Success creates blinders that make good navigation really difficult.
LinkedIn: How Not To Build An Ecosystem
The other day, I had a long conversation with a reporter from a Boston newspaper. We talked about Monster and its current struggles. We talked about the ups and downs of the job board industry.
Increasingly, the drumbeat about the viability of job boards is escalating. Anecdotally,
- 80% of all hires are active candidates
- 70% of the candidates hired through proactive research can be found through Monster
- 65% of employees hired through 3rd party agencies can be found on Monster
So why is Monster floundering and why is its stock price so low?
The Monster culture is rooted in the sort of arrogance required to build a business where there once was none. The high risk cowboy strategy that allowed Monster to educate a customer base while singlehandedly building an industry became the permanent face of the enterprise. Easy money from high stock values bred an overconfident executive vibe that was barely tamped down by SEC investigations.
The new management team, who were brought in during the conclusion of the stock scandal, had no industry experience. This is what boards do when they are trying to rinse the stink of the last crowd off of their asset. Unfortunately, the team saw its weakness as a strength.
No one ever really tried to understand the industry. The cultural arrogance managed to skip leadership generations like male pattern baldness. As a result, Monster is a rusting hulk whose value can’t be readily harvested. Arrogance, the primary side effect of tremendous success, was amplified by the work required to achieve the success. Unlocking the companies extraordinary value will require scraping off an entire layer of management. The core products, services and team are relatively intact.
The same thing is happening at LinkedIn. The trajectory is identical to Monster’s. Success creates blinders that make good navigation really difficult.
Right now, the stock market is being extremely kind to LinkedIn. A Wall Street Darling, the company is doing pretty interesting things as it deals with the fact that 80% of its target audience isn’t interested in doing research. LinkedIn is responding well by offering lots more places to advertise jobs.
The magic trick, and it was a good one, was that this pivot (from research tool to advertising play) transformed the core business model. LinkedIn is morphing from a network based research portal to a standard issue social media site right in front of everyone. That’s better than Monster ever hoped to do.
But, life is hell if you want to be a part of the LinkedIn universe. Fickle partnership relations, stingy data policies and the willingness to throw relationships under the bus give the world the sense that LinkedIn doesn’t really want to be a partner. Routine pivots trash relationships while inconsistent enforcement of user policies leave potential allies paranoid and looking for alternatives.
You can directly trace the growth of career data aggregators like Gild, TalentBin and SocialCV to partner frustration with shifting policies.
What makes most enterprise companies successful in the 21st Century is the degree to which they can create their own walled grade (ecosystem). The more robust the internal options, the better the deal for everyone involved. But, when you go into the LinkedIn garden, all you see is LinkedIn.
In today’s market, companies don’t get a run like Monster had. Success cycles are shorter and velocity is greater. The trick for LinkedIn is not a small one. While the market is heaping rewards, the firm will need to make itself a more open, more reliable partner. That will require checking the arrogance at the door.