Predictive analytics are often used in strategic workforce planning (SWP), to forecast and close the gap between the future talent you’ll have versus the future talent you’ll need. Now, powerful analytical tools are driving that organizational calculus. Those tools predict who will leave and when, where talent will be plentiful and scarce, and how talent will move between roles. But there’s a catch: Very precisely matching talent to “the future” is of little value if that future doesn’t happen. For example, it can take five years or more to develop today’s high potentials into leadership roles. Can you know today the five-year future for which you should prepare them? Increasingly, you cannot. Yet, because HR strategy typically reacts to organization strategy, SWP often assumes a single future as its goal.
Does this mean predictive analytics don’t work for talent? No. Powerful analytics have value in preparing for a VUCA (volatile, uncertain, complex, and ambiguous) world, but optimizing your talent decisions will often mean balancing less predictive power applied to many futures, against more predictive power applied to one future. Options will often trump predictions.
Where’s the right balance? “Work diligently, but don’t fixate on one outcome.” In the yoga Sutras, this is Abhyasa (diligence) with Vairagya (non-attachment). It may be key to effective predictive analytics, especially for your talent.
It’s easy to think expertise can solve this problem through more accurate predictions, but Philip Tetlock’s book, “Expert Political Judgment” reports results from over 20 years of evidence spanning over 80,000 expert predictions. He found that “people who make prediction their business … are no better than the rest of us.” In fact, the deeper the expertise, the more chance of missing something important. Tetlock found that “hedgehogs,” who know a lot about one big thing, predict less accurately than “foxes” who know less about any one thing, but a moderate amount about each of many things. Forbes said, “Experts who had one big idea they were certain would reveal what was to come were handily beaten by those who used diverse information and analytical models, were comfortable with complexity and uncertainty and kept their confidence in check.”
Do you approach strategy and talent like a hedgehog or a fox? With the power that predictive analytics bring, it’s even more important for you to answer that question — are you driving toward one deeply-analyzed future or keeping your confidence in check by preparing for many futures? A hedgehog would start with a confident position such as, “the middle class in emerging regions will be the main source of consumer growth over the next 20 years,” and deeply focus predictive analytics on how to meet that future. A fox would start with many positions (such as different likely regional growth predictions) and use predictive analytics to optimize a collection of tactics for different futures.
In finance, the “fox” strategy is similar to using real options, and it can help you make talent decisions just as it helps in your decisions about R&D, manufacturing and finance. Consider yourtalent resource like an investment portfolio. As with financial investments, you could “bet on the most likely future” (build talent to fit the one highest-probability scenario and win big if you’re right but lose big if you’re wrong), the typical approach noted above. Sometimes, organizations admit they can’t predict the future and “go generic” by building talent attributes like intelligence, engagement and learning agility that are generally useful in most future situations, but not a complete match for any one.
Or, you might “diversify” talent, building several different talent arrays, each one well-suited to a different future scenario, similar to holding diversified financial assets, each well-suited to a particular future. Only a small portion of the portfolio will actually “fit” the eventual future, but skillful mixing in advance can optimize risk and return. Of course, people aren’t financial instruments. You can adjust a financial portfolio by selling assets, but removing or retraining talent requires careful consideration. Yet, in those arenas where VUCA-like uncertainty is pivotal to your strategic success, using predictive analytics to diversify your talent options may be wiser than using predictive analytics to bet big on one future.
A “hedgehog” approach to organization and talent strategy can be a trap, even when supported by powerful predictive analytics. Perhaps your strategists should be more like foxes, optimizing prediction and options, by knowing when analytics should predict many futures moderately, rather than one future perfectly.
JOHN BOUDREAU
John Boudreau is professor of management and research director at the University of Southern California’s Marshall School of Business and Center for Effective Organizations, and author of Beyond HR and Retooling HR.
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