How Big Companies can stop the brain drain

From Fortune Magazine

Across all industries, the best and brightest are striking out on their own to escape corporate bureaucracy. That need not be the case. Here's how big institutions can re-imagine themselves as centers of innovation.

By John Hagel III and John Seely Brown

People are increasingly pursuing the jobs and endeavors for which they have the most passion. It is not a surprise then that many of the most passionate and talented individuals are leaving their corporate homes and striking out on their own.

Passionate individuals are fleeing the institutional environs that constrain, rather than amplify, individual passion and creativity. They can no longer abide being a passive cog in a highly scripted and often stultifying corporate machine.

But the flight from big institutions will be a temporary, transitional phenomenon if those institutions are able to reimagine how they organize themselves and conduct their operations. Once they do, they'll become a natural home for passionate individuals. Here's how they'll do it.

1) Evangelize transformation.

The challenge for institutional leaders in the near term is to find and motivate talented individuals to engage in the task of transforming institutions rather than fleeing them. To attract these passionate individuals, leaders first have to identify them. The Silicon Valley entrepreneur Tara Lemmey has a useful way to identify questing, passionate individuals. In general, she's looking for people who can thrive in different kinds of cultural environments and cross-pollinate ideas and practices among them.

To find out whether an individual has these qualities, Tara takes a job candidate out to lunch, and then, once the food arrives, offers to share a bite of hers. "People who won't share food don't do well with us," says Lemmey. "It's a brutal indicator. People who share food tend to be less territorial. They're more likely to say, 'Hey, what's the table ordering? I want to try a little of everything.' Those folks tend to have a lot more ease in our working process."

To attract these kinds of people, leaders should articulate a new rationale for the firm that can appeal directly to the passionate and offer them the promise of more rapid development of their talents. If companies take talent development seriously, they begin to realize that, in the words of Silicon Valley icon Bill Joy, "There are always more smart people outside your company than within it." If firms are serious about developing their talent, they must find more ways to connect and collaborate with all of those smart people outside the organization. Even more important, they should aggressively create opportunities for people within the organization to work with leading-edge talent outside it.

2) Be a leader on growth

Institutional leaders must resist the instinctive tendency when under pressure to batten down the hatches and assume a defensive posture, the better to protect the core that generates the cash. Instead, the leaders of today's big corporate institutions must begin to pursue major new sources of growth.

Talent thrives when it has new challenges and opportunities to pursue. Institutions that are on the defensive with low-growth strategies simply cannot offer the same level of talent development to their employees. When such institutions are at their worst, a vicious cycle takes hold. As the firm goes on the defensive, the most creative talent becomes more vulnerable to offers from higher-growth firms. Performance deteriorates further as talent flees, and finally, the institution settles into its defensive posture and another wave of the talent exodus begins.

This is where leadership is desperately needed. Institutional leaders must provide compelling motivation for people in the core of the business to venture out to relevant edges—whether those edges are geographic, demographic, or between companies—in search of major new growth opportunities. This means putting a premium on strategies that move beyond straight-line growth within the core and that motivate investment in new growth options. Such a shift in strategic focus will inexorably pull the organization toward promising edges where growth potential is the highest—indeed, that's virtually the only place where major new growth options can be found.

3) Leverage your risk takers

Redefining the rationale of the firm will begin to attract a critical mass of passionate individuals from all parts of the company, but especially from the periphery, where many of the people with the greatest passion tend to congregate. These areas tend to attract risk-takers, people who seek out new challenges and opportunities to drive their own performance to new levels, people who are not only more passionate than those at the core but who tend to have new approaches, practices, and dispositions.

Here's how to find these risk-takers, while at the same time leveraging the strengths that big organizations offer:

Pull people out of the core. Questing explorers are likely to be in short supply. That's why institutional leaders must find ways to motivate the more risk-averse employees in the core of the business—who are likely to be the vast majority of employees— to venture out and connect with their more passionate, questioning colleagues on the edge. These questing explorers need access to the core of the firm and the ability to mobilize their colleagues so that they can scale the emerging growth opportunities that they tend to see and embrace first.

Provide leverage through focused initiatives. As groups of questing individuals coalesce both within and across the boundaries of the firm, they can begin to launch low-risk, high-reward initiatives. Rather than seeking the journey's end in one massive bound, it's best for these groups to recognize that a journey of a thousand miles begins with a single step, followed by another, and another. Starting slowly, below the radar, gives the champions of change opportunities to have small successes and gain strength while gradually neutralizing the inevitable resistance of entrenched interests.

Provide leverage through pull platforms. One of the most powerful ways to drive leveraged growth is to design and deploy scalable pull platforms that reach well beyond the boundaries of the firm to access and attract relevant talent wherever it resides. Rather than trying to specify the activities in processes in great detail, orchestrators of pull platforms specify what they want to come out of the process, providing more space for individual participants to experiment, improvise, and innovate. This kind of modularity—in which the outputs are specified but not the inputs— is powerfully motivating for passionate individuals. In a similar way, instead of dictating precisely how to do their jobs, legendary coach and general manager Al Davis of the Oakland Raiders used to tell football players: "Just win, baby." That's also good advice for anyone in business today.

-- John Hagel III, co-chairman, and John Seely Brown, independent co-chairman, of the Deloitte Center for the Edge, have a passion for communicating world-changing ideas in ways that get executives to change what they do and realize significant performance benefits. Their books include The Power of Pull, The Only Sustainable Edge, Out of the Box, Net Worth, and Net Gain.