Every business is a talent business, retail edition

Over coffee this morning I caught an interview with Macys CEO Terry Lundgren who was a guest on CNBC discussing the retailer's latest quarterly results, (which were surprisingly positive for a company that like many in the retail industry has been struggling of late).

During the interview about the positive results and momentum that seem to have buoyed the company in the 2nd quarter of 2016, one of the CNBC reporters questioned Lundgren about the key drivers of this shift and hopeful turnaround in Macys business. Here's the question, (paraphrased a little), and then Lundgren's response, which I found really interesting.

Reporter: :What is the most important thing you are doing to change the business, is it inventory management, is it physical changes to the stores, or is it the increased investment in digital and e-commerce?"

Lundgren: "I think the biggest single thing that we did was that we decided to invest in people and putting more people back on the sales floor in advance of the performance of the business. So it was a bet so to speak. In a retail business like ours with so many stores, the biggest expense you have is your salesforce on your floors. So investing millions and millions of dollars back into that part of the business before the business turned around was the biggest bet that we placed in the beginning of the 2nd quarter. That to me, because I am watching what we call our 'Magic Scores', which are our customer service scores every single month now improving and going in the right direction. And I think that investment in people has had the biggest positive impact."

There is a popular saying, I think that even has been repeated on this blog from time to time, that 'Every company is a tech company', alluding to the fact that transformative and disruptive technology-driven change has redefined business, markets, competition, service delivery, communication, and pretty much everything else. And while I do believe that sentiment is largely true, and the most successful companies will be the ones that can adapt to and exploit new technologies the fastest, we can't ever let the 'talent' part of the popular Culture--Strategy--Talent triangle go wanting.

Is was surprising and refreshing to hear the CEO of huge organization attribute smart investments in talent as the primary driver of what he and Macys hopes to be a sustained turnaround in business fortunes.

It's never all about new technology. It's never all about the best business strategy. And it's never all about assembling the best talent. It is all about finding the balance between all three, and knowing, as seems to be the case with Macys, when to shift investments and attention to shore up the side of the triangle that may be lacking, and the one that has the greatest opportunity to impact customers and results. 

Every business a tech business today. Sure.

But even if you don't buy that, you have to agree that every business ,truly, at the end of the day, is a talent business.

Are you a buyer or seller of talent?

In sports, and I will contend, in most other industries as well, teams and organizations are either 'buyers' of talent, i.e, the best candidates and people leave other organizations to come there to work,  or are 'sellers' of talent, i.e. they tend to lose their most talented people to other, better opportunities and organizations. 

The problem for organizations however, is figuring out where they want to be on the spectrum of 'seller/buyer' of talent, vs. where the market (and the talent), perceive them to be on said spectrum. In other words, it can be pretty easy for team and organizational management to in accurately peg themselves as a buyer or acquirer of the best talent, when the talent no longer sees the organization as all that desirable.

And in big time sports like Major League baseball, NBA basketball, and international soccer/football at the highest levels we see this tension between desire, perception, and reality plays out often, as teams vie for the services of the best and most talented players. 

Case in point, the potential transfer of one of European soccer's top players, Paul Pogba from the Italian club Juventus to the English club Manchester United. Juventus' management sees themselves as an acquirer of talent clearly, as evidenced by this quote from team manager Massimilliano Allegri on the Pogba situation, (courtesy of Business Insider).

"I am calm about the English rumours. Anyone who has the opportunity to leave Juventus has to consider things very carefully, because right now Juve are among the top four European clubs. 

"This is not a selling club that just lets its players go. Pogba belongs to Juve and at the end of the day he too will want to win another Scudetto (Italian league championship) and hopefully the Champions League.

"We have grown in terms of appeal and awareness of our own capabilities. So far our market this summer has been eight out of 10, bringing in players of international pedigree like Medhi Benatia, Dani Alves, and Miralem Pjanic."

Tease that out a little bit and we can see clearly that Juventus see themselves as a talent acquirer - they think Pogba would be better off remaining with Juventus instead of leaving for Manchester United, and additionally, they are 8 out of 10 in acquiring top-level players against competing clubs.

Meanwhile, Man United, long considered a buyer or acquirer of talent themselves, but who have dropped a bit lately due to some disappointing results, see the potential Pogba signing as one that cements and solidifies their reputation as a desirable location and organization for the very top tier of soccer talent to ply their trade. 

Where Pogba ends up deciding where to play his soccer is a decision that will validate the ambitions and self-perception of one of these two organizations, and cast some doubts on the other. Both teams see themselves as 'the' destination for talent of Pogba's level. It will be interesting to see how this plays out.

Why does this matter to you and your organization?

Because it serves as a reminder of two important points. One, it is important to understand that no matter how you perceive your organization's desirability as a place to work, your self-perception needs to align with market reality in order to better inform and shape your talent strategy.

And two, at the end of the day, your organization's perception and position as a talent buyer or seller is a decision that the talent makes, not you. No amount of branding, or history, or posturing, or past glory will make up for the best talent deciding a competing organization over yours. 

It's good to know where you stand in the pecking order, and it is better to know how and why the most talented people decide to put you there.

Have a great week!

Five quick 'Sports and HR' takes from NBA Summer League - #8ManRotation

I am out at the NBA's summer vacation also known as Summer League in Las Vegas joined by a couple of members of the 8 Man Rotation crew, Kris 'KD" Dunn and Matt 'Matty Ice, akaBruno' Stollak.

As in the past sojourns to NBA Summer League, the reason to attend is not just about the basketball. In fact it is perhaps not even half about the basketball. Rather it is for what happens and is happening outside the lines - the observations of members of NBA team management, league staff, players on the sidelines, and the general approach towards talent management that the different teams take as they all strive to reach the same goal - an NBA championship - in many, many different ways.

Add in the natural sideshow/carnival atmosphere that is Las Vegas, and Summer League becomes just about the perfect confluence (for me), of sports, Talent Management, development, management philosophy, and business strategy played out in the open and in real time.

So with that said, here are my first five quick takes from about a day and a half out at Summer League:

1. A little bit of 'real' experience makes a huge difference. The best players in this year's Summer League have tended to be more experienced players like Devin Booker, D'Angelo Russell, and even the Nets' Sean Kilpatrick. One commonality across these players? They all have at least one full year experience in the NBA already and have come back to Summer League to continue to work on and refine their games. These players and others have shown how much even one year of development and experience makes a huge difference in performance. The lesson to me for managers of talent is that of patience. Even in this world of 'go-go-go', it often pays to invest in talent and development and to be patient to realize increased benefits later on. In other words, don't look at new employees just as ones that have no idea what they are doing, try to envision the value that they can deliver after a year of prep and learning.

2. Stakes matter, i.e., if you give someone a lousy project don't be that surprised if their performance dips. Friday's games at NBA Summer League were all loser's bracket games - the final game of the summer for teams that had been eliminated from Summer League title contention. Basically, there was nothing on the line in terms of team goals in these games. And perhaps not surprisingly, the quality of play suffered. Even though many of the players had plenty personally at stake in these games, collectively they had no goals in common. The result was a day of mostly sloppy play, bad shooting, ill-advised shot attempts, and generally bad basketball. The real world implication of this? When you give employees and teams thankless, low-profile, and low-impact work they are naturally going to be tempted to give less or worse effort. That is just human nature. Don't judge someone solely on how they perform when the nature of the assignment drags their performance down a notch or two.

3. But great organizations and leaders rise above these lousy circumstances. The best game amongst the losers, featured the Spurs topping the Kings in overtime. The game was entertaining because it went down to the wire sure, but the real reason I enjoyed the contest was that the Spurs, probably the league's best-run organization over the last 20 years, took such a professional, competent, and serious approach to the game, one that meant nothing in terms of the outcome. The players were engages, the coaching, led by Becky Hammon, was exceptional, and the execution of the team when it mattered most was excellent, resulting in the win. So while I just said you can't judge individuals solely when things are going bad, you can see how world-class organizations get that way by seeing how they approach bad situations. The Spurs looked and acted like this meaningless game really did matter - and to great organizations everything matters, which helps make them great.

4. Talent trumps everything. But you already knew that. The last game we caught on Friday night involved the Philadelphia 76ers and their new star, first pick in the 2016 draft Ben Simmons. Simmons was clearly the best athlete, had the best basketball instincts, and at times was held back by the inferior talent he was playing with and against. The key for Simmons' early development seems to be that he needs to understand both how good he is, and what he needs to do to improve. Simmons is a great rebounder and passer, but probably needs to work on his shooting in order to realize his full potential. It would be easy for him to stick with what he is comfortable doing, and excels at doing at the expense of working on the parts of his game that need improvement and he seems uncomfortable with (at least at the moment). But to be the best he can be, he needs to do more than just one or two things. HR lesson? The greatest talent can do more than one or two things exceedingly well, but they might need to be pushed a little to do those things that are uncomfortable with. But if you can and do that, then youu develop the rarest of commodities - someone who excels at all aspects of the game/job/function.

5. You have to judge talent on performance, not by appearance. We had the chance to watch (and very briefly meet), NBA prospect Josh Magette, a point guard who starred in the NBA's Developmental League last season, and is playing for the Brooklyn Nets summer league squad. Magette was proably the best point guard in the  D-League last season, and has a real opportunity to break into the NBA this season. That means he is probably one of the best 500 - 1000 or so basketball players in the world right now. And Josh is listed at 6'1" , 160 pounds. And after seeing him up close, let's say those measurements are generous. Josh looks like he could still be playing high school ball, is not physically imposing at all, but yet can compete at the highest levels of basketball against guys that have six inches and 60 pounds on him. If you saw Josh on the street you would never think he was in upper echelon of basketball players in the world. And you'd be dead wrong. Final lesson from Summer League? Talent is everywhere - even in places you'd never expect to find it, and are often afraid to look.

That's it - I'm out for now and about to hit another full day at the Thomas & Mack Center  - there might be a wrap post up early next week for those of you, (both of you), who can't get enough of these sports and HR takes.

Have a great weekend!

Is it a great company culture or just a collection of great talent?

Lots and lots of folks like to push 'culture' as the primary driver of organizational success. I have written and presented pretty extensively on why I think that's wrong. Check any of my 'Rock-Paper-Scissors' posts in case you are interested.

One of the many reasons I get a little skeptical about this 'cult of culture' is that by its very nature culture is hard to define, to measure, and hard to draw any kind of a direct (or even a dotted) line from culture to actual results. I'm not saying it's impossible, but just really, really, tough.

But another reason why culture gets too much emphasis is how easy it can be to confuse a great culture with what is really just a collection of great talent. This challenge was discussed, I think very effectively, on of all things an NBA podcast I was listening to recently, by ESPN writer Kevin Arnovitz on the July 6 episode of The Lowe Post Podcast.  Lowe and Arnovitz were discussing the recent decision by NBA star Kevin Durant to leave the Oklahoma City Thunder and join the Golden State Warriors - a team famous for their 'culture'.

Here's Arnovitz' observations on culture v. talent, then some comments from me after the quotes:

On an NBA team is culture permanent? Or is it really just transient? Is it this fancy word people like us to describe what is really just a concentration of good talent, but it seems like culture? But actually what it is is just really good basketball players there? Which is why they (the Warriors) win, it's not because they have any special connection to the community of San Francisco like people like to talk about. 

Steve here - I think these observations are spot on, especially in a business setting like an NBA team where individual talent and excellence plays such a critical role in organizational success. Said a little differently, it is almost impossible to achieve the highest level of team success in the NBA without at least one superstar player, and one or two other All-star caliber players. You simply can't win without that talent level no matter how fantastic your team's culture may be.

And I know that I get a fair bit of heat from folks for trying to make these kinds of HR/talent points using sports analogies, as some folks think that an NBA team and its dynamics offer little to us to learn from, back here in the real world. But I continue to think that they are valid ones to make, especially as more and more organizations and work teams have to rely on ideas, innovation, creativity, and quite simply talent, in order to succeed in a hyper-fast, hyper-competitive world.

Ask yourself some of the questions about your organization that Arnovitz hints at.

What would really drive increased performance at your shop? More talented people? Or a somehow 'better' culture?

Which one of those levers is easier for you to influence? To measure? To replicate?

This isn't about me trying to convince you that culture = bad and talent = good.

It's about making sure we keep both in mind, (along with Strategy, if we really want to get back to my Rock-Paper-Scissors take).

When you put 4 of the best 10 or 12 best basketball players in the world on the same team you are going to win A LOT of games. If at the same time you have a great culture, you may win one two extra games.

But the great culture without the great players? Good luck in the draft lottery next year.

Have a great week!  

Revisited: Talent vs. Culture in Hiring Philosophy

Let me be very, vet clear about this: If you only have time for one podcast in your life that podcast should be the HR Happy Hour Show. We are closing in fast on 250 shows in the HR Happy Hour archive, and Trish McFarlane and I have lots more great stuff to come this year and beyond.

 But if you are like me (a little bit of a podcast nerd, admittedly), you like to mix up your podcast diet and sprinkle in some other choices. For me, one of the podcasts I almost always catch is the Bill Simmons podcast, which is probably 85% about sports, but mixes in enough other topics (pop culture, politics, tech and business), to make it a good listen even if you are not a massive sports fan.

Recently, Simmons did a show with Silicon Valley investor Chris Sacca, most well known for being an early investor and advisor to companies like Twitter and Uber. Prior to his pivot to investing in startups, Sacca was a relatively early employee of Google, (from about 2003 - 2007), helping the search giant build out its data center infrastructure. 

In the podcast Sacca talks about life at Google and what makes Google so different as a company and a place to work. The most interesting part of the discussion starts at about the 13:30 mark, where Sacce talks about the hiring philosophy at Google, and why that was imporant. Have a listen, then some quick comments from me.

In case you didn't catch the key comment, I will repeat it here.

Sacca: 'One of the things they (Google) did that is kind of like an NBA team, is that they hired just for sheer capability, not necessarily for culture fit. And so they were just like 'If we get the smartest, most driven, ambitious people in the world all to work here and we will see what happens. 

And so other teams were like 'Well, I don't know if this guy is going to work well with this other guy, you know a lot of raw talent but, if you look at Eric Schmidt and Larry and Sergey the owners and general managers, they said 'Let's just get the smartest people in the world here and then see what happens.'

In the podcast Sacca goes on a little more about what the focus on talent and raw capability above this idea of 'fit' meant for Google, but I think you can get the idea from the excerpt above.

Looking back through all the posts I have done on this topic over the years, I would say at least philosophically that I come down way towards the Google/Sacca point of view on this. I think raw talent, the ability to assemble enough of it at one time and in one place will have the most significant impact on organizational success, certainly when a company is smaller and growing.

Focusing solely on talent and ability may result in hiring a few bad apples, and Sacca admits as much in the podcast, but in the end whether its the NBA or a tech company, the team with the best talent almost always wins.

Have a great week, and make sure you check out the HR Happy Hour Show too!