Linkedin IPO success could mean dis-intermediation of the headhunter/recruiter

The enormous success of the Linkedin IPO is shocking to some as Linkedin revenues for 2010 was  $243 million with a profit of only $15 million and the company is valued at almost $9 Biliion!   Half of the Linkedin revenues came  from recruiter advertising and it sure means changes for the recruiter/headhunter businesses. Don't get me wrong, this blog strongly  believes that agents and distributors  have a huge role in business. But its time to  think if the the recruiter/head hunter would go the way of the neighborhood travel agent or the real estate agent – i.e. see a decline in business or at least commissions as employers directly reach candidates via Linkedin and job seekers directly reach recruiting organizations. Without a head hunter as intermediary, the high powered individual candidate might also not be able to negotiate great pay packages  as well.

It's not entirely clear how much of the Linkedin revenues is from headhunters'  advertising and how much is  from companies directly advertising open positions. Either way, the recruiting/headhunting business is set to change  for all types of positions even as the economy turns around. The CEO type of positions should not be much affected just as the very complicated travel plans and very high value real estate deals need high level personal agency work. You can't really book complicated travels via Expedia or buy a really expensive property without a "human" real estate agent! .

So if you are in the recruitment/headhunting business you might want to include Linkedin explicitly in the offer you give out to companies and re-think  the value and innovation you will provide in the recruiting process.

Linkedin IPO and Granovetter’s “Strength of Weak Ties” job seeker

The Linkedin IPO is expected to go public on Thursday – so why should we remember Granovetter's 1973 article on "The Strength of Weak Ties"?

Mark Granovetter is a Stanford sociologist, who wrote by some accounts,  the most influential sociological article  ever in  "The Strength of Weak Ties". Keep in mind that the article came out in 1973- long before the Internet.  The idea is simple and extremely powerful. Your close friends are those who know everything about each other and give you solace,comfort,support and joy in good times and bad times.The downside  from a new opportunity  point of view is that these friends know the same people as you do- so nothing new comes out during interactions with these "tried and trusted" friends. Sort of like the  Jerry Seinfeld  comment in mock despair : And these are my friends!

Granovetter found  that unemployed folks looking for work  during an economic downturn found job leads not from friends but "friends of friends." These second or third level connections had insights,contacts and leads that were very different from ones' own immediate circle.

Linkedin puts an entirely innovative  Internet spin on Granovetter's original theory, making it hugely scalable by constantly telling you about people you "might know" in your second and third level connections. It is probably for this  reason that recruiters find Linkedin useful and are able to reach more candidates when they advertise there. How exactly the individual job seeker gets leads from second order or third order connections is not clear,unless off course the individual keeps reaching out to connect with these individuals.

Either way the Linkedin IPO performance will offer great insight to all folks interested in the Internet and social media.

Who is the “customer” in education?- well the next link in the supply chain…

The employment situation in the US is not getting better, particularly for young people out of college.And this brings us to the "Who is the "customer"in education?" question. It is certainly not the student as the authors suggest and the simple answer from this blog's pont of view is the next link in the supply chain ! That is:

Elementary School–>Middle School–>High School—>Job/vocational training/college—>job/grad school—>job!

No matter which way you look at it, ultimately education must provide a livelihood to the student. While  Michael Courtney and Amy Courtney have some great arguements let me add that the entire chain pictured above must work well from an information and trend point of view.  That is :

What skills does this job require ? —> High School/Vocational School/College/Grad School

In a globalized highly inter connected world, it's very difficult for  leaders in education to keep track of this but they must so that we teach our young people things that matter to joining the workforce.

But that's not all:

Since the customer's (i.e. the ultimate employer's) needs keep changing, with more globalization and technology, we all need to be perpetual learners- whether in school or not.

2011 Yale Consumer Insights Conference brings academics and practitioners together

With 28 presentations packed in one and a half days the 2011 Yale Consumer Insights Conference was once again a great opportunity for academics and practitioners to share insights. This year the focus was on:

  • Social Media
  • Maximizing Brand Performance
  • Marketplace Impact
  • New Product Innovations 
  • Competitive Marketing Strategies
  • Understanding Customer choices

Check out the 2011 Customer Insights Conference Agenda for more details on the presentations.

For me the "big" takeaway was that both academia and practice are at very early stages of figuring out how companies should  deal with social media or the larger question of information, feedback, opinions and preferences being shared at super speed  (think Twitter,Facebook) via the Internet. Companies cannot be nimble enough to respond with execution  to changes in the marketplace. But it's a good start to actively  look out for what customers are thinking as more and more folks let their opinions be known on-line.

Also it's really  important that the firm,its brands and its people including suppliers and distributors be as authentic as possible. Because trying to  say one thing and do another, at any point of the  brand's value chain, is quickly called out via social media !

Where are the variations in healthcare costs? Family of four spending doubles in nine years

According to the Milliman Inc. "Milliman Medical Index -MMI " US families of four are paying double of  what they paid($9,235) in 2002  today at $19,393. The family expenses have gone up by 7.3% from 2010 numbers that sure is more than double of the average US inflation rate.Left alone this increase is going to further escalate according to the MMI.

So where are the variations in costs that innovation, supply chain and marketing  folks are interested in? Keep in mind that an actuarial view like the MMI just tries to identify where the biggest insurance risks are historically, so that insurance folks can work on their prices to cover risk. Look at the page 11 of the Milliman Report and here are some initial thoughts in understanding the items that cause variations in healthcare costs.

  1. Age and Gender– older folks and men have higher life insurance premiums -right?
  2. Personal health status– remember the dreaded "pre-existing condition"  that attracts higher premiums?
  3. Geographic area– not surprisingly some places have low cost- is it only real estate?
  4. Provider variations– Some doctors and hospitals have their act better than others and lead to a resolution of the illness without having the patient bounce around.
  5. Insurance coverage- spending is less per family when the plan is good and the co-pay is lesser. Does the high co-pay deter cheaper but early intervention?

All in all a great study and a good point to start looking at opportunities for reducing cost, both for families and businesses who are even harder hit with increasing healthcare costs.

Skype and Microsoft merger: more consumer centered innovation needed

Microsoft buying Skype for 8.5 Billion US $ is huge news. Steve Ballmer -Microsoft and Tony Bates-Skype The question in everyone's mind is what Microsoft will make of Skype ? Initial speculation includes integration with the office suite,with gaming and mobile and generally just become much more of a communication company. And it is this diffuse approach that makes things look a lot less exciting than Skype and Microsoft separately and brings back memories of the Hotmail acquisition.

Essentially Microsoft has been a technical company with its strength in providing the operating system for computers. Consumers get the operating system with the computer a bit like the tires with the car.  Since then the company has been more about command and control based off course on pure genius on the technical side  and a remarkable ability in "capturing value" on the business side. The world though has changed dramatically and   customer centered innovation  has put companies like Apple and Google on top of the tech innovator list. The latter have devoted more energy and priority  to delighting customers and creating value for them. The capturing value piece has sort of followed afterwards.

Sounds like Microsoft could do well ( yes Innovation 101) to review the customer needs of its various market segments and see how Skype might help. Skype users have put out a huge request not to tinker with Skype and it seems that Microsoft has assured Skype users of no change.

Eventually though, Skype will have to be integrated with Microsoft products  but it will be great if somehow the addition of Skype enhances the satisfaction of both sets of customers. Microsoft products have a huge installed base and whatever help you need (you tend to need help with Microsoft constantly) there is enough great advise when you just Google your problem. On the other hand Skype is a bit like Apple- no fuss, you just download the software and you get started, great quality and everything is intuitive. The design of Skype is great at the concept itself while Windows is expected to go to Windows 7,8,9 and so on. Off late Microsoft has become kinder by at least not "firing" customers with older software- you can read a new Word document with older software. Perhaps this change of mindset will help the Skype integration.

Healthcare innovation: treating elderly dementia patients in nursing homes

The elderly in nursing homes are particularly vulnerable patients, entirely dependent on the good sense and good will of professional care givers. Hence the question of giving anti-psychotic drugs to aggressive dementia patients to calm them down and basically give less trouble to care givers. As much as 88% of these wrong prescriptions are claimed from Medicare according to a Government audit. The inappropriate use of anti-psychotic medications lead to death in dementia patients as indicated  in several past research projects which is why the FDA does not allow its use.

So where is the innovation gap? It probably is in the basics of not considering the customer (patient in this case) first. An elderly person is in a nursing home because he/she needs professional care. The nursing home establishment obviously does not put the patient first and goes in for inappropriate use of medicines just so that it is easier to deal with a  chemically "restrained" patient. And keep in mind that dementia is the sixth leading cause of death in the US.

Perhaps it is important to segments patients carefully and then treat them as first piece in healthcare.  Its just too late if insurance/medicare refuses payment for wrong medications because by then the harm to the patient is done.

Medical insurance innovation: Doctor’s offices – collect the co-pay at patient visit!

All medical insurers are trying to improve their innovation efforts with new hires who will improve different elements of the health insurance value chain.  Let us look at the co-pay  process  at the doctor-patient link in the medical insurance business. If you observe, there is great variation in processes across the same  insurance companies "network" doctors.

Think about how each doctor's office seems to do this differently.Let's say , you have a co-pay, some doctor's offices are  geared to collecting that co-pay at the patient visit itself. It might feel that the doctor's staff are pushy and are interested in collecting money before seeing the patient but it does save cost and time for all.

The co-pay is pretty clear on the insurance card and if the doctor's office postpones collecting the co-pay there is a whole lot of paper work,mail costs, reminders etc which might actually exceed the cost of the co-pay had it been collected during the patient visit.

Just an idea for doctor's offices: if you need to collect the co-pay for a patient, collect it  right away. Make sure that your office credit card terminal works and get if you get it done the first time – you are helping reduce medical costs in the Us. Contact StratoServe.

TV marketing myopia as sales decline 2.2% and Internet usage zooms

As Gen Y grows up and broadband penetration increases the household TV is expected to decline. This is a huge shift for advertising,programming and journalism  on TV as people take more to the Internet for streaming video and social media.

Already 40% of all Internet traffic is from video according to CISCO and this is slated to rise to 91% in 2014, Broadband penetration in US households has increased to 63.5% in 2009 from 50.2% in two years and certainly higher today. The trend for young professionals is not to buy a TV and just watch streaming video on the Internet very much like not having a home land phone line and entirely depending on the cellphone. Accordingly Neilsen's are  planning to include Internet homes in their estimates of TV audience.

The implications for TV programming, journalism and associated advertising will be enormous. Think of the newspaper industry as it got into trouble losing out classified advertising to the Internet. What's surprising is that the TV industry has not really embraced  this shift to the Internet and the power of social media. One TV journalist  noted ruefully that the Bin Laden action was first reported live but inadvertently on  Twitter by Sohaib Athar an IT consultant in Abbotabad,Pakistan.

The  chagrin of the TV journalist  is understandable but the marketing myopia of the TV industry should make all marketing ,advertising and journalism  folks think. Embracing the change of the Internet much more enthusiastically and directly might be the way to go. Contact StratoServe.

End of Osama Bin Laden great endorsement for American spirit

Scenes of crowds of mostly young people cheering outside the White House even before President Obama’s address should assure the world about the spirit of America.

This spirit was hugely evident, despite the  massive deficit, unemployment, and concerns about future American economic competitiveness. Truly the killing of Osama Bin Laden is a great endorsement of the American spirit.

Here are some interesting takeaways from this blog’s perspective based on the news coming through so far.

  • A reporter on NBC mentioned that with the killing of Osama Bin Laden the “retailing” of terror would be curtailed worldwide. Sure, Bin Laden did not have a commercial style terror franchising system but he sure was an ideological lodestar for al Qaeda and its many affiliates in over 60 countries  of the world.
  • Abbotobad is a Pakistani garrison town near the capital Islamabad and the Bin Laden compound is reported about 800 meters from the Pakistan Military Academy. The US special forces were able to get in and out in 40 minutes which is like a pit stop! The extraordinary preparation before the event should continue to inspire managers and businesses interested in  improving strategy implementation.
  • Don Rumsfeld mentioned that intelligence (ie knowledge) was key and the idea of gathering the intelligence via the courier since Bin Laden had no phones, Internet or TV was a brilliant innovation.