Archive for the ‘Strategy’ Category
- Prioritising Short Term Profits
- Short Term Thinking
- An Addiction to Core Revenue Streams
Building on a post from Gary Hamel on the Hacking HR site, the 3 barriers typically serve to undermine or stall attempts at creating adaptability and change. Let’s examine each of these three factors in turn, how they feed off each other and how they create barriers to adaptability.
Adaptability Barrier 1. Prioritising Short Term Profits
Many of the highest profile companies are also public companies and public companies have always been held accountable by their shareholders every quarter. The rise of the ‘shareholder value‘ movement, the demands of banks, investors and analysts, the increasing speed of information flows and the desire to continually improve economic performance have all played their part in creating an environment in which short term results are deemed more important that long term performance.
Further to Stowe Boyd’s piece Socialogy and a Scientifically-Grounded Understanding of People and his Physics of People tag, I’ve been thinking about other people’s thoughts and ideas on the subject. What does the idea of a ‘Physics of People’ consist of and how it might take shape? The following extracts and quotes chart the thinking and writing on the subject over the past ten years or so.
Starting Points for a ‘Physics of People’
The first idea that I’m aware of comes from an article in the IBM Systems Journal. Written in 2003 by Cynthia Kurtz and Dave Snowden, the following extract is an initial call for a ‘Physics of People’, along with the recognition of the challenge involved:
We would like (but do not expect) to see simulations of human behavior able to encompass multiple dynamic individual and collective identities acting simultaneously and representing all aspects of perception, decision-making, and action.
This quote really leaves nothing on the table, conjuring up the idea of an omnipotent, all-knowing reality. Whilst this has an unmistakable element of ‘Big Brother’ within it, it’s also reassuring to know that physics itself seeks an understanding of reality that is equally, if not more profound.
Stowe Boyd is starting some interesting research into what he’s called Socialogy. Stowe defines Socialogy as “The theory and practice behind social business, its tools and techniques, and their impact on business culture, structure, operations, and people.”
From the piece:
I am going to be talking with a lot of researchers, visionaries, and practitioners who are working to push business into the 21st century, and to explore their ideas about moving onto a philosophy of business grounded in what we know about the human mind, social networks, and the emergent behaviors of connected groups.
In the series, I pose one question to my guests consistently: ‘How do you think a scientifically-grounded understanding of people as social beings will change business in the future and how?’
Incidently, Socialogy isn’t the first term that Stowe’s coined – he’s the originator of the term ‘hashtag‘ and also coined ‘social tools‘ back in 1999 so it will be interesting to see how this new term does.
Socialogy and the Potential to Transform Business
Given Stowe’s question, I thought I’d have a go at answering this from the perspective of Four Groups.
A scientifically-grounded understanding of people, such as 4G, has the potential to change business in hugely profound ways, perhaps on a scale comparable to the industrial revolution, the introduction of the PC or the rise of the internet.
Such a statement is naturally loaded with many assumptions and implications, so it’s worth exploring both in further detail.
An article on the HBR written by Paul Ellingstad and Charmian Love called Is Collaboration the New Greenwashing? makes some good points about collaboration and the importance of ‘walking the walk’, rather than ‘talking the talk’.
The authors start by highlighting the importance of the human element of collaboration.
From the article:
Who are the players you want to work with? What does each bring to the table? Why would each player be motivated to work with the others? Figuring this out upfront is critical. The next hurdle is figuring out how people are going to work together in practice, including which tools and resources you have available to facilitate the process.
One response to the points above is that commercial interests and remuneration account for people’s motivation whilst various communication tools determine how everyone will work together in practice.
Whilst this is reasonable, I think that an important piece is missing from this equation, namely how to determine team dynamics and group relationships amongst everyone who is collaborating. Although this is arguably inferred in the section above, it’s by no means clear and explicit – there’s nothing directly actionable.
HRVendornews (here), highlights a new survey from Right Management and Chally Group that reports some interesting findings about the causes of corporate leadership failure. Among the more eye-catching figures are:
“Failure to build a team or relationships was singled out by the most (40%) survey respondents,” said Bram Lowsky, Executive Vice President of Right Management. “Second was mismatch for the corporate culture cited by 26%. Remarkably, not delivering acceptable results was named by just 11% of respondents as among the main three causes for failure”
This is all very interesting, not least because key drivers of leadership performance seem to be intangible factors rather than more quantifiable indicators of performance such as prior experience, education or aptitude and ability. Unfortunately for the majority of organisations, these seeming less valuable metrics are the ones that are most obvious or easiest to gather and have historically been given undue weight when making leadership decisions.
Maybe organisations could avoid the most damaging leadership mistakes by adopting a different approach? Moreover, perhaps the key to successful leadership development is not the identification of aptitude for certain tasks or responsibilities but a more open-ended and abstract idea about the role of “fit”? This would help explain one of the most perplexing problems of leadership, namely why some people are naturally able to achieve great things in one situation, whereas they cannot replicate that success in a different role or organisation. This brings to mind the fierce debate started by Bill Taylor over at HBR (here) about the value of corporate superstars. Maybe what these numbers are telling us is that it is better to have a leader that fits the organisation than it is to go out and hire an industry superstar?
Effective leadership, invariably involves situations where the leader is a good if not great fit with the underlying organisational culture. It is hard to argue that someone like Richard Branson would be as effective a corporate leader in an organisation that was inherently bureaucratic or risk averse. In other words great leadership is about the serendipitous confluence of personal characteristics and organisational context. In other words, the right person in the right place at the right time.
However, the report indicates that organisations still place significant emphasis on industry experience and track record. This is borne out by the numbers, with 73% of HR respondents citing track record as an indicator of leadership ability. However, I’d question this assumption. Is industry experience or track record a reliable indicator of performance in an unrelated or different role? Personally, I am sceptical. Of course leaders need to have credibility and ability, however beyond that I would argue that being able to develop strong and robust relationships with immediate colleagues and understand the culture that enables strategy to work with the culture is more important than in-depth industry knowledge or success in previous roles.
The fact that culture and relationships are intangible and highly complex inevitably leads to organisations focusing on more concrete or tangible. Why try to get to grips with the complex when there are easily available figures in black and white that everyone can understand? The good news for organisations is that with new tools and greater understanding of the intricacies of culture and relationships, it is now possible to place these key intangibles in a more systematic framework. Culture and relationships do not need to be implied but instead can be openly discussed and compared. There are now methods that can be used to take some of the guesswork or gut feel out of these big decisions. In fact organisations that want to get ahead should be looking at this issue in far greater breadth, the question of fit should not be confined to the upper echelons or the C-Suite, instead it should cascade down to all levels and inform the identification and selection of talent throughout. When making any decision about recruitment, promotion or team composition the question of “fit” should be uppermost in everyone’s mind.
Booz & Company’s Annual Innovation Survey (here) dropped into my inbox this morning and the conclusions are challenging and in many ways bad news for organisations striving to catch the elusive innovation wave.
The results suggest that it is not the amount of money spent on R+D that governs a company’s ability to innovate but something much more intangible and tricky to manipulate, organisational culture.
This is tough for business leaders as corporate culture is something that they as individuals have very little short-term influence over. Unfortunately a culture that encourages sustained meaningful innovation can’t be conjured out of thin air. Clearly, many executives are struggling to fully comprehend this and one of the biggest mistakes is the ongoing belief that strategic initiatives can kick-start innovation:
“Culture matters, enormously. Studies have shown again and again that there may be no more critical source of business success or failure than a company’s culture — it trumps strategy and leadership. That isn’t to say that strategy doesn’t matter, but rather that the particular strategy a company employs will succeed only if it is supported by the appropriate cultural attributes.”
The first mistake that many executives make is not having a firm grasp or understanding of the current organisational culture, without this knowledge, it is impossible to know what is and what is not possible in terms of short-term cultural change:
“The larger lesson for companies that struggle to convert their R&D expenditures into successful products, solid financial returns, and unassailable market positions is that it may not just be traditional factors like the innovation pipeline that need rethinking. Instead, companies should follow the lead of the most successful innovators in ensuring that the company’s culture not only supports innovation, but actually accelerates its execution.”
Clearly, achieving this is much easier said than done, and for many organisations the existing corporate culture may be so far away from one that actively promotes and encourages innovation that a truly innovative culture is impossible to achieve in the medium term. All is not lost however, as inevitably within the organisation there will be sub-cultures within certain department or groups that are more amenable or open to fostering innovation. Again, understanding the existing culture and where these groups exist is key to long-term change.
Once the existing culture and its constraints are understood, executives need to ask themselves whether they really want innovation? This may seem like a no-brainer but a culture of innovation is unlikely to be plain sailing. Many pay lip service to this but for most executives it means facing up to uncomfortable truths. This entails not just an evolution of organisational culture, itself something difficult to achieve but also on a personal level and the behaviours that has made them successful in the first place.
This argument was echoed in a blog posting by Saul Kaplan over at HBR in this piece (here) where he highlights the reluctant executive as a key impediment to innovation:
“The most obvious reason companies fail at business model innovation is because CEOs and their senior leadership teams don’t want to explore new business models. They are content with the current one and want everyone in the organization focused on how to improve its performance.”
This inertia also extends to an unwillingness to embrace new business lines or ideas that may cannibalise existing product lines:
“When executives look at new opportunities they see them through the lens of the current business model and view them as competing with the current way the organization creates, delivers, and captures value. Organizations fail at business model innovation because they blindly take cannibalization off the table even if a new business model may have significant upside potential.”
This gets to the heart of the problem, culture within organisations is myriad and many have a hard time understanding this.
A pre-requisite for moving up the corporate ladder should be a willingness to challenge and question what makes you successful. In reality exactly the opposite is in action in most organisations as norms that focus on preserving the status quo are perpetuated. This is touched on in Saul Kaplan’s final obstacle to innovation.
“Business model innovators go against the corporate grain. They see entirely new ways to create, deliver, and capture value. If those that are tasked with sustaining and growing today’s business models are allowed to reject those with the perspective and insight to help design the next one, business model innovation efforts will fail.”
The importance of aligning strategy and culture has never been more apparent. However, organisations must learn that before they run they must learn to walk, this means making the effort to understand the underlying cultures within the organisation and the constraints that these place on the ability to innovate and change. Only then can decisions be taken as to how best achieve this.
Over at MiX, (here), Luc Galoppin posted an excellent blog that succinctly summarises some of the inherent problems and contradictions present in most HR departments. These can be summarised by HR’s ongoing desire for a seat at the top table and to be seen as a key driver of organisational strategy and change that have been top of the HR agenda since the publication of Dave Ulrich’s 1997 book Human Resource Champions (here).
One of Galoppin’s key assertions is that rather than an agent for change, which many HRD’s like to see themselves as (being able to design, implement and promote organisational change programs). HR is in fact naturally much better placed to act as a stabilising force within the business, as he states an agent of continuity during periods of change. Galoppin states:
“In short, HR does not posses the skills that are required to manage change initiatives. Instead, HR’s strength is that of a ‘Continuity Agent’, a stabilizer if you will.”
This makes sense when one considers HR’s traditional strengths such as developing systems and outlining processes and best practice. On the other hand, to be an active proponent and driver of change requires a much more disruptive and experimental approach, not natural attributes one would think of when describing most HR professionals.
The Ulrichian logic that the best way for HR to increase its influence is by being at the heart of decision-making and having greater influence over strategy and decision-making is according to Galoppin the wrong way for HR to think about its position within the business.
All is not lost however and Galoppin charts a three-step process that could help improve matters. By focusing on developing credibility and embedding HR within the business rather than an independent support function, things can change:
“The third step for HR is empowering the business by outsourcing the core part of their activities … to the business. Whereas step 1 may include the outsourcing of administrative tasks to a shared service center, this step will require a handover of activities to the business. That way, HR processes get managed where they live and exist: on the shop floor among the people.
Only by abdicating power and embedding HR practice directly within the business can HR prove its value. For many HR professionals still committed to the idea of a seat at the top table, this is unlikely to go down well. Many HRDs argue that to be influential they need to have control over all these people issues, when in actual fact the opposite is true. For HR to be seen to add real value to the organisation, the HR department needs to devolve as much control as possible.
It is however important to emphasise that the current predicament is not solely down to the inability of HR departments to demonstrate value. In many cases senior executives are guilty of failing to appreciate the complexity and importance of human behaviour, relationships and collaboration when it comes to organisational performance. As Galoppin puts it:
“The attitude in most projects is exemplified by this statement: “We’ll take care of the process re-engineering and the technical stuff; HR will do the soft stuff.””
The compartmentalising of the “soft stuff” is a very damaging attitude to have and highlights why many change projects are doomed to failure from the start. What many senior executives fail to appreciate is that it is actually the intangible people-side of things that is the hardest and most complex element of any change program that cannot be effectively sub-contracted to HR. In fact it can be argued that people-based issues represent the greatest risk to the success of any project. For this mindset to change, arguably it is going to require more than HR to prove its value, instead it will require senior executives to prioritise the naturally intangible, woolly and complex issues that surround the behavioural aspects of change.
Welcome to the final round-up of 2010. In this issue we have brought together an assortment of provocative articles focusing on;
Featured in this issue are articles from: Steven Johnson, John Hagel, Peter Senge, Richard Donkin and examples include HCL, the NHS, Minnesota public schools and the Roman Empire!
Stowe Boyd is starting a long-range research initiative into Social Cognition. The main thrust seems to be around;
- Clarifying the elements of social cognition like learning, performance, decision making, affiliation, sense making, and others.
- Assimilating research from anthropology, sociology, cognitive science, linguistics, behavioral economics, media studies, education, and basically anywhere else that sheds light on social cognition, and interviewing the researchers to get them to extrapolate on their results, especially in the context of the social business.
It will be interesting to keep an eye on it. Good luck Stowe!
Being able to predict things, in business and elsewhere is critical. We don’t always get it right, but understanding the variables and relationships between ‘inputs’ and ‘outputs’ goes a long way to creating a positive outcome.
In terms of Enterprise 2 and related Social Business software, this point is key and is the subject of a post (and a good few comments) by Keith Swenson, entitled Social Has No Future (Yet). Here’s the opening paragraph.
This provocative title simply means: In general, social software systems record what is happening now and in the past, but for the most part completely lack any representation of the future. Enterprise Social Software, or Social Business Software, will succeed only if it has some representation of goals or other future activities.
While Keith goes on to talk about other aspects of social software, this initial point is the critical one in my mind. Without the ability to make predictions, the range of problems that can be solved is dramatically reduced.