The Role of Engagement
As we said in our brandscape that we published last year, employee engagement is a polarizing term. Many people believe that employee engagement is the future of the talent equation. Others believe it’s a hollow buzzword that has no meaning. We at The Starr Conspiracy believe that it’s become its own category with the potential to supplant traditional talent management. It’s not based on personal preference — buyers have demonstrated a business need exists and are voting with their budgets. In response, we already see dozens of vendors building entire employee engagement platforms that include recognition, well-being, engagement measurement, and next-generation talent solutions focusing on reinventing the performance conversation. What’s less talked about is the key role that learning and development plays in employee engagement.
In our 2014 report, we marked the arrival of learning technology as the core of the talent technology stack, supplanting performance management. What we have seen in the interim has only reaffirmed that, finding companies such as GE, Adobe, and Accenture abandoning the traditional performance review. This transition has been a central theme in the industry conversation.
What has been lost is the key role that learning is playing in the emergence of engagement solutions. It’s easy to point to the role that solutions such as Everwise, Docebo, Degreed, Fuel50, Fuse Universal, and other next-generation solutions are playing in the engagement conversation. What’s less obvious is the low-profile way that learning and development solutions are fundamentally changing the product road maps of players in the engagement space.
In the recognition space
In the recognition space, BI Worldwide, Rideau, and Global Engagement Solutions — to name a few — are betting big in a very clear way on learning. They see the connection between recognition, engagement, and performance. “A manager won’t recognize people if they feel uncomfortable, don’t see the value, or don’t know how,” said Peder Jacobsen from BI Worldwide. “Great manager training solves all three issues.”
Solutions such as Whil are emerging under the radar — deceptively sophisticated learning content delivery systems. Whil elegantly blends cutting-edge mobile functionality, high-quality custom content, and measurable outcomes in a solution that many learning players would kill to have.
Players such as Glint and CultureAmp understand that identifying engagement problems is only the first step. They’re very quickly moving toward engaging and educating managers on having effective feedback conversations, including career-pathing conversations.
Established HR technology players such as SAP have stuck with their Jam product and have been able to make a clear connection to the learning conversation with their SuccessFactors Learning product. However, next-gen learning players, such as Fuse Universal out of the U.K., have been able to move faster without the burden of legacy products slowing them down. And that doesn’t even begin to address Slack, Microsoft Teams, and solutions from outside the HR technology space.
In employee communications
Mostly overlooked yet essential component of the engagement conversation — GuideSpark is coming into market with a continuous, campaign-driven solution that may look to some like Marketo or HubSpot for employee audiences. In the learning ranks, it may remind some of Workday’s very atypical approach to learning. It’s little wonder — GuideSpark’s CEO and co-founder Keith Kitani came out of the e-learning space in the 1990s. His company, Presidia, was bought by Macromedia and subsequently Adobe, where it became the foundation for Adobe Connect, the collaboration, virtual classroom, and webinar platform.
In corporate social responsibility
Who knew? We are seeing companies like Joulebug Shine gamify sustainability and CSR initiatives and getting impressive results with a large global retailer. They’re essentially training employees on how to be healthier, use energy and resources responsibly, and basically be good corporate neighbors and citizens.
All of these developments are happening at the same time that the learning technology buyer is less likely to come from the learning silo. These buyers have no special loyalty for learning-first solutions. As a result, we believe these buyers are going to gravitate toward the brands that tell compelling stories about solutions to the challenges they need to address.
To further complicate things, we anticipate turmoil and transitions in the traditional corporate learning market to further complicate the mix:
- Cornerstone OnDemand has built a strong suite of talent management solutions around its core learning product, which has become one of the best in the industry. However, it has hit market headwinds that have generated doubts among the investor class about the company’s growth potential. It’s not the first time these rumors have floated. They’ve been around for years and never amounted to anything, in part because of the strength of its brand. However, we believe this time is different because several potential suitors on the very small list of potential acquirers have decided to pass. We believe this is going to create more pressure, not less, to take a deal now.
- Among the big ERP players, SAP/SuccessFactors remains in the strongest position, driven by the strength of the product, the continuing improvements to SAP Jam, and the solidity of SAP’s business fundamentals. Workday is generating a lot of positive buzz about its new learning product. “The emergence of context-sensitive, user-aware, campaign-driven learning as a part of day-to-day work is coming into focus,” said John Sumser. “Workday’s learning module is a home run in this regard.” However, we don’t see the buzz turning into market enthusiasm. Instead, Workday risks repeating the same mistakes it made with its recruiting product. In the end, it will need to resort to aggressive discounting and strong-arm sales tactics to move units, as it did with recruiting. We don’t see the market negativity swirling around the company as helping its cause either. Oracle is almost a non-factor in corporate learning right now. The old Taleo/Learn.com product hasn’t kept up with the market, and the Oracle Fusion product has gotten little in the way of market traction. We wouldn’t be surprised to see it buy its way out of this problem with Cornerstone OnDemand. IBM/Kenexa continues to confuse the market with its direction at any given moment. It needs to commit to a direction and go all-in or risk further damage to its brand.
- It’s increasingly difficult to separate learning content and technology, which has made a compelling case for two of the leaders in the corporate learning space — Skillsoft/SumTotal and Wiley/CrossKnowledge. Both of these entities have managed to keep pace with the other market leaders, in spite of the challenges that naturally and inevitably follow significant M&A events such as these. Because of the strength in content that both of these entities bring to the table, we remain optimistic that they will be in the leadership mix going forward, even if they’re still works in progress.
- Saba’s recent acquisition of Halogen is an event we believe could be a watershed moment for the traditional players. Saba has always been a market leader in learning in spite of its soap-opera-like leadership and ownership changes over the past few years. At the product level, it’s been very attuned to the future of the learning and talent market. Ditto for Halogen. Among traditional talent management players, Halogen has been pushing its performance management product further and faster toward next-generation territory. If it can manage the to-be-expected post-acquisition challenges and complexities, this combination could be a powerful one if it can tell a compelling story to the market and resolve the tension that always emerges from the synthesis of leading brands in a category.
- The recent acquisition of NetDimensions — among the quietest and lowest profile of industry leaders in learning — by the U.K.-based Learning Technologies Group PLC raises more questions than answers. NetDimensions has a solid niche in multinational enterprises in high-consequence and highly regulated industries. It also appears to be a solid addition to LTG’s portfolio of companies. How buyers will benefit remains unclear.
With this level of market transition in turmoil, there’s a lot of opportunity for an upstart category such as employee engagement to make inroads into traditional corporate learning turf. As BI Worldwide’s Peder Jacobsen put it, “There are three mega-trends that are currently the backdrop to almost every learning project. They are the globalization of business and because of that, the globalization of learning, the modern learner, and the critical need for a strong employee value proposition (EVP). Ignore any of these at your peril.” Well said.
Key Market Themes
Employee engagement solutions will challenge traditional learning and talent management approaches. We cannot understate the magnitude of this shift. We believe that talent management has already passed a tipping point as a category and many brands and solutions are destined for obsolescence barring radical reinvention. Traditional learning management is on much firmer footing but should feel a false sense of security. They will continue to be at risk not only from upstart next-generation players, but also compelling market alternatives from the employee engagement category. Expect increasing competition from adjacent categories. Turmoil and transition among established players will feed market FUD. Keep in mind that engagement is about education — that’s your thing. “We put equal emphasis on enablement and education,” said Anne Fulton from Fuel50. “We enable employees to own their careers with technology and enable leaders to deliver better development conversations through clever coaching insights and tools. This enablement is most effective when partnered with an education strategy, which means upskilling leaders in coaching conversations, and educating employees on what agility is required to remain career-fit today and for the future.” If you’re in learning and development, keep what Fulton said in mind. You are highly experienced in the areas that are the secret sauce of engagement.
Collaboration technology blurs the lines.
Is Slack a learning technology? Maybe not, but the number of employee engagement solutions developing Slack integrations are myriad. It’s worth not taking the potential for unintended consequences too lightly. Slack has experienced viral growth and high levels of user adoption, and facilitates knowledge sharing effectively throughout organizations of all sizes. And then there’s Microsoft Teams, which is gaining early buzz as a potential “Slack killer.” Combined with LinkedIn’s data, Office’s marketshare, up-and-coming AI developments, and the potential synthesis with Azure and SharePoint, there could be a watershed moment on the horizon. But given Microsoft’s history of acquisition and new product struggles, perhaps we’ll slow our roll on this for now.
Corporate social responsibility (CSR) and learning is a significant opportunity.
We discussed blurring the lines between corporate learning and ed tech in 2014. We expect that to continue in 2017, but perhaps not in ways that were being anticipated. Sure, MOOCs have faded. “Jobs are changing rapidly. There are several parts to keeping up with this hyperspeed influence,” said John Sumser. “One is to start to recognize that industrial-era credentials — degrees and the like — recognized a body of expertise in a slow-changing field. While that’s a great starting point, work changes faster than that.” Add to that the rising populism roiling the political scene. However, this shift also presents a unique opportunity for corporate learning. For years, companies have been watching employees go out on their own and spend their own money on solutions such as Lynda to improve their own skills.
Now consumer-focused learning players such as Capella University and Study.com are turning their attention to the corporate side with mobile-optimized, low-cost, high-velocity routes for employees to earn degrees, building on credit earned for real-world work experience. We see a lot of potential to completely upend the way organizations support tuition reimbursement programs. We also see a lot of potential for companies to show that they’re good corporate citizens, which could come in handy in a world where national leaders are apt to call a company out publicly for not supporting workers or creating jobs.
Key Takeaways for Vendors
Our research shows that 82 percent of learning technology buyers are involved in performance and talent management initiatives within their organizations. At the same time, 78 percent of learning buyers are involved in employee engagement initiatives within their organizations. Based on where they’re identifying opportunities and experiencing challenges, buyers are predisposed to considering new solutions and alternative approaches — especially from the engagement category. However, buyers in our survey expressed a lack of self-awareness that borders on delusion: Only 37 percent of learning technology buyers hope to develop their professional skill set around integrating learning and development into broader talent initiatives. This number should be double.
As vendors, this is an avenue for education through thought leadership. You have the chance to frame the market from your perspective and establish early favorite vendor status along the way. In 2014, we discussed turning happy learning customers into talent advocates. We’re seeing companies make progress, but it’s still slow going. Focus your efforts on getting your best customers to tell your story in the market. We see a lot of upside to these efforts.
Taking an agile approach to product and marketing.
Maybe right up there with “engagement,” “agile” is a term that has become polarizing through overuse and misuse. As with engagement, achieving buzzword status doesn’t mean value doesn’t exist. We know this to be true on the product side. “Our best clients are taking an agile approach to career framework development that fits with the 2020 world we are fast approaching,” said Fulton. “So rather than taking years of focus groups and hours of consulting work to build out frameworks, these clients are building data-driven career framework models that leverage employee career capabilities in a way that allows high-performance, high-speed validation that prepares them for the future.” On the marketing side, agile offers similarly aligned benefits. Are you measuring the effectiveness of your marketing — online and offline — consistently and in real time, so you can adjust on the fly? Do you know which demand-generation and brand-awareness channels are performing best? Do you know where your best customers are coming from and how to turn the marketing efforts that are yielding quality results into repeatable processes? Optimize your marketing infrastructure for accurate, ongoing, consistent data collection, then iterate and fail fast.
Focus on differentiation from your learning and non-learning competition.
What is the choice factor that gets someone to buy your solution? If you think it’s your technology, think again. Technology is always a temporary advantage. There’s nothing in your product that a competitor couldn’t replicate by throwing coders, budget, and a little bit of time at it. How do you rise above the noise in the market and avoid saying the same thing as everyone else? You do this by taking a good, hard, clear-eyed look at where you fit into the market and how you truly fit — not where you would like to fit. You also need to do it with an awareness of who you are as a culture. People buy from people. Your individuality must drive your message if you want to be truly memorable. Also, it turns out that authenticity drives market velocity. Your radical buyers are more like you than you realize. If you can create alignment between your market messages and the experience they have when they meet you, you’ll accelerate your close rate and gain market share.
Tie in your solution to your customers’ employee value proposition (EVP).
One of the bigger non-kerfuffles in HR technology today is the debate between employee engagement and employee experience. Many doubters of employee engagement believe that employee experience is a better and more accurate term. We see this as preference. It’s not that we don’t believe that employee experience isn’t an idea with merit or value. It’s that there are more buyers looking for employee engagement solutions than employee experience solutions. That may change, but for now, employee engagement is the focus for companies seeking market velocity.
All that said, we see these terms as complementary and not mutually exclusive. Both employee engagement and experience are directly related to user adoption. Employee engagement is the how, and employee experience is the why. “Simply put, the value you get out of your employees won’t exceed the value of what you provide to them,” said Jacobsen. “It’s critical because your customer experiences will rarely exceed that of your employees.”