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The Promises & Perils of the Microsoft LinkedIn Acquisition

msft-linkedin

The ink is barely dry on the announcement that Microsoft has offered US$26.2 billion in cash to purchase LinkedIn and already the usual suspects are lining up to criticise or praise the deal.

Tech commentator Peter Cohan, writing on Forbes, reckons that “Microsoft Wasted $26.2 Billion To Buy LinkedIn” and offered up four reasons why, including these two:

1. The business social networking industry is not attractive
LinkedIn lost $166 million on $29.9 billion in sales in 2015. As a LinkedIn user, I cannot see anything worth paying for and I would guess that there are simply not enough people who see enough value in the service to make it worth “upgrading to premium.”

2. Combined companies will not be better off.
There is no scenario I can envision in which the combined companies will be better off. There is no reason to believe that Microsoft has the strategic skills needed to revive LinkedIn’s growth.

Recode added in another concern:

LinkedIn’s ad business is slowing down.
While recruitment services are the big sales driver at LinkedIn, advertising represents roughly 18 percent of LinkedIn’s business, a significant segment that has been trending in the wrong direction. When LinkedIn reported Q4 earnings earlier in February 2016, one of the concerns was that its ad business grew just 20 percent for the quarter year over year; that compared to growth of 56 percent in the same quarter the year before. Research firm eMarketer predicted LinkedIn’s U.S. digital ad revenue would fall from 35 percent growth in 2015 to less than 10 percent growth this year. In other words, LinkedIn wasn’t selling ads the way people expected it to.

VentureBeat is similarly negative:

Acquisition double-talk, part 1: On the one hand, this deal is all about the oft-vaunted idea of “synergy” (even if that word is not used). The idea is presumably to build LinkedIn into all sorts of Microsoft products. Great! But, does this mean I’m going to get all sorts of messages suddenly asking if I want to share my Word doc through LinkedIn or have some LinkedIn integration with an Excel spreadsheet…or…what? There’s a lot of talk today about how this is going to broaden Microsoft’s reach into all sorts of new channels for selling stuff like cloud services. But does one of the largest tech companies in the world really need to spend $26 billion to reach new customers?

Acquisition double talk, part 2: Structurally, LinkedIn is going to remain independent. Per the Nadella memo:

“LinkedIn will retain its distinct brand and independence, as well as their culture which is very much aligned with ours. Jeff (Weiner) will continue to be CEO of LinkedIn, he’ll report to me and join our senior leadership team. In essence, what I’ve asked Jeff to do is manage LinkedIn with key performance metrics that accrue to our overall success. He’ll decide from there what makes sense to integrate and what does not.”

So why do the deal?

Officially, according to the slide deck announcing the deal, key opportunities for the combined entity include:

  • Realize a common mission by bringing together the world’s leading professional cloud and professional network
  • Drive increased engagement across LinkedIn as well as Office 365 and Dynamics CRM
  • Accelerate monetization through individual and organization subscriptions and targeted advertising

LinkedIn’s CEO Jeff Weiner explained his perspective, in an email to employees:

Both [Weiner and Microsoft CEO Satya Nadella] recognized that combining [the two companies’] assets would be unique and had the potential to unlock some enormous opportunities.

For example:

  • Massively scaling the reach and engagement of LinkedIn by using the network to power the social and identity layers of Microsoft’s ecosystem of over one billion customers. Think about things like LinkedIn’s graph interwoven throughout Outlook, Calendar, Active Directory, Office, Windows, Skype, Dynamics, Cortana, Bing and more.
  • Accelerating our objective to transform learning and development by deeply integrating the Lynda.com/LinkedIn Learning solution in Office alongside some of the most popular productivity apps on the planet.
  • Realizing LinkedIn’s full potential to truly change the way the world works by partnering with Microsoft to innovate on solutions within the enterprise that are ripest for disruption, e.g., the corporate directory, company news dissemination, collaboration, productivity tools, distribution of business intelligence and employee voice, etc.
  • Expanding beyond recruiting and learning & development to create value for any part of an organization involved with hiring, managing, motivating or leading employees. This human capital area is a massive business opportunity and an entirely new one for Microsoft.
  • Giving Sponsored Content customers the ability to reach Microsoft users anywhere across the Microsoft ecosystem, unlocking significant untapped inventory.
  • Redefining social selling through the combination of Sales Navigator and Dynamics CRM.
  • Leveraging our subscription capabilities to provide opportunities to the massive number of freelancers and independent service providers that use Microsoft’s apps to run their business on a daily basis.

Those are enticing future possibilities, to be sure, but are they really worth 26.2 billion dollars? Some commentators were far more positive.

ComputerWorld provides some current context:

There’s a ton at stake here. Microsoft is slowly dropping out of the hardware business for smartphones as they make a bold move with apps like Outlook for the iPhone and a cool Bing app that provides quick info about movies in your area or local eateries. The world is going mobile, and LinkedIn is one of the first apps most of us install on a new phone. How can you not? It’s how we discover the news, find people to fill a new position, and how we connect socially during the day. Social networking is partly a response to the isolation that comes from working at a keyboard all day. When we need to keep doing business on the move, LinkedIn is one of the best ways to maintain business relationships.

I first realized this when I was working on an article about a new book called “Disrupted” by Dan Lyons. It was a bit of a diatribe against startups in general (and one in particular called Hubspot), and I was curious how people who like the company would respond.

There’s a lot of noise on Facebook, thousands of posts about graduation parties mixed in between serious business news. Yet, on LinkedIn, one quick check on a post by the founder of Hubspot revealed hundreds and hundreds of comments from people defending the company. This is why Microsoft is acquiring LinkedIn. It has become part of the fabric of business discussion. All of those comments are from “the LinkedIn community” in the best sense of the phrase.

The article … was filled with smart comments from people who actually have real jobs. It was filled with people who have something to say and a place to say it. Without LinkedIn, I’m not sure how anyone could parse a discussion like that down to something even remotely useful. Facebook is all over the board. Twitter is too condensed. When we say “woven” we mean useful, that it holds the shirt together. You can stretch it, pull it, drag it over the mud, and even tie-dye it and it will hold up to scrutiny. Woven means it is worth $26.2B and a high stock price.

Microsoft needed something woven, and the acquisition makes perfect sense. Some of their other ventures are a bit frayed at the edges. I’m not sure what will happen with Office, because I’m too busy using Google Docs on a Chromebook Pixel. I’m not sure what will happen with data centers that are so Microsoft-centric, when it’s becoming quite clear that there are thousands of cloud service providers that can do exactly the same thing for much lower costs. I’m not even sure what will happen with the Xbox or Windows 10. There’s some shifting sand beneath these monoliths, and you’d have to be crazy to predict they’ll be around in the same form for the next 10 years.

But LinkedIn? It will have a really long shelf life. It has the same deeply entrenched sustainability as Google ads and Facebook photo archives.

Meanwhile, PC World reckons that the primary reason that Microsoft is buying LinkedIn is to provide content for its digital assistant Cortana:

Picture a typical business trip: meetings all day, drinks at night. A good salesperson knows his or her contacts before he or she steps foot in the door. But that goes for coworkers as well: How you you make them feel comfortable? How do you make them part of a team? How do you let them know who to approach, both inside and outside the company?

All of this usually takes some effort on your part, or at least a competent assistant. And that’s the role that Microsoft hopes to play, especially with its digital assistant, Cortana, and Office 365.

Right now, Cortana provides some basic information about your calendar, suggesting, for example, what time you’ll need to leave to ensure you arrive at your next meeting on time. In Microsoft’s digital future, Cortana will be able to sum up what you need to know both about your business relationship, and what information you can use to cement a more personal connection, too. It sounds smarmy, but a good salesperson will tell you that an emotional connection helps seal the deal.

cortana

If the thought of Microsoft owning more data about you—well, you probably should go delete your LinkedIn profile, now. Microsoft already knows your calendar (Outlook), your meetings (Outlook), your coworkers (Delve) your accounts (Microsoft Dynamics CRM) and some of your expertise (Delve).

Inc magazine spells out a few more considerations:

What LinkedIn has that Microsoft wants is connections — business connections. And that’s critical to the latter’s strategy. Microsoft understands that computing and relationships to the business users that are its mainstay have changed. More people have moved to mobile, an area where the Redmond-based giant has struggled. Computing has shifted to the cloud, and while Microsoft is a significant player in that arena, it’s a far cry from the influence it wielded when companies all had their own servers, whether directly own and run or contracted out to a service provider.

As the statement noted, LinkedIn has 433 million members across 200 countries and territories and 105 million monthly average users. Sixty percent of its traffic comes from mobile, with 7 million active job listings. Two-thirds of its revenue comes from recruiting tools.

Not only does LinkedIn extend Microsoft’s quest to connect business users — Skype and Yammer both previous examples of the same interest — but there’s an amazing amount of data. Microsoft will be able to see what people are doing in business, who’s hiring, what the requirements are for various positions, and the like. To put it differently, this is a way to make the plans and expectations of companies all over the world transparent to a business that wants to sell them the technology they need.

Plus, Microsoft has software for contact management, customer relationship management, prospecting, and other activities that would dovetail neatly into LinkedIn. The social connections become a natural reason for people to take a look at what Microsoft offers.

Tempting or terrifying?

Paul Ford, Co-founder of product studio Postlight, suggests 7 amazing things that Microsoft could do with LinkedIn:

1. Microsoft could embed LinkedIn into Windows as a service.
This makes perfect sense: Think about how amazing Hotmail and Outlook could be if you could instantly write to anyone in your second-degree LinkedIn networks. Imagine how exciting it will be when you can beg your friends for an introduction to someone in their professional circles right from your email client with the push of a button. (This integration is the thing that could finally destroy email.)

2. Microsoft could embed LinkedIn into Microsoft Office.
Office is about doing things, and people do things socially more often than they used to. LinkedIn is a business social network, and it probably knows more about your company than the people inside the company do. Imagine if you came to a section of your Microsoft Word document that needed, I don’t know—some sort of forecast, or a description of a forthcoming product. You could draw a little rectangle and automagically trigger a request to someone from the product team, asking them to fill in the rectangle. Workflows like this used to be the stuff of fantasy and billion-dollar “unified object model” sinkholes, but Git/GitHub has shown that they can work, and they can work decentralized, and LinkedIn has the messaging network and “InMail” system to pull this off, given a couple hundred million dollars.

3. Microsoft could embed LinkedIn into other tools across their ecosystem as a “workplace” API.
LinkedIn knows a lot about what people do and Microsoft builds tools for doing lots of specific, difficult things (I.e. programming, project management, making diagrams, managing databases). If there was a single LinkedIn API that let you do things like: Look up people in your company; find relevant consultants; identify the skills needed to solve problems, etc.; that’s a kind of raw power that we don’t really see inside of most software.

4. Microsoft could turn LinkedIn into the Windows-default publishing platform.
If you want to write a blog post or share some thoughts with Microsoft where do you even go in 2016? I have no idea. Yammer? Windows Live Server? XBox? LinkedIn, for its part, obviously believes that it should be the publisher of record for every horrible list of “inspirational strategies” and mutual ass-kissing glurge that content marketers exhaustedly produce for lazy Fortune 10,000 CIOs. Anyway, there’s a huge opportunity here—become the communications platform of record for the entire global business world! However this is an opportunity that both parties have a proven ability to squander over and over again. We’ll see!

5. Microsoft could mine LinkedIn’s data in order to inform product strategy.
This is the sort of mega-opportunity, and also highly sketchy. Microsoft is a software company, sure, but it’s also a bit of a nation-state with an enormously broad mandate. LinkedIn is an unbelievable data-mining platform; it has the ground truth about the global economy, especially around the technology industry, and it has a lock on that data. Microsoft will know what’s going on with Facebook before Zuckerberg does; it’ll know what skills are being added to Googlers’ resumes; it’ll know what kind of searches HR departments are doing across the world, and it can use that information to start marketing its own services to those companies. It can use LinkedIn as a global knowledge base to make more informed, long-term decisions about its own role in the global economy, and it can combine that information with what it learns from other platforms like Windows, Office 365, Bing, XBox, and so forth. It can answer questions like, “are employees of Google playing more XBox or less compared to last year?” It’s…terrifying. And we’ll never really know what’s going on. Which makes it kind of brilliant. But still terrifying.

6. Microsoft could use LinkedIn’s data to create new advertising products.
Given the above, Microsoft now has an absolutely amazing advertising platform. I can’t bring myself to write much about this because it will make Amazon chasing you around the web trying to sell you another toaster seem like a fun game played by little babies. I mean you’re talking about one company that knows how often you open Microsoft Excel per day, and another that knows how long you’ve been in your current position and if your boss just got promoted. And now they are one beautiful blue company. And the world’s largest advertising agencies and media buyers are just sitting there with their mouths open trying to figure out what to do now. I bet someone will tell them!

7. Microsoft could improve LinkedIn.
Microsoft is Microsoft and will always be Microsoft. But if you look at the recent design work in its applications, it’s capable of first-class, consumer-grade interface design and product thinking.

Microsoft designs for people who have to do boring things with computers in order to make money. It’s the 9–5 software vendor. LinkedIn is the social network of 9–5, too. It’s also a tire fire of failed UX patterns; it looks like robot poop. That’ll be the part we see: When Microsoft slowly starts applying pressure, fixing the long-standing, painful bugs, improving the overall product experience, bringing everything up to code until LinkedIn looks like a fully modern, business-focussed social network. The part we won’t see, though, that’ll be amazing.

Our View
This acquisition is one of those “so big, we can’t afford to let it fail” deals which will define the success or failure of current Microsoft CEO Satya Nadella. Sure, as unkindly noted above by several of the industry observers, the deal comes with a number of pitfalls. But, as others have pointed out, there’s plenty of potential as well.

Without an acquisition such as LinkedIn, how else can Microsoft grow and prosper in today’s cloud-based, AI-enabled world, where:

  • Google follows us from desktop to tablet to mobile phone to smartwatch and senses what we want to know almost before we do, thanks to a combination of search queries, browsing behaviour and GPS-derived location awareness
  • Facebook knows who we know, what our interests are, what we like and what we talk about
  • Amazon knows what we want to buy, what we actually buy, how much we spend and what else we look at
  • Netflix knows what we watch, how long we spend watching, when and where
  • Digital assistants like Siri and Google Now are becoming more and more important in their users’ lives as the data gets richer, behavioural patterns are analysed and harnessed and intent and purpose are more effectively tracked

Microsoft, with much of its clients’ data locked in legacy PC-based systems rather than in the cloud, has been in danger of missing out on the 21st century’s most important innovation – effortlessly harnessing big data to meet users’ needs, with minimal user prompting.

Such data is at its most useful and powerful when it’s available at our fingertips when and where we need it — whether via Cortana, Microsoft Office, Dynamics CRM or otherwise. Let’s hope that the more positive future is the one that comes true.

PS If you’ve yet to discover the full potential of LinkedIn for yourself and/or your organisation (or still think “what’s the big deal about LinkedIn, isn’t just for listing your CV?”), you should check out our How To Use LinkedIn Effectively online training course.

We also delve into these latest LinkedIn developments in more detail in our new Social Media Refresher 2016 course, currently being rolled out.

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How To Brief A Social Media Consultant

how to brief a social media consultant

So you’ve decided to start promoting your business in Social Media — and, to make the task easier, you’ve decided to hire a social media consultant. But how do you brief him or her? And how will you know if he or she is doing a good job?

The Challenges When You Use A Social Media Consultant

The whole social media phenomenon simply didn’t exist when many of today’s Kiwi business owners learnt the marketing ropes. As a result, there’s a significant lack of knowledge amongst business owners — and it certainly seems to be age-related.

According to a recent MYOB Business Monitor (November 2012):

  • just 12% of business owners over 60 years old are using social media in their business
  • 20% of business owners who are Baby Boomers are making use of social media
  • 21% of Gen X business owners have adopted social media for their business
  • 42% of Gen Y business owners have gone social

With Kiwi consumers overwhelmingly adopting social media (95% of them went to a social media site in the last month), businesses really have little choice but to get involved with the medium, even if it is through the use of a social media consultant. But it is essential to give them an effective brief.

What your Social Media Consultant needs to know

Your brief to your social media consultant should give them meaningful guidance on these seven questions:

  1. Who are you trying to reach?

    As with any marketing, an effective social media brief starts by identifying your target market. Understanding the target audience’s age, gender, location, interests, activities and passions will have direct bearing on both the content of any social media campaign and the networks your social media consultant opts to use.

  2. What are you trying to achieve through social media?

    For some businesses, the objective of any marketing (no matter the media channel) is simply to make sales. For those operations, the social media consultant might recommend Facebook Offers or Gifts or similar sales tools. On the other hand, you might be aiming to build a customer support channel; to achieve that, your social media guru might suggest a significant devotion of time and resources to Twitter. Or perhaps you want to generate leads, or improve your brand’s reputation.

    Whatever your business objectives within social media, you need to specify them upfront to ensure that your consultant is on the same page.

  3. What is your Brand Personality?

    Whoever is speaking to your prospects and customers through social media needs to reflect the brand personality and style of your business.

    An organisation that prides itself on friendly, homespun advice to anyone who walks through the front door needs to adopt exactly the same tone on Facebook. If you wish to be perceived as a thought leader in your industry, then your LinkedIn posts need to take the same proactive, well-informed approach.

    On the other hand, if your staff are not happy outside their carefully-protected comfort zone, you don’t want your social media consultant to be outspoken on Twitter.

  4. What resources can your organisation devote to social media?

    You may think that by outsourcing to a social media consultant, you’re avoiding getting bogged down. The reality is otherwise: social media is a direct conduit  between your organisation and your prospects and customers.

    As such, it touches on every aspect of your organisation: marketing, sales, PR, customer service, logistics, the lot. Even if it’s the social media consultant’s fingers on the keyboard, he or she needs to be able to draw information and answers from, and supply follow-up requests to, every part of your business.

  5. What related topics are of interest to your prospects and customers?

    An effective social media presence is not simply about you and your brands — your followers will quickly abandon you if every message you post is about your organisation. At the same time, your social media consultant must post information that is relevant to your customers/prospects and related at least tangentially to your business.

    A food company, for example, can talk about recipes (not only those featuring their products) or about last night’s TV chef surprise or ask followers for tales of their worst cooking disaster. Similarly, an engineering business might post about the engineering challenges of the proposed 501-day trip to Mars and back, or about new technologies that will impact on Kiwi businesses in the next five years. Posting about upcoming concerts is unlikely to be relevant to any business but music labels, concert promoters and ticketing agencies.

  6. What key products and events do you want to promote (and how)?

    Social media isn’t purely non-commercial, of course, so you will want to brief your social media consultant to post stories about your products and your organisation, of course. The secret, however, is in exactly HOW you go about planning those posts.

    Consumers who like brands in social media do so because either (a) they do actually like the brand (they’re fans); (b) they want discounts and deals; and/or (c) they want to hear about new products and services. Actually, if they want to hear about the new stuff, they want to be first to know — and they won’t bother sharing stale news with their friends and acquaintances.

    So if you want your messages to have a chance of being shared, you need to brief your social media expert to first start building anticipation ahead of a new product announcement; and then leak the news in social media ahead of the traditional channels. Think about it this way: if you were a big fan of X, wouldn’t you simply die to get inside knowledge ahead of the crowd?

  7. How is your social media consultant going to be measured?

    Managers and financial controllers are now starting to ask tough questions about Return on Investment and whether social media really delivers value for the time and money involved. If you’re going to outsource to a social media consultant, you need to set some benchmarks against which his or her efforts can be evaluated. The presentation below by Olivier Blanchard provides some smart suggestions which can form a great starting point for measuring that social media performance.

In Summary

Outsourcing your social media can be a good idea — provided that you provide an effective and comprehensive brief that can make your social media marketing achieve tangible outcomes.

Credits: content for this article is largely drawn from our online training courses “Preparing an Effective Social Media Brief” and “The Principles and Practice of Social Media Marketing

Timeless Social Media Insights

One of the more interesting stories of the week comes courtesy of the Harvard Business Review, which reveals that many of today’s oh-so-awesome social media insights actually track their provenance back to a 1966 study on word of mouth by Ernest Dichter, who HBR describes as “the father of motivation research”.

Some key insights gleaned by HBR from that nearly fifty-year-old study:

A major Dichter finding, very relevant today, was the identification of four motivations for a person to communicate about brands:

The first (about 33% of the cases) is because of product-involvement. The experience is so novel and pleasurable that it must be shared.

The second (about 24%) is self-involvement. Sharing knowledge or opinions is a way to gain attention, show connoisseurship, feel like a pioneer, have inside information, seek confirmation of a person’s own judgment, or assert superiority.

The third (around 20%) is other-involvement. The speaker wants to reach out and help to express neighborliness, caring, and friendship.

The fourth (around 20%) is message-involvement. The message is so humorous or informative that it deserves sharing.

We can’t say we’re surprised that these insights were coined so long ago — human nature doesn’t change all that much. If we made the effort, we daresay we’d find similar threads woven through essays by classical Greek and Roman philosophers as well.

Plus ça change …

Top 100 UK Social Brands

A recent study by social brand consultancy Headstream identified the Top 100 Social Brands in the UK. You can download the full report here, but these are some of the findings that are most relevant:

A. THE TOP TWENTY SOCIAL BRANDS

B. THE INTRODUCTORY VIDEO

A collection of talking heads which will give you a bit of an introduction to the Social Brand 100.

C. TEN KEY LEARNINGS

And here, reported by WallBlog, are the ten key learnings from the Social Brand 100 study:

1. Social brands don’t just send messages, they create value for people and communities.

2 Social brands are happy to exchange rigid control of their brand for greater involvement with people.

3 Social brands manage their brands in a more human context. It is less about the word of the brand guidelines and more about the spirit of the brand, often replacing formality around tone of voice in favour of expressing brand character, values, purpose and cause.

4. The types of content that social brands can create categorised as providing information, utility, entertainment, reward, incentive or something that reflects a person’s character and what they value. Brands are still totems to what we believe, reflecting our personality.

5. Timeliness of response is a critical indicator of social enablement. Social brands are agile and responsive to the needs of people, relishing opportunities as they arise.

6. Being appropriate in social doesn’t mean using a lot of brand outposts. The use of brand outposts is driven by what is most relevant for the community.

7. Negative and positive sentiment is acknowledged and accepted by social brands

8. Social brands create, develop and encourage behaviors that mirror community or individual behaviors. They meet and exceed expectations, often delighting people in doing so.

9. Social brands are true, compelling, authentic and transparent.

10. Social brands simplify their intent and continually act to achieve it. They have established what they want to achieve and ensure everything builds towards this commitment. To be a social brand you have to be a good brand, a good employer, make good products, provide good customer service and have a moral centre to your purpose by those that represent you.