After decades of focusing on new and better products, today’s businesses face a new competitive frontier—shifting from a focus on product innovation to being truly innovative in their approach to finding, hiring and retaining talent.
To understand what lies ahead, it’s worth taking a quick look back at the evolution of innovation.
The Evolution of Innovation
In the early 1800s, the Industrial Revolution changed the way we work. Manufacturing innovations helped factories optimize assembly lines and create economies of scale that made more products widely available and affordable. That led to a new way of working, the growth of the middle class and the emergence of big manufacturing companies.
The next wave was one of product innovation. With massive infrastructure in place, manufacturers needed to find ways to not only optimize existing capacity and stave off the competition but to create demand—tasking their teams of engineers and scientists with finding ways to use their manufacturing assets to make something new, more desirable and ideally with a higher profit margin.
The 1990s brought a significant step-change in technology innovation, revolutionizing access to technology and information. Driven by innovative technologies, computers became commonplace in every home—and then in every pocket—giving consumers unprecedented access to the information they need to quickly compare competitive products.
Over the past several years, the importance of product alone has been slowly surpassed by rising expectations around the customer experience (CX). This period of experience innovation has resulted in a marketplace where great (and even outstanding) products are relegated to merely table stakes rather than game-changer status.
However, the key to both product innovation and a great CX is the people behind it. And in almost every industry across the board, the single most critical factor in a business’s success is talent: acquiring and retaining the right people to develop the innovative thinking and execute the great customer experiences that set a brand apart from the sea of sameness.
The Criticality of Talent
So why is talent so important now? Is the Great Resignation a sign of a major realignment in the labor market that will change the future of work, or is it merely a temporary readjustment? In the mid-2000s the U.S. economy weathered the “Great Recession.” Despite lost financial value for nearly everyone, we eventually rebounded to relative normalcy. However, the changes happening to our economy today are dramatically different. Yes, the pandemic has undoubtedly changed the physical locations of where many of us work every day, with over 65% of the workforce continuing to work remote either full-time or on a flexible or hybrid schedule. But the impact goes much deeper than that. Many workers have been not only learning how to navigate the world of Zoom calls and electronic collaboration, but also reevaluating their relationship with their job altogether.
Work Expectations Shift
The pandemic slapped us across the face with some new realities. There has been a tidal wave of change as it relates to what is termed the new YOLO (You Only Live Once) mentality. And it’s not just the Millennials. More workers than ever are rethinking their values in life, and a big part of this is reimagining who they want to be, what they want to do for eight or 10 ten hours a day, or even if they want a standard workday, workweek, or career.
Recent data shows that more than 10 million U.S. jobs are still open (and have been for over a year) causing many businesses to reduce their hours, change how they operate or what they offer, or unfortunately, to close completely.
One trigger to the shift has been personal savings increases. During the pandemic, lower- and middle-class personal savings were at the highest levels in numerous years, fueled by stimulus checks and unemployment benefits, making the need to work (at least in the short term) less necessary than before. The wealthy also saw the soaring stock market cause their portfolios to explode. And most corporations are currently very cash rich and looking to invest those dollars. Everyone with more money should point to a healthy economy, right? Not necessarily, when you consider the unbalanced labor situation.
The U.S. Overall Must Adapt
It’s important to note that this is not a new issue, at least not in most other countries. In comparison, the U.S. has been behind for decades. Many countries (especially those the U.S. competes with) have historically created a much stronger balanced work environment for their employees. On average, the U.S. employee works more hours per week (and year), is provided less vacation time, and less parental and maternity leave. Even our lunch “hour” is shorter. However, there is a benefit: salaries in the U.S. are higher for the same position than almost every other country, and our taxes are also lower. But in the same way that CX has become more important than products to consumers, salaries are becoming less important to employees than flexibility and support for managing work-life balance.
Today, it seems like the U.S. and most of our companies are playing the waiting game or pushing hard to get back to “their” normal. However, companies that expect employee attitudes to return to normal will likely be very disappointed and negatively impacted. How dramatically workers’ attitudes toward work and the workplace have shifted is one key question; whether employers will be prepared to accommodate that shift is another.
Embrace Change or Face a Slow Death
Employees have always looked for companies that have a strong culture and values, and today this is even more important than ever. A crisis (such as the pandemic) does not build your culture, it merely uncovers what you have, or don’t have. Companies that came into the pandemic with strong employee-based values have come out of this crisis much stronger. Those that didn’t are really struggling.
Successful employers will embrace this change of employee expectation and find innovative ways to secure the best talent. Those companies that do not embrace it will be left with only the mediocre employees that are fearful to leave, and these companies will see mediocre business results in return.
Employers have to better understand how their employees’ relationship with work has changed and recalibrate accordingly. Your most valuable asset is not your inventory or manufacturing plants, it’s your people. So, start acting like it.
In future years, we will look back on the COVID-19 pandemic as a crucial inflection point and fundamental shift of Americans’ attitudes toward work. As a business leader, your opportunity lies in not trying to figure out how to push your employees back to your company’s normal, but rather how to be a talent innovator. Being creative in your approach to entice and retain the best talent will ultimately help you deliver an amazing culture and drive your business success.
