We have been on a fully on growth and hiring explosion for a number of years and the ubiquitous “war for talent” a phrase coined in the 1990s and beyond a dip in 2008/2009 it broadly has not let up. Many leaders are assuming that with high profile layoffs and hiring cooling this would be the time for the talent challenges to be availed and as such they have looked to release many in talent acquisition and talent intelligence. I would argue though that this is absolutely the time to double down. Let me talk you through an analogy that has been playing in my mind and that is a formula 1 racing team.
If you assume that the bull markets are the formula 1 season and the bear markets and associated cooling are the off season what we have seen recently is a tighter market and the equivalent of F1 team bosses being given a choice. We can’t afford all the staff, do you cut the mechanics that keep the car moving and will get us to the starting line for next season, or do you cut the R&D function that will improve the performance for next season (this is I know overly simplistic but nevertheless this is where my brain has been going). What a large number of leaders have chosen is to save the mechanics and lose R&D. This is understandable. What I feel many are not foreseeing though is the downstream impact of this.
When the new season starts (the bull market returns and hiring is hotter again) everyone will have the mechanics in place but those that cut R&D (Talent R&D) will be disproportionately impacted. Those teams that held on to their R&D will have a huge advantage going into the season be it improved aerodynamics, braking technology, chassis design, engine performance, tyre performance or materials sciences. These advantages will not only give an initial impact but one that will be felt throughout the season and for seasons to come as competitors will be playing catch up from further back than ever before. I would argue that this is equally true for those that heavily throttled back on R&D and looked to have minimal investment. The increased R&D capability of those investing more will drive innovation across the F1 team organization.
In fact we see this played out in the real world also, this research by Dr Yvonne van Everdingen revealed that “competing in F1 generates a significantly positive effect on innovation, but it benefits only those manufacturers that spend at least €3.8 billion annually on R&D (e.g., Daimler and Honda). This effect is not found for manufacturers such as Fiat or Renault that spend less than this amount on R&D. Thus, if manufacturers decide to invest in F1 to enhance their innovation performance, i.e., to enhance the number and impact of patents for new and unique technology they hold, then they must complement it with an R&D budget that matches the €3.8 billion spend of Daimler or Honda to fully exploit the innovation potential offered by competing in F1.”
People are our greatest asset is declared by every C suite member and access to the best talent is often cited as the number one inhibitor for growth and innovation. I don’t think the stretch is far to see the parallels between F1 R&D and Talent R&D especially when viewed in the broader definitions of Talent Intelligence that also encompass Talent Assessment, Talent Management Analytics, Talent Acquisition Analytics, People Analytics, Sourcing Intelligence, Competitor and Market Talent Intelligence etc.
To see the value driven throughout the talent lifecycle, the increased efficiency, the increased effectiveness, the improved organizational design and effectiveness, the right sizing and right shoring of organizations, the increased levels of competitor intelligence and early warning threat detection etc it is clear to see that those that have and do continue to invest and even increase their investment into Talent Intelligence / Talent R&D at this moment will see an increased ROI and competitive advantage as we move forward.
“Life is like riding a bicycle, to keep your balance, you must keep moving.”
Albert Einstein
Companies that double down in this period. Invest in their Talent R&D. Build the foundations of research to enable future growth and development. These companies will have such a powerful head start that I fear those that aren’t using this period for Talent R&D will possibly fall behind, lose momentum, lose balance and fall and potentially be organizationally fatal.
8 comments
Love the analogy Toby. There’s a big disconnect somewhere in the corporate food chain. When we speak to CEO’s and read about the things that keep them awake at night, it’s typically 50%+ talent, skills and workforce related concerns.
When we look at the investment in and influence of future focused workforce functions (SWP, PA, TI, Strategic TA) – there simply isn’t alignment.
Time to reinvent / re-prioritise a few things. Simples.
Very relevant and an absolutely true and realistic analogy. R&D builds strong and unshakable foundations.
Seriously good article/blog post. As it should be clear for most by now, we have as world as companies, as societies and ourselves NOT paid due diligence to a range of essential elements. Be it security/defence, climate, education or labour markets, we simply lack the ability and will to apply foresight and to act accordingly. As per your blog post Toby, the consequences of this can and will be dire, and I personally fear that as a world we will come to regret our actions, that we took the time to sit down and plan and act accordingly. The yo-yo effect of on/off with activities involving foresight, preparation, preparedness will simply not suffice come the future, and for every time there is a re-start it will become more and more costly and difficult.