Talent Management, Football Teams and Metaphors

Following up on the last blog on investment in human capital and social capital, and the example of football teams, I was taken with a little article in this week's edition of the Economist (August 22nd, 2009, p. 32) on the economics of Real Madrid's strategy for re-gaining their competitive position in world football by recruiting a new clutch of gallaticos - a metaphor for what many companies have done in the past and, apparently, one that finds support in the Harvard Business School study by Jose Luis Nueno of the soccer industry in emerging markets such as the USA, Japan and China.

For those people less engaged by football (soccer) than I am, Real Madrid have spent many millions this summer in re-applying a strategy first tried nearly ten years ago by their then president, Florentino Perez. He has has just been re-employed to help the club regain their former pre-eminent status in Spanish and world soccer from their arch-rivals Barcelona, who, interestingly, have followed much more of a 'grow your own', social capital approach to world domination of soccer.

The Real Madrid strategy is not just based on the ability of the new gallaticos to turn their considerable individual talents into results but to generate merchandising revenue in the way David Beckham did during the first wave of this strategy. It is also based on the ability of Perez to convince banks in Spain to supply sufficient credit to a club operating in one of the worst hit countries in Europe in terms of GDP growth and decline. Finally, much lower levels of income tax on players coming to Spain than in other European countries helps explain that the real costs to Real Madrid in paying wages is lower.

The point of the article is to contrast 'cheque book power' with Barcelona's largely 'home grown' strategy as a route to success. Metaphors, however, such as make or buy strategies are partial - they hide as much as they reveal. What the article fails to mention in Barcelona's strategy of building social capital not only through its attempts to create 'bonds' among the team by its development strategy but by its building of 'bridges' in the community it serves and the wider world through its ethical approach to promotion. So, like all, rather lazy, single factor theories of strategic success, of which sports team metaphors are among the most popular, are likely to be found wanting. Perhaps the secret lies in complementarity among different forms of capital investment. It certainly lies in developing better mid-range theories of success in industries like soccer; otherwise we will end up repeating this make or buy argument in football, which has a long history going back a century or so but has generated little light in what makes for sustainable success.

Picking up on Negative Capabilities and Talent Management

I know as academics we're not supposed to look for confirmatory evidence to support our views, but it's rather difficult not to feel pleased when some ideas you have just written about seem to be supported by what is going on in the big bad world of talent management.

I've just attended another session at the Academy of Management on 'Developing Top Executive Talent; How Employers Do it' featuring three presentations by the heads of HR/ Talent management of three American multinationals - GE, Boeing and Sara Lee. Common themes of these presentations were:

1. The linking of executive development to key strategic capabilities and the distinctiveness logic, which was also expressed in the exclusive approach to talent management focusing on the top 20% of performers
2. But the need to connect and assess executive development to the expression of core, corporate values. Indeed corporateness and corporate values were core themes in all three presentations but never fully explained as to why. GEs performance-values matrix seemed to sum up the way these organizations attempt to reconcile these two dimensions, with leaders measured not only on how the perform but also on the extent to which they express core values. Indeed, they seemed to be pretty ruthless about 'removing' (their word) high performers who didn't live up to the values ('would you want these people in GE' was the question?), whereas they were willing to give second chances to low performers who expressed the core values.

When questioned on this, all three suggested that the strategies weren't forever and that they frequently amended the values to reflect changing environments. In other words, strategic direction was more learning than planning, though the planning word did feature in their presentations - implying even these giants of the corporate world 'muddled through', to some extent at least.

Two further noticeable features were:

1. the desire and reality of all three to focus on developing rather than hiring talent, especially in the engineering divisions of GE and in Boeing. Leadership development in the core businesses was based on taking talented engineers and subjecting them to intensive and extensive development opportunities - in other words seeing leadership and management as an extension of 'craft' and not as something which was separate from and above the core business of engineering and manufacturing quality products, and

2. that sustainability, the core theme of the AOM conference, was not even mentioned in the three presentations. Is this a case of the Academy leading practice, or failing to be in touch with the reality of business?

Finally, the Boeing case highlighted a potential problem in the development-oriented approach to talent management. Everything they seemed to do was aimed at creating strong internal cultures and strategic capabilities based on promotion and development from within. Yet much of the research suggests that innovation often requires the injection of fresh blood and ideas from outside. The Boeing VP for talent management didn't seem to recognise the irony of this philosophy with her need to visit GE at Crotonville and Harvard to develop herself to develop others!