Some professional services firms are proud that they use only employees for projects. They think that this is the best way to control quality, deliver consistency and optimize utilization.

Other firms are making a strategic choice in favor of what Deloitte calls your ‘extended talent network.’ They reach outside the firm for expertise and to scale.

Before we dig into the strengths of each choice, let’s look at what an extended talent network is.

It is not everyone you can find through a web search. And it is probably not the people in your LinkedIn network; or as we are talking about firms rather than individuals, the people that the firm’s employees are connected to. You just don’t know enough about these people to really claim them as part of your talent network. None of them has any commitment to working with you.

Let’s parse out each term in Extended Talent Network.

Extended – you can draw on people and teams from outside the boundaries of your company.

Talent – the people you can reach out to have real skills that are relevant to the work that your company does. These skills can supplement your existing skills (giving you more scalability and/or lowering your cost base) or they can complement your existing skills opening new possibilities for innovation.

Network – there are connections between your company and the people in the talent network. “Connections” has become a very loose term. Is a person who follows you on Twitter a connection? How about a person that you met at a conference and exchanged some ideas with? For an extended talent network to be actionable we have to have tighter definition of network. Here is a proposal. To be in your network a person will

• reliably respond to a request

• consider working on a project with you

• share information about their skills, expertise and experience

Does the level of information shared on LinkedIn satisfy these requirements? I don’t think so. I have about 3,700 connections on LinkedIn. Of these about 10% will reliably respond to a request, and of these I would guess that only 50% would actually want to work with me on a project. That takes the number of people in my LinkedIn talent network down from 3,700 to 185 (5% of my connections would be in my extended talent network).

Does LinkedIn provide the kind of granular information on skills and experience that let me know what kind of projects these people are suitable for? I would say no. The kind of high-level descriptions of job experience and empty skills claims that LinkedIn uses do not give the information needed to make a decision about working together.

We need a new generation of software to really support extended talent networks, one that supports fine grained data, stronger communication models and some level of mutual commitment.

Not every professional services firm wants to leverage these networks. There are three common arguments against them:

• The only way to assure high and consistent results is to use people who are part of the company, who are under its control, and who have been indoctrinated into its methods (implicit in this is the belief that ‘we have the best people’)

• There is too much risk of our proprietary business secrets leaking if we use external resources

• Professional services economics is driven by optimizing utilization ratios so internal resources must be engaged before looking outside the organization

These beliefs are common with companies of all scales, from ten-person boutiques to some of the largest and most prestigious consulting firms. They are reinforced in many contracts, which prevent a supplier from contracting out work.

I believe all of these arguments to be false.

Good processes and knowledge sharing coupled with well-defined frameworks and quality control can assure high quality results with external teams.

Most companies exaggerate the value of their proprietary approaches, and the real competitive advantage today is the speed at which an organization can learn and apply what it is learning. Leveraging external networks accelerates learning.

The best way to optimize utilization is to have an elastic workforce, one that can bring the right skills to bear on the problem at hand when needed. This is not a simple problem, but it is not solved by overreliance on internal resources. As I have argued elsewhere, when availability is the main criteria for allocating people to teams the result is services commoditization. The quality of your extended talent network is the key to differentiation.

Stephane Kasriel the CEO of Upwork extends these arguments in a recent post

The Best Pros Won’t Work For You But You Can Still Engage Them.

The Fourth Dimension Networking approach as described by Helen Palmer has some useful insights on what you can do to take your casual social networks and make them into a talent network.  The key idea is that you have to invest in creating opportunities for people. Do this and people will reciprocate. There is nothing new in this, but it seems that many of us have forgotten it in our rush to build a long list of Twitter followers or LinkedIn connections.

TeamFit is building the platform for extended talent networks for professional services. Is it time for you to get on board?

TeamFit is building the platform for extended talent networks for professional services. Is it time for you to get on board?

Individuals sign up here for free.

Companies, contact us to learn how we can help you build effective teams based on real skills.

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