Industry Moves

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What a Microsoft-Owned LinkedIn Means for Education

• 06/20/16

The planned acquisition of LinkedIn by Microsoft could either sound the death knell for colleges and universities put out of business by the coming "competency marketplace," or it could help schools raise their retention and graduation rates, thereby ensuring their long-term success. Those are the opposing perspectives on the pending deal offered by two education technology experts.

Last week the Redmond company announced that it hopes to make its largest acquisition ever. If the sale goes through — and there's little right now standing in the way — Microsoft will pay $196 per share in an all-cash transaction valued at about $26.2 billion. LinkedIn CEO Jeff Weiner will retain his position, and Microsoft has assured employees and the market at large that the acquired company will be able to keep its "distinct brand, culture and independence."

On the surface, what Microsoft will be acquiring is detailed professional social data on 433 million members worldwide, a network that has grown by 19 percent in the last year. As part of the deal, it's also gaining Lynda.com, the video training company LinkedIn acquired last year, and Bright.com, a job search startup with algorithms for parsing and extracting competencies from résumés and job descriptions, which was picked up by LinkedIn in 2014.

All of these aspects of the purchase touch in some form on the business of education. The question that arises is whether that's good or bad for schools.

According to Ryan Craig, higher education is currently LinkedIn's "single largest vertical." Craig, author of the 2015 book College Disrupted: The Great Unbundling of Higher Education and founding managing director of University Ventures, a fund that invests in post-secondary education companies through partnerships with traditional colleges and universities, said that the paid marketing on LinkedIn done by higher ed is the largest industry-specific source of marketing revenue the company generates. Likewise, a multitude of schools have signed on for "University Pages," which allow them to do alumni networking and recruit new students.

Ironically, he suggested, higher ed is also the most vulnerable target of LinkedIn as it continues to work on development of a competency marketplace that could one day replace four-year degrees as the baseline requirement for employment.

The vision of this competency marketplace is that employers can identify candidates who are close matches for positions based on the competencies their jobs require. Likewise, job candidates can get information from LinkedIn about what competencies a given position requires and pursue that through some form of training, whether through a class at a local college, a bootcamp, online learning or some other form of instruction.

"The signal for universities that the world is about to change is when employers begin to drop degree requirements from job descriptions," said Craig. And by the way, he added, that's already happening at recognizable companies such as Google, Penguin Random House, EY and PwC, which have either eliminated that requirement from entry-level job descriptions or begun masking a candidate's degree status from hiring managers because they "think the degrees are actually false or poor or misleading signals of ultimate job performance."

Not only does LinkedIn have by far the largest collection of candidate profiles, but it has become the leading platform for distributing microcredentials, said Craig. LinkedIn also integrates with many applicant tracking systems, he pointed out, "which is key for the emergence of these competency marketplaces. Employers need to be able to filter candidates based on competencies, and that happens through these applicant tracking systems."

Craig cited the development of Skillful as proof that the competency marketplace is fast approaching. This joint Markle Foundation-LinkedIn initiative kicked off in 2016 to offer a network of online tools and "on-the-ground" resources that connect job seekers without degrees to good-paying jobs and to educators who can help them get the training they need to fill skill gaps. Currently, the service is in Colorado and Phoenix, but expansion to other geographic areas is assumed.

As Craig explained, Skillful allows users to paste their resumes in to build their competency profiles, which can then be used to match people to available jobs. "You can identify education and training opportunities to remediate gaps between where you are and what the job description says you need to have to qualify. So all the pieces are there," he said. "Currently, it's still early, but you can see where this is going. We think that is the story of the next decade in higher education."

Craig believes this kind of activity is putting pressure on colleges and universities to "unbundle" their degrees and create educational packages that are "shorter, less expensive and more clearly connected to careers or even specific employers." The assumption is that those pressures could ultimately crush institutions that can't keep pace.

Navneet Johal, research analyst covering education technology for Ovum, views such innovations differently. She predicts a more positive outcome for all of the participants — students, employers and institutions — from the Microsoft-LinkedIn deal.

First, she noted, there are the non-traditional students that currently dominate the education landscape. "These students are the ones who have come to expect more informal learning events that are driven by their immediate needs and immediate preferences," she said. LinkedIn will continue to act as a "hub" where these people can share their skills and companies can seek them out, with institutions offering the services that can bridge the gap that exists between the two groups.

Johal believes that the numerous colleges and universities Microsoft already works with globally will benefit from new uses for LinkedIn to help them reach those non-traditional students.

Second, Johal thinks the combined company will be able to help those institutions that are customers figure out ways to address the challenge of retaining and graduating students. The six-year graduation rate at public institutions was an "appalling" 58 percent in 2013, she noted. "Compare that against retention rates and success rates in other regions globally," she said. As the OECD reported in 2014, the United States tertiary graduation ranked 19th in a list of 25 countries.

With today's focus on performance-based funding in higher ed, it's in the best interest of institutions to retain students and get them through school quicker and onto graduation as soon as possible — and then help them acquire the skills they need to get into employment, she said. "The more students that graduate, the more funding they get from the state. It's only in their best interest to help more students graduate so they are also successful as an institution."

At least some universities seem to agree with that appraisal. At the launch of Skillful in Phoenix, for example, both Arizona State University and Maricopa Community Colleges participated. As MCC Associate Vice Chancellor of Workforce Development Randall Kimmens explained at the time, "Skillful offers us a way to reach more potential students and have greater access to insights about local employers which can help us ensure that our educational programs continue to meet industry needs. We want our students to get the best jobs possible and Skillful will provide us with crucial data about what types of jobs our alumni are getting and about the employment picture in our region, allowing us to adapt our programs to give our students a leg up."

Arizona State's technology experts actually helped to build the Skillful platform, said ASU President Michael Crow, because it will offer "residents access to the learning opportunities they need to develop a career path."

Both of these educational systems have committed to the creation of "lifelong learning" pathways that encourage people to pursue post-secondary education. Knowing which direction that education needs to head sooner rather than later and being able to reach those prospective students at just the right time could be the boost Microsoft delivers to its institutional customers as LinkedIn data percolates through its cloud offerings.