ULMS704

INNOVATION
AND
ENTREPRENEURSHIP

GROUP REPORT SUBMISSION

Submitted by
JUMPEI HAMAJI 201399690

NICKY SARAH MOHAN 201436144

SAMIHA ALSUM 201363574

SEHOON KIM 201378729

VIVEK AJAYAKUMAR 201454617

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ABSTRACT
This group report presents our innovation concept to LinkedIn’s learning platform, LinkedIn
Learning. We introduce our idea of innovation to come out of its existing business model and
value chain to an open innovation model to create a personalised interactive session to the
subscribers. The key characteristic of our report is to utilise the various model to ascertain our
innovation to create sustainable competitive advantage.

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CONTENTS
Introduction 6
Business Model 7
Innovation in Learning Platform 14
VARIM Framework 15
Potential Implementation Issue 18
Conclusion 19

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LIST OF FIGURES
Business Model Innovation 7
Recruiting Flow Design 8
Talent Solution Pricing 11
Example of LinkedIn ad 12
Premium Subscription Product Table 12
Exploit and Explore 14
Map of Innovation Space 15
VARIM Framework 16
LinkedIn Learning YouTube Page 17

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LIST OF TABLES
LinkedIn Market Segment 10
LinkedIn Revenue Model 12

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INTRODUCTION

LinkedIn was founded in 2002 as a professional networking platform. The service was
mainly used for matching employers and job seekers at the early stage of the LinkedIn
journey(Skeels, M.M. and Grudin, J., 2009). Hence, LinkedIn’s main revenue resource was
selling the users information to recruiters as well as sales professionals, including premium
subscription(Yoffie, D. and Kind, L., 2012). Ever since their establishment, they outpaced
their growth from competitors and built an absolute No.1 professional network position with
660 million users globally(Annual report,2019). In 2015, LinkedIn learning was launched as
an educational platform by offering video courses taught by industry experts in software,
creative and business skills by acquiring Lynda.com(Meyer, S., 2015). Our innovation
focuses on changing the existing value chain of LinkedIn learning and make a new open,
innovative model to create and capture new value in online education.

. 

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BUSINESS MODEL
The business model of an organisation is the set of activities that it performs and utilises its
resources to generate, deliver and monetise its benefits. Moreover, it is a set of activities for
creating and capturing value (Afuah, A., 2014). According to Allan Afuah, Business model
builder (BMB) framework consists of five principal components and shown below.

Figure(1)

LinkedIn Business model is analysed using this business model, and respective components
are examined below.

Customer Value Proposition.

Customer Value Proposition in a business or marketing describes the potential of the product
or service that drives the customer to acquire it. A firm’s customer value proposition also
depends on its reputation/ image and other assets like relationships, acquisitions and
diversification(Anderson, J.C., Narus, J.A. and Van Rossum, W., 2006). .

LinkedIn works on the concept of social media recruitment designed for career and business
professionals to connect. It allows its users, i.e. workers and employer to create profiles in
which job seeker can post their curriculum vitae describing their work experience, education,

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training, skills and personal photo and at the same time employer can list jobs and search for
potential candidates. The site enables members to make “connections” through the online
social platform. From the worker’s point of view, LinkedIn is well suited for personal
branding, i.e. to maintain an image and to create a unique value to position oneself in the
world of career opportunities(Zide, J., Elman, B. and Shahani-Denning, C., 2014).

From the employer’s point of view, LinkedIn allows the company to build awareness of its
brand. It allows to improve its online engagement and lead the people moving from the
awareness stage to the consideration stage and eventually to the hiring stage(Mooney, J.A.,
2013).

Figure(2) Recruiting Flow diagram Source: https://business.linkedin.com/marketing-

solutions/blog/linkedin-b2b-marketing/2019/brand-awareness-build-on-linkedin.

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 These are a list of LinkedIn features to improve the employee-employer
connection(Archambault, A. and Grudin, J., 2012).

In 2015, LinkedIn acquired Lynda.com to create an online educational platform that helps
users to develop and discover business, technology-related and creative skills through course
videos(Meyer, S., 2015).

Market Segment
Market Segment of a business model defines the groups of customers to whom the value
proposition is being offered. Market Segment can be demographic, geography, preferences,
willingness to pay, distribution channels, type of product being offered and type of
relationships (Danneels, E., 1996).

 610 million members.

 303 million users per month and 40% of them visit it daily
User Statics  92% of Fortune 500 companies use LinkedIn
 In 2018, 73.07% of companies had a LinkedIn page
 77% of recruiters are on LinkedIn
 An average LinkedIn user spends 17 minutes on the site per month.
 39% of users have premium accounts

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 Demographics

Traffic Source 
28% of visitors come from the US.
Statistics 
57% of members use mobile device to access the site.

46% of the social media traffic visiting B2B company sites comes
from LinkedIn.
Profile Statistics  “Who Viewed Your Profile” is the top-rated feature.
 27% of the members have between 500 and 999 connections
 Only 2% of LinkedIn users haven’t joined any LinkedIn Group.
Content Statistics  97% of B2B marketers use as a content distribution channel
 91% of marketing executives use LinkedIn to find top quality content.
 Linkedin feed sees more than 2 million posts, articles and videos
every day.
Marketing Statistics  78% of B2B marketers consider LinkedIn is the most effective social
platform
 2.74% is the visitor to lead conversion rate.
 89% of B2B marketers include Linkedin in their marketing strategy.
 LinkedIn accounts for 80% of the B2B social media leads.
 42% of marketers increased their LinkedIn ad budget in 2019.
TABLE(1) LinkedIn Market Segment Source: https://99firms.com/blog/linkedin-
statistics/#gref
Revenue Model:
A firm’s growth model is related to how to continue generating, delivering and monetising
benefits to the customers at larger scale long term (Zott, C. and Amit, R., 2010).

LinkedIn Revenue model is rooted in three main categories

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Talent Solutions It is related to the LinkedIn Recruiter Product, i.e. used primarily by corporate
recruiting teams to find candidates for jobs. It is connected to a massive
database of passive and active job seekers. It is the primary source of revenue
for LinkedIn, and a 28% increase reported(Ramanath, R.,Geyik, S.C., 2018).

Fig(3): Talent Solution Pricing Source: LinkedIn

Marketing It is related to the revenue from the display of ads and banners on the site.
Solutions Almost 23% of the revenue is from the marketing solution. LinkedIn has
nearly 184 million unique users and high user engagement. Advertisements
are specific and can target the relevant segment of the audience(Cooper, B.
and Naatus, M.K., 2014).

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 Figure(4) : Example of LinkedIn ad Source:
https://monetizepros.com/monetization-basics/how-does-linkedin-make-
money/
Premium It is a paid account of LinkedIn service and advanced version of LinkedIn
Subscriptions Basic free account. It offers four-tier of membership, including a free option.
The product table is shown below (Woo, S. and Cowan, L., 2011).

Fig(5) Premium Subscription Product table Source: LinkedIn

Table(2) LinkedIn Revenue Model Source: https://www.denis-oakley.com/linkedin-business-
model-canvas/

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Growth Model
A firm’s growth model is about in generating, delivering and monetising benefits to
customers at a customer at a larger scale long term (Afuah, A., 2014).

Core Growth This segment focus on the entire member life cycle from
acquisition like tools to improve search engine optimisation,
onboarding to helping members build their network to re-
engagement and member communications.
Example: LinkedIn acquired Careerify in 2015 to hire people
from other social media(Kumar, B.R., 2019).
International & Segment This segment focus to improve product-market fit and grow
Growth an engaged customer base in a specific market like China,
Germany.
Data Products This segment focus on experimentation, analytics, data
standardisation platforms to improve the ability to unlock
new insights to accelerate growth.
Example: Acquisition and improvisation of Slideshare
platform to improvise LinkedIn Learning.

Capabilities
Capabilities are the resources and activities that build and leverage resources so that to create
and capture new value (Afuah, A., 2014).

LinkedIn Capabilities are developed and improved per its value propositions, i.e.
Professionals, Recruiters and Third-party developers. Based on that, LinkedIn has multiple
capabilities. It includes keen brand awareness, massive users, internet platform,
online payment system, as well as the number of contact information, including
individuals and organisations. The number of more capabilities and functions can be
referred to Appendix.
Example: LinkedIn Capabilities of Review Analytics can help evaluate the effectiveness of
the updates, video posting, follower-visitor analytics. Same capabilities can be used in the
Learning platform to understand and assess the content to improve it to create and capture
new value.

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INNOVATION IN LEARNING PLATFORM- GAINING COMPETITIVE EDGE
Effective Business Model is rooted in resources that need to be valuable across markets,
platforms, product generations and business model can be scaled to meet new customer needs
i.e. to meet new customer or meet new needs of existing customer. It is like emerging new
markets “at the base of the pyramid” ( Johnson, M.W., Christensen, C.M. and Kagermann,
H., 2008.).

Exploit or Explore?

Fig(6): Exploit and Explore options in the search. Source: Innovation and Entrepreneurship
3rd Edition. Refer Appendix
From the LinkedIn point of view, LinkedIn Learning platform is deployed in its knowledge
resources and capabilities to achieve secure returns. LinkedIn Learning is a “Close
Innovation”, the company started producing and publishing video classes on specific
categories. But the competitors like Plural sight, Skill Soft, Skillshare have created a platform
to attract new online education market segment through a personalised interactive session,
live streams, podcast, student education(Aylen, J., 2010).

LinkedIn has the potential capabilities and resources along with massive market share, can
“explore” to secure and defend a new competitive position.

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INNOVATION SEARCH SPACE

Fig(7) Map of Innovation Space Source: Innovation and Entrepreneurship 3rd Edition. Refer
Appendix

As we explained earlier, LinkedIn-Learning is on Zone 1, where adaptive and incremental

development takes place within the boundary. Our innovation suggestion is to “push”
LinkedIn Learning into new territory through an opportunity window of its existing
capabilities to a personalised interactive session learning platform rather than video tutorials.
In our model, LinkedIn can use its capabilities like review analytics, skill endorsement, and
network suggestion can drive its subscribers to find out the exact learning portfolio that they
are seeking.

Zone 3 is referred to as reframing in which alternative architectures and exploring different

permutation and combinations to collaborate with new users. Like Less is more Innovation
(LIMI) LinkedIn Learning need to come out from conventional learning platform capabilities
and readjust and design itself by utilising the existing capabilities and capabilities of the
parent company, Microsoft to create a new online platform. For example, a new platform can
use the capabilities of Microsoft Teams, Skype, Office 360, Microsoft dynamics cloud to
create a unique online experience to gain a competitive edge over its competitors. Zone 4 of
Co-evolution is the zone where LinkedIn Learning needs to develop its capabilities as per
many variable factors like technology, markets, global distribution, technological
distributions.

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VARIM FRAMEWORK
VARIM Framework is used for appraising the profitability potential of s business model and
components are Value, Adaptability, Rareness, Inimitability, Monetisation (Afuah, A.,
2014.).

Figure(8) VARIM FRAMEWORK

Afuah’s VARIM framework is used to evaluate our innovation in LinkedIn Learning and its
components are detailed below.

Value
From the subscriber point of view, innovation can bring a wide network of tutors from all
spheres with knowledge specific on various topics from marketing to movie making. The
bandwidth of classes and its diversity-related to language, content and review analytics can

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bring the required course and tutors to the subscriber. Moreover, the capabilities of LinkedIn
can create a unique experience for subscribers.

From the tutor point of view, this innovation can allow them to bridge their talent and utilise
the capabilities of the company to create a new learning experience. Moreover, feedback and
review analytics of LinkedIn can help them to improve their content better.

For corporate learning, this innovation can expand its boundaries to new dimensions and new
topics like film designing, artistic skills and explore the holistic network of education.

Adaptability
LinkedIn-Learning becomes an established platform with 17 million users. Our innovative
concept of the personalised interactive session can tap yet another million by utilising the
existing capabilities and create a new platform to touch another millions of users and tutors
irrespective of language, topic and mode of education. Moreover, barriers to entry is low for
this innovation, but data analytics and feedback evaluation is the only concern for the firm.

Rareness
From a normal perspective, this model is an already existing innovation, and it has its
competitors like Skill-share, Skillsoft. But the rareness of our innovation can be achieved
only by the combination of capabilities of existing firms and its parent firm, Microsoft and its
acquisitions. For example, capabilities of Microsoft like Skye, Microsoft Teams can create an
online interactive classroom. Online Library of Lynda and LinkedIn Groups can bring the
same peers together. These experiences cannot be replicated by another competitor.

Inimitability
The service provides by this innovation can be inimitable, but the experience cannot. From
the LinkedIn Platform, using data analytics, it can understand the demand for recruiters like
skills, certifications, it can utilise this data to map to our open innovation to bring right tutors,
courses. Another important feature is that the combination of capabilities cannot be imitated
by any competitors. For example, capabilities of Office 360 and Microsoft Cloud can be
integrated for a new learning experience, and that cannot be replicated by another firm.

Monetisation
Cost Structure to adopt innovation and for its marketing depends on up-gradation of the
existing platform, commission for the tutors, traffic acquisition, market campaign and
improved backend technology. At the same time, new revenue streams can be generated by

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billing the subscribers depending upon the course and tutors. Moreover, other channels like
YouTube, Facebook, Instagram can be used to promote course videos, and subsequent
revenues can be generated. From the tutors, revenues can be generated through LinkedIn
Marketing Solution through display ads, banners etc.

Figure(9) LinkedIn Learning Youtube Page Source: Youtube

Potential Implementation Issue

1. Cost Structure:

The direct learning platform uses pay per service model, which implies that LinkedIn needs
to structure the cost model based on value and duration to create value to users.
Standardisation of cost in tiers based on these factors can complicate the algorithm for
creating cost structure. 

2. Certification and Standardisation of courses offered: Since LinkedIn acts as an open

platform, the Standardisation of the courses provided and filtering of educators will be harder
to achieve, and certification for unique courses offered will increase the cost.

3. Expense in Sales, Marketing and Administration:

In the Annual report of Microsoft for 2019, the sales and marketing expenses for the
company are mentioned to have increased 13% due to LinkedIn expenses and investment in a
commercial sales capacity(Microsoft, 2019). They also saw an increase in administrative
costs driven by LinkedIn. The new platform will add to these expenses to build and maintain
as well as commercialise the platform.

4. Disruptive Technology or Innovation

Disruptive technology or innovation changes the way of operations of consumers, industries,

business operations to recognisably superior(Danneels, E., 2004). It can be reflected in online

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learning also because competitive advantage depends upon the capabilities of the firm. For
example, in future Google decide to integrate the capabilities of Google Glass to Google
Classroom for 3D learning, it can be a new experience and LinkedIn Learning needs to adapt
it(Muensterer, O.J,e.t.,2014)

CONCLUSION
LinkedIn has been developing its business from Talent solutions to the Learning platform and
marketing solutions. They have been shielding their position as the largest professional
networking site by utilising current capabilities and acquiring and developing new
capabilities. The new platform follows the next expected trend of personalised coaching and
mentoring. The lack of quality and Standardisation of the programs offered by the
competitors puts LinkedIn in a superior position to leverage the capabilities they possess
along with the capabilities inherited from Microsoft. If they can tackle the hurdles of
standardisation and cost structure with minimal investment, this could mean they will not
only capture more value in the current market but reach to new demographics. The platform
provider business model used will impact the participation and increase in customer base,
which implies the ability of LinkedIn to defend its position as the largest and most trusted
professional network. Moreover, from our VARIM analysis, all the components of it are
positive (yes), which can bring a sustainable advantage to the firm also.

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References

Afuah, A., 2014. Business model innovation: concepts, analysis, and cases. routledge.

Anderson, J.C., Narus, J.A. and Van Rossum, W., 2006. Customer value propositions in
business markets. Harvard business review, 84(3), p.90.

Archambault, A. and Grudin, J., 2012, May. A longitudinal study of facebook, linkedin, &
twitter use. In Proceedings of the SIGCHI conference on human factors in computing systems
(pp. 2741-2750).

Aylen, J., 2010. Open versus closed innovation: development of the wide strip mill for steel
in the United States during the 1920s. R&d Management, 40(1), pp.67-80.

Cooper, B. and Naatus, M.K., 2014. LinkedIn as a learning tool in business education.
American Journal of Business Education (AJBE), 7(4), pp.299-306.

Danneels, E., 1996. Market segmentation: normative model versus business reality. European
journal of Marketing.

Danneels, E., 2004. Disruptive technology reconsidered: A critique and research agenda.
Journal of product innovation management, 21(4), pp.246-258.

Johnson, M.W., Christensen, C.M. and Kagermann, H., 2008. Reinventing your business
model. Harvard business review, 86(12), pp.57-68.

Kumar, B.R., 2019. Microsoft’s Acquisition of LinkedIn. In Wealth Creation in the World’s
Largest Mergers and Acquisitions (pp. 235-241). Springer, Cham.

Meyer, S., 2015. LinkedIn's Blockbuster Deal With Lynda. com: What It Means To The
Online Learning Industry/S. Retrieved February, 15, p.2016.

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Mooney, J.A., 2013. Locked out on LinkedIn: LinkedIn account belongs to employee, not
employer. Intellectual Property & Technology Law Journal, 25(6), pp.16-18.

Muensterer, O.J., Lacher, M., Zoeller, C., Bronstein, M. and Kübler, J., 2014. Google Glass
in pediatric surgery: an exploratory study. International journal of surgery, 12(4), pp.281-289.

Ramanath, R., Inan, H., Polatkan, G., Hu, B., Guo, Q., Ozcaglar, C., Wu, X., Kenthapadi, K.
and Geyik, S.C., 2018, October. Towards Deep and Representation Learning for Talent
Search at LinkedIn. In Proceedings of the 27th ACM International Conference on
Information and Knowledge Management (pp. 2253-2261).

Woo, S. and Cowan, L., 2011. LinkedIn Price at High End. Wall Street Journal.

Zide, J., Elman, B. and Shahani-Denning, C., 2014. LinkedIn and recruitment: How profiles
differ across occupations. Employee Relations, 36(5), pp.583-604.

Zott, C. and Amit, R., 2010. Business model design: an activity system perspective. Long
range planning, 43(2-3), pp.216-226.

Danneels, E., 2004. Disruptive technology reconsidered: A critique and research agenda.
Journal of product innovation management, 21(4), pp.246-258.

Skeels, M.M. and Grudin, J., 2009, May. When social networks cross boundaries: a case
study of workplace use of facebook and linkedin. In Proceedings of the ACM 2009
international conference on Supporting group work (pp. 95-104).

Yoffie, D. and Kind, L., 2012. LinkedIn Corporation, 2012.

Meyer, S., 2015. LinkedIn's Blockbuster Deal With Lynda. com: What It Means To The
Online Learning Industry/S. Retrieved February, 15, p.2016.

Annual Report of Microsoft 2019.

Annual Report of LinkedIn 2019.

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Appendix
VARIM FRAMEWORK

VARIM: VARIM is a framework which uses management concepts to make predictions about the
expected profitability of a business model when there are no reliable numbers available. Value,
adaptability, rareness, inimitability and monetization are the components of the variant framework.

Value: Value is the degree to which the business model can offer benefits that customers perceive as
valuable to them.

Adaptability: Adaptability or scalability is the degree to which a business model can be scaled
profitably to meet new customer needs.

Rareness: Rareness is the degree to which business model is the only one that can offer customers
unique benefits that they perceive value.

Inimitability: Inimitability is the degree to which the innovation cannot be imitated, substituted or
leapfrogged to create the same or more value.

Monetization: Monetization is the degree to which the customer benefits are transformed into
profits for the company.

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EXPLOIT OR EXPLOIT?

EXPLOIT: Organizations can deploy knowledge resources and other assets to secure returns
to acquire steady flow of benefits by doing the thing better.
Explore: It is way doing the things in an uncertain environment by doing things different that
involves risk, that why it is termed as exploration.

MAP OF INNOVATION SPACE

ZONE 1- OPERATIONAL OPTIMIZATION: It is the area where the organization can

exploit an familiar territory and exploit the knowledge base.

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ZONE 2 -ORGANIZATIONAL TRANSFORMATION: It is the area where organization
explore the existing capabilities and push the frontiers in the familiar direction.
ZONE 3- CO-EVOLVE- It is area where organization can bring new elements to existing
model and more often related to experimentation.
ZONE 4-REFRAME- Its is the final stage in which is difficulty to explore in a systematic
way due to its complexity.

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