At a glance
- Recruit successfully transformed its business model from one based on traditional print media to one based entirely online.
- It went on to launch several new digital platforms that connected SMEs with customers across different business verticals.
- This placed Recruit at the intersection between growing volumes of real-time online data generated by customer transactions and deep offline data and knowledge residing within its frontline sales team.
- The company’s efforts in applying data analytics, machine learning and artificial intelligence (AI) to achieve data-driven innovation and create superior value provides lessons in using data as a source of competitive advantage.
Recruit Holdings is Japan’s largest staffing firm and a leading marketing media company. It offers permanent and temporary staffing services, executive search and online recruitment services in Japan and through its subsidiaries overseas. It is also a leading provider of a wide range of classified advertisements and value-added services in areas such as travel, real estate, automobiles, dining, beauty and weddings. Recruit set itself two goals: To become the largest staffing agency in the world in terms of number of positions filled by 2020, and the largest global marketing media company by 2030. A key thrust of its strategy is to create new business opportunities by leveraging data analytics, machine learning and artificial intelligence (AI).
The broader issue
Across the board, there is a tremendous growth in the volume of data that companies generate and interface with. This data can allow them to spot customer trends and derive insights to make data-driven, smarter, real-time decisions, which in turn can drive better business performance. Taking this a step further, companies can apply analytics to the data to unlock new sources of economic value, creating a source of competitive advantage. That is easier said than done, however, given the hurdles in the effective use of data. First, the available data is typically unstructured, complex, fragmented and siloed, often with many gaps. Second, the adoption of tools needed to process and distill data remains low. Third, as is often the case with new technology undertakings, few companies have the necessary knowledge and skills in domains such as real-time analytics, relational databases and data security. Last, the managerial expertise and bandwidth required for driving breakthrough innovation for the long term is often overstretched because they are focused on achieving short-term deliverables. How can organizations evolve to move the needle toward better data utilization to garner big wins?
With the proliferation of internet penetration and user adoption in the 2000s, Recruit successfully transitioned from being a traditional provider of information via paper/magazines to become the leading online information portal with dedicated websites for diverse business verticals. It operated a business-to-consumer (B2C) model in which it acted as the meeting point for SMEs and users. For example, its job-posting site linked employers and job seekers; its housing information portal connected landlords and tenants; its beauty website helped salons fill empty seats with customers; and so on. Recruit referred to this as the “Ribbon Model” – effectively a two-sided network where the value derived by a given consumer largely depended on the number of SMEs on the other side of the network and vice versa (see Figure 1). From the early 2010s, Recruit started enhancing its business model by launching a number of web-based platforms with functionalities that allowed SMEs to digitize several of their key activities, such as point-of-sale (POS) registers, reservations and payments, thereby simplifying their day-to-day operations. These platforms included:
- Salon Board (2012), a cloud-based reservation platform for beauty businesses to streamline their customer management systems and improve operational efficiency.
- AirREGI (2013), a smartphone/tablet-based free POS cash-register app supported by a cloud-based data management system that allowed businesses to perform everyday tasks such as sales entry, inventory tracking and end-of-day report generation. AirREGI was largely adopted by SMEs looking to buy their first touch-screen POS system or to upgrade their existing cash registers.
- Air SERIES Apps: Building on the success of AirREGI, Recruit launched AirWAIT (November 2014), an app for managing waiting lines so that customers could use their smartphones to queue virtually; AirRESERVE (February 2015), an app for managing bookings; and AirPAYMENT (November 2015), an app for processing payments. The basic AirREGI POS app was free, but the value-added functionalities were chargeable.