I had an enjoyable phone conversation with the VP of HR for one of the country's largest retailers. I was surprised to learn this company used four different vendors for their talent acquisition, talent management, learning management and HRIS systems. Wouldn't it be easier to consolidate some of these vendors? Maybe in an ideal world, she told me, but it's not realistic or necessary. She explained that while some vendors are getting better at end-to-end product suites nobody excels in all. She went on to tell me that their systems all talk to each other and work just fine so there is no real business case to consolidate. There is also no financial reason to consolidate.
Hmmm. My hunch is that she is not alone in her beliefs.
This is one reason why there will always be room for one more vendor in talent acquisition, talent management, learning management or any other HR product category.
The other reason is nothing in business is static. Demographics change, technologies change, workforce dynamics change, business models and competition change. The list goes on an on.
Yet so many people view the HR marketplace as a Poloroid - or forever consolidating. And they give little attention or respect to start-ups or smaller HR vendors.
Me? I respect and admire the 800lb gorillas but I try not to overlook the little ones. True, most start-ups fail and most smaller HR vendors remain just that - small (although in aggregate they control a dominant share of the HR product marketplace). But there is always room for one more visionary / entrepreneur.
Look at the classic 1980's management book, In Search of Excellence: Lessons from Americas Best Run Companies (a must read for anyone in management). Many of the businesses profiled in the 1982 book are no longer in business. You'll say the same thing about the companies profiled in Good to Great some day.
These companies would have benefited from the advice of Ray Davies in his hit song, Celluloid Heroes:
Be always on your guard,
Success walks hand in hand with failure.
FORTUNE Magazine's 2010 Business Person of the Year is Santa Cruz's own Reed Hastings, the CEO of Netflix, a company he founded in 1997. In January of 2005, analyst Michael Pachter of Wedbush Securities said that NetFlix was a "worthless piece of crap".
You know the rest of the story.
By the way, the FORTUNE article on NetFlix is an outstanding business strategy read. And a 2nd by the way, in case you missed it when it went viral in 2009, make sure to download the NetFlix PowerPoint presentation "Freedom and Responsibility Culture". There is a reason why NetFlix is so darn successful and has insanely low turnover. No, it's got nothing to do with money, stock options or "perks". If you're a CEO, give yourself a late holiday present and read Freedom and Responsibility Culture. And then make a New Year's resolution and try to implement just ONE of the policies you read about. I bet most of you can't do it.
Anyway, I digress.
As we approach end of year 2010, here's a toast to all the entrepreneurs, start-ups and "small" HR vendors. You keep the industry fresh and unique.
As for the larger and more established HR vendors? We toast you as well (in fact you can pay for the toast) - you are the ones who set the bar and inspire and motivate the rest of us.
May 2011 bring good fortune and raise the tide for all HR vendors.
Post by HRmarketer CEO Mark Willaman. Join Mark on LinkedIn and Twitter.
Labels: business strategy, consolidation, Netflix