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 / Winter 2008 /Issue 53(originally published by Booz & Company)


Best Business Books 2008: Human Capital

Consistency and clarity are qualities that Lawler values. He warns against not “walking the talk,” that is, preaching a talent focus and then rewarding managers solely on the basis of financial and operating results. He also notes that appraisal processes often fail because perfor­mance measures consist of vague terms or poorly defined personality traits. This practical take on human capital strategies and tactics makes Talent a trove of wisdom, some of it conventional and much of it not.

Learning Disruption
In his popular book The Innovator’s Dilemma, Clayton M. Christensen, the Robert and Jane Cizik Professor of Business Administration at Harvard Business School, brilliantly demonstrated how disruptive technologies derail organizations that do not understand the trajectory governing innovation cycles. In Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns, he adapts his visionary theory to the challenge of public education. Although the focus of the new work is K–12 schooling, it is the best human capital book of the year because Christensen’s observations about product modularity, learning trajectories, and the ways in which markets adapt to innovation have radical implications for organizations seeking a fresh approach to human capital development.

Christensen’s understanding of product architecture shapes his insights about learning. In the early stages of a product’s development, he explains, the interfaces among its parts are distinct. If someone changes a part, all the parts connected to it must change; customization is costly and difficult because it requires a complete redesign of the system. But as technologies mature, standard interfaces emerge that make interoperability possible. Components can be modularized, and modularity permits customization.

Public education, says Christensen, is still stuck in the batch processing mode of non-interoperability, and thus must adhere to a one-size-fits-all design. The first step in improving education, then, must be moving from monolithic to modular architectures that can be adapted to suit various needs and support distinctive learning styles. Beyond this modularity, the author envisions a fundamentally different kind of education based on user-designed platforms that offer learners a means to create, rather than simply choose, both the design and content of their learning, a process that supports and frees innovative talents.

If public education is still primarily based on a monolithic instructional style, corporations have for the most part moved on to a phase of learning that customizes content and delivers it in the form of ex­periential opportunities integrated into everyday work. This constitutes progress, but extrapolating from Chris­tensen’s model, it appears that this too can evolve into a new phase of self-designed learning that better supports a culture committed to innovation. In this phase, on­going feedback loops will enable learners to calibrate and adjust what they generate and verify mastery as they go, replacing evaluations and assessments performed by outside experts.

Christensen’s insights about how disruptive technologies succeed in the marketplace also have important implications for the development of human capital. He observes that disruptive technologies never find a market among traditional customers for an existing product; selling a disruptive product requires identifying an untapped pool of non-consumers. For example, Sony sold its first tinny, in­expensive transistor radios to teenagers who were not buying the large, better-quality, and far more expensive table radios of that era. In other words, disruptive technologies gain a foothold only when offered for applications to customers who have no alternative. Later in the product cycle, if all goes well, improvements and modularity create opportunities for more widespread adaptation.

The same process applies to talent development. Customers never clamor for organizations to beef up their investment in human capital infrastructure. Like shareholders looking for short-term results, they are concerned with having their present needs met. Yet if companies fail to make these investments because they seek to placate the present market, they will miss the potential benefits of disruptive learning and the market will move on. That lesson alone makes Disrupting Class a must-read for anyone considering how to develop and profit from human capital.

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