Strategy Based Learning–Inspiration for Talent Acquisition, Performance and Development
The Age of Unknown Unknowns
How can we ensure an enterprise's competitiveness and profit continuously grow in the changing business environment? There are different answers based on different business and management theories. Starting from the 90s, process re-engineering and balance score card has been the solutions for many management issues. Yet, in today's rapid changing business environment, process re-engineering and balance score card are not the answers for many of the challenges we are facing anymore. United States Secretary of Defense, Donald Rumsfeld described his slippery situation in Iraq that there are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don't know. But there are also unknown unknowns. These are things we do not know we don't know1. We are in the age of unknown unknowns.
Asia Financial Crisis in 1997, SARS in 2003 and Financial Tsunami in 2008, the business environment for enterprises have been changed dramatically. Many management theories and practices are challenged and new rules are coming. Many scholars are describing this new era as the "East & Green" era, signaling the future world economy will be driven up by the emerging markets such as China and India, so-called the East era, and the demand for environmental-friendly initiatives, so-called the Green era.
As the core members of an enterprise, we should stop blaming for the increase in market competitiveness, cost and changes in marketplace. If we take a more macro point of view to look the overall business environment, we will understand that many successful enterprises were able to leverage off the uncertain times to get ahead of the competition. Two good examples of corporation are iPhone and e-Bay which were able to use a combination of different strategies and tactics to strike against their big competitors.
The Winning Formula for Enterprise and Country: Capital
Nowadays, many don't understand the full underlying meaning and application of the phrase "capital" for enterprise. For management and business application, the phrase "capital" should actually be defined in two ways:
Monetary capital: The income made every year that will later contribute back to the growth of an organization. Here, we have been using operation targets such as KPI to monitor and control the monetary capital generated by our team every month.
Talent capital: This is usually the missing part of the capital. As senior executives, we are often shortsighted to look only at our bottom line and cash flow. However, without good talent, how could we generate more money?
Given that money could give us the capacity to hire talent and talent could help us to generate more money, these two capitals are indeed inter-correlated and are necessary to be in place for an enterprise to grow and strike for a leading position in the marketplace.
According to Historical Records 《史記·高祖本紀》2, the founder of the Han dynasty (漢朝) - Emperor Liu Bang (劉邦), revealed that he is not as good as Zhang Liang (張良) in terms of strategy. He is also not as good as Xiao He (蕭何) in terms of managing the policies of the country. Furthermore, he is not as good as Han Xin (韓信) in terms of winning wars and battles. The reason why he could beat Xiang Yu (項羽) and became the King is that he was able to manage and use the strength of the top talent in the countries (Zhang Liang, Xiao He and Han Xin). Even though Xiang Yu is a talent himself and he got a great talent Fan Tseng (範增) assisting him, Xiang Yu wasn't able to fully utilize Fan Tseng's talent. This is exactly why Xiang Yu lost the battle and could not become the emperor.
You Can't Win the Competition War without Winning the Talent Capital Battle
If "talent capital" is so important for an enterprise, how should we define this term? Furthermore, how could we find, build up and retain our "talent capital"?
The term "talent capital" could be defined in many ways. Generally, people define this term as those who have competencies to add value to an enterprise. In the western world, company management often defines "talent capital" as the "Intellectual Capital" of an enterprise. The concept of intellectual capital is used to explain how enterprises cope with the knowledge economy in today's Information Revolution. Stewart introduced the concept of intellectual capital in Fortune Magazine in 19913 and proclaimed that it was the sum of everything everybody in your company knows that gives you a competitive edge in the market place. The concept is used to highlight the importance of managing knowledge, intellectual capital, and intangible assets in an organizational learning environment4.
In an enterprise's point of view, "talent capital" does not directly correlate with a single employee's education qualification and experience. It is indeed more related to a resource that could be used continuously within the enterprise. Therefore, "talent capital" should be counted as an important asset of an enterprise like any other assets listed on the company balance sheet. The only differences are that talent capital is highly liquid, hard to measure in monetary term and changing constantly.
- Top 20% - Leadership team
- Middle 60% - Majority of average talent
- Bottom 20% - Below average performers
If we can distribute our leadership team to become the leaders of important positions at different departments and corporate hierarchy, the overall execution ability of the enterprise will go up significantly. The issue really is that each job type and position requires a different set of leadership skills and competency set. This is indeed the key challenge CEOs and talent management executives are facing nowadays.
How could we as CEOs and talent management executives figure out the best talent management and retention strategy for the enterprise? The answer indeed is laid out in chart 1:
Source: The OLC Study 2010
This chart evaluates talent capital with the following two criteria: "alignment with management's vision" and "job performance". To define talent using these two criteria, we will end up with the following four types of leadership teams:
- Janissary team: They are the key persons to help CEOs to solve the first-hand issues and oversee the entire operations. They are usually the core members of company management.
- Execution team: They are the key talent to execute strategies decided by CEOs and company management.
- Specific talent team: They are the employees who believe in your strategies yet not the most outstanding performers.
- Training required team: They are the employees who require additional training to perform effectively as a leader. They are often the frontline staff who are doing the operation work for an enterprise.
To explain chart 1 clearly, "Alignment with Management's Vision" is a necessary requirement for an enterprise to operate effectively towards its goals. For instance, enterprises are using Key Performance Indicators (KPI) to measure how well each function or department is working towards the growth target set by company management. But this measurement is short-term and deforms the vision. The talent development should be in longer term and aligns with the vision.
On the other hand, "Job Performance" not only relates to individual competencies but the long-term job performance at an enterprise. We need to understand that job performance could be changed with changes in the corporate environment, company culture and job type. Therefore, it is indeed not easy to create one single set of work performance measurement for everyone in the enterprise.
Where are we going to find our talent? This is a challenge enterprises are facing everyday in their operations. Indeed, the answer is very simple: Search inside and outside an enterprise. The advantage in developing the talent inside an enterprise is that this helps to build up the core team and talent backbone of an enterprise. On the other hand, if an enterprise is lacking the talent with a specific skill set, searching outside from the enterprise will help satisfy the immediate need.
Source: OLC Study 2010
The next question is then how are we going to retain our talent? Training is the best solution. Yet, enterprises often employ "skill based learning" which is hard to quantify the return. There are many studies out there which attend to do an analysis on the return of training investment. Yet, it is extremely to quantify the return. This is exactly why HR departments are cutting training budget every year. In terms of talent development cycle, there are five key stages in Chart 2: recruiting, recruited, engaged, disengaged and exit. Talent could be found and developed in every stage yet they could also be gone anytime. If "skill based learning" could not solve the employee turnover issue, what could be the possible solution?
"Intellectual capital" is always determined as a resource that could be used continuously by enterprises to enhance its competitiveness in the market place. Yet, the true solution should not be "skill based learning" but "Strategy Based Learning". "Strategy Based Learning" focuses on the goals of the organization and using teams as the base to develop its own leadership team.
Reference:
- Donald Rumsfeld, The Unknown, Feb. 12, 2002, Department of Defense News Briefing.
- Records of the Historian《史記·高祖本紀》
- Thomas A. Stewart (1991). Brainpower: How Intellectual Capital is Becoming America's Most Valuable Asset, Fortune magazine, June 3, 1991, p.44–60.
- Thomas A. Stewart (1998), Intellectual Capital: The New Wealth of Organizations, London: Nicholas Brealey Publishing.
This case is implemented by Dr Joe Leung for City Telecom (H.K.) Limited.
Dr Joe Leung 梁永忠 博士
Founder, Organisational Learning Consultancy Limited (OLC)
Unit 103, 1/F, Stanhope House, 734-738 King's Road, Quarry Bay, Hong Kong
(Mobile phone 9103 3586 and email: drjoeleung@gmail.com)
Dr Leung is the first Chinese to gain the Middlesex University's innovative doctoral degree by adopting its Work Based Learning approach in the study of learning organization in Chinese culture environment. He has extensive practical experience in helping clients grow into a "living and learning organization" in the competitive marketplace. During the last 10 years, Dr Leung has visited more than 100 Hong Kong enterprises and has been consulted for their development and growth potentials.