Fostering a Culture of Innovation: Hiring Millennials to Transform a Mature Business
by Bill Verhelle September/October 2015
Bill Verhelle explains the importance of hiring and retaining “digital natives.” Verhelle says these young professionals are important to the survival of old-line businesses, and they are often the key to fostering innovation, agility and adaptability in a rapidly changing marketplace.
I’m often asked how to foster a corporate culture more conducive for young workers. This seems to be especially difficult for large firms operating in mature industries. Hiring a few college graduates or early-career professionals and spreading them around in different departments is often ineffective. My friends who run large banks and financial services businesses sometimes share their challenges retaining young professionals. So what can be done?
Here is my best advice, based on a decade of work with some of the brightest and most remarkable young professionals in the commercial finance industry.
It’s important to begin by understanding why hiring young workers today is so important. This is no longer optional. It’s not about controlling costs, succession planning or the graying of the industry. For many mature businesses, hiring young professionals is necessary for survival. Let me explain:
Marc Pernsky first used the term, digital native, in his 2001 article, “Digital Natives, Digital Immigrants,” in which he argued that teaching methods in U.S. schools required a change to address the needs of students born after 1980. Today, the term is often used to describe the unique perspective of younger workers who grew up in a world of new technology.
These digital natives have a different perspective, which is often helpful to identify and execute transformative business changes that have only recently become possible due to dramatic improvements in technology and corresponding changes in customer buying preferences. Many of us who have been running old-line businesses desperately need the fresh perspective and insights provided by digital natives.
Young professionals with dramatically different technology skills — and with different beliefs regarding what is possible in business — are reinventing industry after industry. Firms founded, led and staffed by young professionals are reinventing everything from the way we buy consumer goods to the taxi industry. We need these talented young professionals to help transform our businesses. And, as I’ll review in a moment, commonly discussed generational differences are insignificant compared to the huge benefits these talented young professionals can bring to our companies, which may sit on the verge of digital transformation … or irrelevance.
If you are the leader of a large financial services business or bank, it is your job to figure out how to hire and empower these talented digital natives to transform your business before it’s too late.
For those of us who entered the workforce more than ten years ago, things have changed dramatically. A decade ago, the business landscape was stable. The firms we joined focused primarily on incremental improvement. Our mastery of the fundamentals and the technical aspects of the business drove our early career success. Initially, we added little to the overall success of the business, because it wasn’t until after we mastered the technical aspects of the business that we earned the right to start making strategy contributions.
Today’s business environment is completely different. Most of our companies are in need of transformative change, and the perspective of digital natives entering our businesses can help us re-envision and remake our companies. So don’t treat digital natives the way you were treated when you started your career. They don’t need to learn all the technical aspects of your unique business before they earn the right to suggest changes. It’s just the opposite. You need their candid advice and feedback before they become too immersed in the way your company has always done things. Recognize the immense value of digital natives by treating them differently from the first day they join your organization.
If you run a business or department that has experienced problems retaining younger professionals, accept personal responsibility for 100% of past failures. Continuing to publically or privately blame departed employees is the worst action a leader can take; it will turn prior misfortune into permanent failure. Don’t blame the folks who quit. Instead, spend your energy dramatically changing the plan for the folks you will hire tomorrow.
I sometimes hear managers say things like, “Young people today aren’t loyal to their employer like we were in our generation.” Or they say, “Young people today are more focused on their quality of life than they are on getting ahead at work.” Sometimes I hear, “Young professionals today don’t work as hard as we did in our generation.”
If this were a longer article, I would argue that these stereotypes are all false; but, I’m not going to do that here. Let’s not waste time debating it. Your previously departed young professionals aren’t spending a minute worrying about what you think of them. What really matters is the fact that these stereotypes hurt you. They prevent you from being a successful leader of the people you need to connect with in order to transform your company. So accept responsibility, get rid of the emotional baggage and commit to trying a new approach with your next new hire.
Firms Don’t Innovate. People Innovate
Even firms with a reputation for fostering innovation like Apple and Google don’t really innovate. All firms are systems of rules and processes, which, at their core, are actually the opposite of innovation — firms are systems of process standardization and conformity. “Innovative firms” have leaders who realize they must constantly get the firm out of the way so their talented people can innovate. Leaders of successful firms foster a corporate culture that encourages individual innovation, calculated risk taking and team-based learning from frequent small failures.
Culture is a critical component of successful innovation, and no one is more responsible for creating a culture of successful innovation than the CEO. Today, successful business leaders must begin with an understanding that things are changing so quickly in the marketplace, they can no longer direct the detailed activities of the business; instead, they must build an agile, adaptable organization. They must let go and trust their small-specialized teams (which operate with significant autonomy, close to customers and competitors) to experiment, iterate and to guide the business forward. For many of us, this simple idea constitutes a massive transformation in both thinking and actions. It changes what we think about all day long. It also changes nearly every activity in our daily work routine. Yet, it may be the most impactful transformation a business leader can undertake.
Addressing Organizational Design
Hierarchy and silos are good for cost control, but very bad for innovation. In many firms, a long history of employing a cost leadership business strategy has resulted in an organizational design that is preventing any meaningful innovation whatsoever.
The lean startup model, used by many successful startups, fosters innovation, agility and adaptability. This model is characterized by a flat, team-based organizational structure. The organizational design of most banks and large financial services businesses is the opposite of a flat, agile, team-based structure. Solutions to this problem are complex and business specific, however, meaningful innovation may not be possible in the organizational structures that dominate many mature industries today. Until business leaders recognize this structural impediment, efforts to hire and retain young professionals to foster innovation may continue to be largely unsuccessful.
Hierarchical, silo-laden firms are under significant time pressure to solve this structural problem. Otherwise, new entrants without these structural disadvantages will undertake the innovation that is inevitably going to occur as a result of new technology and rapidly changing customer preferences. This could come at huge cost to the shareholders of banks and financial services firms. Business leaders must solve this difficult challenge before it’s too late.
Most of the young professionals I know want to do something meaningful with their career. They want to make the world better. And they also want to help you build a better company. But, they are not going to waste their life working in a silo in a huge organization that is deeply resistant to change. Life’s too short. Unlike ten years ago, there are alternative career options that afford the brightest and most talented young professionals meaningful career options.
Leaders need to cultivate a compelling purpose. Reducing costs by 3% in 12 months doesn’t inspire. And, other than buying a few more months of survival time, this goal may also do little to address the day of reckoning that many believe is ultimately coming for many of our financial services businesses. Instead, challenge your idealistic, technically savvy employees to help you solve the big, long-term problems, which you rarely discuss, even with your board. For example, if you worry that the delivery or service model in your business might be changing as a result of new technology and new customer buying preferences, consider asking some of your workers to spend part of their time thinking about these big marketplace changes and crafting new business ideas for the entire company. Commit to making yourself available to discuss their thinking on these broad topics on a regular basis. A new employee’s lack of knowledge about how your business has always done things might actually be a big advantage when they think about how to change business models. Familiarity with current technology, especially emerging consumer technologies or trends in other industries, may also be helpful.
Burdensome rules and low expectations diminish innovation. Instead, inspire your colleagues by taking time to envision the distant boundaries of what is possible for your business over the next five or ten years. Expose your personal vulnerability by asking the big questions, and take time to carefully consider the answers you receive. Then, set out together to change the world. If you do this, I assure you that your recently hired digital natives will become the fiercest, most dedicated and most loyal colleagues in your worthwhile undertaking.
Some sales tax concepts for the leasing industry are simple; others are more complicated. Brian Greer, Partner and CRO at TaxConnex, gives some context to the more complex terms and offers advice on managing tax obligations.