6 Talent Management Lessons From the Silicon Valley

Driver #1 — Innovation supplants productivity as the key workforce goal –for hundreds of years, the goal of any workforce was to be productive and efficient. The role of a manager was simply getting workers to produce more output at the lowest possible labor cost. However, in the last few years, it has been hard not to notice the amazing success of Silicon Valley companies like Apple, Google, and Facebook that have produced amazing results by shifting their focus toward innovation. Apple, for example, has been able to produce amazing sales volume at relatively high prices by producing serial innovations from the iPod, to online music stores, to the iPhone, to retail stores, and finally to the iPad.

Based on revenue and profit-per-employee calculations, it appears that a complete focus on innovation may produce up to 2 to 15 times the amounts produced by firms that still focus on productivity. Such large returns from innovation may help to explain why firms like Yahoo and Best Buy eliminated their telecommuting programs which had produced up to 40 percent improvement in worker productivity in favor of increased “come-to-work” collaboration. And since 100 percent of all innovation comes from people, it makes sense to focus on recruiting and managing employees.

Driver #2 – An effective workforce is the key driver of organizational success — because people play such a critical role in innovation, it makes sense that Silicon Valley firms are employee centric. And although all firms require financial support, buildings, and equipment in order to exist, in the Silicon Valley, innovation emanates primarily from one key factor. And that is having extremely talented employees and an effective approach for managing them (i.e. an effective workforce). The underlying principle is reflected in this quote from a recent Harvard Business Review survey of executives “Increasing the effectiveness of the workforce was the most important means to improve organizational performance.”

It turns out that recruiting innovators and maximizing their collaboration are essential to serial innovation. Note that old-school management approaches, rather than increasing innovation, often instead stifle it. Of course innovating means that you are the first to do something, and you can’t be first without being a fast-moving organization.

Driver #3 – Innovation means developing the capability of going fast — in business, innovation means being first with some aspect of a new product or service. Unfortunately, the fast-moving world, even being first may not be enough (i.e. the Walkman), because the competitive marketplace may require that you serially innovate. The process of continuously being first requires exceptionally fast employees and business processes. Silicon Valley executives make it clear to their employees the importance of speed with quotes like “move fast and break things” (Mark Zuckerberg) or “create products and services that are 10 times better than the competition” (Larry Page).

Moving fast obviously increases the amount of risk taking and “breakage,” but remember that each small failure provides an opportunity for employees to learn. Always being first also requires employees to learn rapidly, so learning ability becomes the No. 1 hiring competency. Learning and innovation areas are especially difficult because the more innovative the topic, the less you will find written about it. Many firms are now realizing what Silicon Valley has known for years, and that is that innovation increases proportionally with collaboration. So leaders must implement collaborative office designs and fun features that increase the number of serendipitous interactions between non-teammates. In order to successfully recruit and retain the highly desirable purple-squirrel innovator, you have to fully understand the factors that drive them to accept and stay in a job.

Driver #4 – Innovators want to do their best work and have an impact — during my research on Apple and Facebook, I learned that the No. 1 attraction and retention tool at both firms was not the free transportation or food but instead, two simple factors. The first was the ability for employees to do the best work of their lives, and the second was to have their work impact the world. In fact, glassdoor.com ranked Facebook as the No. 1 employer to work for, saying that they had these two exact factors.

Doing the best work of your life generally means being on the leading edge of practice and knowledge, as well as working with the right manager, teammates, tools, resources, and amount of freedom. Impacting the world generally means providing products or services that significantly change people’s lives, while at the same time helping the environment and making the world a more open place.

Driver #5 – A story a day reminds them about the excitement – perhaps the biggest secret in the Silicon Valley is that the free food, ice cream, transportation and all the various perks are not primarily designed as direct recruiting tools (they are barely mentioned on their firms’ corporate websites). Instead, these perks and the exciting work together create “a story a day.” This story a day, when shared with family directly or colleagues on social media, serves to remind the employee how exciting their job is compared to others who merely have “paycheck jobs.” Daily self-reminders of the excitement they live help to drive them to the performance levels required at a serial innovation firm. Virally spreading stories also indirectly helps to place Google, Facebook, and Apple at the top of many “Best Place to Work” employer branding lists, so these stories eventually have a retention and recruiting impact.

Driver #6 – Managing innovators and speed both require analytics — anyone who compares the dashboard of a car to that of the jet plane would immediately see that as speed increases, so does the need for more performance gages and measures.

Going fast also means that it’s easy to make weak people management decisions if you rely on “nonmetric driven” intuition or past practice. Instead, the Silicon Valley, and especially Google, have learned to shift to a “data-based decision model” in all aspects of the business, including managing employees. In effect they are trying to raise the level of talent decision-making to match the level that already exists in their engineering and IT groups. Google even has a people and innovation group (PiLab) to test and assess new people management approaches before they are implemented companywide. Assessing the data has led to dramatic improvements in recruiting, retention, collaboration, diversity, and leadership development.

The best firms are now working on predictive analytics which warn decision-makers in advance of upcoming people management problems and opportunities. These predictive metrics also allow a manager to model or try out different people management decisions in order to see the different consequences that each one has.

Final Thoughts

Even though your firm may be “old school” and located outside of the Silicon Valley, it doesn’t mean that there isn’t a lot that it could borrow from the Googles, Twitters, and the Facebooks of the world.

Speaking of old school, it may be because they don’t have a long corporate history that they don’t have to “forget” a lot of antiquated practices. Instead, with a relatively clean slate, they are free to try new recruiting, retention, and management approaches that are now possible because of new technologies. If you work at an old-school firm, I urge you to think about the fate of Kodak, TWA, Polaroid, Montgomery Ward, Hostess Twinkies, Oldsmobile, and the “black, corded Ma Bell telephone.” They were all once “proven stars” that were “suddenly surprised” by how much the world around them had changed.

So finally, the lesson for all to learn from the Silicon Valley is that if the speed of change outside your organization exceeds the speed of change inside your organization, your end is in sight, and unfortunately insiders will probably be the last to actually see the end coming