The Big Shift

The Big Shift

by Mark Bennett | Talent Management

 

There is a big shift happening that will change the way companies get the maximum value from their talent. Companies that adapt to the changes will be stronger, more productive, more committed and more engaged than ever before. The companies that are not preparing for this future may struggle to stay alive.

 

What Is the Big Shift?

 

The big shift is what The Power of Pull authors John Hagel, John Seely Brown and Lang Davison call a "recording of life, learning, socializing, playing and working." It's driven by new technology, social media and increased performance and digital storage capacity, as well as public policy changes such as trade liberalization, immigration and deregulation. The authors said these drivers have created three overlapping waves.

 

The first wave is evident: The evolution of a new digital infrastructure has given unprecedented access to and distribution capabilities for information. Simultaneously, shifts in public policy have made the movement of people, products, money and ideas across national boundaries easier than ever. The second wave is a movement from putting primary value on knowledge stocks, such as intellectual property and trade secrets, to knowledge flows, where valuable knowledge is being continuously created. We see examples of this in the ways social networks and other collaboration tools help people find each other, share knowledge more effectively and develop long-lasting relationships that create even more knowledge.

 

Finally, organizations are beginning to develop the third wave, what the authors describe as institutional innovations. Here, organizations foster and participate in creation spaces, platforms people access to attract the resources they need to improve their performance and achieve a purpose for which they share a passion.

 

Most companies have created wealth the classic way, by developing a formula to repeat a solution to a problem. This formula allows the company to efficiently address greater and greater numbers of the problem - for example, through manufacturing processes such as an assembly line. That in turn enables "ne plus ultra" of profitability: economies of scale, which usually result in lower costs due to the effect of the experience curve, and hopefully increased barriers to entry.

 

How Are Companies Vulnerable?

 

Hagel, Brown and Davison point out a twofold problem. First, the experience curve is one of diminishing returns on performance; it offers less value the more organizations produce, plus it has a lower limit of zero cost. Second, global competition and greater information available to consumers undercut barriers to entry, making it harder for companies to push larger numbers of their products to the market. It is becoming increasingly difficult to remain competitive simply by becoming larger because consumers can find what they want in ever-increasing numbers of alternative choices.

 

Finally, much of the push-based business thinking also was based on a accuracy in demand forecasts. The better organizations could predict demand for a product or service, the better they could control costs and increase profits. But the waves of the big shift are making forecasting demand harder thanks to the increasing rate of change in technological developments, consumer tastes and product innovations from competitors, which can alter demand more quickly than organizations can react.

 

Consider how push-based principles of business were worked out during the height of the Industrial Age, when labor was viewed primarily as a component of an assembly line. Much was done to create efficiencies of scale to further reduce costs and variance in labor. Jobs were broken down into specialized tasks to remove the inefficiencies of task switching from the production equation. Individual performance could be measured easily and rewarded through extrinsic means such as bonuses and pay. As Dan Ariely discusses in The Upside of Irrationality, performance of routine tasks has been shown to respond positively to extrinsic rewards.

 

This also made for a fairly predictable model upon which to plan hiring and training programs. Further, training could be more efficient by having each training event focused on a specialized task for as great a number of employees as could be handled. Breaking down work into component tasks and applying external rewards for performance served business quite well for some time.

 

However, knowledge workers gradually became more important to creating corporate wealth. Knowledge workers typically do not perform routine tasks primarily; instead they are often called upon to apply research, analysis and critical thinking to solve problems. To management, it was logical to continue using the carrot-and-stick approach of extrinsic reward systems as the main motivation for performance. But Ariely cites research that indicates extrinsic rewards can have a negative impact on the performance of tasks requiring more cognitive effort, with distortive rewards being dangerous to the organization as well as society. Intrinsic rewards improve knowledge worker performance more often. In Drive, Dan Pink describes these as autonomy - the ability to choose how to work; mastery - personal growth and fulfilling potential; and purpose - finding meaning and relevance in work.

 

Ariely also said that breaking jobs into their component tasks can have negative consequences that can outweigh efficiency gains. Many knowledge worker jobs have been engineered to become more efficient by breaking them down into specialized tasks. But often once this happens the worker no longer sees his or her contribution as purposeful because the task is an anonymous piece connected to some unseen output. Ariely shows that this destruction of meaning greatly reduces the worker's motivation to do more of the task. Autonomy is also reduced, since the job has become tightly defined in order to be more efficient, with strict procedures to be followed. Opportunities for mastery also are reduced when a job is limited in scope.

 

In short, current approaches to managing talent are not helping companies get the most value from talent, and in some cases actually damage its value. The push-oriented mindset of management, which is primarily focused on cost, efficiency and scale, is apt to find itself running just to stay in place because those advantages are no longer sufficient in a rapidly changing world. There is a severe shortage of engagement, commitment and passion in talent that could be a tremendous resource to bring new solutions to customers' needs and companies' challenges.

 

To reverse this trend, The Power of Pull authors propose that the best way for companies to survive and even thrive in the big shift is to find, attract and participate in high-value knowledge flows. In these flows, knowledge is not just being shared, it's being continuously created. In other words, if the waves of the big shift are driving change, it may be best to learn how to ride those waves.

 

Uncovering Passion and Purpose

 

To succeed at riding the waves, a company can transform from a machine whose formula pushes training to employees to a platform that pulls resources and then connects both talent and knowledge to achieve a particular purpose. That shared purpose should be an initiative or difficult problem the organization is wrestling with, which will further attract more talent that shares the same passion for that initiative or solving that problem.

 

This is a different way of solving problems from the push model, which focused on creating a repeatable process. The network effect of connecting more, focused talent on an initiative or problem provides increasing returns on performance - something the authors refer to as capability leverage. The question then is: How can we ignite engagement, commitment and passion in talent?

 

People sometimes have trouble determining what they are passionate about. One place to start is with the individual's sense of identity. In The Why of Work, Dave and Wendy Ulrich focus on employees' strengths rather than gaps. When employees ask, "What am I known for?" they are essentially trying to find their identity in the organization and how it provides meaning to their work. The answer to their question often lies in discovering an employee's signature strengths, things that make that person stand out from the rest. Passion is not always about a particular strength; sometimes it's about the positive sense of self-worth and meaning that exercising that strength gives. The challenges that interest a person also can help to identify their passions.

 

Just as individuals have an identity, so do organizations. Each organization has capabilities that distinguish it from others. With this information, talent leaders can blend employees' personal strength with organizational capabilities and help employees know how - or even if - they fit into a company.

 

To evaluate talent and determine whether an organization is ready for the big shift:

 

1. Think about capability leverage:

How does the company measure performance? Is it only about results, or does it include a "contributes to others" component? Are the right people connected to one another and to the right knowledge flows?

 

2. Think about motivation:

How does the company reward performance? Are there only extrinsic rewards, or are there individualized, intrinsic rewards? Do employees have a clear communication of purpose, support for autonomy and opportunities for mastery?

 

3. Think about aligning purpose:

How does the organization develop talent? Does development start from the top down and focus solely on talent gaps, or do talent managers evaluate where talent strengths can be better utilized?

 

These questions are just a start, but with them and a willingness to rethink how organizations view talent in light of the big shift, talent leaders will be able to better prepare their companies to compete.

 

 

[About the Author: Mark Bennett is a product strategy director for Oracle Fusion Profile Management and Network at Work.]