Innovation: The Alpha Effect

We recently got a call from a friend who happens to be the CEO of a Fortune 1000 company. She told us she was leaving to go to a much smaller firm. She had nothing but positive things to say about her current job, but something about this new opportunity was more inspiring to her. We were not surprised. We'd seen this type of behavior before. She is an Alpha, an A-player who drives meaningful change.

So is the seasoned veteran who just joined our firm. His most recent title was "executive creative director" at a global creative firm. We were happy but not surprised to have attracted this talented individual. Like many superior performers we all know, he chose a smaller firm despite being pursued by a host of larger firms with deeper pockets.

Why did we expect him ultimately to work on our team? Because of the environment we created. That may sound like bragging, but it isn't. Much of what we've read and certainly everything we have experienced running our firm tells us that the keys to attracting and retaining the best employees—the Alphas—are working on something 1) meaningful, 2) in a lower stress environment, and 3) with a reward system that makes sense. These three criteria for Alpha attraction and retention are quite obviously linked through innovation. This applies at your firm, as well. Stop and think about the last truly great person who left your organization. First think about what made that employee great. We bet you name such characteristics as action-oriented, driven, passionate, fun, and genuine. Following the Challenges Now think about where that worker went. Chances are, to a position with a perceived promise of putting his or her talents to better use—moving into a role with greater challenges and opportunities to learn and make a difference. It wasn't about money. Sure, the new employer may have given a pay hike, but that was likely more about the individual's track record than his or her focus on salary and benefits. Money follows these types of people because they follow the challenges. They find them and master both problems and opportunities and get well paid for doing so.

So being innovation-focused naturally attracts Alphas, and this in turn drives a better culture. Here's why: Successful innovation is intrinsically meaningful. Said differently, you have to be solving a significant need in order to have success with a new product or service The best and happiest employees want to work on something meaningful. So they naturally gravitate toward innovation assignments. It is not only more fun but also has a greater potential for personal payoff. Innovation is typically on the radar of the CEO. If you want to be in the spotlight, take on a major innovation initiative. It will bring out the best in you as an employee and get you immediately rewarded for performance.

Back to that Alpha who left your team. In hindsight, what would you have done to keep her happy? Chances are you would eagerly put her on your most heady, rewarding challenge. Think about what would happen if you had a project like that for every Alpha in the organization. The result would be a magnetic culture that attracts and retains the best people. It would be the Alpha Effect. Instead, too often we ask our best people to handle our most difficult clients or profitable but uninspiring projects. That leads to an unfortunate exodus of talented people.

Change to Rules You can smell a culture. Walk into any office and in seconds you will know whether something fun or insidious is cooking. That's why I am always thrilled when people say "this feels like a really cool place to work" within the first few minutes of a tour. (The fact that they are taking the tour on a Segway might have something to do with it.)

I am happy not just because they are right but also because it is on purpose. We hire wonderful people (people full of wonder) and let them work on world-changing projects. We let them change the rules. In fact, our clients encourage them to change the rules.

Respect, humility, challenge, and talent are all key ingredients in the innovation stew. It not only smells good but also tastes great.

When we welcomed our new creative thinker, we were pleased to hear him say: "Something about the place just feels right to me. I think I can really make a difference here." We're committed to making sure he is correct.

Before it's here, it's on the Bloomberg Terminal.