Wednesday, July 2, 2008 — STRATEGIC MANAGEMENT OF IP, GLOBAL IP STRATEGY

IP and the war for talent

by Duncan Bucknell

Deepak Somaya, recently sent me a note about an article he co-wrote with Ian Williamson for the Sloan Management Review.

It's well worth a read - here's a link: Rethinking the 'War for Talent'

In essence (and I hope they forgive me for my overly brief summary), Deepak and Ian argue that a firm's strategy for dealing with exiting employees should depend on the strategic importance of the knowledge (and role) they hold and where they are departing to. So, a less strategic employee going to a collaborator should be given more freedom to leave, whereas the senior executive running your firm's make-or-break project should be seriously dissuaded from joining a competitor.

I think these are great points, and the experience of the law firms they studied must be right more generally - they do better when an employee goes to work for a client or a potential client, than if they go to a competitor.

Interestingly, Zappos seems to take this to another level by offering employees a $1000 bonus if they will quit after the initial training period is over. That way they get to keep only the most committed employees. I guess a difference here is that Zappos is focusing on getting the right people, whereas Deepak and Ian are focusing in this study on when they exit. (I asked Deepak about this and he commented that they decided not to include hiring practices so as not to detract from their main point.)

From all accounts, the 'war for talent' is only going to intensify as the boomers retire, or at least slowly decrease their commitments at work. So, what are the IP implications?

Firstly, I'm sorry to say, that if you think you can keep your intellectual property locked up, away from most employees, so as to minimise risk that it will move with them, then you're sadly mistaken. I'd even go so far as to say that I really don't think that litigating to enforce non-competes is a good idea at all (as advocated in certain circumstances by Deepak and Ian). At best, you create a bad publicity incident, a very disgruntled ex-employee and a hollow, shortlived victory, at worst, well it can be a lot worse than that. So be strategic about your IP and the way you handle it. Create an IP-conscious culture within the firm, have appropriate employment agreements in place, provide strong incentives for employees to create and then disclose new IP developments as soon as possible, protect them properly and so on.

Secondly, to focus only on exiting employees, I think is looking at the wrong end of the equation. (And certainly Deepak and Ian are not advocating such a narrow focus at all.) Instead, focus on hiring the right people, waiting forever to get them, and as Goldman Sachs does, going to extraordinary lengths to attract and retain them. Once you have the right people, you know what? They will do the right thing by you if you do the same. They will. The only trick is to find the right people.

For those interested in Deepak's work - Jo Sinclair and I interviewed him for IP ThinkTank back in October 2007, he is a friend and reader of this blog and, Assistant Professor of Strategy at the Robert H. Smith School of Business at the University of Maryland.

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