Three lenses on talent

Three Lenses on Talent

How changing your perspective creates greater value through people

New technological tools such as omnichannel platforms, digital supply chains, and process automation have been delivering increased speed, profitability, and enhanced customer experiences. However, the ubiquity of these technologies today means market gains are being exhausted as the playing field is leveled. Organizations must look elsewhere for a competitive advantage that can be sustained.

Against this backdrop, organizations are increasingly turning to talent to unlock value. While machines may be faster when it comes to the execution of repetitive tasks or data analyses, they lack synergetic creativity – the capacity to connect diverse and disconnected ideas to drive innovation. From Isaac Newton’s laws of motion and gravity inspired by a falling apple to Steve Jobs’ design innovations drawing on calligraphy, human beings excel when it comes to adding two and two to come up with something completely different.

Capitalizing on this human advantage has accelerated the hunt for talent. Organizations are seeking talent to help them get ahead, whether it’s for deep expertise, diverse perspectives, or innovative ideas – and there is clear empirical evidence that talent does indeed create value (Carlucci et al., 2004). However, our traditional talent management mechanisms are struggling to fulfill these needs. In this paper, we present:

1. The traditional definitions and measurements of talent.

2. The gaps in these approaches for delivering the capabilities and innovations that businesses need now.

3. A new framework for talent that drives greater value in today’s dynamic market.

How does talent management create value?

Talent management generates value for organizations by enhancing performance through improved efficiency and by creating and delivering advantages that other organizations don’t have (McDonnell et al., 2017). This is consistent with the theory (Barney, 1996) that sustainable competitive advantage can come through resources (including talent) and capabilities that are valuable, rare, and difficult to imitate or replace, and that can be exploited by the organization (known as VRIO for value, rarity, imitability, and organization).

Technology is the predominant driver of efficiency, while talent fuels the focus on scarce or hard-tocopy capabilities (such as the depth of specialist knowledge) and the generation of innovative ideas to advance the organization.

What is talent?

If “talent” consists of people who can create value and competitive advantage, what are the best ways to go about identifying talent for your organization? One approach is to define talent as individuals who can make the greatest difference to organizational performance, either through their immediate contributions or over the longer term by demonstrating the highest levels of potential (Chartered Institute of Personnel and Development, 2007). Two elements are central to this notion of talent: performance and potential. These two components form the basis for the renowned “ninebox grid,” pictured, which plots combinations of perceived performance and potential as a tool for talent management.

High professional

Explore aspirations to identify retention path

Developing talent

Develop expertise and industry exposure

Top talent

Stretch and broaden experiences MED

Solid professional

Measured growth and progression

Core talent

Consistent contributors, explore value creation potential

LOW

Wrong fit

Calibrate on role expectations

Inconsistent talent

Explore how to better translate potential into performance

Emerging talent

Identify how to translate potential to performance

Untapped talent

New to role, wrong role or still developing

Performance

In practice, however, many organizations find the ninebox grid problematic. Firstly, “performance” is hard to pin down and difficult to define. For example, research has found that there is a low correlation between objective measures of performance (e.g., sales) and subjective measures (e.g., manager appraisals): it is only about 0.389 (Bommer et al., 2017), whereas a significant correlation would be a value between 0.5 and 1.0 (1.0 being a perfect correlation). Further, people are spending 85% or more of their work time collaborating with others (Cross et al., 2017), making it harder to attribute successful outcomes to individuals.

Potential

Likewise, the second component, “potential,” is also hard to pin down. Potential has been variably defined as the ability to achieve higher hierarchical levels, the potential for performance in the current role, or the capacity to develop (Campion et al., 2020). Ready et al. (2010) describe “high potential” as a focus on consistently delivering strong results, mastering new types of expertise quickly, underpinned by the drive to achieve excellence, a constant focus on learning, an enterprising spirit, and a capacity to make careful assessments of risk. However, these characteristics suggest a strong overlap with “high performance,” which renders the nine-box grid confusing to interpret and implement.

Even if an individual possesses above-average potential, they need the right leader and organizational climate to flourish (Goffee and Jones, 2009) and the opportunity to perform (Collings and Mellahi, 2009). Groysberg’s 2010 article “Chasing Stars” showed that talent may not be sustained across different environments, suggesting that context is key in the expression and identification of talent. Indeed, some authors have gone even further, suggesting that talent is simply a skill that has been nurtured and developed through many hours of practice (e.g., Gladwell’s “10,000 hours rule” popularized in his 2008 book Outliers), rather than an inherent quality present in a few special individuals.

In summary, defining, identifying, and measuring talent on an individual level is difficult. One alternative lens is to look at roles, competencies, and skills that drive value, rather than focus on people.

Organizational approaches to talent

Roles

From the organizational lens, talent development and management are investments in ensuring that the enterprise has the capabilities it needs to deliver the business strategy (Scullion and Collings, 2011). A strategic-capabilities analysis enables the company to zoom in on the factors that support sustained success, and then encode these in role requirements.

One way to approach role requirements is to focus on specific strategic or pivotal roles that can disproportionately create value and competitive advantage for organizations (Boudreau and Ramstad, 2005). Rather than identifying latent talent in individuals, the goal is to identify “mission critical” positions and put strong performers in them to optimize their potential for value creation.

Competencies

Another approach is to deconstruct role requirements using competency analysis. Following the methodology advocated by researchers such as Boyatzis (1982) and Spencer and Spencer (1993), the aim is to identify the specific characteristics and behaviors associated with outstanding performances. These competencies can then be fostered through selection and development, to have more people doing more of the things that differentially drive value and performance. Ideally, a competency analysis is conducted for all mission-critical roles to provide a robust basis for talent management, or, according to the Society for Human Resource Management (SHRM), to create a “unique leadership brand” through which organizations gain competitive advantage or a “core competence” that competitors can’t match (Prahalad and Hamel, 1990).

However, in practice, few organizations approach this process with sufficient discipline to create the empirically grounded competency suite that the leading lights of the competency movement advocate. Instead, many organizations adopt a common set of competencies that capture key behaviors aligned with their strategy to provide a shared language for “what good looks like around here.” Profiroiu and Hurdubei (2018), in fact, found significant overlap (up to 75%) in organizational competencies even when looking

across industries, suggesting that competencies capture very few unique factors that could create competitive advantage because they do not take account of the unique context of each company, such as structure, culture or domain (Megahed, 2018).

Skills

More recently, there has been a resurgence in the use of skills to define the knowledge and behaviors perceived to create value across different roles. However, “skills” are variously defined as hard skills, technical skills, soft skills, cognitive skills, human skills, abilities, behaviors, and characteristics – in other words, they are not clearly defined. Further, the association of skills with core job performance – rather than value creation – makes them impractical for talent management (Effron, 2024).

While these three organizationally grounded approaches – based on roles, competencies, and skills – hold promise to connect talent to company strategy in a way that individual approaches do not, they are also difficult to implement. Firstly, rigorously defining and identifying roles, competencies, or skills that definitively drive value requires significant investment to identify and maintain. Secondly, the increasing rate of change in business has accelerated the rate of obsolescence in roles, competencies, and skills, so that they rapidly become outdated and may even restrict organizational agility if enshrined in human resources information systems or other systems that may be cumbersome to update. What is needed is an approach to talent that can keep up with the ongoing changes in roles, organizations, and systems. How can this be achieved?

Dynamic capabilities

To create a competitive advantage through valuable, rare, and inimitable capabilities in a dynamic context, organizations need to build new capabilities to constantly revitalize their organization and satisfy emerging needs (Stahl et al., 2012). This process of identification of new capabilities to drive value creation and the ability to learn and deploy those capabilities quickly happens across multiple overlapping levels. From IMD’s Strategic Talent perspective, here are five features to watch:

Flexibility

The persistent theme in the literature describing drivers of success highlights “cognitive, behavioral and strategic-process flexibility” as key to continually reframing, learning, and developing new capabilities that are important for success, underpinned by strong self-management.

Role crafting

Job performance is a function of the person-role fit, which necessitates changing one’s approach to find the optimal fit as individual strengths and the demands of the role shift.

Adaptability

To deliver value and high performance, individuals must be proficient in working in diverse work contexts (Dierdorff and Morgeson, 2007), where the drivers of performance vary according to the situations and stakeholders involved.

Ambidexterity

Leaders and those they manage must be able to switch seamlessly between different strategies for driving value: performing and transforming. On the one hand, they must exploit current capabilities to drive efficiency and profitability. And, on the other hand, they must make calculated investments to lay the foundations for future value creation.

Systems engagement

Being part of teams, groups, and systems will require integrating, complementing, and responding to others to support collective intelligence to solve complex problems (Beechler and Woodward, 2009).

In sum, today’s organizations need to identify emerging trends and needs, understand the capabilities and responses required, deploy, or develop these capabilities, and have the courage and resilience to continuously operate and adapt amid incomplete information. At IMD Strategic Talent, we call this “accelerated adaptation.”

Panel: Accelerated adaptation

Research by the IMD Strategic Talent Lab identified four key processes for accelerated adaptation. These are dynamic capabilities at an individual level, supporting effectiveness in dynamic environments, increasing the pace and effectiveness of learning, and enabling individuals to take on more diverse roles and role challenges – which in turn enhances accelerated adaptation through a virtuous development cycle. The cycle incorporates the cognitive, strategic, and behavioral flexibility that Carter (2015) specifies as important for ambidexterity.

Acuity Agility

The capacity to scan the horizon by drawing on a broad range of information sources and synthesize insights to anticipate likely trends or events.

The ability to look at insights and information from multiple perspectives to ensure a robust consideration of the situation. It includes elements of cognitive flexibility and strategic flexibility.

Adaptability

The capacity to choose behaviors, strategies, or actions based on what is needed and guided by insight rather than preference, habit, or other factors. It focuses on behavioral flexibility.

Audacity

Having the courage to step forward, take the action, and move ahead in the context of ambiguity and uncertainty despite scrutiny from stakeholders. It requires courage, grit, and resilience, underpinned by high levels of self-confidence and self-awareness.

Talent assessment

Talent assessment provides insights that can be used to identify, develop, demonstrate, and deploy the constantly changing capabilities required by business. According to Gagné (2004), talent has two distinct predictors: innate abilities and systematic development. In talent management, the goal of systematic development is to transform innate abilities into capabilities in a continuous triple learning loop with three actions [drawing on the work of Argyris and Schon (1978) and Bateson (1973)]:

1. Understand and leverage capabilities

Identify the capabilities that individuals have already developed in terms of the needs of their current and near-term environment, where performance is driven by the effectiveness of the choice and deployment of capabilities.

2. Enhance the ability to develop capabilities

Help individuals transform latent innate abilities into new capabilities to address perceived gaps, where performance is driven by the speed of development to translate potential into practice.

process continuously and effectively. This includes environment, recognizing that both capacities and and fostering the change in “being” not just “doing” 2014). Here, performance is driven by the quality of insight regarding what is needed, drawing from an increasingly broad range of perspectives, and the

Identify gap in capability required

perspectives (on self, situation, and environment)

Inspired by Tosey et al., (2011)

IMD tools for talent development through the triple loop learning

1. Understand current capabilities

IMD has developed tools to assess current capabilities, including leaders’ motivation (“What do I want to do?”) and business know-how and acumen (“What do I know how to do?”). Combined with an experience survey, these interactive tools help individuals understand and appreciate their current capabilities and begin to understand what they are capable of.

What I choose to do is at the heart of the triple learning loop. The judgment I make about the action I take in a given situation is influenced by:

• Current capabilities: The motivation, experiences, and knowledge I possess.

• New capabilities: Choosing to apply new behaviors or approaches in the context of the organizational vision or my personal aspiration.

• New perspectives: Applying accelerated adaptation to constantly reframe my understanding of the situation and what is needed.

The effectiveness of the leader over time is a product of the cumulative impact of the judgements they make across situations. The better their “accelerated adaptation” the more accurate their perceptions, the broader their range of choices and the more effective their ability to realize these choices in the context of changing, complex and challenging environments. This synergetic model is IMD Strategic Talent’s Leader Performance Model.

to explore and develop an individual’s ability to

Talent development

Following assessment, systematic talent development is required to transform latent abilities into dynamic capabilities that drive competitive advantage. Talent development focuses on the planning, selection, and implementation of systematic strategies for the organization’s staff to ensure a current and future supply of talent to meet strategic objectives (Garavan, Carbery, and Rock, 2012). Integrated and multi-level development helps to achieve optimal impact.

Integrated

To be integrated, talent development should be connected to workforce planning, career planning, leadership experiences, engagement, and coaching (Pruis, 2011). Conger (2010) also emphasizes the need for an integrated approach to the learning itself, highlighting four components that should be incorporated to maximize learning impact:

1. Individual skill development

2. Socializing development interventions

3. Insights into action

4. Strategic learning initiatives

These activities can support accelerated learning, as relying on more passive, natural, experiential learning alone can be a slow process (Tansley et al., 2007).

While this approach to development may appear complex, IMD’s experience is that today’s technology and analytics streamline these activities, with data collected via talent assessments at scale. Datadriven approaches allow a holistic view of talent and organizational capabilities and can provide an indepth, needs-based analysis to better design learning interventions.

Multi-level

To be multi-level, talent development should support connectivity across the tiers of the organization, recognizing the multi-faceted influences on organizational behavior that are both bottom-up and top-down. Talent development efforts should be framed as shared interests that can also foster collaboration and innovation across functions and hierarchies (Haskins and Shaffer, 2010), further enhancing value creation.

Bringing it all together for leading-edge talent development

The traditional definitions and measurements of talent outlined in this paper are being tested by the more dynamic and complex environments in which people and organizations need to operate today. They all add value – but in different ways and with different outcomes. Bringing it all together, there are three lenses on talent management that organizations can adopt.

1. The mechanist lens

The mechanist lens, which takes a micro-lens to define the key skills and competencies that disproportionately drive value, then seeks to hone these qualities and behaviors to high standards through development and selection. For example, Amazon’s focus on customers or Toyota’s leadership in lean manufacturing.

Benefit: Embeds competencies and skills that potentially differentiate and drive performance and can be delivered with high efficiency.

Risk: Entrenches competencies and skills that can become outdated for the organization, making it harder to adapt to new circumstances.

2. The chameleon lens

The chameleon lens, where structures, roles, and teams that disproportionately add value are configured to respond quickly to market opportunities and provided with the resources, talent, and capabilities they need. For example, the Mexican restaurant chain Chipotle’s introduction of “Chipotlanes” to respond to the demand for mobile food delivery or the evergreen LEGO Group’s ability to rapidly produce lines linked to popular films and characters.

Benefit: Leverages key capabilities to move more quickly than competitors to grab market opportunities.

Risk: Reinforces focus on the short term to steer evolution rather than more long-sighted, disruptive, and innovative approaches to value creation.

3. The shape-shifter lens

The shape-shifter lens, where organizations leverage the mechanist and chameleon lenses but also harness their potential for breakthrough ideas and innovations. For instance, Shell’s energy-transition strategy requires new capabilities to support net-zero-energy provision while simultaneously continuing to extract oil and gas efficiently and profitably. Meanwhile, NatWest took on a new customer-centric mission: “We champion potential, helping people, families, and businesses thrive” – with no mention of money, finance, or profit.

Benefit: Implants capacity for accelerated adaptation to enable the organization to sustain success over time, fueled by successive waves of reinvention and metamorphosis of skills and competencies.

Risk: Needs talent with high levels of ambidexterity to make robust judgments about when to focus on today and when to invest in tomorrow.

By acknowledging that capability development needs to be continuous to address the challenges and opportunities of a dynamic environment, organizations can better support their sustained success and maximize value creation. While all talent lenses add value, this new framework suggests that it is likely to be shape-shifters who ultimately win the day. Their broad and dynamic focus on continuous capability development and accelerated adaptation primes them for success and offers their people opportunities to thrive, grow, and continually challenge themselves. In this way, shape-shifters can fully capitalize on the human advantage that people bring to drive innovation, adaptation, and transformation.

Talent lens Mechanist

Delivers consistent excellence through expertise and skills

The three lenses on talent

Chameleon

Enhances current capabilities to exploit market needs

Value created by

Key challenge

Operational excellence

Deliver well

How do we do this consistently?

Value through excellence, reliability and economies of scale

Perform

Respond quickly

How do we do this faster and better?

Value through speed of capability deployment to tap into current market opportunities

VRIO category

Organized

Talent focus Individuals

Develop skills and competencies for excellence and high performance

Outcome Cost savings

Professional excellence

How IMD can help

Use technology-enabled tools to identify the critical competencies that drive value for you

Devise and deliver interactive assessment tools for assessment and engagement

Create personalized digital learning journeys deliverable at scale

Valuable

Individuals and structure

Identify critical roles and processes and develop ability for problem-solving and rapid response to market needs

Enhanced profitability

Customer-centricity

Shape and refine roles and structures to align with strategic imperatives

Develop leadership teams to increase their ability to make robust decisions quickly

Provide analytics and talent metrics at business unit and enterprise level

Shape-shifter

Adapts constantly for congruence with market shifts

Transform

Innovate flexibly

How do we transform to meet emergent needs?

Value through cultivating innovation and new capabilities to drive and capitalize on market shifts

Rare, inimitable

Individuals, structures and organizational capabilities

Cultivate capacity for constant learning, adaptation, and evolution of capabilities

Competitive advantage

Market leadership

Measure and enhance accelerated adaptation and executive strategic thinking

Improve the ambidexterity of leaders to increase value creation

Use multi-level integrated approaches to build dynamic capabilities

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