Note: originally posted on Knowledge@Wharton
Despite an unemployment rate hovering at 6.7%, American businesses still struggle to fill jobs, with executives saying there’s a lack of innovative minds to lead new projects. But it seems the blame for this can be placed on the C-Suite, with leaders overlooking entrepreneurial-minded employees who are actively pitching the next big thing. Companies are wasting innovative energy by failing to support ideas. Business strategist and best-selling author Kaihan Krippendorff explains how this jobs dilemma is hurting progress and how business leaders can fix it.
“The Polar Vortex Didn’t Stop Us!” might have been an apt title for this year’s February jobs report: Despite the cold weather — which tends to put a damper on hiring trends — the economy added 175,000 jobs. The good news continued into March, during which nonfarm payroll employment increased by 192,000, according to the Bureau of Labor Statistics.
But these better-than-expected results hide a growing challenge for corporate leaders. It’s an oft-repeated concern echoing through corner offices and human resources departments: “Where is the talent to feed our projected growth?”
I help business managers build growth plans and too often hear that they are limited by their inability to find the right kind of talent to ensure a new innovation’s success. The customers and technologies are ripe for the taking, but the innovative workers needed to seize new business opportunities probably do not want to work for you.
Cathy Benko, vice chair and managing principal of Deloitte LLP, notes that “in California there are 840,000 critical jobs unfilled, yet unemployment is 10%.” She believes there is a fundamental misalignment between the skills employers need and those job seekers have. This results in scarcity, which has become a high-priority strategic business issue.
Studies show that entrepreneurs within companies are significantly more likely to be on the lookout for new growth opportunities than managers.
Recent studies suggest that part of the blame should fall on entrepreneurs. I’m not referring here to the young tech businesses that lure your talent away with better pay packages and more exciting growth options. But I am talking about the entrepreneur who should be working for you right now or, worse yet, the one who is part of your ranks but is about to leave. I’m talking about my friend Jody Johnson who left a career as a nurse to start Sage, now one of the largest business-coaching firms in Florida. I’m talking about Wharton grad David Klein who should have returned to McKinsey, but instead co-founded CommonBond, a peer-to-peer student loan program that recently raised $100 million. I’m talking about the person working at your company right now who wants more meaning, freedom and possibility. People like Matt Reilly, who was a partner at Accenture and left to join a smaller, more entrepreneurial firm.
Studies show that entrepreneurs within companies are significantly more likely to be on the lookout for new growth opportunities than managers, making them more likely to recognize opportunities. If growth and innovation are an important part of your corporate strategy, you want to attract and retain these employees with entrepreneurial mindsets.
Reilly has a particularly interesting perspective on this challenge because he can approach it from both sides. He eventually sold his business back to Accenture and today heads Accenture’s North American management consulting business, where recruiting innovative talent is a top priority. Accenture has over 280,000 employees and is seeking to hire 50,000 more. So Reilly has done some interesting research to understand the challenge.
Your Employees Want to Stay
For example, in a recent survey of 1,000 corporate employees, decision-makers and self-employed individuals, Accenture uncovered a missed opportunity: Your entrepreneurial employees want to stay.
A myth persists of the entrepreneurial employee who develops an idea while working full-time and leaves. For example, Saleforce.com sprang from Oracle, and Adobe from Xerox. But actually the opposite is happening. Of the self-employed surveyed by Accenture who previously worked at large corporations, 93% pursued an entrepreneurial idea within their previous company first.
This means that the overwhelming majority of future self-employed entrepreneurs working for you right now want to pursue new growth ideas within your walls and for your benefit. They are willing to pursue these opportunities without giving up other responsibilities. Only 30% left because they wanted to pursue the idea without having to focus on other projects.
But companies waste innovative energy by failing to support ideas. Of this same population, 57% say their company did not support their pursuits. In other words, entrepreneurs want to build their ideas inside companies; they don’t mind doing so while they continue other duties, but companies are not supporting them.
You Are Measuring the Wrong Objectives
New ventures always pass through a phase of uncertainty, when the effort put in does not match the tangible results that come out. One of my clients, a Fortune 100 firm that’s remarkably adept at leveraging the entrepreneurial power of its people, ensures that it does not expect new projects to produce the same results as established businesses. In the early stages of a new initiative, a team’s performance is judged by market share, later on revenue, and only after time, on profits.
The overwhelming majority of future self-employed entrepreneurs working for you right now want to pursue new growth ideas within your walls and for your benefit.
Yet most companies miss the point. The majority of corporate leaders believe a new idea should be considered successful based on the following measures:
- Makes measurable financial gains
- Makes the company more cost efficient
- Improves the company’s status as an industry leader.
But industry-shaping ideas rarely show signs of being able to meet these measures early on. Innovative plans are usually ripe with option-value. They are moves that “buy” you an option to potentially do something valuable in the future, but whose value cannot be accurately predicted in their early stages.
One trick that successful large-company entrepreneurs use is to focus their business cases on elements of an idea that address immediate threats. For example, a team we worked with recently at a major consumer products company had developed an idea that looked more like building a movement than producing a can of sugar-water. Knowing the CEO may resist this new idea, we reframed it as a defensive move to protect against a threat to the company’s core brand. The idea won funding. In two to three years, we hope this idea provides brand protection and also generates profits. But had we argued its attractiveness based on profits alone, senior management would have probably killed the idea.
Committed entrepreneurial employees may go the extra mile to trick your corporate system into embracing innovative ideas, as this team did. And you are likely to benefit down the line. But most will leave or choose not to join your firm, leaving you struggling again with your “big talent dilemma.”
The implications of this are simple. If you want to attract and retain the right entrepreneurial talent for innovation, consider these three steps:
- Let them know you care about their ideas.
- Give them job descriptions that allow them to pursue ideas, even as they maintain the core business objectives.
- Measure their ideas with the right metrics (e.g. new customers, not profits).
