Business leaders increasingly acknowledge that talent really matters.1 The trouble is that it is hard to know precisely how valuable it is. In what way, moreover, do a company’s development processes increase its value, and what is the proper way of enhancing the intangible assets, such as corporate culture, that help nurture it?
The dynamic-resource view (DRV)2 can give chief executive officers a powerful understanding of the role talent plays in their companies and the way it combines with business processes to expand or shrink shareholder value. The DRV characterizes the "talent pool" as a set of resources—tangible and intangible—that are in constant flux. People come and go, culture shifts, knowledge accumulates, skills develop, relationships wax and wane. The DRV maps such resources and the links among them. The resulting model reveals the impact of changes in resource levels on a company’s performance. Crucially, it also shows what causes these levels to change. Once the managers of a company understand the relationships between its resources and its success, they can focus on rebalancing resources to bring them in line with changing circumstances. (See sidebar, "Do you need to understand people better?")
This approach has proved especially...