ReFounding LinkedIn

Topics: HRExaminer, John Sumser, by John Sumser

example microsoft linkedin logo

The Microsoft acquisition of LinkedIn exposes a simple truth: LinkedIn was never designed to improve recruiting productivity. It was designed to disrupt recruiting.

LinkedIn is a 21st Century job board. Although the recruiting vanguard dismisses it for problems with data quality and price to value ratio, the service facilitates individual network development and productivity. Most of the individual users I know rely on LinkedIn for insight into the next person on their calendar. Compared to other job boards, LinkedIn is focused on the expansion of the networks of its members

The single largest limitation to growth for LinkedIn is the inability to monetize the real value it delivers. LinkedIn preps knowledge workers for the next meeting. It expands  the individual human capacity to recall and interact with others. It shaves time off the warm up cycle in conversations. It creates multiple additional points of stickiness between people who are not so close. This is how non-mediated job hunting works.

The problem for LinkedIn and its struggling stock is that there is no hard cash in this productivity improvement. LinkedIn turned out to be the single greatest monument to PowerPoint dollars – PP$ (those savings and ROIs that only exist in the presentation justifying a large enterprise purchase.) LinkedIn increased individual efficiency in a way that must be worth trillions of PP$.

It closes the gap between people and therefore expands Dunbar’s number (the cognitive limit to the number of people with whom one can maintain stable social relationships – between 100 and 250). That’s massive savings and productivity improvement without any monetization.

Recruiters, particularly innovative leading  competitors who constitute the edge of recruiting practice and technique don’t resemble the rest of us. They surf vast quantities of personal information in search of the right intersection of person and opportunity. They understand and exploit the intricacies of inter industry jargon. They are masters of the science of motivation on both sides of the equation.

The Microsoft acquisition of LinkedIn was not designed to make recruiters either happier or more effective. Reid Hoffman called it an opportunity to refound LinkedIn.

In fact, it exposes a simple truth: LinkedIn was never designed to improve recruiting productivity. It was designed to disrupt recruiting. Its design improves individual worker’s abilities to network and discover opportunities. It’s a 21st Century Job Board because of the way it empowers people to network and find work.

Sometimes, disruption simply makes things disappear.

In every deal, what the buyer buys and what the seller sells are always two different things. Although the well scripted narrative suggests a world in which Microsoft purchases LinkedIn only to leave it alone, the reality will be far different. Unless it is collectible  art,  one does not buy a company in order to leave it alone. It makes sense to go slow and make sure that you know what you are dealing with. But, Microsoft is buying LinkedIn to make Microsoft better and more productive, not to give LinkedIn a free romp in the park.

The ‘we’re not touching anything’ posture reduces the net outflow of critical talent while the two cultures get used to each other.

LinkedIn sold a 21st Century Job Board. Here’s what Microsoft purchased:

  • The world’s largest stash of PowerPoint presentations. Imagine opening PowerPoint and finding an array of templates and content for the next presentation. This will broadly expand the utility and longevity of the presentation program which has been on its last legs.
  • A huge vault of curated online training programs. Now, when you have to write a business plan, tackle a new job, uplevel skills, investigate new markets, identify potential product improvements, help clients, or improve internal processes, the material will be in your MSFT productivity toolkit.
  • A database of personal information about MSFT’s best customers. The high volume users of LinkedIn (who have never been served very well) complain loudly about the quality of LinkedIn data and the volume of fraudulent profiles. They see them because of the volume of information they process. It’s a minor issue for either low volume users or someone with a list they want information for. MSFT has a list.
  • A method for expanding the data MSFT has about clients who are not LinkedIn members. This, by the way, is also how you accelerate LinkedIn’s membership growth statistics. Office has 1.2 Billion users, nearly triple LinkedIn’s membership.
  • Tools for adding information about contacts into the middle of work. It will begin in outlook. You can readily expect detailed information about collaborators in meetings, on projects and in documents.

At it’s simplest, Microsoft is buying LinkedIn to defend its productivity franchise against Google’s incursion. They got a very good deal. Down the road, they have the foundation for a powerful data and analytics offering.

You’ll also want to read LinkedIn Redux for a view on the downside of the deal.

Here’s a list of LinkedIn’s acquisitions.

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