I trust you had a wonderful holiday with some memorable meals. My most memorable meal was pasta while camping in Death Valley. In order to reduce campfire ashes in their food on future trips, my kids have vowed to remind me to bring a lid for the pot. Failing that, I told them to be sure to order their food with “less ash.”
Even more memorable was travel writer Geraldine DeRuiter’s visit to Bros’, a Michelin-starred restaurant in Lecce, Italy. Her review recounted a dining experience that began with no menu, but rather a QR code linking to a video of the chef talking about things unrelated to food. Which foreshadowed a 4.5-hour ordeal of 27 “courses,” including:
Geraldine and her companions were flabbergasted, exasperated, and ultimately still hungry. During one course of reconstituted orange slices, diners were reprimanded for trying to eat the real orange served ironically alongside. To conclude, they were ushered into the Bros’ “laboratory” to watch a video of the shirtless kitchen staff playing extreme sports. “I cannot impart this enough,” wrote Geraldine, “there was nothing even close to an actual meal served.”
Dining at Bros’ sounds a lot like the education and training offerings that U.S. employers are now making available to their employees: lots of courses, but a long way from a whole meal.
Employer-paid education may be as hip as Bros’. In just five years, employers have gone from providing employees with libraries of mediocre asynchronous online courses that few complete to courses from top universities and free online degrees. Coursera is selling over 4,000 courses, 100 skillsets, and 1,000 guided projects to enterprises. Guild has revolutionized the sleepy tuition-benefit sector, transforming employer-sponsored degrees into a welcome ray of light in the gloomiest enrollment landscape in modern history. The level of activity has become frenetic over the past year as Covid’s twin labor market legacies – accelerated digital transformation and the Great Resignation – have crystalized.
Nowhere is the change bigger than frontline jobs. While education and training used to be a benefit for white collar and professional service workers, as employers scramble to attract and retain workers willing to interact with difficult customers, it’s now a primary tool for keeping restaurants, stores, and call centers at full strength. In addition to free online college, companies are offering high school completion and certificate programs along with student loan repayment. Boot camps are next; Career Karma, the leading marketplace for finding boot camps, is announcing a $40M raise to launch “Career Karma as a Benefit” so employers will be able to include boot camps in the mix. But off-the-shelf online degrees still dwarf the rest. And as I’ve noted previously (and as Bloomberg recognized last month, albeit in the context of a critique that was distractingly scattershot), Guild and its brethren have trained their sights on increased retention of frontline workers rather than any improvement in human capital or beneficial outcomes for employees. Just as the Bros’ dining experience is almost certainly more enjoyable for shirtless kitchen staff than customers, making generic online degrees available to frontline workers may do more good for employers than employees.
With the greatest need to attract and retain frontline workers, America’s fastest growing large employer has gone furthest. Amazon’s Career Choice program offers in-distribution center training programs leading directly to local open jobs that pay at least 10% more than Amazon’s $15 per hour. In so doing, Amazon has recognized something that many other large employers haven’t: frontline workers are less interested in education and training for its own sake than as a means to a better job. The more direct that connection, the more attractive the benefit.
Career Choice is focused on outplacement because the skills gap between Amazon’s picking/packing/shipping and tech jobs is bigger than, say, Chipotle, where crew members might be trained to become store managers and gain experience running a small business. For most large employers, it’s not only conceivable to imagine educational pathways from frontline jobs to higher skill positions, recruitment and retention challenges make it imperative. What does this mean for the education sector? With 50M frontline workers and potential annual value to employers easily reaching thousands of dollars per employee, intracompany pathway provision is the education industry's first $100B market opportunity since the dawn of online learning.
2022 is the year education companies begin scrambling to design, develop, and deliver enterprise-specific pathways from point A to point B. In stark contrast to off-the-shelf online degrees, intracompany pathways will consist of a series of short, discrete skill-based offerings knitted together in a highly customized manner.
Three sets of would-be pathway providers are converging on this massive opportunity. It’s going to get crowded very fast. Here’s the current landscape and prospects for each at the outset of the Great Convergence:
1. Education-as-a-Benefit Providers
EdAssist (Bright Horizons)
With Guild in pole position in terms of brand name employers of frontline workers like Walmart, Chipotle, Disney, and Taco Bell, and with EdAssist serving even more clients than Guild, education-as-a-benefit providers have already done the heavy lifting of convincing employers that education is key to attracting and keeping frontline workers.
Education-as-a-benefit providers sell into benefits administration, which is tasked with optimizing retention (and to a lesser extent recruitment) from a fixed benefits budget. But benefits is typically 2-3 levels down in HR organizations and siloed from anything relating to learning and development (L&D), let alone employee mobility. Bridging this gap means building relationships with and selling to entirely new enterprise clients.
Second, education-as-a-benefit’s business model is based on a long line of providers willing to share revenue in order to attain a new channel for their off-the-shelf online degrees. Intracompany pathways mean unbundling these degrees and repackaging them so they’re specific to enterprises and roles. That’s direction that education-as-a-benefit learning providers like Southern New Hampshire, Purdue Global, and UMass Global will have a hard time with for several reasons: (1) no direct contact with enterprise clients (other than via benefits administration); (2) limited expertise on skills required for specific industries and roles; and (3) faculty. If Guild, EdAssist, and InStride are to win the Great Convergence, they’ll need to build internal leaning development capabilities (or outsource to a proven instructional design and build partner) while simultaneously convincing inflexible learning providers to relinquish control and not only take direction in terms of course and module development, but also subsume their learning experiences (and brands) into intracompany pathways.
2. Education Platform Companies
OPMs like Wiley, Pearson, and Academic Partnerships
Just as Arby’s says “ We have the meats” (in stark contrast to Bros’ meat molecule gelée), Coursera and 2U can credibly say “We have the contents.” By starting with courses and degrees from famous universities then progressing to shorter certificates, skills-based courses, and even boot camps, Coursera and 2U are on their way to blanketing the landscape. And by working with learning partners on a wide range of credentials and experiences (e.g., edX’s microbachelors and micromasters programs, now owned by 2U), both have begun to overcome institutional inflexibility. While Coursera and 2U are well ahead – to the point that Phil Hill designates them the only “education platform” companies – a plethora of other well capitalized online education businesses, ranging from course marketplaces to former MOOC providers to OPMs, share the vision and are headed in the same direction.
In addition, Coursera, 2U, and Udemy have already built enterprise businesses selling into L&D, not benefits. In Coursera’s case, enterprise is already a $100M business growing 75% YoY. Udemy’s is already twice as large.
The main reason to doubt education platforms is the contradiction and complexity inherent in trying to simultaneously execute B2B and B2C strategies. Unlike education-as-a-benefit providers, these companies all started as consumer businesses; enterprise is an afterthought. And none will abandon consumer entirely, in part because their learning providers won’t allow it. Meanwhile, B2B pathway provision requires entirely different marketing, sales, and customer support functions. And don’t forget innovative and intensive product development. There’s a reason few online businesses excel at both consumer and enterprise.
In addition, like education-as-a-benefit companies, education platforms aren’t embedded in industries or enterprises and therefore may not have the requisite expertise to develop specific pathways (although at the GSV conference last summer, Coursera CEO Jeff Maggioncalda spoke about plans to build thousands of enterprise-specific courses, which would be a huge advantage for pathways).
3. Learning Experience Platforms
LMS companies like D2L, Instructure, and Blackboard
Unlike the prior two sets of competitors, learning experience platforms (LXPs) aren’t only selling into enterprises, they’re already embedded. LXPs are cloud-based software that employers use to manage employee learning. While learning management systems (LMS) handled learning delivery, LXPs are integrated with HR systems and aim to create personalized experiences for employees, including analytics-powered, AI-assisted discovery of relevant new learning opportunities. So it’s fair to say that if education-as-a-benefit or education platform providers are to win the pathway market, they’ll need to incorporate some of the functionality of LXPs like Degreed.
Five years ago, online learning was the sole province of white collar and professional service workers. LXPs have grown to serve those employees, not frontline workers who are much less likely to have company-provided devices. As a result, LXPs like Degreed aren’t serving many of America’s 50M frontline workers.
More important, like education-as-a-benefit providers (and Udemy among platform companies), LXPs aren’t creating content. They’re curating content (they’re effectively content management systems). And that means less control and quality assurance. It also means the vast majority of LXP learning experiences are asynchronous – suboptimal for frontline workers who haven’t yet learned to learn online at their own pace and would benefit from the motivation that synchronous learning can provide.
While one of these three sectors is likely to win the Great Convergence, there are two other possible outcomes.
The first is that, in deciding to make Career Choice primarily onground rather than online, Amazon knows a thing or two about frontline workers. As online completion rates remain dismal for low income students, it may be that no amount of synchronous learning is enough to allow millions of frontline workers to complete online intracompany pathways and demonstrate to employers that they have the requisite skills to be considered for significant promotions. If so, the intracompany pathway market opportunity may be a mirage.
The second is that the unsatisfying education and training offerings currently sold to employers continue to attract plenty of customers, and that education-as-a-benefit providers, education platform companies, and learning experience platforms see no need to begin building and selling intracompany pathways. The aftermath of the bad Bros’ review is a case in point. As the New York Times reported, following the review and the chef’s response – a 3-page “declaration” including questions like What is art? What is food? What is a chef? What is a client? What looks beautiful? and What is a man on a horse? alongside the chef’s drawing of a man on a horse – Bros’ business was better than ever. With all the attention, plaster casts of the chef’s mouth priced at €58 had sold out and a plan was afoot to launch a Bros’ nonfungible token (NFT).
But I have a feeling neither of these two nebulous scenarios is likely. First, a combination of shorter, relevant skill-based learning experiences, synchronous learning, and new online learning technologies like AI-powered discussion boards and chatbots make it highly likely that digital technology will be instrumental in establishing viable intracompany pathways for millions of frontline workers. Second, as the limits of pushing off-the-shelf online degree programs to frontline workers become clear, education-as-a-benefit companies in particular will be forced to evolve. And while they can be slow and bureaucratic, large employers are a lot more rational than adventure-seeking diners or NFT buyers.
2022 is the year competitors converge on intracompany pathways from three sides. Let the year and games begin! While one or more of the aforementioned companies will be a big winner of the Great Convergence, we’re all huge winners economically, socially, and politically if frontline jobs turn out to be much more than the dead ends they currently appear to be.