's new and it exciting and it's leverages the internet and it leverages AI and it has all sorts of B2C and B2B kinds of domains to it. I think it's actually an example of how people helping each other can provide some of the most valuable solutions in business. You know, it's the Christmas season at the time I'm creating this podcast, and it's a time to reflect on what happened over the last couple of years and the pandemic and the political instability in the United States. Speaker 1 00:14:29 All the various other challenges in the world, society and culture in the United States. Only 17% of Americans actually trust the US Democratic system anymore. I mean, we're really in sort of a dark day. And coaching is, to me, online coaching is a manifestation of the goodness of people, of the goodness of society, of the goodness, of the human spirit. Who would've guessed that while companies like Facebook and many others have created a lot of discord and difficulty online, that something so positive and developmental and really important would come out of all the internet technology we've created. The nice thing about the coaching industry is that it's not based on advertising. It's not based on clickbait. It's not on who can sell the most content, it's based on value. People use a coach online. If the coach is good, they rate them highly, they get more activity that coach can do more work and grow their business and everybody's happy. Speaker 1 00:15:32 In a sense, it's the perfect positive marketplace. We're taking a world of hundreds of thousands or literally millions of people who have expertise or seniority or experience that they wanna share, and we're unleashing it to everybody else who wants it and needs it in a lower and lower cost way over time. So it's a really good example of how the economics of social media and the internet can do some really, really positive things for businesses, for individuals, hr, and for generally just for everybody. I'm pretty jazzed about it. And the companies I mentioned are all very successful companies. I think a lot of them are gonna end up becoming pretty big companies, and there are others in the market too. We're going to be publishing a whole bunch of case studies on the uses of coaching in different applications. So watch for that. And in the early part of next year, we'll be, uh, unleashing a whole bunch of interesting research on the whole corporate training industry, and then later a big program on what we call irresistible leadership development. That'll be coming out sometime around q2. So stay tuned for more and have a great holiday and a fantastic 2022. Thank you.

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