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In the last half century, relationships between employers and their employees have evolved away from one rooted in long-term loyalty to a new paradigm of short-term alliances driven by uncertainty and competition.
Entrepreneurs and coauthors Ben Casnocha and Chris Yeh argue that the new world of work isn’t so different from the typical conditions that many entrepreneurs operate in. And if you’re a manager, you may need a new strategy to hire and retain top talent.
Casnocha and Yeh are coathors of the book, The Startup of You. In this episode you’ll learn why it’s important for your organization to build internal and external employee networks, and how to get started if you don’t already have those informal groups.
This episode originally aired on HBR IdeaCast in May 2013. And just a note—we recorded this by phone. While the audio quality is not great, the conversation is. I think you’ll enjoy it. Here it is.
JUSTIN FOX: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Justin Fox, and I’m talking today with Ben Casnocha, an entrepreneur and co-author of the recent book, The Start-Up of You. I’m also talking with Chris Yeh, an entrepreneur, investor, and blogger. Ben and Chris are co-authors, along with Reid Hoffman, of the article, “The New Employer-Employee Compact” in the June issue of HBR. Ben, welcome to IdeaCast.
BEN CASNOCHA: Thanks for having me.
JUSTIN FOX: And Chris, welcome to you to.
CHRIS YEH: Delighted, especially as an HBS alum.
JUSTIN FOX: Excellent. So first of all, what was the old employer employee compact?
BEN CASNOCHA: Well the old employer employee compact was primarily characterized by stability, by predictability. It was very much in line with a phenomenon that we describe in the Start Up Review as the career escalator. Which is this idea that people would go to college, study hard, get a degree, land an entry level job at a big, stable company. And then so long as that employee kind of worked hard, and was loyal, and wasn’t particularly unlucky, that employee rode an escalator up the corporate hierarchy over many years, slowly accumulating increased levels of seniority and expertise.
And in exchange for this pledge of loyalty on the part of the employee, the employer was expected to train and invest in this employee, and essentially guarantee job security for many, many years. And this compact I think has defined the American labor market for many years. And it’s actually been the backbone of the American dream in some sense, which is almost guaranteed or implied prosperity for many generations. But that that’s all come undone in the last decade or two.
JUSTIN FOX: Yeah, so Chris, what happened to it?
CHRIS YEH: Well, what essentially happened is the conditions changed. The macroeconomic conditions in the post World War II era were pretty unique, where the United States was experiencing prosperity, very little competition from around the globe. Obviously we live in a completely different world now. We’re all globalized. We have competition from around the globe, Asia, Europe, everywhere else. And as a result, companies have been forced to move away from this concept of stability. Since it simply doesn’t exist.
And as a result, the new compact that we’re proposing is going to really take over, is instead of a concept of loyalty, it’s a concept of alliance, where you have two different parties entering into a mutually beneficial relationship. The employer is saying, hey, make my company more valuable, and I’ll make you more valuable. Even if this is not a relationship that’s going to last for an entire lifetime, this is a relationship that is going to be beneficial to both of us during the time it exists and even afterwards.
JUSTIN FOX: Ben, The Start-Up of You is subtitled, “Adapt to the future, invest in yourself, and transform your career.” And the book’s premise is that the habits of start-up entrepreneurs in Silicon Valley and elsewhere is sort of what Chris is talking about here, this alliance way of doing things. And you think they provide a pretty good model for anybody trying to build a successful career, right?
BEN CASNOCHA: Indeed. The argument is that the conditions that entrepreneurs have long worked in, which is conditions of great uncertainty, lots of competition, lots of volatility, are now the conditions that we all work and live in, no matter our industry. And over the years, startup entrepreneurs, when seeding new businesses in these conditions of uncertainty, have developed a playbook for how to successfully found and grow a business. They’ve developed strategies for how to adapt amidst conditions of changed. How to build networks, how to take intelligent risk, how to pull intelligence out of networks, and those strategies we think are pretty universal, and in fact pretty necessary for every individual professional to know in order to have a successful career.
And what’s interesting is that, since the book’s come out a little over a year ago, an increasing number of employees are showing up to work, showing up to their company. And maybe they’ve read the book specifically or not, but are in effect telling their employer that they want to be entrepreneurial. They want to invest in themselves. They want to adapt. They want to build new skills. They want to pursue break out opportunities. And we’ve heard from a lot of managers with some mild concern or confusion or anxiety about what they do with a workforce that’s showing up to work with these expectations.
JUSTIN FOX: And this article is basically a response to that, right?
BEN CASNOCHA: Exactly. This is a message to corporate managers about how you invest in your people, how you think about the relationship with your people in an era that is increasingly dominated by the very best employees wanting to be entrepreneurial in their career and on the job at your company.
JUSTIN FOX: Now before we go into some of the details about the article, you guys don’t just write about this stuff. You live it to a large extent. And I was kind of curious, first Ben and then Chris, could you describe your career trajectory briefly?
BEN CASNOCHA: Sure, I think my career trajectory is rather unusual. And I think we’ll see more and more career trajectories that look very much like a zig and zag, zig and zag, zig and zag. That’s certainly been in my background. I’ve started technology companies. I’ve help other people grow their companies. I’ve started an enterprise software company myself. I helped a friend in Mexico start a Mexican journalism company. I’ve written books.
I’ve travelled around the world, and generally not had a single place of employment for many years consecutively. And I very much have always thought of myself primarily as a business of one. I’ve leased my time and talent to different employers and clients over the years, but my identity has always been primarily of myself rather than a single place of employment.
JUSTIN FOX: How about you Chris?
CHRIS YEH: Well Ben says that he’s rather atypical, although I think that his experience is actually pretty illustrative. My experience is pretty typical. I tell people I’m a classic startup guy. I started working in 1995 when the internet took off, and I’ve been in internet start ups ever since. Began just as an early guy at helping start companies for D. E. Shaw company, which is that big hedge fund in New York– they’re doing internet things– and have just done internet companies ever since.
I think it is interesting to note that I think I span sort of the generations. The transition began around the time I entered the workplace. Back then, people had started to talk about the concept of the brand called you and free agent nation. And it’s been interesting to see that play out over the next few years. Today, as both a startup entrepreneur and as an investor, I do a lot of work with young entrepreneurs. And so I see the kind of entrepreneurial drive and ambition these folks have. And I see how you need to find a way to harness that within your company, as well as simply as an investor.
JUSTIN FOX: And so the key here is how can employers find a way to make working with them attractive to people like you guys?
BEN CASNOCHA: Exactly, our thesis is that if someone can’t be entrepreneurial in their own career, if someone’s unwilling to take risks in their career, if someone’s not keen on remaining agile and adaptive in their own career, how could you possibly expect them to bring to bear those strengths, those traits at your company? And so the people that every company wants to hire, the superstars, the entrepreneurial leaders, the adaptive thinkers, those people are thinking a certain way. And in order to attract them, in order to retain them, in order to invest in them, you need to have a certain approach to how you think about that relationship, how you manage them.
CHRIS YEH: I think it’s also important to note that this isn’t just a defensive strategy. It’s not that, oh, in order to retain your best people, you need to take this kind of approach. It’s also an offensive strategy. Because in the world we live in today, where the pace of change is rapid, where everything’s global, you need to innovate if you’re going to sustain your success. And so companies need to become more innovative. Even if they’re 100, 200-year-old company, they need to bring this kind of innovation into their organization. And we feel that the only way you can really have innovation, is by having innovative people. The only way you can have innovative people is by presenting them with a different way of working together.
JUSTIN FOX: So this different way, this alliance, what’s in it for the employee? What’s in it for the employer?
BEN CASNOCHA: So the key is that each party in the relationship is getting something. The company is getting increased adaptability. They have these innovative people who are in their organization who are able to read the tea leaves in the market and help them drive new initiatives, new products, new lines of business. That adaptability is what enables the company to survive and thrive.
Meanwhile, the company is investing in employees’ employability. Once you let go of the notion of hey, I’m going to be at this company for the rest of my life, then the obvious answer is, well, what I need to do in my time with this company, in a tour of duty, as we’ll sort of discuss in greater depth later on, is to progress to the next stage of my career, to increase my marketability employability, to build on the skills and abilities that I already have.
JUSTIN FOX: So in the article, you just mentioned the tour of duty, that’s one of three pretty straightforward ways you talk about to make this alliance reality. What are the other two?
CHRIS YEH: The other two that we talk about are, in addition to the tour of duty, we talk about an emphasis on building employee networks outside the organization. And what we mean by this is the notion that in any organization, you’re going to have more smart people outside your organization than inside your organization, and the way you’re going to tap those people is through the networks of your employees. So we believe it’s very important to recognize that the extended network of an employee, their social network, their knowledge network, is one of the key things that a company has to encourage. And that means potentially even subsidizing the building those networks. That means paying for trips to conferences, allowing people to take interesting people out to lunch.
The second thing, in addition to the networks, is the creation of a formal alumni network. We see this all the time in terms of companies that have set up alumni networks. Even companies that don’t set up alumni networks, almost certainly their alumni have set up an informal network. Well now that you have given up the notion that an employee is going to be an employee for life, what you can still have is a relationship for life. And the alumni network is the thing that allows you to that. Facilitate this lifelong relationship between your company and your employees and ex-employees, and you’ll be able to drive a lot more value.
BEN CASNOCHA: And I think, Justin you mentioned they’re all straight forward. I think the three kind of action items out of this article are straightforward. But we’ve also found them to be somewhat counter-intuitive in talking to managers. There are still a remarkable number of companies that have this vague notion that an employee serves at their pleasure for as long as the employer wants to have them on board. And maybe that will be 5 years. Maybe it’ll be 10 years. Maybe it’ll be kind of indefinitely.
And they haven’t yet gotten their arms around the fact that talented people today want to be more mobile. They want to change jobs more frequently. They want to sign up for defined tours of duty.
I think the second point of engaging external network intelligence also make some managers a little uneasy until they think about it. It’s this idea of, wait why do I want my employees out building their professional networks, out being recognizable by other companies, and they want to poach them? Why does that help me?
And the third point is I think there are some innovative companies that do the alumni network thing well, but still a remarkable number of companies, when an employee wants to leave, sees that employee has gone, and isn’t particularly interested in spending resources in an ongoing relationship. So all three I think are straightforward, but there’s still a lot of work for companies to do to successfully adopt these principles.
JUSTIN FOX: Yeah, well a couple of the skeptical questions I imagine you must get is with the tours of duty, doesn’t that encourage people to leave after their tour rather than make a longer commitment?
CHRIS YEH: Part of the issue with the tour of duty is people think, oh I’ve defined an end to the tour of duty. That means I’m going to lose the employee. That’s not the case. The tour of duty is the unit of the relationship, but that’s not to say you can’t sign an employee up for future tours of duty in addition to that.
The second point that we make is that, whether or not you make this explicit, and manage it, this is how employees think about it. Think about how rarely it is that you look at a resume and you see, oh, this person spent 15 years at this company. In fact, in the startup world, if we see that someone has spent 15 years at a company, we’re kind of wondering, hey, what’s going on with this person? Why would they have spent so long in the same role?
So I think that if you think about the tour of duty as something that is a codification, and a way of thinking about the reality that’s already there, you start to see that just making it explicit doesn’t increase your chances of losing your employees. In fact, it decreases your chances of losing your employees. Because at least you’re being above board and taking steps to manage the situation.
JUSTIN FOX: And on sort of building a profiling and engaging beyond the company’s boundaries, you hear a story every few months about somebody fancying up their LinkedIn profile and getting fired for it or swatted down for it. That seems to be an area where you’re just going to keep hitting against managers who are just used to the old way of doing things, where an employee who was polishing up their resume was somebody who needed to leave.
BEN CASNOCHA: That’s right, and it would be remiss not to pause here and mention that are co-author on the article, Reid, started LinkedIn, is chairman of LinkedIn. And so we’ve thought a lot about the LinkedIn dynamic in particular, and how it is that a company can be pro-LinkedIn in terms of its individual employees taking control their profile, updating their profile, communicating information externally out into the world.
One of my favorite lines from the piece I think is the sentence, no matter how smart your employees are, there are always more smart people outside of your company than within it. And this is true from the one person start up to companies like Google, which obviously have thousands and thousands and thousands of really smart people. So the idea behind updating the LinkedIn profile and making yourself more findable by others by going to networking event outside of your company and building your network with folks who may even work at competitors, is that your individual employees will be exposed to really valuable, potentially, information, ideas, people who could be valuable to their current place of employment, ie, your company.
And so you want your employees out there being findable, being sent articles, being pinged by folks, meeting folks for coffee, learning about what’s happening in the industry, and then bringing those insights back to your company to make your company more innovative and adaptive. And this network intelligence dynamic is very prevalent in Silicon Valley, and we think it will spread around the world.
In Silicon Valley you have so many companies, literally one after the other. LinkedIn is right down the block from Google. LinkedIn and Google employees interact with each other all the time, drive next to each other, go to the same coffee shops, and talk about what’s happening in the industry. And rather than eschew that behavior and be worried that one company’s going to poach from the other, the idea is that collaboration, that brainstorming, that informal communication, will actually enrich all companies in the industry.
JUSTIN FOX: You talk in the article about the different trajectories of Silicon Valley and the Boston tech industry. And what did you say was the defining difference there?
CHRIS YEH: The key is the sense of openness. The Boston tech community– and I lived in Boston for five years in addition to going to Harvard Business School there. So definitely very familiar with it. And it is the case that at least in the days of Route 128, it was a much more closed system. There were non-compete agreements. Employees were discouraged from talking about their work with people at other companies. And as a result, the span of information and innovation at any given company was limited to the people within the company.
In contrast, in Silicon Valley you have companies that are constantly working with each other and competing with each other at the same time. And you have this incredible ecosystem of events, of mixers, of things that bring people from different companies together, that bring big company people together with entrepreneurs, that drives a much greater awareness and a much more rapid diffusion of ideas. And so as a result, you have, in addition to the individual companies, the entire ecosystem acting as a repository of knowledge. And that really helped Silicon Valley have a huge leg up over the Boston ecosystem.
JUSTIN FOX: And your argument is that companies in lots of other industries and lots of other places, if they think more in ecosystem terms, and think of their employees as being part of this ecosystem, that they’ll do better?
BEN CASNOCHA: And well especially if they bless the behavior as opposed to being worried by it. If they encourage their employees to go out and engage in their ecosystems, to go and get active in industry events, to join groups online, LinkedIn groups or Facebook groups or follow people on Twitter, be public, be visible, see what people are reading. If you bless that behavior, and in fact, even create programs or culture statements or protocols to mine that intelligence yourself, to make sure that that network intelligence can come back and benefit your company, that will benefit your company in a very meaningful way.
JUSTIN FOX: All right, Ben, thanks again for talking with this.
BEN CASNOCHA: My pleasure.
JUSTIN FOX: Chris, thank you for talking with us.
CHRIS YEH: It was wonderful.
HANNAH BATES: You just heard entrepreneurs and co-authors Ben Casnocha and Chris Yeh in conversation with Justin Fox on HBR IdeaCast. They’re coauthors of the book, The Start-Up of You.
We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review.
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This episode was produced by Anne Saini and me, Hannah Bates. Ian Fox is our editor. Special thanks to Maureen Hoch, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.
