By Daniel Masata, Skill Principals


Competing in business today requires agility and innovation more than ever. Companies that innovate ahead of others become the flashiest success stories. Those that just manage to keep up merely survive. And laggards suffer eventual extinction. Here is one way to not let that happen.


After 15 years working in the “future of work” and human capital management space I now see something very clearly – something that everyone who works in this industry, investors included, can benefit from knowing. More often than not “hard innovation,” meaning new trends and ideas in areas like technology, operations and marketing originates in the U.S. The more “soft innovation” in topics like talent and workforce engagement, training and reskilling, or data privacy and governance, more often emerges from Europe.

Why is that?

Given the two regions’ unique histories, this innovation trend actually makes good sense. Much like their country’s founders who blazed the trail for an experimental form of government without really knowing if it would work out, modern U.S. companies go to extreme lengths to try new ways to improve technology and, now via AI, even look for ways they can predict future success. ”Growth hacking” is an expression that sums it up well and – if you ask me – would have had a hard time being born in Europe. You don’t hack growth over there, rather you engineer it.

Europe, however, has a more extensive history with many societal and governmental iterations, resulting in a long string of both human hardship and successes. Its storied past has crystallized and elevated the importance of workforce wellbeing both for its own sake and as a key driver for people productivity. As far as many Europeans are concerned, companies (and societies) seem to work better when there is at least some sort of ‘people care’ available to all who provide at least a minimum contribution to a company’s (or society’s) objectives.


American Innovation vs. European Innovation: Results and Examples

Both the U.S. and European schools of innovation result in successful business practices and foster organizational achievement. Let’s take a look.

The American business tendency to not settle for what’s good enough right now has led to Apple’s revolutionary introductions of the iPod (remember?) and iPhone. The company introduced the iPod at the beginning of a new millennia before digital music was the clear, or even common, consumer preference. Six short years later, Apple’s iPhone combined four consumer devices: mobile phones, digital cameras, portable music players and, essentially, computers. While some lauded the innovative device saying it would change the world, others just didn’t get it and said as much. Even TechCrunch predicted the device would “bomb.” So, even when the rest of the world didn’t yet see a need for these new products, Apple’s approach to tech innovation created a strong consumer desire for the company’s products.

While the U.S. is the frontrunner when it comes to product- and results-focused innovation, Europe consistently innovates on the talent side. We’re talking an innovation focus that’s softer at first glance but just as necessary. Think data privacy and workforce wellbeing/productivity —all things that typically benefit business success in the long-run. When it comes to talent care, companies in the EU are nearly always ahead of their U.S. counterparts. Not only do they typically offer better work-life balance as evidenced by vacation and paid parental leave policies that many Americans can only dream about, but they also focus on taking care of their non-employee workers more often than American companies. I would even go as far as to say that the much-hyped workplace innovation we see at companies like Google, Facebook or–new to the list–McDonalds is nothing other than European-style workforce-centric innovation brought into the material world (another case in point?).


Cross-Innovation Equals New Business Opportunities

From what I’ve seen, it takes three to five years for new and effective business practices to get the full attention of business leaders on the other side of the Atlantic. And as these best practices traverse the ocean, we soon see early-adopting businesses get an innovation head start and M&A activity pick up in the respective space.

Take LinkedIn’s recent acquisition of Glint, an employee engagement and satisfaction platform. Even new economy players like LinkedIn feel the pressure to maintain their edge, working to stay ahead of business trends they aren’t yet exposed to. LinkedIn’s seemingly high-priced acquisition is especially interesting because Glint focuses on improving employee satisfaction and engagement—typically a European focus. But the company packages its concept in a very American way: a well-thought-out business model heavy with technology and data that shows how it contribute to its clients’ bottom line, therefore, helping them better compete.

We may soon see even more American focus on typically European worker-centric innovation. Why? The U.S. has a larger population of freelancers and non-permanent workers than Europe despite not having comparable social safety nets. So, while the U.S. is at the forefront of the flexible workforce trend, it lags behind on independent worker care—something Europe already has. Curious? See The Association of Independent Professionals and the Self-Employed (IPSE). If in the future, these two elements – a flexible work force and a system that supports them – can blend together, then the sky is the limit.


Three Major Takeaways

With all this in mind, what are your next steps to get ahead of these trends at the right time?

…For contingent workforce buyers:

Don’t be satisfied with the same old temps-fill-a-job approach. You already know that you’re not getting good value out of your current contingent worker program, especially now that great flexible talent has so many options. So modernize your extended workforce program by looking at the larger picture. Consider what part your extended workforce plays in your overall workforce ecosystem. Challenge your suppliers and partners on technology, worker benefits, and retention and loyalty programs. If your recruiting partners lag behind on these points, then you already know you’re not getting the skills you need when you need them. Employers’ or job seekers’ market, permanent employee or independent worker – none of it matters. The better talent will only be placed by the better workforce providers.

…For human capital management service providers:

Up until now, you’ve probably focused on delivering the right people when your clients needed them. But if you want to survive going forward, you need to accept that finding the right people is no longer enough. You need to know your tech and tools game. Besides tech, make sure you take care of your workers. Think benefits, a loyalty program, redeployment strategies, private talent pools, and efficient onboarding. Understand that you’re just one part of your clients’ ecosystem and play your role well. Without these elements, you will feel the heat of just being another commodity provider the next time the market gets tougher, and you know it.

…For investors:

Use this knowledge to predict companies’ success. Look for organizations that already have an edge when it comes to folding together the best influences from both the U.S. and Europe. These blended innovation strategies can help you illuminate which companies have greater potential, clearly differentiating opportunities. When it comes to the buy-and-build approach, consider how each company’s strengths and innovation strategies complement the others’ in a similar way to the mutual benefits between LinkedIn and Glint. In your strategy build-outs, take a more proactive approach. Look beyond your own geography, not necessarily for geographic expansion (which can be costly and lengthy), but certainly to anticipate innovation trends that don’t start right in your own backyard. Dare to be curious.


Using my own background to help businesses navigate emerging workforce realities like this one is exactly why I started Skill Principals, the only independent consulting and services platform fully dedicated to the extended workforce ecosystem and future of work. Take a look at what we’ve started.