In hiring, the less you know, the more you’ll grow

In the show, she is portrayed as one of the very few female tech talents at Mythic Quest and, as we learn throughout the series arc, one of the few female leaders in an industry known for its impressive “bro monoculture.” In episode 4, we watch Poppy at a convention as she struggles to have her ideas acknowledged by colleagues Ian Grimm, Mythic Quest’s creative director, and Brad Brakshi, head of monetization. It is when she has given up and headed off to grab one of those ubiquitous convention pretzels that we see her “spotted” by another industry talent, Dan Williams, the producer at the competing company Cold Alliance Studios. Dan is frank and to the point: The company has noticed Poppy‘s work, recognizes her talent, and wants her to abandon Mythic Quest for a senior creative position at Cold Alliance Studios.

While played to comic perfection, this glimpse into talent poaching is as true to real-world corporate recruitment strategies as it is to this fictionalized gaming world. There is nothing new about stealing employees away from the competition. In R&D especially, “learning by hiring” is a long-recognized, top strategy for developing innovations and countering tendencies to organizational myopia. Companies rely extensively and increasingly on their employees’ networks (prior ties) as a channel to find recruits. Moreover, they believe that hiring via employee networks reduces the risk of bad hires. If you cannot innovate with your current human resources, the practice goes, bring in known talent from somewhere else. And why not cripple the competition in the process!

While older research has documented the adoption of the strategy, new research raises important questions about its efficacy under diverse conditions. That is, researchers are asking if and how learning by hiring is affected by factors such as the age of the firm, among others. Researchers Vivek Tandon (Fox School of Business, Temple University), Gokhan Ertug (Lee Kong Chian School of Business, Singapore Management University), and I joined the debate with our research on prior ties and how it affects learning-by-hiring strategies. Do you gain more when you already know the person you are recruiting? How close is too close?

Our research suggests a surprising paradox about learning-by-hiring strategies in corporate R&D: the more you know your future employees, the less you will learn.

Let me explain.

When we hire, the most fundamental reason is because we’re looking to fill some knowledge gap. In our research on R&D hiring, we identify two types of knowledge that new recruits bring to the table: what we know (shared knowledge) and what we don’t know (unique knowledge). In the Mythic Quest example, Poppy is working in the same sector as Cold Alliance Studios, yes, but she otherwise has no prior ties to the company or its team. In seeking to poach her from Mythic Quest, producer Dan believes Poppy will bring unique knowledge — fresh perspective, skills, etc. — to his company’s creative direction.

We similarly posit in our research that hiring R&D scientists with no prior ties brings greater R&D value than hiring those that do.

To test our hypothesis, we looked at patents filed in the field of electrical and electronic goods between 1985 and 2000. From those records, we identified R&D scientists and their firms and tracked the career movement and patent activity of these scientists across the field. We wanted to see how much a prior connection affected their later patent activity, especially as indicated by co-patenting — a widely validated approach to measuring R&D-based collaboration because of its indication of strongly shared knowledge. We asked, did these scientists innovate more or less after moving to the new firm?

What the data revealed was that the greater the number of ties, the less the scientists relied on unique knowledge. That is, where companies hired people with whom there was already great familiarity due to past collaborations, the results in new patents showed that there was more focus on already shared knowledge and resources. Moreover, the new hires did not reach far beyond the borders of that shared knowledge, resulting in what we noted as “lower-impact knowledge.”

Perhaps this is unsurprising on an intuitive level — the idea that furthering a relationship based on shared knowledge is unlikely to result in lots of new knowledge. However, counterintuitively, this data suggests that learning-by-hiring strategies are less effective, because the new hires with prior ties are focusing on what the company already knows. This defeats the purpose of using hiring by learning for R&D innovation and growth goals and makes questionable the utility of prioritizing it as a recruitment strategy.

In that respect, the data on learning by hiring offers a cautionary tale and suggests valuable alternatives to companies wanting to employ poaching strategies. If you want to poach, reach farther afield — away from the people you already know and with whose work you’re well familiar. Otherwise, you’re just too close.

This article was originally published by Forbes on February 18, 2020.