Here is an excerpt from another outstanding article now available at the website of The McKinsey Quarterly, published by McKinsey & Company. It was co-authored by Wouter Aghina, Marc de Jong, and Daniel Simon.

They include three exhibits: Exhibit 1: Among practices that influence a lab’s productivity, talent is the one most correlated with high performance; Exhibit 2: Talent is the practice most correlated with success—and where labs have the greatest room to improve; and Exhibit 3: Some behaviors are more important to high performance than others are.

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The highest-performing labs use the best talent-management practices. That’s no coincidence.

Of the $1.2 trillion spent globally each year on R&D across corporations and academia, 40 percent—much the largest share—pays for people. Our team interviewed and surveyed world-class researchers in academia and a range of industries to understand what drives research productivity in labs. We found that the best ones, regardless of specialty or industry, share a pattern of behavior across six key practices: talent, strategies and roles, collaboration, problem solving, portfolio and project management, and alignment with the needs of the business and the market. To understand what characterizes the best labs, we then studied 4,500 researchers in 260 laboratories in academia and research-based industries, including automotive, basic materials, high tech, and pharmaceuticals.

Our conclusion was that talent management, more than anything else, is what the best R&D operations consistently get right (Exhibit 1). While all the practices we looked at are clearly correlated with high performance in labs, talent is the most important driver of their productivity and shows the highest level of correlation. Interestingly, talent management is also the practice that has the highest opportunity for improvement. That makes this a tremendously powerful lever to improve R&D productivity, regardless of its current level (Exhibit 2). Strategy is the second most correlated practice, but here the respondents saw the least opportunity for improvement.

[The co-authors cite several areas in which “the top labs get it right.” Here are two. To read the complete article, please click here.]

Recruiting for potential

Managing talent appropriately starts with recruiting appropriate talent. The head of a top-ranking academic lab told us that “the most important intrinsic we look for is scientific curiosity.” Great labs such as this one evaluate the potential of researchers by appraising their basic intellectual ability, general problem-solving skills, and enthusiasm. They also test a candidate’s cultural fit, important to support teamwork and collaboration, which in turn drive productivity. Candidates may, for example, spend an afternoon devising answers to a specific question or working in the lab with the team. This approach helps labs assess a candidate’s social compatibility as well. Before making a decision on recruitment, the best labs also solicit the views of team members about each candidate.

Average labs typically look mostly for specific technical proficiencies—say, the ability to use a piece of equipment or to run certain tests. Specific technical capabilities are sometimes required, but even when hiring for them, top labs want people who can adapt to new roles as the research evolves. Those new roles, especially in industrial settings, should include project management and business experience—something many labs overlook

Nurturing people

Talent management doesn’t stop once researchers are hired. As an R&D executive told us, “Many of our research leaders don’t have the capabilities they need to succeed in senior positions in the organization. We are trying to give people more experience across the business to round out their future leadership potential.” A top lab, unlike a weaker one, actively supports its researchers’ development throughout their careers. Senior team members, for example, spend significant time in solo sessions with new researchers and mentor them continually. Year-end reviews appraise these activities. The most productive labs also require all researchers to develop annual personal-development plans.

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Six key practices drive successful research organizations. Among these six, talent management is the one most correlated with high performance yet has the highest opportunity for improvement. No lab should neglect its people.

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Wouter Aghina and Marc de Jong are principals in McKinsey’s Amsterdam office; Daniel Simon is a consultant in the London office.

The authors wish to thank Ajay Dhankhar, Michael Edwards, Mubasher Sheikh, and Tony Tramontin for their support with the research behind this article, as well Ankita Gupta, Eoin Leydon, and Kate Smietana for their help with the analytics.