Bill Kerr: Welcome to the Managing the Future of Work podcast from Harvard Business School, I’m Bill Kerr. The following is a guest appearance—one of an occasional series of podcast episodes produced elsewhere that highlight research and expertise from the Managing the Future of Work Project.

My project co-chair and Managing the Future of Work podcast co-host, Joe Fuller, recently joined Aassia Haq on MBO Partners’ State of Independence. Their wide-ranging discussion addresses the post-Covid talent picture, the skills today’s CEOs need to manage their diverse constituencies, and how the C-suite is handling remote work. They also consider workforce transformation, the market for high-skills freelancers, and the hybrid, on-demand workforce. We hope you enjoy the conversation.

Joe Fuller: Many of the skills that companies most need and want are, in fact, in short supply. If I’ve got a rare set of skills where six, eight, 10, 12 companies would be keenly interested in what I bring to bear, that inverts the power dynamic a little bit from history so that the talent has more say so.

Aassia Haq: Workforce transformation—a future of work, where individuals are owners of their own career. Companies buying work outcomes, not employees, on the open market. Welcome to State of Independence, the podcast about how independent work has completely transformed the US economy and how you can take advantage of it. I’m your host, Aassia Haq, vice president of talent marketing at MBO Partners. Today I’ll be speaking with Joseph Fuller, a professor of management practice at the Harvard Business School, where he oversees the Managing the Future of Work Project and focuses his research on the changing nature of work and the evolution of the C-suite. He was the founder and longtime CEO of The Monitor Group, the global strategy consulting firm, now Monitor Deloitte. Today, we will speak with Professor Fuller about what the term “the future of work” actually means and how we can apply his learnings to workforce design and transformation. We will also talk about what he sees as the biggest challenges facing today’s CEO and organizational management.

Well, Professor Fuller, it is an incredible pleasure to welcome you to MBO’s State of Independence podcast. I have followed the work that you and your colleagues are doing over at Harvard Business School around the topic of future of work. And you’ve added a lot to the national dialogue. Looking forward to sharing your expertise with our audience.

Fuller: Well, thank you, Aassia. I am delighted to be with you.

Haq: One of the questions we ask all of our guests is, given that we’re at the 10th year of studying independent work in America here at MBO Partners, where were you 10 years ago today? And how did that lead to your role today at HBS, where your work really shapes the future course of America’s C-suite and the CEO?

Fuller: Actually, at this time 10 years ago, I was deciding whether or not to join the Harvard Business School faculty. I had decided previously to retire from the firm I was leading at the time and had founded—a company called Monitor, which is now called Monitor Deloitte. One of the several opportunities I had was to return to my alma mater, Harvard Business School, as what we call a “term faculty member,” a senior lecturer. And I was thinking about that and contrasting it with a major corporate role that I had been offered, which I was enthusiastic about. And also a couple of major investment companies had been interested in me joining them in what they called an “operating partner’s” role. But the more time I spent at Harvard, the more excited I got about it. And also a little confession: Both my parents were Harvard professors, so it was a little bit of a nostalgic choice. But it turned out to be a great one.

Haq: At some point during the pandemic, I feel like the future of work became such a hot topic. That, what is the future of work, anymore? It feels like it’s become the future of everything. We hear talent management, remote work, upskilling, AI, D&I, and of course, contingent work, which is a topic you and I are both very interested in. So you and your co-host and fellow HBS Professor Bill Kerr launched the Managing the Future of Work Project and staffed a team to dig into the subject. So the question I have for you is, for you, where does the line begin and end? And why did you choose to focus in this area?

Fuller: Our project started actually as an offshoot of a project that our then Dean Nitin Nohria started on the competitiveness of the US economy after the 2008 Great Recession. And when I joined the faculty, the team of professors that were running that project invited me to join their team. A lot of the techniques they were using were actually ones that had been pioneered at my old consulting firm, Monitor. And as I looked at the data, an issue that just jumped off the page at me was that our alumni felt that the skills and human-asset base of the United States had historically been a major source of competitive advantage, but that that advantage was waning quickly relative to other countries. And that caught my eye. And I knew very little about the subjects other than in the preceding few years, my clients had kept bringing up the same issue, my consulting clients. So I dove in and said, “I would like to own that issue.” None of the faculty were working on it at the time. Had I known how involved it was, I might have said, well, how about Middle East peace or curing cancer or something a little simpler than the skills gap and labor market in the United States, which is an immensely complicated topic. Over time, though, both because of the enthusiasm of some of our alumni and also because of the ambition of our research project on the future of work, the project became more than half of the work being done in this US competitiveness project as a whole. So at that time, our dean said that maybe it was deserving of just becoming its own project. That’s when Professor Kerr, who’s a leading scholar on skilled immigration, joined as my co-head. The project really defines itself. It may be a rather ambitious—some would say arrogant—way of … we want to be able to talk to decision makers—particularly business executives, but also policy makers—about what are the types of considerations they need to take into account as they think about the future of work. That leads me to how you introduced your question, Aassia, about this becomes so big and so important. Is it really the future of everything? I think the degree to which companies differentiate themselves based on their human talent—which is to a considerable degree how companies respond to what’s happened in Covid—is going to be very, very determinative of their future success. To a senior business executive, this is absolutely an issue in their top one, two, three considerations as they think about their strategy going forward.

Haq: We have been looking at this topic for so long at MBO, and I really appreciate that you have chosen to tackle this head on. With decision makers, what often happens is these conversations happen essentially just in the ivory tower, or they happen in policy rooms. But that translation between the ivory tower, the policy maker, and the business executive is one that is critical, because this is a topic that, it’s about humanity, it’s about people’s jobs, their ability to succeed—either individually or globally. So I truly appreciate that you both took on the task of … really that you call it “arrogant,” but I see it as necessary and ambitious, in the right way. So it’s a topic that we know here at MBO is on the minds of many CEOs, and we see that in our own landscape. So speaking of the topic of the CEO, the CEO of today faces truly unprecedented challenges. You are both a former CEO, a teacher to CEOs, and you’re a practitioner studying the evolution of the C-suite. What do you believe are the biggest challenges facing the CEO today, kind of building on what you started to speak about? And where do you advise that they focus the most?

Fuller: The challenge facing any CEO’s course is determined very much by her or his specific company and circumstances. But I think cutting across CEOs, the single biggest challenge—and it’s really emerged in the last 10 to 15 years—is, how does one balance and integrate your approach to different constituencies? That, if you go back to when I was starting the consulting business in the 1980s—that was before activist shareholders, that was before private equity existed, that was obviously well before social media—and companies had a fairly straightforward set of constituents they had to manage. If you were in a regulated business, it would’ve been the regulator. It might have been labor unions. Obviously your investors, but investors were much more passive back then. Your workforce. Maybe some key customers or suppliers, depending on the structure of your industry. Now, if you look at the calendar of executives, what you’ll find is a couple of very interesting things. One is that, over time—I’ve been doing this stuff for many years, so I kind of have an institutional memory of how those diaries have changed, and they’re far more complex. A CEO today will be seeing an NGO on a Monday afternoon; will be talking to Squawk Box on CNBC; after lunch, will be going to a facility for a function in the evening. The next day, will be talking to their industry association or lobbyist about something going on in Washington, then talking to a key customer, then talking to an asset manager. They’re moving between different tasks that require different expertise—and, frankly, different voices—with incredible athleticism. Over time, the category of skills that have grown, in terms of being mentioned in executive search for CEOs and other executives, are social skills: the ability to interact with others, listen and communicate effectively, have empathy. This is not, are you a good golfer or do you have a lot of good one-liners? And I think that is indicative of this explosion in the constituencies that CEOs have to be able to manage. Also rather strongly suggests that day-to-day management of the company is devolving to others to a greater degree than historically because a CEO’s time is so taken up by managing this breadth of constituencies that rivals the diversity of the UN.

Haq: I think you’re right to point out that the CEO is a social listener. And to me, the takeaway I have there is, instead of a management style that projects a “can do, I know it all” sort of attitude, it becomes “I am really listening to you.” And then turning around and communicating what I think is most important: “What have I taken away from this interaction?”

Fuller: It has a lot of implications for the future of work as well, because if we just take that as a topic, post-Covid, think of all the different constituencies that have very strong opinions about what the future should hold. Employee groups, they can be worried about safety, actually anxious to get back to work, concerned about others in the workforce that are declining to be vaccinated. Different segments of workers, customers, and suppliers with different expectations. Obviously, local regulators, public health officials. How do you integrate all that into coherent back-to-work strategy by a CEO shift? One example of how this role of the CEO has become much more about integration and balancing the interests of different constituents.

Haq: I hadn’t thought about it until you spoke just now, but I remember participating in a leadership group in the venture capital space when I had one of my first startups, and the group—I believe it was Korn Ferry—worked with all of us and then kind of came back with what they thought the important traits were for an entrepreneur. And I think today’s CEO also does have to be tremendously entrepreneurial versus a traditional manager. And I still remember looking at that and thinking, aha! No wonder I’m an entrepreneur, because I greatly deviated from the management skill set, but kind of did well on the entrepreneurial one. And there were two traits: learning agility and change agility. These were the two traits that were identified as most relevant to entrepreneurial success. And I just thought of them as you were speaking, because they, I believe, speak to a time of rapid change. And in that time of rapid change, if you don’t have those two skills, chances are, you’re in trouble, even if you did great pre-Covid.

Fuller: If we think about the development path for a lot of CEOs in big companies, those aren’t usually development paths that cultivate those types of skills. Very, very often, someone comes up through a function—sales or R&D or operations—then gets a P&L job. But most big companies, the actual choices you get to make in a P&L job are fairly limited. When the clock starts on any given year, about 80 percent or 90 percent of your time, and more importantly, your budget’s already committed. You don’t have a lot of ability to exercise a lot of creativity and originality if you’ve got maybe 5 percent of your budget that you might be able to flex. Suddenly, you find yourself in that corner office on the top floor, and the issues are much more complex and much more subtle. And it really does take someone with that capacity to continue learning to be able to make that transition successfully.

Haq: On that topic, you, in addition to your many roles, have now become a podcaster, yourself. And I mentioned earlier the fantastic role that you play. And I was looking through your podcast that both you and your colleague do under the “future of work” handle and your project at HBS. A recent podcast between you, Bill, and BCG’s Allison Bailey was really interesting to me, given MBO’s deep history of surveying the workforce transformation of the professional services industry—obviously, one you know very well–and its move to a contingent model. Our own CEO, Myles Everson, had spent many years, like you, running a global consulting firm. You, in fact, sold your firm, Monitor, to Deloitte. So this makes the thesis that you three discuss in this podcast particularly interesting to me. And I wanted to point out this history for those in our audience that are really passionate about the topic of contingent work and workforce transformation. So can you talk to our audience about your thesis on freelancer management and the evolution of the space, and further, touch on how you advise CEOs considering workforce transformation?

Fuller: Well, in terms of freelancers—or what’s often called in the literature “contingent work”—we think it’s one of the most important trends in the future of work, and that’s driven by several different things. The first is that many of the skills that companies most need and want are, in fact, in short supply. You know, as my colleague from Harvard, Bill Kerr, sometimes says, “Well, all we’re looking for is someone with great project management skills who can code in SQL and speaks Farsi. Very, very often, what’s needed by companies is a rare commodity. And that has a couple of implications in terms of the nature of work. If I’ve got up a rare set of skills where six, eight, 10, 12 companies would be keenly interested in what I bring to bear, that inverts the power dynamic a little bit from history, so that the talent has more say so. That talent will find on these platforms that they have the opportunity to cherry-pick a little bit of the type of work they want to do or for the types of companies they want to do it for. Those platforms are also very, very important for employers, because let’s say you’re looking for someone who’s got terrific digital marketing skills. Who isn’t interested in that? Someone with great credentials in that area might simultaneously be entertaining offers from Best Buy, Capital One, Facebook, Goldman Sachs, you know, the US Digital Service—a government agency that supports digitalization of the federal government. And now, notice how I didn’t mention third-tier auto-parts suppliers. I didn’t mention companies that are headquartered in Abilene, Texas, or Tulsa, Oklahoma, or Boise, Idaho, or Burlington, Vermont. Nothing against those communities or those industries. But if everyone is looking for the same talent, how is it that a well-run, well reputed company—may be in an industry that doesn’t have a whole lot of prima facie appeal or in a location that has trouble attracting that type of talent—how are they going to source it? Just hanging out a job advert and saying, “This is what we can pay and here’s the title,” you’ll have applicants, but are you going to have qualified applicants? So turning to these platforms is a very important means for companies that are not going to be able to attract world-class talent on a full-time basis to get the skills they need. And that’s why it’s very important that governments be extremely cautious before they start deciding what’s good or bad about these talent platforms. If you go to Congress, which I used to do regularly before Covid, they think of contingent work as Uber, delivery services, things like that. They don’t think about it as data scientists or machine learning experts. And things like AB5—the bill to restrict contingent work in California—was written failing to recognize what I was just talking about. In fact, I’ll be talking to the largest employers association in Germany next week about this. They’re very worried that they don’t have any platforms like this. They’re very worried about the consequences of having talent available on these platforms.

Haq: You know, this is a topic that is very close to our heart at MBO. So our founder, Gene Zaino, has been in the independent work business for more than two decades. And he was one of the leaders in really advocating for what you call the “supply side” of the economy before others really saw the opportunity. Historically, as a business, we’ve supported both sides of the equation. We work very closely with very large, mega employers to help manage their independent talent through a framework, actually, that is all about what you just discussed: pinpointing the skill, pinpointing vertical interests or expertise, the rate—meaning this is the cost this talent wishes to offer their services for in the open market—and creating that final, what I’ll call the “last mile of employment,” the contingent engagement, the engagement that can actually get through the door and doesn’t run into the regulatory hurdles that often, I think, pure consumer marketplaces do, where they don’t understand how difficult it is to actually get to work on the high end of the market, right, where there’s a lot of barriers. When you’re talking about delivery or a taxi, it’s a little different, because it’s a true C2C play. So, fascinated to hear you point out something that we have really been advocating for—both on Capitol Hill and in our employer discussions that we have with large employers. The framework that we’ve taken and that we found really effective—and I think it would probably echo some of what you were doing at the project—is really to help those clients understand what makes you a client of choice. There’s an actual report within the subset of the State of Independence report that’s called the “Client of Choice Report,” and it speaks to talent, motivation, and skills on the higher end and helps organizations essentially align their employer brand with the inclusion of the extended workforce, rather than having a very well-defined, very deep talent-management brand that then neglects this part of the population, given their importance to value creation. I think in forward-thinking organizations, there is now a CHRO who is kind of starting to recognize, based on business unit heads or the CEO, that this is a group that I need to engage with, again and again. And they’re starting to think about this. Maybe they haven’t gone quite all the way to articulating a cohesive strategy. So I’m really curious to see where this goes.

Fuller: Well, I think you touched on a lot of interesting issues there. I think maybe the hardest thing in “Building the On-Demand Workforce,” which is the title of our long report on this, is that companies … you used several times, Aassia, in your comments the word “starting.” And I think that’s correct. I think companies are, in part, accelerated by Covid. One of the interesting things about Covid, generally, is it seems to have accelerated a bunch of trends that were latent in workforce practices but were moving at a much slower pace prior to Covid. So, for example, Covid has made it much easier for companies to imagine people working in remote places with access to secure data with the right types of technology. And that was a barrier historically to using contingent workers on important projects. Now, you know, the CIO is not so worried about that, anymore. And the data architecture is accessible from outside of headquarters, except in the most exotic or secure environments. But using contingent work well is different than managing your full-time workforce well. So, for example, someone who’s running a project like, say, if they’re managing their project by doing the old MBWA—managing by wandering around—and calling everyone together whenever there’s a problem in a conference room, and relying on kind of informal information networks because they’ve worked at the company for 15 years, and assuming everyone else is doing that as well, and assuming everyone kind of understands what the purpose of the project is, what and how our incentives work in the company, what our nature of our relationship is with customers or vendors or regulators, for that matter, none of that is known to contingent worker, unless they’ve done multiple projects with the company. And how you actually define the work, chunk it up—do what we call “work planning” in consulting—when you check in with someone, what your expectation is about the burden of the project manager to design not only the work, but the interfaces between people doing different parts of the work—it’s a different task. And a lot of companies early on introduced contingent talent. But the managers using it haven’t been either taught or had the foresight to think ahead in that way, and, therefore, they get less productivity than they’re hoping for, or they have, you know, rather unambitious roles for that third-party talent. “Here’s a specific piece of code that needs to be written. Here’s a specific piece of the market that needs to be analyzed,” as opposed to, “How do I get the best talent on the right project at the right time, irrespective of who they work for?” which is, I think, the absolute goal that most companies should be aspiring to—blending your internal talent and your external talent in a way that gets you that right talent/right project/right time formula.

Haq: I can imagine that inside your context of working with students—both those at the school and then the students that are CEOs that work with you to become better at their craft—seems like this is something that could really be a point of success or failure toward sort of the future organizational design, and organizational design becoming something that’s very critical to the boardroom, given the level of flux and uncertainty that exists in the world. We talk internally about the greater need, just in our own organization, and we see it in our clients, of a need to manage a variable talent model versus a fixed-talent model, because you don’t know where your market, your business, your opportunity is going to go week to week, month to month, year to year. How do you talk about that as a strength for your students, as I said, at all stages?

Fuller: Well, I think irrespective of where you are at a management hierarchy—whether you’re leaving an MBA program, about to become a first-time manager, or whether or not you’re a seasoned CEO—the variable that I think best explains asymmetric performance that’s decidedly better than competitors—whether that’s a competitor for advancement inside your company or competitors in a marketplace—is what kind of return you get on your deployment of discretionary resources. I kind of referred to this a little earlier, Aassia, that when you start a year, you might have 10, 15 percent flex—what you get to deploy. If you take a budget for outside talent, if I fritter away that budget on an unoriginal kind of off-the-shelf consulting study from a consulting firm (and I used to run a consulting firm, so, you know, I get to say things that might, you know, suggest that consulting firms don’t always deliver Titanic value), but if you fritter that money away on that, as opposed to, let’s say, going out and deploying it on some really world-class talent that’s going to greatly accelerate some deployment of some capability that enhances your customer value proposition, you’re going to fall to the bottom of the distribution. And the person that does the latter is going to fall the top of the distribution. And since so much of what differentiates company performance, ultimately, has its roots in the insight and talents of human beings, companies—whether you’re running a Fortune 50 company, or you’re about to join a Fortune 50 company—a manager should be always thinking about “How do I get the most from my spending power, the most from my working hour?” And as I speak to CEOs about transforming their companies, I’m very much following some of the themes you introduced, that companies have tended to think they’re going to change the nature of work by periodically having these big, usually consultant-led transformation projects. We’re going to de-layer, we’re going to digitalize. And those have been top-down. And they’ve been inside the four walls of the enterprise. And what’s actually needed is much more engagement with workers and colleagues to get much more of a bottom-up point of view about how can we reconfigure ourselves to be more productive and think about that as including outside the four walls of the enterprise. It could be anything from “How we transform our processes of the interface with key customers?” to “How do we deliver innovation in our company, throwing open the windows and the doors to rely on skilled external talent as integral to that process and many others?”

Haq: You are somebody who was very close with Clayton Christensen. You called him a friend. And it was a true loss for those of us that loved his work and followed his thinking when he passed in 2020. He is the original architect of sort of this idea of conscious, proactive disruption. I’ve always loved his book The Innovator’s Dilemma for that idea. And you started to allude to this. But my big question is, is it time for CEOs to proactively disrupt their workforce and redesign it? And what are the risks of waiting too long to go down this road?

Fuller: Well, I think, you know, Clayton was an inspiration and someone I knew for the better part of 30 years. The notion of disruption was one of the seminal ideas in strategy and innovation of the last 25 years. But Clayton would be the first to say that it became overly elasticized, and people started throwing it around without actually studying the concept. And we were disrupting the, you know, Friday night wine-and-cheese party. And we were disrupting the … well it’s being used as a universal term to define “change” and whatnot. Central to Clayton’s theory, of course, is that companies become preoccupied with preserving their present state—meeting the needs of their biggest customers, advancing and creating incremental improvements to the core technologies that have allowed them to compete successfully to date. And Clayton and I discussed these ideas on a number of occasions. And one thing that Clayton knew, that I thought he may have underestimated, was how incentives and metrics actually lock companies into that. That it isn’t so much that companies get entranced by their key customers, so much as managers’ incentives are so geared to keeping that customer and growing that customer that they start ignoring warning signs—whether it’s anything from the growth of demand inside that customer for a new type of product, which is giving a competitor an entry point, to the growth of different types of customers that aren’t very excited by our product, can’t afford our product. And this is just an extension of Clayton’s thinking. And I think what we just touched upon is, one of the key themes of actually what next-generation transformations have to be about. Some recent research I did in partnership with a different old friend at Accenture showed that a considerable percentage of managers in a company—basically a third—are going to be quite resistant to almost any change. And another almost third are going to be really judging whether or not they’re going to go along with a transformation based on how it’s going to affect their personnel and the people they care about in the organization. And only about 40 percent—you’ll have to give me some rounding errors in there, 41, 42 percent—essentially salute, taking their orders: “Whatever senior management says goes, company’s got to change, let’s get on with it” types. Now, I don’t mean to be dismissive of that. The largest share, that’s very often exactly what needs to happen. But imagine you’re a CEO who wants to instill a change program, and you’re oblivious to the fact that only roughly about 40, 45 percent of your managers are actually going to toe the line the way you want it done. And, you know, almost 60 percent of them are either withholding, you know, whether or not they’re going to be actually supportive or are actively hostile to what you’re trying to accomplish. You better solve that problem before you start jumping in the deep end of a transformation. You better engage those people. And I think this gets to this notion of, how do we think about transformation in the future; that we’re going to have to think about it much less as a wait-’til-the-last-minute command and control. In comes a big consulting firm. They’re going to kind of be the mercenaries who are going to drive this whole thing. It’s going to have to be more continuous. It’s going to have to be more engaging of the workforce. It’s going to have to be more flexible and not rely on all the old ways we fixed things, like de-layering or offshoring, and things like that. And companies that wait too long, especially in deploying things like cognitive, artificial intelligence, are going to go from—you know, they’re cautious. They have what, you know, my students call FOMO—you know, “fear of missing out.” If you wait too long, you’re going to find yourself in a state of COMO, a “certainty of missing out,” where you’re just too late. And companies that are more agile, more able to embrace the type of change—whether it’s in technology or in the composition and nature of their workforce—are going to get too far ahead to close the gap. And I see a lot of very big, absolutely storied companies, famous, famous companies with hundred-year histories. They are the most anxious about it. And they’re the most agile about it. And their anxiety is, of course, it’s triggered by the fact, they’ve got digital-native competitors that they fear are going to disrupt them, per Clayton’s term. And they’re trying to move very fast—and I think some quite impressively—to get to some future state, which will allow them to have another century of success.

Haq: That is so insightful. So we’ve been talking about the CEO, and it strikes me that another player in this conversation is the corporate board. Is there a way to structure the right challenge that a board might give a CEO to help each side be successful in this business of workforce transformation?

Fuller: Well, for boards, this is always a very delicate question. I think there are going to be several issues that boards will be prodding executives about, which are perfectly appropriate, that will naturally bring up the issue of the way talent is developed and sourced and what the talent profile of the company has to do in the future. The first is digitalization, generally, which has been the trend that’s been most quickly accelerated by Covid. And boards who are doing everything, from improving budgets to try to ensure that shareholder value is preserved, will be pushing their management to talk about how digital processes and tools are being used to meet customer needs. A second is going to be on a completely different issue—diversity and inclusion: a 64-point headline in a lot of board books. The events of the last 18 to 24 months in the United States, most of them tragic, have really put economic equity and inclusion firmly on the agenda of boards. And that becomes integral to questions of talent strategy—that you have to think in terms of how you’re sourcing talent, but also how you develop it once it gets in the door, because it’s not just a recruiting problem. That will cause questions of talent to be very much in the fore. I think also globalization and supply chains. If you look at the logic of globalization for large companies, it’s really taken two forms. The first is, I can play a price and regulatory labor rate and regulatory arbitrage. And whether it’s building cars or appliances in Mexico or sourcing electronics from Vietnam, I can continue to have real-dollar cost-per-unit of those articles to fall, because I’ve got lower labor rates and the cost of everything—of constructing the facilities to how I handle refuse that comes out of my facility—are lower. The second, though, is talent. The Indian IT outsourcing industry exists largely because US-based talent (it was the US companies that have been disproportionately the source of growth and profitability for those firms), historically, the US couldn’t create talent fast enough. And if I’m now suddenly a little bit more worried about where I source my health care PPE, where I source my generic pharmaceuticals, where I source my integrated circuits, where my cybersecurity code is being written, that’s going to put boards very much on the issue of: Where does talent come from? Where do we want it to be situated? How do we cultivate it if it’s not currently available? If you gave the directors of New York Stock Exchange companies a poll, “Where does talent fall in terms of your concerns about the company you serve as a director?” I’d be very surprised if 90 percent-plus didn’t include it in the top three. I think the definition of what those concerns are and how more specific they get, and the type of implications they have for management, are going to be more specific than they have been historically. And it’s going to be much less “What does the succession plan look like for VP and above?” It’s going to be talent from shop floor to the C-suite, and it’s going to be applying very consistently, now, more filters than had been applied for—whether it’s diversity and inclusion, location and security, reskill-ability—to phrase a rather not mellifluous word. You know how much learning capacity do these people have? Our strategy is to hire the best people and pay them as best we can and be a preferred employer, those are all hollow words now, too. Too general, not actionable. Those are Hallmark cards of management. You have to be much more specific and much more actionable.

Haq: I’ve been watching the evolution of what is happening in the higher-education space, and it’s hard to ignore the threat that has come to higher education as a result of the combination of digitization and then Covid as, sort of, something that took it over the brink for some organizations in terms of a traditional education model. Google, at the same time—as sort of the example of on the other extreme, opportunistic technology-based player—chose this time to decide that they weren’t going to recruit from traditional four-year colleges anymore. They were going to put their skills needed to enter into their organizations out onto the open market in the form of self-learning modules and certifications, so that anyone, anywhere in the world could train to a certain degree to arrive at the skills needed to do a successful entry-level role, obviously significant for education, significant for diversity and inclusion in a very positive way, and potentially a threat for how we think about the sort of credentialing that has created some of our great leaders within the corporate world until today. I’m curious as to where you see this growing and moving, and especially with AI, which you mentioned being another nuance of this, right? The ability also to understand something about someone through tools and selection processes that don’t require some of the same traditional higher education. So what is your thought there as a closing idea for our conversation?

Fuller: Well, the use of degrees and visible, tangible, confirmable experiences—particularly degrees—were devices employers used, I think, primarily as a proxy for the ability to learn, having higher-order social skills and whatnot. And in my paper, “Dismissed by Degrees,” which got quite a lot of attention by corporations, demonstrated that very often by insisting on degrees, employers were excluding employees who were actually highly qualified for the work they needed done but just didn’t have that degree. And that removing what I’ll call “negative filters,” like “BA required,” and trying to develop recruiting systems that have more affirmative filters, “This is the type of experience we would expect to see on someone,” it will be a step in the major direction. AI should unlock all of that. It hasn’t been applied to the end-to-end recruiting processes by many companies. And most of the AI that’s currently used by companies in this space is used in an applicant-tracking system, and they’re used for filtering and ranking. Rather primitive. I’ll have some major research coming out that hopefully in about the next four to six weeks shows the shortcomings of that. But what we should have eventually is AI systems that say: “Here is a job. One of the outstanding performers in this job was Aassia. We have isolated the attributes of Aassia that we think explain why she was an outstanding performer in this job. We are now using those in our algorithms.” We’ve gotten more and more sophisticated about searching for—it could be a job applicant. It could be someone who’s applying as a first-time employee coming out of anything—from a community college, even a high school, all the way up to a college or graduate program. And it’s rooted in what the job actually requires. And it’s rooted in the experiences and demonstrated skills of someone who was outstanding at the job, was a candidate for advancement, that moved fast, that fit in well, as opposed to a proxy. AI will be, I think, hugely helpful. And also helpful in isolating things like, “We’re concerned that Aassia doesn’t have the skills to go to the next level. But through AI, we have isolated, here are two programs or credentials that we could hook her up with through our corporate learning system, which we have high confidence will backfill what she needs to be a serious candidate for the next level of advancement.” So the ability to harness that type of technology should suffuse everything from hiring, talent management, assignments, what projects you’re assigned to, what jobs you’re considered for, and will also eventually be able to mine talent platforms for contingent talent when either we don’t find a candidate internally or we need it in a time and a place where we cannot match it with internal resources. It’s going to be amazing to watch. I hope I live long enough to see it come into full flower.

Haq: Well, Joe. I want to thank you for sitting down with me. This was such a far-ranging conversation. You really helped me, and I’m sure our audience, think about how a decision maker will really need to dissect and break down the elements of workforce and talent management to set up a competitive business for the next century. So thank you for sitting down with us and sharing your expertise.

Fuller: Well, thank you, Aassia.

Haq: That was Joseph Fuller, professor of management practice at Harvard Business School and former CEO and founder of Monitor Deloitte. For more of MBO’s insights on the future of work, visit MBOPartners.com or find another episode of State of Independence wherever you find your podcasts. Thank you so much for listening.

Kerr: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.