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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday or catch up on full episodes with transcriptions here.

HR Tech Weekly

Episode: 255
Air Date: February 27, 2020





Important: Our transcripts at HRExaminer are AI-powered (and fairly accurate) but there are still instances where the robots get confused (or extremely confused) and make errors. Please expect some inaccuracies as you read through the text of this conversation and let us know if you find something wrong and we’ll get it fixed right away. Thank you for your understanding.

John Sumser
Stacey Harris


John Sumser 0:14
Good morning and welcome to HR Tech Weekly, One Step Closer With Stacey Harris And John Sumser. Hi Stacey, how are you?

Stacey Harris 0:22
Hi John, I am doing well. I’m home in sunny North Carolina today and it’s slightly above chilly. So I’ll take that for a nice early late February day here in the Carolinas. How about you? Are you home this week?

John Sumser 0:35
I’m home we’ve had you know, February is generally the rainiest month of the year and instead we have drought and so it has been gorgeous and spring like for most of February and today’s like another beautiful day in paradise.

Stacey Harris 0:50
Very good. And next week we head out on the road right? Well, the both of us will be got next week.

John Sumser 0:55
Next week will be on the road. Well, let’s see God knows what’s going to get cancelled, but I’ll be on the road in Philadelphia. And you’re going to see the folks at Ultimate in Las Vegas,

Stacey Harris 1:09
We’ll find out a little bit more about the Ultimate Kronos connection in Las Vegas. Yeah.

John Sumser 1:12
Yay. So we’ll have lots of interesting stories from the road next week. What’s in the mailbag? There’s some big stuff this week, let’s cycle through the the big stuff.

Stacey Harris 1:21
I’ll have to say on Monday I you know, Monday afternoon I got back to my office after after taking my pet to the vet and I was like, all the days ended and we got four o’clock a whopper of announcements. So the big deals and conversations the fallen. Cornerstone sent out an announcement around four o’clock Monday afternoon that they are acquiring Saba which is probably the next largest learning management system in the market space outside of like, Skillsoft or something, which is the content and LMS play right, so Cornerstone and Saba are merging together. So there’s definitely some interesting conversation we can have there. The thing we didn’t get to talk about last week because of the focus on what was going on with Kronos and Ultimate is that iCims named a new Chief Executive Officer Steve Lucas. And I know you know, he’s been someone who’s been in the mix. I think there’s some conversation about we know can change them and taking a nice place license, but it’s worth maybe having a conversation about, there was some big funding outside of even the cornerstone zombie conversation. headspace, which is a global leader in mindfulness meditation and wellness programs reads $93 million in seriousiy, to focus on health and happiness in the workplace. Just that amount of money in that particular space. If we get a little time probably worth a conversation. There’s also some interesting stuff going on in the AI ethics based the European Union introduced an AI strategy to build an ecosystem of trust. And at the same time, Google researchers released an audit framework to close the AI accountability. Yeah, so lots of stuff going on. That’s going to be worth conversations, if not this week, down the road. And then the last year was a group of ex-NSA and Amazon engineers are building a GitHub for data. If you’re in the data business, this one will could look really interesting. So our own HR backyard is blowing up with information stuff going on in the AI space stuff going on in the wellness space. It’s been a busy week, John. So where do you want to start the conversation?

John Sumser 3:17
Well, let’s look at all the buzzwords. Ecosystem of trust don’t you love that? You know, you can imagine this team of sort of bearded and elderly people going, what are we gonna call this thing. Ah, Ecosystem of trust! Right, it just rolls right off the tongue. It has all the characteristics of a buzzword that’s liable to endure. Yeah, and then Github for data. Whoo, whoo. Oh, Hold it. Hold it. We had an agreement going into this but this week, you are going to be the grumpy one.

Stacey Harris 3:53
Yeah, I’m going to be the grumpy one. Yeah, you’re you’re slipping a little bit, but that’s okay. We’ll get through we get talking to Cornerstone then. These are definitely things that caught my eye. So did did the job they were supposed to do, I suppose, right. But they also the EU disclosed that plans to spend almost 21 billion on AI and research program and platforms. And that’s part of why they’re feeling like they not the EU in particular, but the economy and around us. But that’s why they feel they need to develop an ecosystem of trust, basically just a framework of ethics. But it sounds like, like, here’s the things you should do and shouldn’t do. And that’s the same thing I kind of got from the Google audit framework is these are the things you should do and should do the things you should check to make sure before you release this monster into all of your databases and that what we’ve been devolved to on artificial intelligence spread is here’s some guidelines for how you should do this instead of you should not do this.

John Sumser 4:48
Well, but this is the thing. It’s particularly relevant in HR ethics is not a set of rules and HR loves the turn good ideas into policies and in the process district. The ethics is a frame of mind and the frame of mind is what’s the worst thing that could happen here? Are we doing the right stuff? What could go wrong? What do we need to do to make sure we understand what we’re doing? What do we need to do to make sure that we aren’t creating unintended consequences? And so in order to have an ethical approach to something, it requires a deeper level of thinking, you can’t just get ethical by following the rules. This is something I’ve been working hard on and following the rules. That’s the law. The law says you can’t do this, you must do that ethics is and so it looks backwards. It looks at the disasters that we’ve had, and it says we don’t want to have those masters. And that’s x is forward looking. ethics is how do we become better? How do we do this in the best way possible? How do we spread the benefit of this as far as it can reach and a lot of the stuff that you see about ethics in This stuff here is fixing the barn gate after the horse got out. The Google thing with Google things suggests that doing an audit before you release the product is a really good idea. And great, but you know, it’s been turned into mandatory audits and mandatory audits are going to have to look for mandatory things. And that increases the likelihood that you won’t see the actual problem on Monday. So I think we’re still early in the understanding of what this means and you know, the people who are developing these ethics things currently are all trying to protect their interesting game and you know, new so it’s it’s interesting that Google releases it on paper. Because you know, it’s a stock price move isn’t’ it.

Stacey Harris 6:49
probably right. Yeah, but a little bit of a branding and marketing as well. Let’s put some guardrails around some things people are doing with our stuff.

John Sumser 6:57
Yeah, this is Google saying. Remember that do no evil thing? Well, we’re still trying to do that. You know, they long ago became Facebook Junior. So you think I’m taking ethics advice from Mark Zuckerberg? The world is getting weird in this way. Because when you have people who are the chief offenders claiming to be the noble leader isn’t providing guidance for how to do it right. You know, I don’t know how you make sense out of that. It’s the same thing that appears to be happening in politics.

Stacey Harris 7:29
Yeah, I think that’s a little bit of what the EU is trying to do. I mean, there’s a comment here is that look at what’s happening, you know, in the US development work, and the conversations are being led by tech giants with deep pockets in China, which is probably the next biggest place where we’re seeing AI grow. It’s being managed by a central government with very little transparency. So what I think the EU environment is trying to do is create a space where people can trust the technology and trust and being backed by a more transparent conglomerate of different government and Geez, I don’t know, we’ll see if that works any better than tech giants building it or single government owning it. But their hope is that that will make people more comfortable with using it so that we can actually make some leaps forward. I don’t know whether it’ll be interesting to see.

John Sumser 8:13
Yeah, I think the idea that trust is central to moving forward is right on. But I don’t think that people would talk about trust, really understand what it means. I believe you get one or two shots before an individual simply doesn’t trust the technology. And so that suggested What you need is a very, very distinct discipline, covering the users experience of the tools. And they’re not really talking about that when they say ecosystem of past. They’re not really talking about making sure that the user can be trained, has some sense of control and has a good feel for the risks of families. And so it’s early, it’s early, but I’m not hyper optimistic about experience because of the net buzzword content.

Stacey Harris 9:03
I was just gonna say before we jump into the Cornerstone, which I think is the bigger conversation today. Do we want to have any comments about iCim’s new CEO, Steve Lukas was just the chief executive officer, the former CEO of Marketo, brings extensive global leadership experience in enterprise to iCims along with track record in the marketing space and executive roles from SAP,, and Business Objects, as well. So he’s got a long list of data and data analytics type of companies, cloud companies and a marketing company. What is this say to you anything at all? Or is this just an expected move?

John Sumser 9:37
Oh, yeah, yes. iCims is an incredible story. This is the market leader who never should have been the market leader. And they have done everything their own way so that I don’t find another tech company like them in our world, and they’re awesome in this insistence on being true to their core principles and So they don’t take advice from anybody, particularly they build technology that you shouldn’t be able to build using tools that should work and have a pretty happy customer base.

Stacey Harris 10:10
Yeah, 1,000+ companies are using them. Yeah.

John Sumser 10:13
Yep. This is the contemporary dominant applicant tracking system. Now, they sold the private equity a couple of years ago. And so private equity is always what’s the formula, you invest in the company, you loaded up with debt, and you sell it. That’s how private equity works in sort of short order. And the key phrase in this press release is Steve Lucas is the new CEO tripled the value of Marketo. It became the CEO of Marketo in 2016, tripled the value of the company and sold it to Adobe in 2008. Right, so he’s got a history of tripling the value of a company in two years while selling so what does that tell you? That tells you that he’s here to auction our iCivics over the next couple of years and that means that you can expect that isotherms will become a part of something larger I think I saw I don’t remember maybe you saw this I think I saw an announcement of a tighter alliance between WorkDay and iCims. Recently

Stacey Harris 11:17
Yeah, there was more I think integration going on at the whatever level partnership they needed for that. But iCims has made some more announcements with SAP and Oracle and some of the others in the market so I think an enterprise level they are would say to go to partners probably a better way to put it.

John Sumser 11:34
So then that’s the starting point. And we’re gonna see some massive deal with iCims over somewhere the next two or three years that’s what this tells me.

Stacey Harris 11:44
And that’s what I thought. One of the big conversations about what’s happening with the Kronos Ultimate Cornerstone Saba, is so who’s next, like generally when you start seeing these big things fall when one makes a play, everyone else has got to make their play. So you know, there will be some consolidation in the market, not total consolidation, I don’t think we’re ever gonna see the kind of consolidation that we saw, you know, in the early 2000s. around some of the but probably a lot more like what we saw in 2010. And beyond is when we saw SAP and successfactors sort of get acquired until laio. And Oracle get acquired those kind of like the big guys in the big movers the marketer trying to figure out how do we fill the gaps we have? And I’m not sure if the cornerstone and the samba acquisition is exactly that. I think a lot of people were like, well, is this them trying to fill gaps? And my responses? Probably no, these are two companies that are very similar and their approach to technology to their approach to the market as a whole focused startup and learning spaces where both of them that are into this is a buy that wasn’t filling gaps, or creating the right type of partnership like the ultimate and Cronos one. What do you think about this job? This one doesn’t excite me as much as some of the other you know acquisitions.

John Sumser 12:58
You know, My initial take was that this is like, I don’t know if this metaphor is too old for some of the listeners, but this would be like Kodak buying Fujifilm in the face of the advent of digital photography. That was my first take is what the analysts call talked on and on about the importance of being an incumbent and the importance of having bigger scale and the value of the business moving forward. And the announcement precipitated a massive drop in the stock price, massive stock price. And so I didn’t understand these things. And I had to go to my network and see what I could discover. And it turns out that when you make a move like this, you expect the stock price fall because by making this move, Cornerstone went from being a growth company to evaluate all of the people who had Cornerstone in their portfolio. Because of the growth dumped it, and the stock price will come back up as people who are looking for more stable performance by and so that’s the first layer is that there was an intentional move from growth to value in the in the finances. But you know, when you look at the landscape, there are a lot of learning technologies out there, and none of them are really catching on. Right, we can all agree that the learning management system, which was such a bright, shiny object when it emerged 20 years ago, isn’t doing the job. It isn’t solving the problem of getting people up to speed in the new world of work. But all of the things that have come along that claim to replace it aren’t working, or they are horribly expensive to implement. And so what Cornerstone gets out of this, I think, is the ability to consolidate a huge rd function and attempt to tackle that problem. So I think the question might be, is that a reasonable bet? What do you think?

Stacey Harris 15:04
I get where you’re going. And I understand that that’s probably I mean, there was a bit of a sense of that in the deck that they presented, which was showing sort of innovation and change and growth opportunities from a development team perspective. And all that. I mean, and Cornerstone has definitely made this buy, irt’s a $1.4 billion buy right after it made two very interesting buys in the last two years, one of the content provider growth over 24 million in 2018, and an AI powered skills engine company called Clustry for &18.5 million last year. So that fits the dialogue that definitely sounds like it makes them The only thing they’ll push back on a little bit as it’s hard to be innovative. When you’re small. It’s really hard to be innovative when you’re big. You know, Cornerstone has been the leading LMS for at least the last five years. One of the only illness is still things acquisition growth and partially because of the way they approach their new content work partially Because they’ve been able to increase their tax rates due to some of the investments they’ve made in their recruiting products, and in some cases, because they were sort of the last man standing as far as a learning based talent tool for someone who maybe was planning to stay on an old on premise application, or someone who had a current existing HR environment that didn’t have a learning or talent component to it. There was no doubt that Sabah had just as many customers at 3000, but you just didn’t see their name in the market as much. They were definitely struggling. I think they had purchased halogen not too long ago, they’ve purchased lumos. Not too long ago, halogen was probably one of the best sort of applications from a user experience, better satisfaction perspective for mid market team based kind of organizations. And that acquisition, I think was meant to bolster their adoption numbers. We didn’t see much of that having an impact on our research and the conversations I’ve had with people, they just couldn’t sort of get out of the challenge they were facing, which is a lot of technical debt, and the turnaround anything Did you make to just be more profitable, which is what they were doing while they were at the private equity. And so their focus have been on being profitable. Adam mentioned that when they bought them, they were now much leaner that they he his comment was they only had 25 organizations left and an on premise environment that sounded a little low to me, but then also included the Department of Defense. So when you talk about an organization that big living in an on premise environment, I think there were some opportunity there to sort of get into some of the stuff that Doug was doing in that face. But I’ll be honest, I watched Cornerstone grow is really amazing talent management organization over the years with a lot of investment and a lot of good innovators in the organization who were focused on solving business problems. That was a one differentiator thing for Cornerstone in the early days is when they came out with solutions. Really good example is content bundling merely days when you bought an element you didn’t get content with it. You had to buy another separate content contracts for content and elements was the first to the game to say look buyer homes and will create That license for you with the content providers and will allow you to split up things. So you don’t have to buy a big bundle of stuff you don’t need sort of like the Netflix conversation we’re having today versus cable right? Do you want to buy cable with a bunch of TV shows you don’t actually watch? Or do you just want to buy Netflix that has the things you know, you’re going to watch every day that it was really important to note supervision was the first one to sort of do that kind of channel model for content because they were solving a problem that organizations had, they were in the first to the table with students occasion that focused on a skills need versus sort of certification focused on just a test testing made but in the last few years, they’ve followed the same formula that we’ve seen a lot of the other organizations follow which is trying to reach parity with features and functionality and that I think has been their biggest downfall is trying to focus on acquisition through we have everything you need versus acquisition through, we’re solving a business problem. I’m not sure that they’re able to turn this corner as soon as they win. They really need to rethink the idea of how they approach this. I mean, that’s my two cents on it. I will be very happy to be Cornerstone to make this work. But I also know how hard these mergers and acquisitions are.

John Sumser 19:08
Yes, it’s a very interesting question. The downside is that they become a cash cow and just work the client base till it doesn’t exist anymore, which is a long life. And the upside is that they can consolidate resources and actually discover some path to innovation, and I’ll be anxious to see how it goes. I’d be very anxious to see how it goes. And it’s nice. It’s nice every once awhile for you to be the naysayer.

Stacey Harris 19:42
And it’s hard right you know, we were talking about I think I sound awful grumpy about this. But I don’t think this is a bad move for Cornerstone. I do think you know, there’s nowhere in the in the world that you’re going to get a 20% growth in learning right now on an LMS from I just acquisition is just not enough companies out there. Acquiring these Kind of LMS’s or interested in this when there’s other opportunity, most people are actually dropping illnesses in our dataset. So from a growth perspective, they were almost buying a set of customers that they could cross sell their product to. So I understood why they were doing it. I just think that the idea that we’re creating a better, bigger, more interesting Talent Management Suite when Talent Management Suite aren’t really the thing that people are buying right now. Or the idea that we’re going to put all of these resources that we’re at Baba, and we’re at Cornerstone into innovation. And I’m not sure the most innovative people would have been drawn to either of those companies, as much as I love both of them. And I love the learning space. It’s a long set for me. And and I think they’re the customers. They don’t need to have a conversation about it. Right.

John Sumser 20:45
So let me ask you the million dollar question then, if the LMS isn’t the answer, and you’ve looked at all this junk that’s out there that tries to insert micro content into the middle of a work process and that sort of stuff. Those things do not seem suited to the actual developmental transformation that the workforce needs to get from here to 10 years from now, what tools are going to make that work? Because it has to there has to be a technology that accelerates the transition in the workforce. And if it isn’t an LMS, and it doesn’t appear to be any of the, we’re not an LMS, we have a better idea, things that have come to market so far. What is it? Do you know?

Stacey Harris 21:28
I don’t know, I wish I knew man. I’d be I’d be rich in a couple years if I knew for sure. Right. But I will say that I think the idea of what learning has to be is changing. And so I think these tools have to really become something different. There’s a list and I think you and I disagree on maybe whether or not it’s a great list but the Gartner put out but I didn’t find the six trends for Chief Human Resource Officers is going to impact polarizations experience the future of work interesting was some good stuff on here from Gartner. But the one thing that I thought was interesting is they put the elimination of on the job learning on this book. They come to this decision that that’s a big trend that people should pay attention to, because we’re going to automate most of the type of jobs that required that kind of on the job learning. Now, I’m not sure that all of that’s going to go away. But I do agree that the automation of what I would consider the more tactical work that goes on inside organizations is going to happen pretty rapidly as the technology starts to sort of beat up on what can be automated and can be programmed to work better. So the learning that’s going to have to take place is going to be much more about how to think about things how to make decisions, which is much harder than step one, step two, step three. And that kind of learning requires constancy back conversation, evaluation and testing. It’s a much more complex approach to learning. One of the big things I know that I’m banking on his content, he’s thinking that he can provide the right content through a series of artificial intelligence going to figure out exactly what you need when you need it, and that he’s going to have a series of the right kind of content now. Maybe That content in his mind includes all this feedback, conversation testing, I don’t know that seen all the things that he’s pulling together, I know that there are sort of theories of stuff that he’s trying to put into his channel content. But if you look at what the media environments A good example of this, what’s happening in media, people are like, Oh, it’s great to have a nother series. That’s kind of interesting. But I want to have a relationship with the actors, I want to have a social environment where I’m talking about it, I want to have a space where I can buy chronics that have their name, the idea of having a series that makes it just because the good theory isn’t as valuable as having a whole ecosystem that surrounds or something and you can get into and get involved in. I think learning is going to have to be the same way. What kind of tool can do that in a way that’s feasible and doesn’t require you to carry a headset around with you on a constant basis or a visualization tool on a constant basis? I don’t know. It probably has something to do with the nature of VR and something to do with the nature of the tools we will will have available to us for the next five or six years on Internet of Things and wearables. level. But it definitely requires more than just content. And I think that’s the most important conversation,

John Sumser 24:05
We should really dig into this in the next couple of shows because, you know, I spent a lot of time looking at and thinking about AI and what the current kinds of AI are really good at doing is repeating the past. And the learning problem that appears to be to be there is learning about things that we haven’t done before, and figuring out how to how to anticipate the need in the workforce and train people to be ready for the thing we haven’t done before. And that is super challenging. And it’s beyond what an LMS can do. Because you can’t really develop a curriculum for something that hasn’t happened before. But the competitive advantage caused by learning is going to go to companies that can identify a skill set that needs to be acquired in advance of everybody else and push that through the workforce. So you can imagine learning Rather than system being a reasonable tool for doing that, but it’s the front end, it’s the advanced taxonomy development. That’s really the question. And I don’t hear anybody talking about that.

Stacey Harris 25:13
Yeah, yeah. That’s the conversation about bees and drives this idea of teaching you care for what’s happening. Yeah, I think we definitely want to continue to have this conversation. And if anybody has any thoughts or comments on it, we’d love to hear it. Because this is a space, we just did not have the kind of investment both from an r&d perspective, but also, I think, from just a sheer thinking perspective, because it’s one of the harder problems. It’s a place where I think it’s not as easy to apply AI as it is in some other places like recruiting and matching.

John Sumser 25:41
Maybe, maybe well let’s bottle that up, and we’ll talk about it some more next week. This has been a great conversation. Stacey, thanks so much for doing it. Thanks, everybody, for tuning in. We’ll be back here next week, same time from somewhere out there on the road. You’ve been listening to HR Tech Weekly with Stacey Harris and John Sumser and we’ll see you next time. Bye Bye now.

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