Recognizing the talent ‘doom loop’

As practitioners in this area we have both bought into this notion, and worked for many years to make it happen. We have worked with CEOs, undertaking extensive talent reviews. We have worked with psychologists assessing people’s capability. We have worked with technology specialists to introduce databases to capture skills across the workforce. We have worked with ‘the talent’ as coaches. We have worked with recruiters to scour the market for more talent. And yet when we reflected on the difference this activity was really making we felt that it was still not enough.

That is not to say that the work we were doing wasn’t useful; it was. We provided CEOs with better insight to inform their decision-making, our systems reduced administration and the individuals we worked with grew in capability. We could (and did) measure our results for each of these activities and in each area we could see an improvement. It was when we stepped back and looked at the whole picture we could see that the dynamic problem about the quality and supply of talent organizations was not fixed. Like other professionals in this area we continued to wrestle with attraction and retention, trying to resolve this with ever-greater rewards. While we could provide our ‘talent’ with world-class executive education, it was a continual struggle to move them on to new roles.

The struggle was systemic and success was secured only when a complex set of organization and individual factors lined up. Was the individual mobile? Did they trust their leaders enough to take the risk? Was their current business able to let them go? Was there sufficient back fill? And so on.

In truth, we had metaphorically put sticking plasters over the obvious issues without really getting to the root cause of the problem.

We spoke with our colleagues in other organizations and they too commented on the never-ending treadmill of talent reviews, succession planning, assessment and development. Many were weary with an engine of bureaucracy that had almost taken on a life of its own. Although all were busy, very few could honestly point to the commercial advantage of their talent activities. We could talk about the risks we had managed but not how our activities had contributed to our organization’s long-term success. Why is it that marketing directors, product directors and finance directors become chairmen, chief executives and board members at a much, much greater rate than HR directors? Could it have something to do with a perceived lack of connection between the work of HR professionals and the direct commercial impact on the business?

It felt to us that organizations were operating in a talent ‘doom loop’:

The Talent Doom Loop

We believe that many organizations are now stuck in this systemic loop, with important implications for corporate governance and the pool of available talent. Two high profile CEO succession stories bring this vividly to life. Coincidentally, in February 2010 the Boards of the UK’s largest retailer, Marks & Spencer, and the UK’s main commercial broadcaster, ITV, announced CEO successors within the same week. Both appointments attracted much press attention, particularly since both were external candidates signed up for packages reportedly in excess of £15 million each. Coming at a time of economic difficulty, many people were naturally perplexed - not just by the eye-watering scale of the packages, but also by the fact that they appear to pay huge sums irrespective of company performance.

The justification used by both companies to defend these decisions is the limited talent available: a simple question of supply and demand. Not for the first time, this response provokes a scathing rebuke from several commentators, incredulous that such significant companies had failed to groom internal successors. What many people feel is shocking is the complete lack of succession planning and the non-suitability of any internal candidates for two of the highest profile and most commercially-significant jobs in the UK. Resigned to looking outside their organizations, both boards then discovered that the pool of senior executive talent is seemingly very small. Either UK plc has failed to develop managers capable of leading large corporations, or the boards of the biggest and best British companies just can’t find them. Clearly, with the penalty for mistakes at this level running at £15 million per post, to say nothing of the problems of uncertainty and delay when replacing a CEO, this is an alarming inefficiency that surely needs to be corrected.

What seems more likely is not that great senior executives are in short supply; it’s simply that boards are often completely unaware of the many neglected or underrated people who are very capable of running large, complex organizations. Because they are at the top, boards of directors get away with an unquestioning arrogance that says ‘people who are capable of keeping company with us and leading this business are in incredibly short supply’. This belief is uninformed at best and potentially self-serving. It may be that there are people who can run large commercial organizations. However, they don’t get an opportunity, as the directors and head-hunters prefer to opt for stars with proven track records. In other words, it is preferable to take a safety first option.

The practices of talent management are seriously adrift from the strategy and challenges facing organizations today.

This book is our exploration of what might be happening to cause this doom loop. It is based on extensive conversations with the stakeholders and HR professionals involved in the talent system. We spoke with senior leaders and head-hunters as well as people who had been identified as ‘talent’ and those who hadn’t. We also conducted an anonymous, global survey reaching 300 executives across Europe, the USA, South America, the Middle East, India and China. The one thing they had in common was a frustration with the way talent management was working.

About our research

The aim of our research was to understand more about the beliefs and assumptions people have about talent and how these might be influencing current practices. We used our research to return to first principles and address several questions:

• What is ‘talent’ and why do we need it?

• Why, even in an economic downturn, is there never enough talent?

• To what extent is talent a universal, global idea?

• How come despite the ‘scarcity’ of talent women and people from minority groups are still notably absent from key positions?

• Is there any relationship between the perceived talent shortage and how we see work these days?

• Who is really in control of talent?

• What are the rituals, behaviours and practices affecting the way talented people are managed?

Seven key insights

What we learned was surprising, heartening and, in places, complex. In high-level terms we learned how the practices of talent management were adrift from the strategy and challenges facing organizations today. We have summarized these into seven key insights:

1. The need to revaluate how people contribute and create value in today’s economy - it is about knowledge, innovation and relationships today rather than executive potential tomorrow.

2. Challenging the conventional wisdom that talent refers to a ‘special few’ rather than the ‘vital many’. Perhaps we don’t have enough because we keep looking in the wrong places and doing the wrong things?

3. Conditions facing organizations are tough and competitive and markets are turbulent. To withstand this, we need to build talented organizations and talented individuals.

4. Interdependence between people within and across organizations is critical. The way that each individual relies on each other and how talent is realized through social and team ties makes a decisive, defining difference.

5. Individuals control when and who their potential is shared with. The idea that an organization can manage talent and potential is an outdated conceit.

6. The nature of work itself matters hugely. The extent to which it is stimulating and engaging - and how people can make the connection with what they do and the wider difference it makes - is vital.

7. The way talent is generated is affected by the whole ‘ecology’ of an organization - its sense of purpose, rituals, the behaviour of its leaders, how it hires and how it fires people all influence the way talent is generated.

It seems counter-intuitive at best to claim that ‘people are our greatest asset’ and then largely neglect the talents and aspirations of the majority.

These observations point to a need to understand the social dimension of how talent works. We have spent so much time focused on human capital: the capability and resources that each individual offers, the ‘within employee factors’ - yet we have neglected to look at the role social capital, the ‘between employee factors’ plays.

How this book is organized

We have written this book to offer some ideas about breaking out of the talent doom loop. The ideas we offer are intentionally challenging. Our book is intended to stimulate new perspectives and practices. This is because the most important truths about talent are the beliefs we hold about it.

In Chapter 1: We Are All Talent Now, we start by exploding a number of the core beliefs we hold about talent. We look closely at several individual stories: Gary Flandro, a NASA summer intern, as well as Bob Woodward and Carl Bernstein, the journalists who doggedly pursued the Watergate investigation, and reflect on how they were able to make the differences that made history.

We learn that talent can come from unexpected places and that individual success is highly dependent on hard work, the timing of opportunities and the support of other colleagues. In this sense we feel it’s time to more completely understand the conditions for talent; how the character of the organization shapes the way individuals perform and develop.

Chapter 2: A New Way of Thinking About Talent highlights the simple fact that to really get to grips with the idea of talent you need to understand what it is for. We look at how the changing shape of our economies is driving different needs in our organizations, and how this is influencing the demand for talent. More than ever, our organizations need to be fast, adaptable and networked. This drives the demand for a wider portfolio of talented people who, whatever their role, are able to generate sustainable value.

On the supply side there are three, significant trends that are converging: the fluctuating supply of labour, a capability crunch and more connected consumption. We look at the impact the global downturn is having on the labour market, noting that pension insecurity has postponed the predicted retirement of the Baby Boomers. Also, despite this temporary increase in the labour supply we still have a shortage of critical skills. We think that this ‘capability crunch’ is being caused by an education system designed more for the Industrial rather than Information Age. As HG Wells noted, the future is a race between education and catastrophe - and this failure to adequately prepare our children for the new world of work is the most problematic aspect of our future talent supply.

Devoting all our attention to small groups of high potentials leaves our organizations dangerously exposed to changing economic conditions.

Combined with this are dynamic changes in our social lives, often brought about by technological innovation, and we find that is not reflected in our workplaces or the way we plan for talent. We explore the crucial question of ‘potential for what?’ and explain why devoting all our attention to small groups of high potentials leaves our organizations dangerously exposed to changing economic conditions.

Against these tremendous changes organizations will thrive by being distinctive, a fact explained in Chapter 3: Talent Diversity: You Need to Believe It to See It. Distinctiveness will be achieved through innovation and more specifically an ability to respond to the kaleidoscopic requirements of different consumer groups. Why then does the leadership of our organizations continue to look so homogenized? It is striking that despite the increased diversity in our society and our consumption (women make over 70% of purchasing decisions in the developed world and some £300 billion is spent in the UK by the combined over 55s, disabled and gay communities) this is not reflected in the leadership of our organizations. We therefore ask if our conventional methods of identifying talent are exacerbating this diversity gap.

The need for a practical, business edge to the way that people are managed and led is the subject of Chapter 4: Strategy - Beginning With the End in Mind. This chapter explains that strategy is the first priority, encompassing other tasks such as serving customers and adding value, managing finance, innovating and leading people. Strategy is a word that is, sadly, over-used and often made to appear as a ‘black art’ - in truth, it simply means moving a business from where it is now to where it wants to be in the future. It highlights the fact that in this essential journey the role of senior HR professionals is, surprisingly and consistently, neglected and under-valued.

A talented person is anyone that adds value to an enterprise or activity, a concept that is simultaneously simple, vital and often challenging.

The chapter also provides several practical tools enabling the business to make its strategic journey from where it is now to where it needs to be. These tools include scenario planning as well as the essentials of developing, implementing and communicating strategy. Also included in this chapter are strategic tools for HR professionals, enabling them to mobilize, stimulate and focus talented minds to move the business the right way. We have no doubt that were this to happen more, with HR professionals directly connecting what they do with the ‘hard-edged’ strategy and priorities of the business, we would find many more assuming the top roles of Chairman and CEO in corporations.

In Chapter 5: Hire and Wire - Developing Your Organization’s Talent Ecology, we look closely at the challenge of implementing strategy. One issue that matters, but is perhaps not well understood, is the need to create the right conditions for talented people to thrive. We call this the talent ecology and it is vital if talented people are to perform. This matters because it ensures that they and their organization achieve their true potential. The forces shaping the talent ecology are explained, notably the external market conditions and the link with the organization’s strategy.

As well as explaining how to manage the talent ecology we explain that a talented person is anyone who adds value to an enterprise or activity, a concept that is simultaneously simple, vital and often challenging. We also describe how best to find and nurture talent, the need to get the right structure, the importance of networks and the nature of talented teams. This chapter describes how an organization’s culture can make or break their strategy. We also borrow an intelligent and highly appropriate metaphor from business writer Jim Collins, introducing the ‘fly wheel effect’ where small, incremental changes in an organization’s culture gradually build a powerful momentum among everyone involved.

The increasingly significant issues of employer branding, the employee value proposition and segmentation are explained in Chapter 6: Getting Personal - The Workforce of One. The point here is that geographical and social mobility of labour has risen dramatically within a generation. People are concerned about themselves and their futures and they have the ability to do something with this concern. For Western employers, the concept of a career for life has largely disappeared. This has major implications for the way that people are managed. Employees need to be encouraged to bring all of their talents to work. This situation was loudly championed by business prophets like Ricardo Semler nearly two decades ago, but it has become even more urgent today. In the twenty-first century economy the time to view employees as a single ‘workforce’ is passing, a better approach is mass customization, viewing each individual as a workforce of one.

Meeting this challenge is no easy task. One leadership challenge is central to the task of creating value (the defining attribute of talented employees): that task is described in Chapter 7: Engaging with Talent. Employee engagement is vital to improving business performance, effectiveness and productivity. The thinking behind employee engagement is simple. If people in organizations are actively engaged with their work - not simply motivated, but valuing what they are doing and striving to do it better at all times - then they will be more productive for the organization and likely to implement the strategy, as well as being more personally fulfilled. The trick is to move from a situation where people might (or might not) be simply happy and motivated, to one where they are actively loyal, committed and engaged with their work.

In Chapter 8: The Meaning of Work we consider why people are much more than ‘human resources’ and why, in the future, work needs to be made much more personal and meaningful. While this is easy to say and it may sound optimistic - even naive - it is undoubtedly the case that for most employees, meaning matters. Consider, for example, the extent to which your organization succeeds with the following challenges:

• Does your organization strive to achieve positive change in society - doing things differently and better?

• Are leaders creating the right conditions for their people to develop, flourish and succeed?

• Do your company’s values actually inform and guide the way people work (or are they just meaningless words)?

• Are people proud to be working for your organization?

• Are trust, energy and strong relationships commonplace?

These issues also underpin Chapter 9: Leading for Talent, which describes how the challenge of leading has been changing in recent years. Currently, some of the greatest challenges and opportunities for business leaders are posed by: greater globalization, interconnectedness and interdependence. These have led to increasing complexity and the escalating need for growth, innovation and an approach that meets rising expectations among customers and employees.

There is an answer, however, and this is explored in Chapter 10: Techniques for Realizing Talent in your Whole Workforce. This explores the connection between leadership and talent and answers several questions: how do you attract good people to your organization and how can you ensure that they achieve their full potential? How do you stimulate, engage and inspire people at all levels to achieve greatness? What practical support do people really want at work and what do they get? Above all, how can you build a dynamic workforce, help people realize their potential and enable them to succeed?

The answer to many of these leadership challenges can be found by:

• using intuition and emotional intelligence;

• applying intellect, intelligence and insight;

• showing decisive, courageous leadership and integrity.

The conclusion draws together these themes and explains how to create a system, the talent flywheel, which achieves steady, inexorable progress for the organization as well as each talented individual.

Chapter 1

We Are All Talent Now

Biologists often talk about the ‘ecology’ of an organism: the tallest oak in the forest is not the tallest just because it grew from the hardiest acorn: it is the tallest also because no others blocked its sunlight, the soil around it was deep and rich, no rabbit chewed through its bark as a sapling, and no lumberjack cut it down before it matured.

Malcolm Gladwell Outliers (Little, Brown and Company 2008)

What is talent and how is it best viewed? This chapter explains about talent and why we believe talent cannot be managed. It introduces the main issues, in particular, the belief that the context in which talent operates is as important as the individual, and the fact that engaging the whole workforce is not simply one leadership task among many, it is leadership. Crucially, it also explains why elite approaches to talent management don’t work, and why successful businesses need to get better at realizing the potential of different types of talent across the workforce.

In the summer of 1965 Gary Flandro was a summer intern with the NASA space agency. At that time, NASA was in the middle of the first Mariner missions to Mars and Flandro was given the routine and supposedly far less interesting task of calculating, in detail, the movement and relative positions of the planets and the best time to launch a probe for a future expedition to Jupiter.

Gary Flandro approached the task carefully and enthusiastically. He understood that the gravitational field of one planet could slingshot a probe onto another target at even greater speed, and he calculated when the four largest planets in the solar system (Jupiter, Saturn, Uranus and Neptune) would be on the same side of the sun, in the same proximity. He then calculated that a specific timing for a mission to Jupiter would, because of their proximity, also enable the probe to ‘slingshot’ using the orbit of one of the four outer planets to visit the next and continue its journey. Finally, Gary Flandro worked out that only once every 175 years were the four planets close enough to make such a mission viable.

This was a major breakthrough in space exploration: Flandro, a Masters student on a summer internship, had discovered what has become known as the multi-planet ‘Grand Tour’ mission: a feat that uses gravity to enable a space craft (ultimately the Voyager) to explore the four major outer planets of the solar system. This led NASA to launch the enormously successful Pioneer and Voyager space probes that during the 1970s, 1980s and 1990s dramatically increased our understanding of the solar system. Voyager is now the most distant and far travelled object in human history and Gary Flandro’s journey is also interesting. For many years, he was a professor of space exploration at the University of Tennessee and he has been named by the American Institute of Aeronautics and Astronautics among 30 of the world’s finest contributors to the field of aeronautics. Not bad for a young student given a routine task to complete!

Another American of the same generation as Gary Flandro, Robert Woodward, was born in March 1943 in Illinois. He studied history and English literature at Yale University, receiving his BA degree in 1965 before beginning a five-year tour of duty in the US Navy. After being discharged as a lieutenant in August 1970 he considered attending law school but applied instead for a job as a reporter with the Washington Post. He was given a two-week trial but was not hired because of his lack of journalistic experience. After a year at the Montgomery Sentinel, a weekly newspaper in the Washington DC area, he was hired as a Post reporter in September, 1971. While he was at the Washington Post Bob Woodward was partnered with another journalist, Carl Bernstein, who had attended the University of Maryland but did not graduate. Together, these two young, relatively inexperienced journalists doggedly pursued an investigation that became the Watergate scandal, eventually resulting in the first resignation by an American president in US history when Richard Nixon resigned the presidency in August 1974.

In his 1995 memoir A Good Life, former executive editor of the Washington Post Ben Bradlee singled out Bob Woodward in the foreword, commenting that he could not overestimate the contributions made by Bob Woodward, a reporter that Bradlee viewed as the best of his generation and the best he’d ever seen. Both Woodward and Bernstein have maintained their position at the top of their profession (and, thankfully, subsequent US presidents seem to have raised their game as well).

So, what do these stories of Gary Flandro, Bob Woodward and Carl Bernstein have to do with our understanding of talent management? Several facts are quite obvious while others require a little more thought.

First, talent requires effort. It can be tempting to assume that the most talented people can do no wrong: their success seems almost preordained and all they need to do is simply ‘show up’. This is not true. Gary Flandro had already graduated high school, obtained his undergraduate and master’s degrees and was well on his way to obtaining his PhD. He was used to hard work and study and that, presumably, was why NASA hired him in the first place. Similarly, Woodward and Bernstein understood that their profession requires patient, diligent and sometimes tedious effort. All three worked hard. In fact, it may be misleading to call it work at all. What they did became a passion, almost certainly they were thinking constantly about the issues they faced, even when they were away from their organizations. Talent requires energy if it is to develop and flourish. Fortunately for these individuals (and the rest of us) they were able to find an area of activity – a genuine passion - that would drive them on and enable them to excel. (In his fascinating book Outliers the writer Malcolm Gladwell makes a similar point, providing evidence for his claim that 10,000 hours is the time required to become truly successful at a task.)

The next point about talent is that it comes from anywhere, everywhere, and can emerge at any time. For example, the administrators at NASA who hired Gary Flandro clearly believed they were getting the services of a bright college student, but they probably did not realize they were hiring one of the greatest contributors to the field of aeronautics. Similarly, Harry Rosenfeld, the Washington Post’s metropolitan editor who released Bob Woodward after a two-week trial in 1970, did not realize that the man with no journalistic experience who he had just let go would, within four years, have returned to the Washington Post and conduct an investigation leading, ultimately, to the resignation of a sitting US President.

This point - that talent comes from anywhere, everywhere, and can emerge at any time - is especially significant today, in the first decades of the twenty-first century. For the first 30 years of our lives we witnessed a world recovering from the shocks of the twentieth century. In particular, there was a Cold War, apartheid, atrocious governance, horrendous poverty in that part of the globe known as the Third World, and economic instability in the First and Second Worlds. Of course, there were many amazing successes too, especially in the fields of science and technology, but that does not obscure the fact that the late twentieth century saw huge disparities in income and opportunity around the world.

This situation now is changing. Countries such as Brazil, Russia, India and China (the ‘BRIC’ countries) have been developing fast, together with other populous countries dubbed the N11 (the ‘Next 11’ fast-developing countries after BRIC are: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, The Philippines, South Korea, Turkey, and Vietnam; the terms ‘BRIC’ and ‘N11’ were coined by the investment bank Goldman Sachs). Moreover, the rates of economic growth are significant and sustained. For example, between 1980 and 2006 China’s economy grew by an incredible 9% each year. This has helped to lift millions of people out of poverty and into an increasingly globalizing economy. Even if these fast developing countries stumble economically or politically at some point in the future, much as the Western democracies did in the first half of the twentieth century, their growth, long-term prosperity and influence now seems assured, at least during the twenty-first century. The implications of this are far reaching and they are especially significant for organizations. For example, it is a simple, sobering fact to consider that the top 5% of China’s student population is significantly larger than the United Kingdom’s entire student population.

The stories from NASA and the Washington Post also highlight the profound influence exerted by leaders and organizational cultures. Clearly, both organizations, NASA and the Washington Post, were exceptional places. Both have suffered huge setbacks and doubtless made major mistakes but, undeniably, they have come to be seen as organizations defined by the talent and character of their people and, perhaps most significantly of all, the ability to achieve their goals. Even today, the Washington Post is regarded as one of the world’s great newspapers, while NASA still has the ability to instil excitement, awe and interest. Of course, this is in part a reflection of what they do and what they have done in the past, but, crucially, it also suggests that a whole range of leadership issues are at play when organizations enable their most talented people to develop their potential and succeed. This includes coaching and providing mutual support, team working and collaboration, innovating, building relationships and being able to develop your skills. Of course, that personal success invariably drives the organization’s success, but the organization or, more specifically, the team, is driving the individual.

For example, in February 1676 Isaac Newton, the renowned British scientist, wrote to Robert Hooke, another successful scientist with whom Newton was in dispute over optical discoveries, remarking: ‘If I have seen further it is by standing on the shoulders of giants’. Historians tend not to believe that this was a statement of self-effacing modesty from Newton (surely one of history’s greatest ever scientists); the prevailing view is that this was instead a sarcastic attack on the curmudgeonly Hooke who, although immensely successful in his own right, was also short and hunchbacked. Whatever the true sentiment may have been behind Newton’s remark, the idea has lasted throughout mathematics and science that progress is made incrementally and interdependently, by methodically building on the discoveries and insights of others. So it is with many issues in business including the need for talented people to be able to learn from what is around them and what has gone before.

Another thought that comes to mind when one reflects on the diverse stories of Flandro, Woodward and Bernstein is that these were, despite their achievements, relatively ordinary people. By their own admission these were normal individuals (at least, compared to their peers), rather than the greatest geniuses in history. Gary Flandro may have gone on to become a rocket scientist but in 1965 he was a student intern. By this we mean that it would probably not have been apparent to NASA that a summer intern would make a major contribution to the exploration of the outer planets! Similarly, no one realized that Woodward and Bernstein’s investigation into a Washington DC burglary at the Watergate complex would have such far-reaching consequences. Moreover, it almost certainly never occurred to the individuals involved. A journalist barely out of his 20s with less than four years professional experience investigated a crime (and the high-level cover-up of that crime) bringing down a president. A student’s calculations during a summer internship program were integral to the successful exploration of the outer planets. Amazing though these stories are, one suspects that most successful organizations contain many impressive but perhaps less eye-catching examples of people achieving more, and going further, than they had ever thought possible.

Crucially, it is the environment in which talented people operate that allows them to develop their potential and succeed: the organization gives them access, opportunity and encouragement.

This is one of the most fascinating things about talent: most of us have it, or, more precisely, we are each more talented than we give ourselves credit for. The notion that we can each achieve more than we might think we call discretionary potential and it is one of the main themes of this book. The challenge for leaders and organizations is to find the right people and then help them to go even further than even they might have thought possible. That sounds to us like a great challenge and the meaning of great leadership.

Another insight that comes to mind when one considers the phenomena of distinctively talented employees is the fact that they always seem to display several notable characteristics. In particular, these include initiative, flexibility and drive. They display a relentless desire to find things out, to get things done and, above all, to make progress. They want to achieve things and even more than that they want their work to have meaning. These qualities of initiative, drive and a desire for work to have meaning have several vital implications and results. For example, they lead to passion, enthusiasm and inquisitiveness. They also propel talented employees to seek out, both consciously and, one suspects, subconsciously, new opportunities. Talented people tend to find themselves in the right place at the right time more often than other people, and that is because they are looking for opportunities, they gravitate towards them, and opportunities also come looking for them. In other words, they make their own luck.

Crucially, it is the environment in which people operate that allows them to realize their talent and succeed; who they work with, the projects they work on and how they are led. And given the shortfall in skills in today’s labour market it is the task of today’s leader to create an environment where the latent talents in the whole workforce can be realized.

What we mean by talent

So, what do we actually mean by ‘talent’? It is a valuable word that could become discredited with over-use or if it is used too widely without being clear about its meaning. Today, for example, we can see that ‘talent’ may mean someone who is physically appealing, or a Star, or a prima donna, or a capable all-rounder, or simply someone who has a specific skill. The danger is that if the term is over-used and discredited then the concepts behind it are similarly disparaged or dismissed. In business, language really does matter. For that reason we have tried to provide a very clear definition of talent: one that is grounded in business reality.

We like the conventional view that talent is a special ability or a capacity for achievement but that definition is understandably broad. When it comes to organizations and the challenges of leadership, we believe that a talented person is anyone who adds value to an enterprise or activity. Or, to put it another way, to be considered ‘talent’ you have to add value to something; improving it in some way.

This is one reason why talent matters so much: because it lies at the heart of improvement, innovation, competitiveness, customer service and progress. In the twenty-first century it is no longer enough simply to focus on a few ‘high potential’ executives, those people who demonstrate a capacity to be effective at senior levels. The twenty-first century has seen a shift towards value that results from: service/product innovation, brand experience and social relationships, and sharper insights from customers, stakeholders and wider communities.

To understand this view of talent further requires the appreciation of a simple economic truth: profitability requires scarcity. If there is an abundant supply of something (such as knowledge) then its price and value will be low. If the supply is scarce then it is more likely to be valuable and generate a profit. This is the law of supply and demand. And what is often at the root of scarcity? Skills and knowledge. For example, in the pharmaceuticals industry if there is a high demand for a product for which you have a patent and no alternative exists, the future is a lucrative one, even if the research and development costs have been substantial. In this way scarce and valuable knowledge can help deliver exceptional profits. Crucially, the source of that knowledge was people - in this case, the researchers and scientists working for the pharma company. It is important to realize, however, that it is not people, potential or talent that are scarce, it is people with the right knowledge and skills. Our organizations make life harder for themselves than they need to by ignoring the necessity for leadership, by focusing only on a chosen few, by failing to help people realize their potential, and by using the many to develop things that are original, insightful and valuable. What we need to be doing, therefore, is closing the gaps in skills. This means upgrading education and also locating business in ‘talent hubs’ - those places where specialist skills are in high supply.

That much may seem obvious. It is hardly a revelation that the talent in a pharma company rests with its scientists. But just as the scientist’s expertise is the culmination of their background and studies and is now part of a process of generating knowledge and understanding, then producing and selling a product, so that scientist is also being supported in their vital work. Other people are contributing in significant, valuable ways so that the scientist can make a breakthrough and the product can be developed, put into production, marketed, distributed and improved. In fact, we would go so far as to say that however brilliant the scientist, if that support is not there at some level, then success will be highly elusive if not impossible.

Talent ecology and the truth about talent

A talented person is anyone that adds value to an enterprise or activity – a concept that is simultaneously simple, vital and often challenging.

The definition that ‘talent’ is the ability to generate value is significant. One of the most often debated points among people management professionals is how to determine ‘potential’ and ‘talent’, prompting the question ‘potential for what’? How can you accurately predict someone’s future capability to succeed in a leadership role? The key point is the emphasis on prediction, one that we believe is too loose and unreliable. It is time for a more tangible definition of talent: one that is more robust, reliable and dynamic than future predictions and guesswork given in an annual performance rating. A more rounded definition takes into account an individual’s impact on their organization - the difference and value that result from their presence and their effort.

This definition (that ‘talent’ is the ability to generate value) gives us the truths about talent. One of the most significant truths is that talent requires the right environment in which to thrive. We call this talent ecology and it is the situation, culture and surroundings in which a firm’s talent operates. Ecology is a great metaphor for talent; for example, it makes the point that talent does not exist in isolation but relies on its surroundings, it can be fragile, it grows and benefits from nurturing. This concept and its implications for leaders and organizations are discussed in detail later.

This definition of talent has several fundamental implications for leaders and their organizations. First, innovation, relationships and development are inextricably linked with talent. This means moving away from traditional approaches to managing people with a hierarchical focus on executive potential to an approach that favours those who can innovate, sell products or ideas, learn how to improve and do more and even change the way that the organization operates. These issues are at the heart of those organizations that are successful, and they are essential attributes of firms that can manage their talent. Working in this way may not make you the next CEO but it will bring vital knowledge, pivotal relationships and a practical ‘can-do’ approach that favours progress, ownership and personal responsibility. This is the type of talent our organizations will need and we need to think very differently about how best to attract and retain it.

This definition applies to not-for-profit organizations as well as commercial enterprises. For example, there can be little doubt that Gary Flandro’s work as an intern made a major contribution to his organization, Nasa, and to the whole field of space exploration. Similarly, the Washington Post may be a commercial entity that has benefited hugely from the work of Woodward and Bernstein, but then so has the whole of their profession. They made journalism appear exciting, respected and cool - at least, for a while.

The second implication of this definition is that we now need to move beyond the idea that talent can be managed. Tangible assets can be managed but talented people and their potential cannot. You can only seduce, attract and inspire it. You can’t manage talent. Think about it: talent management is an oxymoron. Trying to manage talent is like herding cats or nailing jello to a wall, without the wall. Why would you (and how could you) use management , a concept that historically comprizes planning, organizing, leading, directing, facilitating and controlling an organization, to control talent, with its own special ability or personal capacity for achievement? In fact, the notion of talent management was coined in the early 1990s by an IT software company marketing a new employee database. Talent management works with data; it doesn’t work with people and their potential.

Another implication that springs from the definition of talent is the fact that it is diverse and much more ubiquitous than we might think. Sometimes it stands out but often it goes unnoticed and unfulfilled, linked to an individual’s self-belief and an organization’s capacity to engage with their employees. Those who confidently exhibit their strengths, are self-aware and take personal responsibility for their life and career, are more likely to find ways to add value, and this talent is more likely to be recognized. Equally, those who have yet to realize their capability require roles and environments that continually teach new skills and inspire self-belief. In each case, we believe that potential (meaning the ability to display talent and add value) is discretionary and that talent needs to be engaged rather than managed on its own terms. This concept of discretionary potential is also explored in detail later.

Success is rarely an individual pursuit. Talent and value result from collaboration; this might be through team effort or through peer competition.