Which comes first, talent or strategy?

By William J. Rothwell, Ph.D., SPHR, SHRM-SCP, CPLP Fellow

It is a commonplace view in modern management thinking that strategic plans come first and all else follows. But what if that is not true? What if talent comes first and strategy follows? In this short article, consider: what is strategy? What is talent? How might it be possible that talent could drive strategy and strategic plans?

What Is Strategy?

Strategy is a word derived from the Greek word strategia, meaning in one sense “command.” Strategy is about choosing targets and also about discovering the best ways of hitting those targets.

In modern thinking, strategic planning is about identifying the purpose of an organization, establishing its measurable goals, scanning the future external environment to identify opportunities and threats, analyzing the present internal strengths and weaknesses of the organization, choosing the direction of the organization best able to capitalize on the future, and evaluating strategic results against the goals.

An important component of strategic thinking is the idea of an organization’s core competency, which usually means its strategic strength that makes the organization better and different from other organizations in the same industry. Core competency is the essence of competitive advantage. One important idea is to build on core competencies, leveraging the competitive advantage of an organization as much as possible.

What Is Talent?

Talent refers to a strength. There is more than one way to think of talent. Talented people can be more productive than others; they can be more capable of promotion than others; they can have natural gifts that set them apart from people who are not gifted; they can possess special knowledge; and, they can possess special social relationships.

While talent may be understand in more than one way, many organizational leaders today think of “talent” as people who are both good performers in their present jobs and capable of promotion to other jobs at higher levels of responsibility on the organization chart. A common rule of thumb is that high potentials (HiPo) make up between 1 and 10 percent of an organization’s workforce. HiPos are often considered to be the “cream of the crop,” and they are especially deserving of special attention and developmental investments because they are both productive and promotable.

How Might Talent Drive Strategy and Strategic Plans?

In the first book on modern corporate strategy, Strategy and Structure (1961), Alfred Chandler argued that strategy must precede structure (organization). Although it might seem simple to conclude that direction must precede the organizational chart, the reality is that strategy is established by leaders. And structure determines who the leaders are.

Contemporary observers of modern organizations believe that the world is entering a so-called design economy in which creative thinking and innovation become the most important elements of competitive advantage. Examples of that are easy enough to find. Apple became one of the most valuable companies in the world through its innovation. Google and Microsoft have emerged as powerful competitive players through their innovation.

While capital can be borrowed, land can be rented or purchased, and technology can also be rented or purchased, only the human ability to be creative leads to breakthrough competitive advantages. Apple, Google and Microsoft—among other such companies—would not exist without the creative thinking of talented people. Human talent is at the heart of founding new organizations; talent finds new ways to serve customers; talent discovers new ways to sell products; and much more.

For these reasons, it is safe to conclude that talent precedes strategy. There can be no organizational strategy or structure without the creative, innovative spark that leads to new businesses and opportunities. The collective talent of the organization is the essence of what makes the organization competitive.

What does all this mean? It means that talent management precedes, and is the basis for, strategy. And from talent springs strategy.

About the Author

William J. Rothwell, Ph.D., SPHR, SHRM-SCP, CPLP Fellow is President of Rothwell & Associates, Inc. (see www.rothwellandassociates.com), a full-service consulting firm that specializes in innovative approaches to succession planning and talent management. Author or editor of 103 books, he is a frequent consultant, seminar speaker, keynote presenter in the U.S. and in many nations. He can be reached at wjr9@psu.edu.

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