6 Creating a talent ecosystem
If you join McKinsey, you join for life even though you are not necessarily still employed here.
Emily Lawson, head of global human capital practice, McKinsey & Company
As this book has already touched upon in Chapters 1 and 4, companies rarely have a clear strategy on how to make the most of:
creative and innovative mavericks and outsiders;
those who are entrepreneurially minded and usually leave because they are frustrated by the lack of opportunity to engage in start-up activities. There are also those who (more cynically) use a corporate career as a stepping stone to launch their own enterprise;
late starters or those people recruited later in their careers who might be considered gap fillers rather than potential high-flyers;
those who would like to make and would respond well to a sideways move, or those who want to make sideways moves for personal reasons or because they prefer the line of work;
those who are deterred by the price that has to be paid to climb the corporate ladder.
This is costing organisations dear because a growing proportion of the flexible, agile and creative people they require to anticipate and respond effectively to change fall into one or more of these categories.
The cause of this failure lies in an outdated model of strategic workforce planning that emerged in the 1980s. This divides the organisation into a “core” of “firm-specific” workers and managers who are the focus for promotion and development. At the growing “periphery” of the organisation are part-time, contract and associate staff who are recruited because they are cheaper to employ and whose careers and aspirations are largely ignored.
The second orthodoxy is a concept of retention that equates with continued permanent employment inside the organisation, at a time when the idea of committing themselves to a lifetime career in a single organisation is neither realistic nor desirable to talented people.
This chapter argues that companies have the option to broaden access to their talent by being less rigid in their thinking and freer, more imaginative and less possessive in their approach to talent people.
Career planning and intrapreneurs
In the mid-1980s, Marsha Sinetar, a researcher at the Massachusetts Institute of Technology, undertook a survey of intrapreneurs – people with entrepreneurial spirit and aspirations who choose to work inside large corporations. Her study of hundreds of managers with a track record of successful entrepreneurial thinking and activity revealed that they had the following things in common:
They are easily bored, and would rather move into untried areas.
They are comfortable with ambiguous situations.
They are happy to take risks – and indeed enjoy doing so.
They are intellectually curious, needing to use their minds to solve difficult, personally fulfilling problems.
They often see their work as a calling or vocation.
Intrapreneurs, Sinetar argued, possess personalities that thrive on freedom in three important areas: freedom in the general area of their work and the way in which work gets done; freedom to come up with novel or disturbing questions; and freedom to come up with unusual solutions to the things they are currently thinking about, sometimes in the form of what seem, to others, to be impractical ideas. At the same time, she found that this singular thinking often undermined their ability to work in teams, supervise other staff or lead the organisation.
This creates a dilemma for the conventional career planning that is often a feature of talent management strategies. Unless organisations can meet the need presented by these freedoms, they are liable to lose the individual to ones that can.
The warning is amplified by Tim Levine, who gave up a traditional corporate career to pursue a life as an entrepreneur in his 20s and is now a managing partner and founder of a venture capital firm, Augmentum Capital. As he explains:
If a company’s entrepreneurial talent is not being challenged, they are going to get frustrated and bored and look elsewhere. This has always been the case, but the options for corporations are more limited in the current climate of expectation and aspirations than they were.
Some of these options might involve moving these talented people across the organisation or giving them new roles and opportunities that make them feel they are growing.
A company might well have subsidiaries in other companies where they can put their talent into senior positions, which gives them that learning opportunity and the opportunity to act independently.
On the other hand, you could do something drastic, which some corporations are doing, which is to create spin-off enterprises which offer more entrepreneurial people the chance to play with a fully capitalised new business.
For me, the time when I am learning is when I am enjoying the greatest levels of satisfaction. This might involve making mistakes or learning from people more experienced than myself.
You might argue today that in the economic environment people are going to be hard pressed to find good jobs elsewhere – but the crème will always find the best jobs. Many will take the risk of leaving their employer if they have a strong belief in themselves. So you cannot be complacent.
Stephen Dury, managing director of strategy and market development at Santander UK, is a good example of what Levine is talking about. He moved on from a career at Royal Bank of Scotland to join Santander. He was attracted to the Spanish bank because he believed it had an entrepreneurial culture and was willing to be innovative, targeting in particular small and medium-sized enterprise (SME) and start-up customers.
I am a marketer by background and education. I have a keen interest and passion for new market development, innovation, disruptive technology and learning from the way SMEs and entrepreneurs behave. Lots of innovation comes from SMEs.
I knew of Santander because I knew some of the people that had moved there – very good people – and you would hear that people were creating great opportunities in a creative, structured and entrepreneurial environment. Going into a business where there are very clear lines of accountability, space for innovation and sponsorship from the senior executive team makes any business more attractive – this is a culture that fosters creativity and delivery in equal measure.
The work Dury undertakes at Santander – including developing new ideas and services for start-ups and SMEs – puts him into contact with a wide variety of entrepreneurs, something that provides him with significant job satisfaction.
I love working with entrepreneurs. I’m fortunate to work on and be responsible for a lot of entrepreneurial projects. I’ve thought a lot about the way I try to approach challenges and it is similar to the way some entrepreneurs approach running their own businesses. I try to think of them as role models in the way in which they make decisions – their creative thinking, passion and dedication is inspiring.
Entrepreneurs think they are part of the solution and no matter what gets thrown at them they find a way of doing things differently or overcoming the challenge they face. They are confident and unwavering in their focus to make things happen and it’s this drive that makes them successful. This entrepreneurial spirit and tenacity is not something I believe everybody has.
Business incubation
Some intrapreneurs will never be happy with the opportunities offered by a traditional corporate career.
Ross Hall is a good example. He was headhunted by Pearson, a multinational publishing and education company with headquarters in London, on the basis of his background in setting up new businesses. He says:
They particularly wanted someone who could come in and take a fresh perspective on this particular business unit and to see if it could be turned around.
However, his restless mind and social conscience led him to explore other avenues for his talent. With Pearson, a company that has a strong commitment and business in developing new education materials, he looked at developing a new form of schooling in rural Zimbabwe and Ta
nzania. This involved extending the traditional curriculum beyond normal subjects to develop qualities of mind that are most influential in creating and maintaining quality of life, with topics such as empathy, assertiveness and self-esteem.
Hall realised that this was a step too far for Pearson and that his senior management colleagues did not have the appetite for the project, which led him to consider pursuing the idea on his own. He was appreciative of Pearson allowing him to explore the idea using its resources, but the impasse caused him to consider a deeper philosophical question about intrapreneurialism:
I have a very live question, which is: “Do companies really want people like me?” I think there is a lot of recognition that companies could benefit from having people like me. But the reality is that entrepreneurial people are difficult to manage and the value that they bring is not always immediate – these things take a long time to develop. They can also cause friction with the main business when they try to do things differently. Does the company really have the appetite and ability to execute their new ideas?
Hall is not the only person asking this question. At a talent summit in 2012, Khurshed Dehnugara, author of The Challenger Spirit: Organisations that Disturb the Status Quo, pointed out the contradiction between what organisations say and do when attempting to meet the aspirations of intrapreneurs.
He argues that that companies send out messages that encourage staff to be creative, disruptive and risk-taking while at the same time punishing people who “mess up and fail to keep everything nice and stable”. As he concludes:
Faced with this contradiction, people take up the default position of staying safe so that nothing can go wrong. My concern is that future talent is desperate for something more groundbreaking.
Some telecoms and digital companies have accommodated the entrepreneurial aspirations of their most talented intrapreneurs and those of people they would not normally attract by setting up business incubation schemes, offering start-up funding to help them create their own enterprises. This offer of help is in return for a stake in the business or access to the new technology or thinking of the start-up.
This is an effective way of extending the organisation’s reach to young entrepreneurs who have opted out of corporate employment. As Tim Levine observes:
I started having a conventional corporate career – but it all felt very bureaucratic and restrictive.
What I started to see were new technologies coming on board and what I hoped would happen was that the next generation of entrepreneurs would be empowered by new platforms such as the internet, which it certainly has been. That has changed the whole dynamic of young graduates with aspirations to be an entrepreneur. It is a hell of a lot easier now than 10–15 years ago. You are empowered.
In the 1980s if you were talented and entrepreneurial, you needed capital and you needed large office space. Today you can create a website if you have a good idea and your requirement of capital is minimal. There has been a huge shift of ambition among young people of school leaving age. If I told my father when I left university that I was not going into conventional business but I was going to be an entrepreneur, he would have thought I was going to be unemployed for the next three or four years.
It is now a much more acceptable path for people leaving university or even school to have this ambition. They are no longer regarded as mavericks. There are probably lots of people in their early 20s building really successful businesses. The barriers to entry are nowhere near as considerable as they were. I think that is a real challenge for corporations. The ambition is there and these people do not want to be pigeon-holed.
There is a greater level of impatience among talented young people and if they are not getting what they want, they are going to leave. It doesn’t mean that they will be successful and won’t come back, but the question for corporations is what they do with these ambitious young people. Do you encourage them? Do you try to incubate them? There are a lot of options.
The most well-developed incubation initiative is the Wayra Academy, the brainchild of José María Alvarez-Pallete, chairman and chief executive of Telefónica Europe. This provides start-ups with €50,000 in funding in return for a 10% stake, and Telefónica gets the right of first refusal on buying the company.
It was originally launched in Latin America and Spain, where there are nine business incubation schemes, and has been more widely extended in Europe. At its London offices, for example, Wayra accommodates about 20 start-ups for six months, after which it will help them pitch for follow-on funding from other sources of venture capital. If a start-up does not find other sources of funding in six months, it may be granted another six months. If after that things are still not working out, Wayra will sell its stake for €1.
Simon Devonshire, manager of Wayra’s London offices, took the unusual step of selling the idea in bars, clubs and coffee houses. As he explains:
Entrepreneurs are quite a difficult bunch to identify. I can’t think of a conventional advertising medium you could use. I have always been passionately obsessed about networking and informal means of connectivity. If you send the right message out and you have the right touch points, the first respondents become ambassadors for the project.
The first night we tried it, our people at Telefónica went nuts, saying we would only get 12 people. It netted us 30 people. The next time we got 50 people. By the fourth time out we had 300 people. The word soon spread and the numbers grew in leaps and bounds. The bars were really an instrument of that strategy rather than being the strategy itself.
Telefónica Europe plans to open other Wayra Academies in Berlin, Dublin and Prague. Ultimately it plans to fund around 350 start-ups. As Devonshire argues, Wayra is as much a part of its talent management strategy as its high-potential schemes for senior managers, extending its reach far further than most of its competitors:
It is not just about the ideas. It is about attracting talented people. We are using Wayra as a way of acquiring great talent for the benefit of Telefónica. And like many talent management schemes, we bring mentors into the academy to help and support and realise their best potential.
Linked-in internships
Both Santander UK and Telefónica recruit interns for their start-up schemes from Enternships, an online company that finds places in SMEs for university graduates with entrepreneurial ambitions. For example, Enternships has a partnership with Santander to supply interns for the bank’s SME customers, linked to the Santander Universities Programme, which embraces 60 universities and funds 500 internships.
As Rajeeb Dey, the founder and CEO of Enternships, explains, the enterprise enables companies to contact and build relationships with young talent who would otherwise not think of working in a conventional employee relationship:
Companies, big and small, need people who are entrepreneurial or think like an entrepreneur – that is the ability to spot opportunities, to take risks and to hit the ground running.
The world is moving fast, and companies need people who are able to adapt quickly, who are agile and can operate in a time of flux and help the business grow. In a start-up, these qualities are obvious because you are part of a small team, everybody needs to pull their weight and there is no space for dead wood.
You will be spotted quickly if you are not adding value. At the same time, large corporations are spotting that they need entrepreneurial talent within their organisation. But the challenge is that corporate structures may not be right to enable the talent to flourish because in order to have truly entrepreneurial talent, you need to enable risk-taking and give a level of autonomy and freedom. Because of the way many reporting systems and appraisals work, a large company is not conducive to a truly entrepreneurial and maverick individual.
Having said that, the spectrum of entrepreneurial skill is broad. There is the through-and-through entrepreneur who you would struggle to get into a corporate environment (like myself). Then you have people who have entrepreneurial aspirations or tendencies
yet crave the comfort of security and structure around them – and therefore would be more of an intrapreneur.
Companies, big and small, need to identify the individuals who will keep the business one step ahead, spawn new opportunities and help the company to grow.
Schemes like Enternships are important because the proportion of young people with entrepreneurial ambitions is increasing.
In the United States, a nationwide cell-phone and landline survey, conducted by the Young Invincibles in 2011 in conjunction with Lake Research Partners and Bellwether Research and funded by the Ewing Marion Kauffman Foundation, polled 872 “millennials” (young people aged between 18 and 25) on their thoughts about the economy and entrepreneurship.
Carl Schramm, president and chief executive of the Kauffman Foundation, says:
This poll reveals a generation that is enthusiastic about entrepreneurship, and that is good news for the US; 54% of the nation’s millennials either want to start a business or already have started one. They recognise that entrepreneurship is the key to reviving the economy.
An even higher percentage of young people from ethnic minorities – 64% of Latinos and 63% of African-Americans – expressed a desire to start their own companies.
Managing Talent Page 15
