Why We Need People AND Technology (with Josh Bersin)

🎧 Listen Now:

I’m super excited to launch this third season with no one other than the one and only Josh Bersin. 

Josh is an Industry Analyst and Thought Leader in the HR, leadership, and technology space.

He speaks at major conferences and his thinking can be found in all of the prominent magazines. Josh also authored three books, most recently the bestseller Irresistible, The Seven Secrets Of The World’s Most Enduring, Employee-Focused Organizations.

Today, we discuss The modern company, Technology, AI, people, and playing the infinite game. 

Here are a few takeaways to apply as a leader: 

‍1. Taking Care of People

‍Josh reminds us that our people are the company. While our financial system sees people as an expense, companies should look at people as their most valuable asset and invest in them, which in turn strengthens your company.

2. Keeping People Connected

Happiness is dropping significantly, especially in the UK and the US, and especially amongst young people. Some of the causes include a lack of trust, a sense of corruption, and a loss of social connections.

This last part is due to the pandemic, when people entered the workforce remotely, missing out on the opportunities of building social bonds. 

Companies have to create connections between people and operate as a community, not just a business. This may be harder in remote settings, which is why it’s an effort we all have to take.

We have to give them a great development plan. Give them opportunities to meet other people, like how Josh brings all of his 50 remote team members together twice a year.

3. Becoming an Irresistible, Enduring Company by Playing the Infinite Game

‍We often talk about employee value propositions and employer brand but what actually makes for an irresistible company? Josh wrote the book on it based on Glassdoor data.

He found that the best companies are enduring companies that play an infinite game.

Those companies start with a clear mission and a problem to solve, and adapt with the market. They don’t fixate on a product, but on a problem, usually an enduring one like  like engineering of flight and transportation or healthcare.

He points to companies like Unilever, Nestle, and Microsoft under Satya Nadella, which are very mission-driven companies in competitive markets. These companies don't necessarily get into totally new businesses, but they adapt all the time so it isn't difficult for them to change. 

It helps them engage and retain their best people because they continue to be committed to the core mission, like Boeing with multiple generations of engineers working there. 

4. Transforming to a Dynamic Organization.

‍Companies always had transformations but now those have to happen much faster. Listening to employees and customers, who will tell you where change is needed and then adapt products and services

But it also means you need to adapt internally, focusing on goals versus titles and budgets. And to focus on every person as the unique individual that they are. Our skills and our relationships and our experiences can be used in multiple ways.

And this will pay off: the Bersin research shows that dynamic organizations like Telstra, ING bank, Unilever, Bayer have seven times better business performance.

5. A new Generation of Work Tech

‍Traditional HR systems were not designed for dynamic organizations.

The organization of the future needs to know who works in them. What are they good at. What will they be good at, what’s their potential.

So a new category of software is called Talent Intelligence is on the rise, and this includes platforms like Eightfold and Beamery.

Josh recommends any company to have a conversation with vendors like these and see where the opportunity is.

And there may be downsides to newer technology companies but don’t forget about the upsides, to work with someone that can tailor technology to your needs and perhaps adjust their roadmap to fit your purpose, make you more competitive and potentially change not just the vendor but the entire market.

6. AI and the Future of Work.

‍While it’s clear that AI has the potential to transform companies, for example through use cases like skills marketplaces, Josh reminds us that AI is really about data, and that the power and value are in the trustedness and accuracy of your data. And that you’ll continuously train your LLM on new data.

Josh also remarks that AI marks a huge oppportuntity for HR people to lead the agenda. Can really buy AI systems without the IT function being involved, so include them, but lead with the functional agenda – what do we want these systems to do?

🔔 Available on:

‍

You can find the full episode and transcript here:

Transcript:

Daan van Rossum: This podcast is about a happier future at work. You released a podcast and a newsletter about world happiness reports. What made you address this report, and what are some of the lessons in it for business leaders? 

Josh Bersin: I have done this two or three times before. It is a fascinating study because you can't really understand HR, recruiting, and the workforce without understanding the global culture around them. As the report pointed out, there were two things I highlighted, and there's a lot of things in there.

One is that the United States, where I live and where a lot of the world works, is really dropping pretty significantly in happiness. The reason for that, if you look at the correlations in that report, is a lack of trust, primarily a sense of corruption, which is being foisted upon us by the political system, and then somewhat of a loss of social fabric between people in the United States, but I think that's happened all over the world. But here's a bit worse, and that, of course, applies to companies too. We have to be trusted entities, and we have to create connections between people and operate as a community, not just a business.

Then the second part of it that I think is even more interesting is the statistic that younger people, especially those in their early thirties, are much less happy than older people. When you read the report over time, that's always been true. Young people have a lot of stress, and older people have lived through and gotten over it.

But it's gotten worse. And I just had a long talk with Linda Gratton from the London Business School about this. So there's some interesting perspective there, Daan. If you'd like to talk about it, we can talk about that too.

Daan van Rossum: No, absolutely. I love that. I think two things that really stood out were that one, the US is dropping also the UK, even though the UK is geographically very close to the rest of the European Union with Finland and my country of the Netherlands, all in the top 5. And then the UK is at number 20. But yes, the US dropped significantly. Then in the youth, because the US is now number 23 for their youngest cohort that they measure, they're in the low sixties. So that's remarkable. 

I would love to hear a little bit more about that conversation, and what can we learn from it? We obviously shepherd a lot of young people into our organizations. 

‍Josh Bersin: Absolutely. The reasons are not completely clear, but I think there are a couple of things that are pretty clear. One is that most people in the early thirties got hit with the pandemic for almost four years, right in the early stages of their careers. When they were making friends and professional associations, learning about their careers, getting to know what the working world is like, and thinking about getting married and having boyfriends and girlfriends, all of that got delayed.

Marriages are down. People are not having children at all; to say maybe postponing, we don't know yet, and I think the pandemic had a lot to do with it. I think social media has a lot to do with it. The people who wrote the report talked a lot about that, but then there's this other factor that, in my late sixties,.

For me, a lifetime is roughly 80 to 85 years, hopefully longer, but for people in their 30s, and I know that sounds odd, you have to just come to grips with reality; they're going to live into their 100 or 110 years, or maybe longer. So, they actually have more time and more options.

When I was 30, my generation basically felt that if you weren't well established in your career by the age of 30, you were way behind. So there was this rat race, but it wasn't a difficult rat race. You just got on the rat race, and you just did it.

Now you have all these options. You can work part-time. You can be an influencer. You can take a year off. That's all great, but there's also a lot of uncertainty.

And I think the third thing is because people worked at home and still do. They don't have the friendships and personal connections that they had at work because of at least the first 10 or 15 years of my career. All my friends were people that I worked with, and we did things after work and went out to lunch and dinner and that kind of stuff. So I think those are all factors, and let's hope it gets better.

What it means for employers is that hiring younger people, which is absolutely mandatory the way the demographics are going, implies that you have to take care of them.

You have to give them a good year or two of development. You have to give them opportunities to meet other people, move around, get them connected to people, and spend some time on social activities. I don't know if you know much about our company. We have almost 50 people now, and we're all remote. Twice a year, we all meet face-to-face.

For a pretty good-sized meeting. One of them is certainly an attainment meeting. The other one's our conference. Everybody in the company. And so we're trying the best we can to make sure people really feel like they have some good relationships with the people they work with, because everybody spends so much time at work.

So I think those are all factors that big companies have to deal with. And I do think we're going to go back to the office to some degree. I don't know how you feel about it in the Netherlands, but we're not going to work at home every day.

Those are all things that employers have to think about.

One more thing that's come up a lot is that nowadays it's perfectly okay to talk about mental health, cognitive differences, childbearing issues, or medical issues at work that all used to be sacrosanct. Nobody talked about that when I was young.

Employers are becoming much more comfortable with all sorts of additional services to provide people; by the way, we don't have them in the US. Family leave. For parents of both genders. Those are things that are just going to become mandatory. I think the US is way behind there. We'll probably eventually catch up, but all of those things affect employers in a big way.

I look at Glassdoor ratings a lot. You can tell the companies that are doing a good job of taking care of early-career employees because their Glassdoor ratings are much, much higher. And they're just operating in a more productive way.

Daan van Rossum: There's something to be said for doing well by your employees. It will probably make the company more successful. And I think Glassdoor was actually the data source for your book, “Irresistible.” I think you took a very data-driven approach, and you looked at what the data tells us about the best companies in the world.

I think that book is a must-read for anyone who is in business or HR right now to understand again what the data tells us about what those top companies are doing and how we could replicate some of that. 

What were some of the insights in that book that were surprising, maybe even to you as you were going through the data?

Josh Bersin: I wrote the book over a period of years, and everything I wrote in there is just as relevant now as it ever was, but it's actually coming true. Some of it was forward-thinking at the time; it's becoming much more real, and I'll give you an example in a minute.

The fundamental idea of the book, and I think most people, certainly HR people, know this, is that the employees are your company. It doesn't matter what business you're in. If you're a trucking company, an oil company, a software company, a consulting company, a retailer, or a healthcare company, your company has employees, and that is the asset you have. That's the only appreciating asset that you have, and you have to treat it like that.

Unfortunately, our financial systems treat labor as an expense. So it's easy for the CFO to say we're spending too much money on people because it's an expense. It looks like an expense on the P&L, and it causes your stock price to go down theoretically.

But actually, the opposite is true. When you take care of the people, they appreciate the value and performance of the company. So the book is all about how to do that.

And just a couple of the basic principles are that in the industrial age, we designed our companies as hierarchies, and you entered a company with a job, and you waited in that job, you did the job the best you could, you got evaluated once a year, and if you did well, relative to your peers, by the way, so it was competition, you might get promoted at some period of time, and you might get a raise, and you might eventually become a manager or a leader, maybe. If there was room for you in the pyramid because the pyramid gets narrower at the top, and if the guy above you is not leaving, you're not taking his job. So there was this patience that was enforced upon people. And that was okay. We all put up with that, and that was just normal.

Nowadays, because of the transparency of the job market, the dynamic nature of companies, all the layoffs, restructurings, and mergers going on, and the transformations in technology, the company is not capable of giving you that kind of career. The company needs you to move around more, and people want to move around more. I talked about that just a little bit earlier about young people.

So we've got to change the dynamics of how you get rewarded and paid. Whether you have a job title and a job level or not, most companies have been collapsing their job levels by multiple times, like three, four, or five times fewer levels, so that they can have more mobility, and your manager, who used to be the gatekeeper, who told essentially your boss—the book chapter is called Coach, Not Boss—your boss used to tell you what to do and what not to do.

Now your boss is just this person who's there to help you and who maybe gives you an evaluation at the end of the year, but they may not even be the person you're working for. You might be working with other people on other projects.

So we've got to think about these new dynamics in companies and how we reward people and take care of them. In the context of every human being, it is enormously important, and now you add AI to that, which isn't even in the book, and you've just doubled or tripled the performance of every person, and add to that the fact that we're not having children, so the labor market is getting more and more difficult to hire.

I think the average person who's a manager, leader, supervisor, or whatever doesn't think about this stuff all day. So, those are the concepts in the book that I think are really important.

Daan van Rossum: Where do you think the disconnect is? That's really interesting. HR people think about this, but managers don't. Don't we all know that it's the people that make the company? 

Josh Bersin: No, that's not true. Many people go to work. They have a boss; maybe they don't like their boss; their boss has other issues; or your boss is unhappy, so they don't get a good experience, and then they get promoted. And they have to be the boss. How do they know how to be the boss if somebody doesn't show them or hasn't modeled it for them?

Leading people, projects, and teams is very challenging. Human beings are the most interesting, imperfect animals on the planet. Every human being is different.

Once you become a manager, your profession just changes. And learning how to lead and having a role model, a coach, or somebody that you emulate is great for those of us that have had it, but a lot of people don't get that, so they have to leave the job. So now hopefully HR people learn this because they've been doing it a lot; they've observed managers, they've gone to school, and they've read books and done research like we do.

I'll give you a perfect example: Boeing. Boeing is a national icon that is likely to become a national disaster for the United States. There are only two aircraft craft carrier manufacturers in the world, and every day there's more information about the culture at Boeing and how they got to the point where they've had these problems.

Somebody at a fairly senior level had their eye off the ball and said that Boeing is basically an engineering company. It's not a financial company. Engineering has to come first, but they lost sight of that. They also lost sight of the fact that the employees at Boeing.

Most of the people I've met at Boeing are multi-generational employees. Their parents worked there. Their grandparents worked there. So they're really committed to that company. And I have to believe, and I know this because I talked to the CHRO, that there were people at Boeing pointing out problems in quality, speed, and other issues. We're not being listened to. They're trying to fix that. And this is a really sophisticated company that's been around a long time, and they have these issues. So you have to keep at this.

Daan van Rossum: Yeah. For sure. In a company like Boeing, at some point in the short-term financial situation, stakeholder pressure or shareholder pressure just takes over, and that becomes the focus. Where does that stem from?

Josh Bersin: I have this chart, a bar cart; it's a little curve, and basically what happens in companies is that in the early stages of a company, there's a mission. There's a really big problem. The company wants to solve this problem, and everybody who joins is really passionate about it.

They go after it, and they create some kind of successful offering of product service, whatever. It grows and grows, and people join and like the mission, and it becomes more and more reinforcing.

Then, at some point in time, sometimes this goes on for many years. Sometimes this goes on for 5–10 years or longer. Something goes off. If a competitor copies you, the product or service you created becomes obsolete for some technological reason. The market changes, and the problem you were trying to solve suddenly wasn't a problem. Maybe the government changed some policy or a competitor took away that problem because they were bigger than you. And the company has to rethink what it's doing.

As Apple's going through this right now, what comes after the iPhone? They don't, not the car; they just wrote off a billion dollars on that, so it's a minor crisis for them, but usually it's a big one. Phillips went through this; you know them. Then the leadership team that took it to that point, many of them stayed, but a lot of them left, and new leaders came in that were turnaround people.

Now you've got the original mission and the original vision of the company that made it what it is. And this other leadership dimension: how do we fix this? And that's a very tricky period of time because sometimes what happens is fixed financially, but they lose the mission. Then it becomes a financial company, especially once you go public. The shareholders couldn't care less what your mission is. They want to know how much profit, revenue, growth, etc.

So these are the things that get in the way. In my experience, in my own research, the core mission is that it's important through this whole process. And I think Boeing is a good example: Johnson & Johnson. If you read the stories of Nova Nordisk, it was the original mission that created the value proposition that has to be manifested through new products and services.

When you change it, it's dangerous. So I think what Boeing's going through is that they did drift away from their original mission. They bought McDonnell Douglas. There's all sorts of things that they did. But they're finding out that they've got to just go back to being a really great engineering company. They've got the DNA to do that.

The funny thing is that, having talked to so many companies about this, it comes back to that a lot. The original founding value proposition idea gets lost in the shuffle of making more money, selling more stuff, and having more market share.

Another really important idea that I want to just throw into this, Daan, that I think is interesting is. There's this book called The Infinite Game. It's about having an infinite or abundance perspective versus a limited perspective. And if your business is focused on a problem that's enduring, like the engineering of flight and transportation, health care, or something else, there's no end to that. You can keep working on that forever, and you can get better and better, and one product will be obsolete and a new product will be invented. That's okay, and that's all fine.

But a lot of companies play a finite game. We're going to build a product that's better than somebody else's product because we think we're smarter than them.

These seem like theoretical concepts, but they really play out all the time.

Daan van Rossum: Absolutely. That's what I was going to say earlier: working for Ogilvy, the advertising agency, even after he passed away, they kept very strong hold on to that original founder. What was David Ogilvie's perspective on the market at that point in time? A lot of those principles didn't change, even though obviously the field of advertising changed a lot.

The idea is that you should run a company in this sort of way. One of his big ideas was that the advertising agency should be like a teaching hospital. So that really brought in the mindset that you want to bring new people in and you want to teach them the trade, but you also want to learn from them. So they kept going back to that. 

I totally believe in the cultural part. 

If we look at Boeing on the one hand, who is someone, maybe in the book or outside of it, that you feel is a really good example for companies to emulate as it comes to becoming that irresistible company?

‍Josh Bersin: Companies tend to be very sophisticated about this because they have such a dynamic market. Unilever and Nestle are very mission-driven, but multi-product, multi-faceted companies.

I think in some sense, under Satya Nadella, Microsoft is somewhat that way. They're not just selling stuff. They really do have a vision of where they're trying to take individual productivity in the business, mostly business, but also in the personal world. The Cleveland Clinic is a cancer clinic and a big healthcare company in the middle of the United States. It's very successful. A lot of healthcare providers are like this.

I don't know if I can think of any off the top of my head, but those are companies that I have learned to admire over the years. And what's interesting about them is that they don't necessarily get into totally new businesses, but they adapt all the time. It isn't difficult for them to change. Because people are still committed. They know what the core is, and so the employees go along with whatever the change is because they believe in the core. Disney, by the way, is another example.

Disney is in the middle of a turnaround, but we're doing a lot of work with Disney. Disney's culture is exactly the same. It's an entertainment and creative company. Their core is being creative and entertaining people. And I think most of their businesses are still in that area. So I believe in these long-term companies, which I call enduring. By the way, that's the reason I call them enduring companies in the book.

You don't know if NVIDIA is enduring. It's hard to tell; we don't know. It certainly is at the moment. But one of the tests is: how long has the company been around and has it survived multiple economic and technological cycles? And if it has, and there's something going on inside other than just a lot of smart people.

Daan van Rossum: That's a good measure. If that resilience is there, then obviously something keeps it going, even though there are a lot of headwinds. 

I want to shift from irresistible companies to dynamic organizations. So this is a topic that I've heard you talk about a lot recently. 

Maybe you can share a little bit about that concept, and if I were to say that when people hear this and think I should become like that, what are some of the first steps that companies can take to become more dynamic?

Josh Bersin: Thank you for asking. We do all these big studies, and over the last couple of years, there's been this enormous interest in internal mobility inside companies. Filling jobs internally with internal candidates, moving people around, re-skilling people, and so forth.

We originally said, let's do a study of all of the aspects of that, including how people are doing it, why they are doing it, what domains, and so forth. And we started doing it. We did it together for this big survey.

Once we started to get the research back, we realized. This wasn't really just about internal hiring. This was about culture. This was about diversity, growth, development, and a sense of creativity in the company that allows it to redesign itself as needed.

What we realized when we did the research is that we again came up with four levels of maturity. But the simpler way to think of it is: In the older model of business where most of us grew up, you had this idea of a transformation. And the transformation was an episodic event.

I was at IBM in the early days, and John Akers ran the company. It was a proprietary computing company that kind of owned all the different areas of the data center. And that all fell apart when open systems and PCs came along. Lou Gerstner came in and said, No, we're not a technology company; we're a services company

Now, that transformation has gone on for 30 years. It might've been a mistake, actually, because they lost a lot of their technology. But anyway, the idea was that you're going to do these things one at a time. And you're going to just go, “Oh, your job changed; new department; new boss; new role; let's figure it out and then live with it for a while.”

But actually, what you find today is that this is actually a continuous, never-ending transformation.

Daan van Rossum: In much shorter cycles.

Josh Bersin: All the time. And the information on what to change doesn't always come from the top. Sometimes it comes from the bottom. It's the customers telling you, “Hey, this thing we're doing isn't working anymore. They aren't buying it anymore. They don't like it anymore. We need to do something different.”

So these dynamic organizations are very good at listening to their employees and their customers very regularly, constantly, and constantly adapting the products, the services, and how they're organized to do that.

Now, what gets in the way of all that HR stuff? I'm the boss of department A, and I have 50 people working for me. I am a third-level or a 17th-level, whatever I am, and I'm making so much money. I have a corner office, and I have my own parking place. And you're telling me we're going to redesign everything, and I'm not going to be the boss anymore? No! We're not doing that, right?

There are all these people who are resistant to doing that. They stay resistant as long as possible until the company fails, and then they get laid off. What dynamic companies do is basically say to everybody, you're here; your goal is to help the organization, not yourself.

You will be well taken care of in your career as a result of working here because of all the things you're going to get to do. But your fiefdom, your hierarchy, your job, your title—that's just a little tag we gave you at the moment. We need you to do what we need you to do. And one day, you might have to do this. And then, a couple of months later, you might need to do that. And if we think your skills are better suited in this department, we're going to recommend you go over here and work for this person.

Once you get used to that, it's incredibly empowering for employees, but you have to figure out how to pay people. The leaders have to move around too. You have to have a very inclusive company because in a lot of companies, the individuals who work in this department look different from the individuals who work in that department. 

And we don't understand them, whether they're of a different gender, a different nationality, or whatever it may be. There's an inclusive issue with it. You have to figure out how to pay equity. Because when somebody changes from a job that's maybe underpaid in the job market to a job that's overpaid in the job market and they take their old pay with them, all of a sudden they're underpaid in the new role. So you've got to adjust that.

So this dynamic organization research shows you what all these things are about. The crux of it is really, to some degree, HR, but a lot of it is leadership.

We happen to do another piece of research on what we call “irresistible leadership.” We're just in the middle of profiling dynamic leaders right now. We will be doing this later in the year. The CEO and the CHRO certainly have to get this, believe in it, enforce it, and talk about it. And I think the best example was yesterday. There was this great article in the Wall Street Journal about Bayer. I don't know if you saw it; you may have missed it.

Bayer is this giant pharmaceutical and science company, and they bought Monsanto. They're a really successful and well-known company, but they're not moving very fast. So the CEO basically decided we're getting rid of all this hierarchy, we're going to organize around teams and around projects, and we're going to flatten the organization. Every now and then, companies do this. Unilever operates this way. There's a Telco in Australia called Telstra that did this.

This is becoming more and more common now as an operating model to allow a company to grow and thrive much more productively. The other reason I think it's going to become more popular is that AI has a tendency to cut across organizations.

We can get data and information across the company much faster than we could before. We used to have lots of silos. I don't know what those guys are doing. I don't even know what their systems are like. So the dynamic organization research is about the multipliers of the companies at levels three and four versus one and two. In our research, we found seven times higher business performance metrics. This is the highest ratio we've ever seen of anything we've ever studied.

As far as how you get there from here, if you're a manager or an HR person, the real concept is that we are all individual people. We are not our jobs. We don't own our job, and our job doesn't own us. But our skills, our relationships, and our experiences can be used in multiple ways, and for us as individuals, we're going to be a more successful businessperson, salesperson, or whatever we call a healthcare provider, whatever we call ourselves, if we take advantage of different opportunities in our lives.

I think most people know that. They don't want to be locked into one job their whole career. But once everybody understands that, then these operating metrics that we talk about in the report can start to take place, and a big part of this is also the tech. The HR technology platforms weren't designed for this, so you need some new technology tools to facilitate mobility, to help people assess their skills and identify the skills of others to manage projects and teams, and so forth.

But Telstra did this with no technology at all. They just, basically, created an agile operating model, and it worked. ING Bank has done this. I mentioned Unilever earlier. We're talking to Bayer in a couple weeks. It is going to be interesting to hear exactly how they're doing it, but not every company has to do this. If you're a railroad, you may not need to do it, but...

The government's not very good at it. Educational institutions are not very good, but companies that are very close to lots of consumers are very good at this because consumer demands change so fast, they have no choice.

Daan van Rossum: Change all of the time. And you have to adjust very quickly, and you cannot do that when you're very stuck in your way of working. 

But it sounds like it's a really big cultural change, as much as maybe a technology change, and then it's good to hear that at least some of those, like big companies, have been able to pull it off because you would almost imagine that there's just too much resistance from the inside to make that kind of transformation.

Josh Bersin: Even HSBC operates this way. Standard Chartered operates. Even banks are starting to figure this out because the banking industry is very dynamic too. If they can't adapt to new customer needs or geographic changes, they don't keep up either. So it touches just about every industry.

Daan van Rossum: You mentioned that technology is a really big part of that. So I know that you did a really big drawing of the landscape a couple of months ago in HR technology. You identified a couple of key categories of platforms and offerings. 

What do you see now as the most critical workplace technologies for companies to adopt, especially if they need to make some of those changes towards something like becoming more dynamic as an organization? And what further changes will you see? And I'm sure AI will come in there somewhere. 

Josh Bersin: You can't run a company with a core HR system, but it's very clear to me that the level of technology you need to operate in a dynamic way is not going to come from the core HR system. The core HR system is primarily a record-keeping system.

These really dynamic issues are usually addressed by what we call talent intelligence, or it's now an AI platform that does things like identify every employee's skills, store vast amounts of data about the employee, including their history, where they worked, and what they've worked, and lots and lots of other things that are not stored in the core HR system. It also allows you to organize people into multiple teams.

I might have a job title of A-Level 6. We're also working on this project. I'm also responsible for that project. I'm also leading this group. Information isn't even in the core HR system. So there need to be systems for that.

Daan van Rossum: Those will be platforms like Eightfold, Gloat, and Beamery.

Josh Bersin: Exactly. Eightfold, Gloat, Beamery, and NeoBrain. There's a bunch of them, and they're basically AI-driven, and AI helps. The transactional data about what you did isn't enough to really allow you to operate in this more dynamic way, because I need to know what you're capable of doing, not what you did. What was your performance rating? I need more information about you and will hopefully be intelligently assessed.

These are very powerful tools. An example of something that's very cool. Hydra can struggle with working with a fold on a product called the Heidrick Navigator. We like to refer to it as leadership intelligence.

One of the big issues in a dynamic organization and in every company is knowing who's going to lead what, who's most qualified to lead what, and what might be a project, initiative, function, organization, or business. People have different skills in different areas, and the way we've traditionally done that is through a leadership pipeline, a succession process, or a 9-box grid, which is purely non-scientific and subjective. That's what I was thinking of.

Then, a lot of bureaucracy and a lot of politicking. That's okay when you have a hierarchy and it's narrower and narrower at the top. In a dynamic organization, there's leadership everywhere. There's a leader leading all sorts of things. And so earlier in your career, you might have to lead something.

That you're fairly comfortable in because you're an expert in it, but you've never led it. So where are those people? Who are the right people? So we need to think about who's going to lead, what, and how we're going to assess them. There's a lot of new tools being developed now that are oriented towards this new model.

Even though companies hate buying systems from multiple vendors, the bigger HCM vendors and ERP vendors just can't keep up with it. So they'll either acquire a lot of these technologies or, eventually, there'll be another generation.

ADP has been working on this next-generation HCM platform that has a lot of these dynamic capabilities for about 6 or 7 years. And they're just now getting to the point where they've got 60 or 70 customers. So there's a lot of new technology that's entering HR. That's going to facilitate this new way of running our companies.

Daan van Rossum: Talent intelligence is one big bucket. My immediate question was, Why aren't the HRIS or HCM providers building this kind of technology? But it probably goes back to the fact that it's just not their DNA. It's probably just not what they were founded on to build an AI company practically. 

Josh Bersin: There are a lot of reasons. One is that they didn't design it for that. So it's architecturally not even possible for them to do it. The second is that they're too busy expanding what they already have. The transactional part of HR is still massive.

Daan van Rossum: People need to get paid. 

Josh Bersin: If you look at Oracle, SAP, and Workday, they're doing financials; they're doing supply chain. They have way more things to do than HR, so their engineers can only do so many things at a time. None of them have been able to really grapple with this in a significant way. Yet they're all obviously working on it, but most of the innovations are coming from smaller companies.

Daan van Rossum: I'm talking about those smaller companies. You have a category of vendors that you call Trailblazer platforms. Platforms like Sana in L&D. I know you did Galileo with platforms like HiBob and CoreHR. 

There are two questions about trailblazers. On the one hand, you then basically get more modern technology that basically fits the modern company better. So things like being a dynamic organization are easier when you have that modern technology, but at the same time, there's also some trade-offs because maybe those platforms don't really have the certifications and the security, and maybe some of the integration advantages that the older, legacy platforms have. That's one challenge. 

The second challenge is that, again, you're stitching together a bunch of different platforms. That is also kind of something that most companies are trying to get away from. 

How can companies take advantage of those Trailblazer platforms, maybe without some of those potential downsides?

Josh Bersin: Anyone who thinks they're going to buy only one HR platform is very naive. It's never going to happen. Even small companies. We have five or six systems here, and we're not that big. The way it works is that the vendors that come up with new technologies are usually one of three types.

They're seasoned entrepreneurs who have built enterprise software before, and maybe they've worked in HR technology before. They used to work at Oracle or PeopleSoft or somewhere, and they know what they're getting into, but they know that there's something new needed, and they carefully build something that nobody has done before. They usually last a long time, and they usually grow pretty well. Sometimes they have challenges in marketing and positioning, or they get acquired.

The second category are very, very innovative entrepreneurs who don't know the HR space, but they think they do. There, it's hit or miss. Honestly, it sounds really simple to build a tool for performance management, a tool for coaching, or a tool for employee assessment. But most of the vendors who start that and haven't done it before don't realize that there's a whole bunch of other people who have already done it. Maybe they're going into a really red ocean where there are 25 or 30 other companies doing the same thing. They reach a certain stage of growth, and then they immediately sell out because they can't do it.

Then, in the third category, there are companies that have a combination of things that just turn out to be spectacular. And I think if you look at Sana, Degreed, EdCast, and Cornerstone, for example, these were companies that were founded by people who were very smart, very ambitious, very hardworking, and didn't know HR.

But they learned really fast, and they just had this unique ability. They were humble. They had enough humility to say we thought we knew what we were doing, but we're going to change it because we were a little bit off, but we're going to move really fast because this is what we need to do.

They are the ones that change the industry, and usually they get bought or they become really big. And so you, as a client, as a buyer, have to really check these guys out and visit them at the conferences and get to know their leadership teams and talk to their other customers. And see how deeply they understand your situation, your industry, and your company size, and you'll find great ones.

A great example of this is Gloat. When I first met Gloat, it was like five guys in Israel, and they were working on a matching technology for recruiting and were beginning to sell it, but it wasn't really that interesting because there were other matching technologies out there. Theirs was a little bit better, but it wasn't 10 times better.

Unilever found them. One of the guys at Unilever, who was the head of the tech strategy, said to them, I want you to build me a system that uses your matching to implement this new operating model we have, Flex, where we want people to move around and we need a platform.

So they jumped right into it. They built it, and voila! They had a product that was really successful. You've got to pick the ones that work for you. And also, the other factor is that some companies are very conservative, and they don't want to buy anything until it's very well proven.

Other companies like working with smaller companies, and they like working on their product roadmaps, talking to the product managers, giving them feedback, and all that.

Daan van Rossum: They almost see it as a benefit rather than a challenge. Maybe they don't have everything that those legacy platforms have, but this is my opportunity. My opportunity is to, maybe, tailor the Unilever case to what I need. Therefore, I will be more competitive as a company because I now run on software that no one has and that the majority of the market doesn't have.

Josh Bersin: Exactly. And the interesting thing for HR people is that if you're working for a company that's reasonably sized, you can pick a vendor, and if you pick somebody good and you work closely with them and they listen to you, you can change them, and you can change the market.

A lot of the things that change the dynamics of the market are vendor innovations. That some brilliant person dreamed up that nobody ever When Ashutosh Garg thought up Eightfold, I remember talking to him 7 or 8 years ago, and I could barely understand what he was talking about. Now look what happened.

Daan van Rossum: Incredible. That definitely did well. Obviously, very AI-driven, and I think for a lot of people, AI was very vague, very in the background, and very like a foundational technology versus just in the last two years, that huge transformation since ChatGPT came to the scene and people intuitively get better at what AI can do.

What do you see now as the state of AI? Because I know you talk to a lot of companies, and I'm sure there are huge gaps in the opportunity that AI provides and how it's actually being implemented. And maybe also some of the barriers that exist towards implementing AI. 

‍Where do you see it now? And what do you see as some of the biggest shifts coming up for companies to implement AI better? 

Josh Bersin: Let me talk about the vendors, and I'll talk about the companies. So the vendors are going nuts because they all know that they have to understand this stuff and find a way to use it. So there's essentially a frenzy going on in the HR tech vendor market to hire people that understand AI, figure out how to use it, and stay ahead. And it's really hard for them because the technology platforms are changing, the core providers are changing, and the use cases are just barely evolving.

I talked to a company just earlier today that's built an amazing AI system for management coaching. It has multiple LLMs and multiple models. I won't go into the details, but it was not easy for them to build it. So there's a lot of work going on there.

On the client side, on the customer side, I think the thing that we have to remember, and this is what I learned over Galileo, is that the AI systems are data systems, not transactional systems.

So the power and value of the AI are dependent on the value and trustworthiness of your data. So if you buy an AI system for employee experience, for recruiting, for learning, for knowledge management, or whatever many of these applications are, you are in the data management business. You're going to have to make sure that the data is accurate, that it's protected, that it's trusted, and that people only see the things they're supposed to see. You've got to continuously train it. We're now at the point with Galileo where we're watching what people are doing and what they're asking for. And we can't wait six months to write a new piece of research.

Every time we see a new thing, it's actually fun for us. We're getting much quicker at doing things, but we're now constantly looking at it. And so as a company, whatever data you're going to put into it or whatever data it's going to get, you're going to be in the data business, the data management business of making sure that it's accurate, training it, maintaining it, and working with it.

I also don't think HR people can really buy AI systems without the IT function being involved. Because the IT people are getting sold by Microsoft or somebody else, some grandiose thing. And so you're going to go buy the HR thing, and then they're going to have the Microsoft thing, and then you're going to collide, and they're going to say, why would you buy that? We just did a big deal over here. Then the HR person is going to say, but that doesn't do what we want.

So we're at that stage where this is a whole new platform, and so we got to work together on it as the two functions. I don't think that the IT decisions about AI are going to keep up with the innovations in all these functional areas, like HR.

We're going to become so expert on how AI is used in HR that the IT people will be coming with us. I think this is a situation where, in all of the evaluations you do, you should be looking at things, but bring the IT people with you. So they can bring their judgment and some sort of data management and security advice along with you.

So it's really exciting. It's the beginning of a whole new technological platform. from the bottom up.

Daan van Rossum: Super exciting. I have two questions left. 

One is about leadership. You're not only advising companies; you're not only writing books, doing podcasts, and talking about leadership; you're also leading yourself. You have a 50-person company that, as you said, is fully remote. I didn't know that, but that's interesting and impressive. 

How has your leadership changed over the last couple of years, and what further changes do you foresee coming as the world keeps changing? 

Josh Bersin: I have a very capable partner, Bill Pelster, who helps me run the company and the leadership team, as well as Mark Spratt, Amy Farner, and others who helped me with this.

I'm an entrepreneur by nature at this point, and you tend to do things yourself, and I'm an engineer, so I get my hands dirty and stuff. I would say I've learned in my particular case that the top leader really has to set the direction and the culture and push people towards the things that need to be done most urgently.

But you need a leadership team. There is absolutely no replacement for a good leadership team. And that takes effort. Finding the right people, working together, getting to know each other, replacing the people that aren't necessarily in the right roles, and moving people around. We move people around a lot in our company, but we're really an integrated group. We're not that big. So everybody knows each other very, very well.

I never wanted to start a company. I never wanted to be the CEO of a company.

Daan van Rossum: The Story of Every Entrepreneur. 

Josh Bersin: I just ended up having to do it because it just happened, and it became like an albatross after a while. So I've learned what I am good at and what I'm not good at. I'm not the operations guy who keeps track of everything that's going on all day. That's just not my interest, but if you find people that are complimentary to you, then the team is incredibly powerful, and you become very resilient as a team.

We're in this weird business where everybody thinks we know everything about everything. We had to work really hard to stay on top of things. A lot of my role here is to point out things that have changed that we have to pay attention to if we fall behind, become stagnant, or become too wedded to the things that we've said last year. We may be becoming irrelevant too.

Our infinite game is that we think we can help HR organizations continuously improve themselves year after year on behalf of their companies, their employees, their customers, and their stakeholders by doing lots and lots of research.

If we stop doing good research, if we stop paying attention, if we stop doing advertising, and if we stop becoming neutral and independent, there are all sorts of things we have to be careful about. Those are the things that I have to worry about.

Daan van Rossum: Do you think that's going to change in the next couple of years? Obviously, one really big change is going to be that doing that research and staying on top may become harder and harder with how fast the market is changing. Do you think that's going to change, as well as how you lead the company? 

Josh Bersin: No, there will always be a need for people like us, but how we produce our information is changing a lot.

We're basically a publishing company. We're producing hundreds of PDFs, courses, videos, and stuff. We have to use AI. We have to be really good at AI. So that's why we put all this time into Galileo. I think we're way ahead of whatever competitors we have. I'm not sure who that is, but we've really gone down that learning curve, and we're spending a lot of time making sure we really know how to take advantage of it.

Our clients now who are using Galileo are saying, I'm using Galileo two hours a day, whereas I used to read one of your research reports, maybe once every two weeks. So it's a totally different experience. We're very closely tied now to our clients, which is really fun. So that's the big change that we're dealing with right now on our side.

Daan van Rossum: How do you do that as a CEO and as a leader, because everyone is looking at you not only as the person who knows most about this industry and most about the field that you're in but also as, like, how is this company developing? One of those big choices you make clearly is to go with Sana and to build Galileo. That's a really big decision because you're moving away from something like the knowledge that's in our heads, and that's very proprietary, and people have to access it through big reports. Suddenly, people can just type to Galileo, and they get the answers. 

Josh Bersin: I'll tell you just really quickly. I know we don't have too much time. Let me tell you what happened.

I'm an engineer. I like tinkering with things. More than a year ago, when the LLM market hit the streets, a year and a half ago, I immediately became concerned about what we were going to do with all of our content. The rest of the company was cranking away doing what we do.

I have a very good friend who's a very savvy engineer. He's a young guy, and I just said to him one day that it was like the end of 2022, I think. Do you think you could put our content into an LLM? He goes, “Oh yeah, I'll figure it out.” So he reads the documentation on OpenAI. He builds us a prototype. We called it the HR Copilot. We put our research into it. He built a really nice UI for it. I show it to the rest of the company, and they say we don't need a new search engine. I told you guys, it's not a search engine.

We showed it to the clients. Their minds just exploded because what it did was allow people to ask questions about the research that crossed the research in a way that they wanted the information, not the way we wrote it, because we do write it almost like a book. It just hit me like, Oh my God, this is the future for us. So I got the rest of the company on board, and everybody got pretty excited about it.

Then we realized we don't have an IT department. We don't have an engineering team. We have this one guy as a contractor who's helping us with this. In fact, he doesn't even want to work for us. He wants to work part-time. So I know a lot of vendors, and I happened to know Sana, and I knew Joel, and I had met him. We had a big meeting, and we discussed this.

They immediately jumped into bed with us to help us with this, and that's how we got to where we are. We really love working with them, and they're just an incredibly cool company.

They're not very big, but they have a big opportunity in the market. So that's how it happened.

Daan van Rossum: Wow. Incredible. One very last question, one wish you have for the future of work?

Josh Bersin: I think every employee is an hourly worker. individual manager who goes to work, I really wish that you could find an opportunity or a role or a company or a boss that lets you do what you need to do as a human being, because I do believe in something I call the unquenchable power of the human spirit.

I do believe that when companies let people do what they're really good at and find an opportunity to fulfill their passions and interests and take advantage of their God-given expertise, we all have expertise in different things that we're just born with, that we develop over time, that the organization will thrive and the individuals will thrive, and I really have a hard time. It's very hard for me to talk to somebody who hates their job, hates their boss, and hates their company. It happens.

I had plenty of situations like that, too. That's my wish for the future: that we can all find a way to move ourselves into the right position, or that the company will help us fulfill our desires so that work can be really ultimately fulfilling. It doesn't have to be the only thing in your life, but if it's not fulfilling, I say, you know what? Don't settle for that; find something else. That is my mission.

Daan van Rossum: I love that. Great call to action for everyone who's listening. Josh, thanks so much for being on today. 

Josh Bersin: Thank you, Daan. I really appreciate you taking the time to ask all these wonderful questions.

Daan van Rossum: My pleasure. Thank you, Josh.