Ask any HR Manager on talent profile for their organization and you will get a ‘talent pyramid’ – an odd-looking ‘pyramid’ that is supposed to reflect the talent profile of the organization. Ask them further – what is the measure of ‘talent’ in this pyramid, and chances are 9 on 10 that the answer will be ‘experience’. This experience is typically the number of years of (supposedly relevant) experience in the workforce, and pretty much determines how roles, and consequently the compensation are derived out of it. Question is – is that the right measure of talent?
I was in an interesting industry-level peer discussion a few weeks back where we debated on the utility (or, rather futility, at least in my opinion) of talent pyramid for R&D organizations. A conventional view is that talent pyramid helps us understand the operational costs better and hence it makes sense. Unfortunately, it ends up creating linearity between experience, role and eventually the compensation. So, while we might talk a lot about being a meritocratic organization, in the end, we are just paying lip service to those tenets.
Another interesting point was that while talent pyramid makes sense for software service companies because they get billed slab-wise (and hence, there is a business case to inflate roles and titles disproportionate to the real capabilities), it is really an anti-thesis to product development where talent has no linearity with experience, at least not in the classical way it is ‘measured’. Some of the most compelling and life-altering products in recent times have come from folks who were still in college, or had no ‘talent’ when they hit upon the next big idea. By all conventional yardsticks, they would never get a second chance. What, then, should be the best, or at least better way to measure talent?
So, here is my take on new-age talent metrics that makes much better sense than the traditional ones:
Democratization of Innovation Index
In the old economy, innovation was essentially limited to the large organizations because if often needed huge capex (and opex) to build and run large R&D facilities. With the advent of globalization and Internet, the entry-level costs of innovation have irreversibly deflated, and one can pretty much source ideas from anywhere in the world. Companies that continue to take a narrow view of the ‘thoroughbred’ innovation will eventually find themselves at the short end of the stick that deprives them of the wisdom of crowdsourcing ideas from just about anywhere in the world – including their own companies. In this fiercely fast-paced and ruthlessly ultra-flat world, it is hypercritical to be able to harness the power of ideas coming from just about anywhere in the organization. If you don’t create avenues to your employees to take their ideas further, they will take it to just about anyone who is willing to listen to them. Worse, they will create their own company around it. And we have seen it happening for a long time – Xerox, KFC, FedEx, and scores of companies are prime examples of what happens when ideas are rejected but their creators continue to pursue them with dogged determination.
P&G owes a lot of its recent success to its so-called Connect+Develop program has established over 1,000 active agreements with innovation partners – worldwide! They have clearly embraced open innovation as a much more effective and viable alternative to yesteryears’s internal R&D capabilities alone. The question that you need to asking in your organization is how much (rather, how well) are we learning and borrowing from other adjoining, or even remote, areas.
How many of your new product ideas are coming from top-down PRDs created by product managers and how many are coming from bottom-up ideas from engineers and customer support folks?
Intellectual Property Creation and Adoption
What is most important for your R&D organization – managing within some arbitrary budgets or coming up with futuristic cash flow ideas? Costs must be managed, but after a point, we must remember that cost is there to serve us and not the other way round! The larger aim is to eventually create a great workplace where creative individuals and teams can fire their imagination and come out with supercool innovative ideas that create intellectual property and competitive advantage for the organization. How about measuring the IP Density as the total number of IP ideas filed per unit employee? Much like the sales productivity? This number by itself is meaningless, but a trend over a reasonable period of time will help us understand if the company as a whole is moving towards the right direction. Similarly, IP Quality is the measure of how many of these ideas get converted into public filings? To me, these two measures are a great indicator of the real R&D happening in a team, center or a company.
These are more like the entry-level metrics, but one might eventually move up to things like IP Adoption – how many of the ideas are really used as opposed to just being filed, and actually create future cash flow? Or, generate royalty by protecting the entire marketplace?
Cross-pollination of Ideas
Success in the past depended on narrow and deep specialization in a given domain. However, as we have come to learn from the brilliant ‘Medici Effect’, it is anything but true in today’s complex world where there are too many lookalikes a dime a dozen. If we continue benchmarking against today’s competition, we will only end up doing more of same. How many of your people are willing to tear-down functional and political boundaries of the organization to create better products and services that delight customers as opposed to simply complying with some silly organizational diktat? How many products are coming out of efforts that systemically break down ‘associative barriers’ that stop people from learning ideas from even more remotely unrelated areas? Long back I worked at a large company where I was surprised to find that we had three versions of basically same products competing against each other. Years later, when I worked at a small company, I was shocked to discover that we had something like 5 products essentially trying to compete with each other on product features. Why? Because not only were the ideas not cross-pollinated but the product managers were all trying to outcompete with each other – rather than the competition.
When Steve Jobs wanted to design the chassis for mac laptops, he saw how industrial designer used brushed aluminium. George de Mestrel got inspiration to design velcro from burrs of burdock. August Kekule reportedly saw a snake catch its tail in his dream and got the inspiration to design Benzene formula.
So, there you go. Are you still measuring your talent pyramid by the number of software engineers or number of people in 5-7 years experience band? Do yourself a favor – throwaway your talent pyramid.