This example of GE, I think, is an interesting one because it shows the dedication of a company to proactively investing in talent over time so that you've got a pool of successful leaders and managers that are available to execute a strategy. But different people approach this in different ways and the talent syndrome, with this chronic shortage, there's a continuum in terms of where organizations sit on this and really their approach to talent and ability for strategy execution. Here's one manager, for example, who said to us, if I need more engineers to execute my strategy, I'll just go hire those engineers to execute my strategy. We'll be fine. This is not something that, in this case, this person is thinking needs to be a strategic investment over time. It's more reactive. John Hofmeister, who retired recently, as the president of Shell had a different point of view. His view is we need to think of talent management, not as filling jobs but as creating the strategic capability for tomorrow. When John said this, he was actually head of Human Resources. He's one of the few people that we know that the organization had so much confidence in the HR leader that they promoted him to run the whole company. But John really said this as a challenge, to not think of talent management in a reactive way but as a proactive investment so that organizations can execute their strategy in the future. Now one of my favorite quotes is actually by the great Wayne Gretzky, a wonderful hockey player, who said something I think similar. A good hockey player skates to where the puck is, a great hockey player skates to where the puck is going to be. Our investments and talent and leadership development in the context of strategy execution is offense skating to where the puck is going to be. If we wait until that we want to execute the strategy today and we don't have the talent, we'll follow into the set talents syndrome. Wayne Gretzky didn't know he was talking about talent management but I think the principles are the same. We want to talk further about what's really required to make sure you have all the ability and talent to execute your strategy. The first is to identify strategic talent pools. We're going to go into that. The second piece is looking at what is required for a robust talent system throughout the organization. The third is generating the vitality, the energy that builds that talent pipeline over time. There are many moving parts to this but these are the three most critical elements that we've seen in organizations to make sure they have the capacity to execute against their strategies. Looking at strategic talent pools first. Now we won't go into the details on this but what I want you to see here is that any organization can map its talent pools. Now in this case, we're using two dimensions, the x-axis is from operational roles to strategic roles, really how critical is this talent to strategy and value creation. Is the y-dimension, the vertical dimension, is really more how unique are these skills. In some cases, we would find skill pools that those skills only exist in that company. So value and unique, strategic and in general, we've come up with four different quadrants. Now, the top right-hand corner of this matrix, we find those A positions. Those ones that are central to strategy and are unique to the firm. Think about how you would manage that group of employees. The different colors represent different functional areas and the different sizes simply mean how many people are in those categories. But how would you manage those strategic assets? This would be somewhere where you'd invest over time and make sure that that talent was there. In the bottom right-hand corner are skills that are strategic and valuable but maybe not unique to your firm. Investment there is a little bit different. The top left corner are skills that are very unique but not central to strategy. In this company's case, this is a biotech firm, these were very specialized scientists that were working on things that might in the future have big payoff. Down in the left-hand corner are skills and talent pools that are not central to strategy and not unique to the firm. In this case, you can't do those things poorly but they were candidates that maybe there was an external partner could help them with. What this shows is that one size doesn't fit all. Organizations need to understand where are those strategic talent pools and make sure that they're investing in them appropriately. The second thing is once you've identified where those talent pools are that make the biggest difference is, what's our talent management system look like? Are we cultivating that talent, bringing it in, growing it, putting it in the right positions and making sure that it's driving performance? How we think about the talent management system is a whole series of practices, how we source the talent, how bring it in and create an assimilation. How we develop them over time through job assignments, coaching, or formal training, the career management, the performance management, the reward systems, both monetary and in terms of recognition, social kinds of things. Engagement and then retaining these, this is a talent cycle and it shows all the pieces that have to work together. Now the robustness, the functionality of this talent system can be evaluated by the managers who use it. A very simple rating system we have managers do all the time is on a one to five scale, rate how effective each of these practices is for getting the talent you need to execute your strategy. You can say this example, they're some in some places and maybe weaker in another. Obviously, want you want is a system that everything is working well together. The system is mutually reenforcing and driving and developing that talent. The functionality of the system really is about are the processes useful and usable? You can have some fantastic talent management systems, the managers just don't find usable, it's maybe too complex or unclear, and so the functionality is do the managers who implement it feel like it's useful? The second is the system mutually reinforcing? If your training programs are focusing on creativity and customer service and your reward system is rewarding efficiencies, they may fall into each other in conflict. The mutual reinforcement of that talent system is very, very important. Finally, does it produce those A players in those A positions, the strategic talent that is there to drive the business forward. The best organizations, they know this, and they are very intentional about placing those best performers in those key positions. In other organizations, it's maybe a hit or a miss. Now one caution is that the real success of the talent management is it not just that the leader and managers are driving the results, we need to look at the long term effects of how they get those results. In some organizations, you could see a short term hit the numbers but really do it in a way that destroys the culture, destroys the engagement of those on the team. Both are important, this overall functionality of the talent system is necessary for making sure the organization has all of the leaders and managers necessary for execution. The third is the vitality, the vitality of the system. You can have great tools but if the carpenters aren't using those tools very well, it can lose its impact. Vitality of the system is really are the top leaders, the line managers, those employees themselves who are some of the key talent, all working together and focused on business performance. This is, they need to be committed to it, they need to be highly engaged and involved, and accountable for that talent, as well. Without vitality, without that kind of energy of the top leaders and managers working together, there will be a disconnect from strategy execution. We found one another element is that HR, the Human Resources department can't own this. They support it but it has to be owned by the line managers, by the leaders of the organization. This is what vitality's about and it's one of the most critical elements in execution. In fact, it may be more important than the system itself. As we go through this, keep in mind, the first is avoid the talent syndrome, this under-investment in talent, or the reactive approach that really limits the capability of the organization to implement its strategy. Execution is not a one-time event. The gun doesn't go off and the strategy gets executed. It's a capability that needs to be nurtured over time and to do that, you've got to know where you strategic talent pools are. Where are the positions that matter the most, and how are you managing those? As with any strategic investment, one size doesn't fit all. You've got to make choices about where you put that investment and what the talent development actually looks like over time. It's a total system. All the pieces have to work together and at the end of the day, it's the responsibilities of leaders to make sure that this happens.
