Tuesday 15 February 2011

Talent dilution

Talent. It's not too easy to define, but we all know when we see it.  The problem is, do we know when we lose it and do we know how to nurture it?

Let's begin with a young startup. Just a handful of people, sitting in a room creating something new. A company like this is rich with talent; entrepreneurial, technical, creative, imaginative. The repetitive tasks are minimal, and nearly every conversation is a rich cordial of talent that can create innovation and generate competitive advantage. For want of a better term, let's call them the 'talent group'.

Let's jump forward a few years. The startup has blossomed but that has increased the volume of repetitive tasks and so now they've had to employ new people. Because these are repetitive tasks, the new people are treated differently and don't  get invited to join the talent group. Where before we had a talent group making up 100% of the company it is now down to 50%. The cordial is watered down, but because the company is small it still appears innovative.

Let's stop for a moment and clarify. I have not said these new people are lacking talent. They have just been implicitly excluded from contributing talent because of the role they were employed to perform.

Now, jump forward a few more years. The company is even more successful and has new external investment.  The investors want measurable results, and as we all know, quantitative measures of success tend to focus on the repetitive tasks. Now our ever increasing underclass, already excluded from the talent group, are further disenfranchised by reducing their role to a list of instructions. Any that might have asked to be included in the talent group feel it's impossible and direct their creative energies to things outside the company.

The company is now made up of a large underclass of potential talent suppressed into automation, and our talent group is now even smaller, say just 5% of the company. Our cordial is decidedly watery.

So far, our increasing dilution has been gradual. So much so that it has gone unnoticed and been largely obscured by the increasing scale of activities. If nobody notices, it's not a problem, right? Wrong. We've scaled our operation on an ever decreasing asset and now it looks like an upside down pyramid. In this position we find it almost impossible to innovate our way out of the situation, worse still, when members of the talent group leave, the effect is disproportionate and significant.

At this point, the company culture has embedded the idea that one small group contribute ideas, a thin layer scrabble around the fringes and the majority sit in miserable servitude. This is an irreversible position in my opinion. A company in such a position will seek partnerships and mergers in place of innovation, and will ultimately be consumed into a larger group where similar problems exist, but where economies of scale allow profits to continue.

So is there an alternative? I believe the answer is yes. Here's how I'd do it:

  1. Explicitly look for talent in new employment candidates as well as skills.
  2. Create a culture and structures that actively promote ideas from all people about all things. This includes setting aside time.
  3. Train all people in skills for giving, receiving and considering suggestions (no, we aren't all very good at it)
  4. Reward people for contributing and participating.
  5. Create and stick to a manifesto that gives employees autonomy and responsibility.  

Companies begin by talent but gradually dilute to automation by treating people like machines. What's great about talent is it's unconstrained by class, role or salary. Great ideas can come from anywhere and all we have to do to find it is open our eyes and our meeting rooms.


  1. This is one of the greatest things you have written in quite some time and highly observant of many middle weight organisations.

    It is very easy to be blinded by charts and fiscal figures and forget the purpose of why you are doing something to start with. Many times this will be a result of the original idea no longer being something that works, but that of course is where you should apply an evolutionary scale.

    The gravitas of losing vital figures within an organisation of a certain size simply goes un-noticed, diluted as you have seen the shining stars appear further and further away. Nobody notices Deneb when the milky way is so vast.

  2. Really great post Mark and so very true. I think the attitude you talk of needs to be filtered down from on high. without someone at the helm who is passionate about building something the company seems to tend to lose identity and focus purely on generating cash by using old methods and what I would say are easy quick win routes. Talent can't be taught but if given the opportunity to be nurtured encouraged and grow it is a no brainer that it would benefit an organisation in so many aspects.

  3. Really excellent post and observations Mark.

    I do feel we get it right at NixonMcInnes, we have a culture that is about nurturing talent at all levels, and a lot of our in-built processes help us keep that in check, such as our commitment to being a democratic company and membership of Worldblu, guest seats on our board, feedback culture, happiness measures, participation principles and people development processes... etc.

    Of course we can always get better and are always learning!


  4. Thanks your your comments guys. I'm convinced that it has to be a cultural change applied to all roles within the company early on.

    What you describe Anna seems to me to be the right approach. I'll bet it can be hard work at times, but I also bet you aren't diluting your talent as you grow.

  5. Well, interestingly enough we had the founders of Worldblu, the democratic workplaces body in the office recently and I asked them if they thought it was possible for a company that is well established, large or older to change to become democratic and participatory (slightly off subject here, but I think it relates..) They said they had worked with many companies that had turned themselves and their culture around successfully later in life, so to speak.

    So I think a culture of nurturing talent can be applied later in a companies' life, but it probably needs firm commitment and passion from the top, and takes a lot of hard work, time, communication and development of management staff.

  6. Now that IS good news. I'd love to see any case studies for this. I can certainly think of a few candidates, but I reckon it would take strong leadership from within to prioritise this and stick with it. Spread the word!

  7. From the bottom looking up, its finding the strong leadership that's the issue most of the time, the talent pool is always there, but things need to be allowed to be put in place to do something about it. ("allowed" being the important word as most people are happy to implement things that will better their life, unfortunately sometimes it needs a bit of money or something to be agreed that gets it shot down.)
    Dan R

  8. Interesting post, Mark.

    I think one of the critical things is to design a business which really requires talent, now and in the future.

    As you said "Companies begin by talent but gradually dilute to automation by treating people like machines". This is often true, sadly, but there is a choice involved. I think people choose to turn their companies into companies where automation is a virtue.

    "The investors want measurable results, and as we all know, quantitative measures of success tend to focus on the repetitive tasks."

    But there are profitable companies that don't focus on making money out of repetitive tasks. And in a world economy where automation increasingly means machines doing tasks that people once did this is probably not a good idea. Eventually tasks that are "automated by people" will be automated by machines.

    I think company owners sell their companies knowing that investors will want to increase efficiencies and thus turn a quick buck. But owners don't have to make those choices. There are other business models to choose - where, for example, talent and creativity is central to the value proposition.

    And there are other financial models than selling to those that want to turn a quick buck.

  9. Thanks Dan,

    I know what you mean. It does seem that having one strong person in a position of power wanting change will gather support and make things happen. Still, I'd like to think that a popular movement could influence existing leaders to make change. Maybe I'm being overly optimistic.

  10. Thanks Pete,

    I've got to admit that I've been blinded by the money when choosing investors. I don't think it ever entered my head that an investor could value the personality of the company as well as the bottom line. I think you have just proved that to be wrong.

    I have considered whether it could deter investment if a company operates an overtly democratic and open system? I think I'll focus on making a company that I'm proud of and take longer finding the right investor.

  11. I think part of the problem is that we live in a system that tells us (through the media etc) that there is a particular way to do things.

    In relation to business part of that story is "start a business, get venture capital, sell the business, do the earn out, lie on a beach".

    The question is, is that the only model?

    Some people I know who have been through that cycle end up back at the start again wondering what to do next. They thought taking investment and all that followed would make them happy. But it didn't. So they are back where they started.

    Our challenge, I think, is to design different investment and return models that lead the entrepreneur and probably the employees to a different place.

    Like many design tasks, starting with clarifying what we want to achieve is probably a good start. Is it lying on a beach - then not?

    Or is it something else: like achieving fulfillment?

  12. PS Interesting listening to Bill Gates (certainly not one to lie on a beach) advising graduate students at Stanford on which careers to choose.

    Although I am pretty sure he is someone who doesn't "do" regret" he seems to say something like "I wish I had known what I now know about the world when choosing my career. If I had known more I think I would have perhaps done something more worthwhile".

    Quite a statement from someone who has achieved everything he has.

    Here's a link to the talk http://ow.ly/3Yr4g


  13. conscious-business

    I don't strictly agree with that.The media don't tell anyone to do it that particular way, they just report it happening.

    Those who follow their business in the format of start->turn profit->sell on do that because they are financially driven.

    Not everyone is so inclined, in fact the top 10-20 internet business never started out with those intentions, they're there because somebody had a vision or an idea of something that could work and make others lives better.

    So by that, there is indeed many ways to start and evolve an organisation.

    the key to all of this is that if you continue to allow creativity but the risk increases in trying new things to effectively discuss and educate your thinkers as to why you as a manager don't believe they will succeeed.

  14. Well, that was useful. In any way, I think that it will be better to add here more ideas on the possible rewards.

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