How Well Do You Capitalize on Your Talent Pool?

A few years back while working at Microsoft, I was able to attend a briefing with one of my favorite authors, Malcolm Gladwell, who opened his presentation by sharing with the audience a topic that had been on his mind since writing his newest book at the time, Outliers. His idea surrounded the capitalization of innovation, or, more specifically, our ability to capitalize on talent. In fact, he shared that the topic was so pervasive in his mind, had he been able to go back and amend his book, he would have included this new insight as a chapter.

He went on to share a number of examples from his book -- but the story that resonated with me was around his research on long distance runners. For the last century, the relative quality of athletes in the major developed nations was, all things considered, equal. But something has changed over the last couple decades -- the quality and quantity of runners out of two African countries has eclipsed the talent of these other historically dominant countries. The US, UK, German and Russian athletes, for example, have competed evenly for decades, with very little differentiation between them as far as advances in training, results, and, arguably, raw talent. But now? The sport is completely dominated by one geographic area (in case you’re wondering, the last time the US medaled in the 10,000 Meter was 1964).

Gladwell provided some insight into why this was happening, sharing with the audience that while there are hundreds or even thousands of prospective runners in the US, only a handful qualify at the level necessary to compete at the Olympics. However, in Ethiopia and Kenya, there are a few million youth who are running 10+ miles a day, every day. It has become a way of life for millions of youth. And with that large of a base to begin with, it’s no wonder that there are more qualified runners -- and far superior runners -- than every other country. It's now part of their culture to run -- something that will be difficult for other nations to overcome. But having the talent available is only half of the equation. Ethiopia and Kenya have both learned to capitalize on this outpouring of talent by offering various levels of training and competition, starting at early age, to refine and develop their Olympians from a wide and deep pool of talent.

During Q&A, I asked Mr. Gladwell how he would apply his ideas to the business environment, where few companies have mastered the ability to harness, much less capitalize on, the potential intellectual property floating around in the heads of employees. He agreed that there was no simple answer to this question, but that a company must find that balance between talent identification and capitalization, with most companies failing on one or both fronts.

In the weeks following the event, the idea of talent capitalization was still running through my mind -– and while on a road trip north from California to Seattle, the following analogy came to mind: most successful companies are like a soccer team. They excel at identifying talented soccer players, and at convincing them to sign on to the team. With the season underway, the problem is that they have 120 people sitting on the bench. The coaches do their best to put the most skilled 11 players out on the field, but most don't get a chance to play and really showcase their talents. With no chance to play, a few dozen give up and walk away.

One coach says to another, "Well, they were clearly not good players, because they couldn't stick it out. We're better off without them." The problem is that the team still has 80 or 90 very good players sitting on the bench (assuming the team did a good job of attracting quality players), with no clear understanding of the talent they have -- or whether the 11 players out on the field are even the best players against the current opponent.

The epiphany I had out on the road, and which tied back to Gladwell's talk, was that there seems to be a "capitalization threshold" -- and finding that threshold is critical to our ability to capitalize on the talent we have within our companies.

Expanding on my analogy, the capacity of the coaches to identify and utilize the talent on their team needed to be expanded: by developing multiple tiers within their program, expanding the coaching staff, doubling the length of the pre-season to further identify skills and specialization. The recruiters, simply put, need to raise the bar on finding talent: become better at understanding the weaknesses of the team and identifying players who can add those strengths, and raising the bar overall on the selection process.

To efficiently maintain their talent capitalization, the recruiting team needs to keep a sufficient flow of talent coming, so as not to let a future star go unidentified, but the coaches also need to develop a better model to keep their already deep bench warm, spending more time understanding the unique strengths of each player so that they can tap into those strengths when needed. That is the capitalization threshold -- the balance of resourcing talent against your talent utilization.

What does this mean for your company? There are always opportunities for Human Resources and Staffing teams to improve processes and efficiencies, but I believe the most important changes need to come at the individual manager-level. We control the hiring decisions. We manage the career progression of our teams. We are the coaches on the field, and there are a few things which we can put into practice immediately:

1. Raise the bar on hiring. We’ve all heard this again and again, and yet the pressures of delivery more often than not drive our decisions, and we hire for immediate needs over long-term fit. Don’t just look at whether the person can meet the basic requirements of the role, but hire people who will bring added value to your team, and to the company, as a whole. Functional expertise is great, but we should try to match it with diversity of experiences, demonstrated innovation, and passion. Ask yourself, “Would this person make my team better?”
2. Know their strengths. You hired a fantastic person based on their diverse background, their demonstrated innovation, and their energy and passion – and then you tried to force-fit them into a pre-defined role that doesn’t utilize their strengths or capitalize on their natural talents. This is the ‘meat and potatoes’ of being a good manager: the need to establish a relationship with your people, understand what makes them tick, what they are passionate about, and then do your best to tap into their strengths. I highly recommend every manager take the time to read or listen to First, Break All The Rules by Marcus Buckingham and try to apply these principles.
3. Keep your team engaged. Once you know your team’s strengths, continually look for ways to challenge them. Another important aspect of people management is load balancing: do your direct reports have that right balance of projects to keep them busy, interested, and growing? Your role as manager is to continually stretch your team, and make sure their commitments and metrics drive value to both the company and to the individual.
4. Create meaningful development plans. Keeping your team engaged focuses them on the tactical, but having a solid development plan in place helps them focus on the long-term, strategic aspects of their careers. Frankly, this can be one of the most challenging aspects of managing your team, because to be successful at it, you really need to be doing 1 through 3. There should be a mix of short-term and long-term goals. No way around it – this one requires thoughtful reflection on your part, and is not a once-a-year formal review activity, but should be folded into your regular one-on-one conversations.

Understanding your organization’s capitalization threshold, I believe, is something that will become increasingly important as you seek our way through an increasingly competitive economic climate. This means you need to become more efficient in just about everything you do, while continuing to extend your team’s intellectual firepower. As Malcolm Gladwell identifies in Outliers, there are a number of factors that play into your ultimate success, but you must do whatever you can to manage the factors that are within your control.

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