Hacking HR to Build an Adaptability Advantage
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How to tell whether your organization is truly adaptable.
Most of us have no trouble in coming up with examples of companies that failed to mobilize around a major new opportunity (e.g., Intel and chips for mobile devices), or procrastinated when confronted with a wrenching discontinuity (e.g., Kodak and digital photography), or struggled to let go of a beloved but dying strategy (e.g. General Motors and its bloated brand portfolio.) In most of the cases of strategic inertia I’ve come across, HR wasn’t the primary culprit, but neither was it a powerful force for proactive change. We’ve launched this hackathon with our friends at CIPD because we believe HR can play a hugely positive role in helping companies to become adaptable at their core.
I’ve always loved this quote from Ralph Waldo Emerson: “There are always two parties—the party of the past and the party of the future, the establishment and the movement.” The question is, to which party does the HR function belong? Imagine if we posed the following survey question to everyone in your company:
Which of these two statements most accurately describes the HR function in this organization?
1. HR is a powerful catalyst for change.
2. HR is a major impediment to change.
Ideally, more than 90% of your associates would pick statement #1, but I suspect this might not be the case if you ran the survey today. However, if we work together, we can start to change this. As we tackle this challenge, we need to start with a shared definition of adaptability. What, after all, is the distinction between “agile,” “resilient” “flexible,” and “adaptable?” To an extent these terms are interchangeable, and whatever the word, any definition is at least somewhat arbitrary. So instead of consulting the dictionary, let’s get clear about the sort of organizations we are trying to build.
I’m betting you’d like to work for an organization that . . .
- Never takes refuge in denial
- Is positively discontent
- Always plays offense and never defense
- Rushes out to meet the future
- Is relentlessly optimistic
- Regularly reinvents itself and its industry
- Captures more than its fair share of tomorrow’s opportunities
- Frequently surprises both its customers and competitors
. . . and does all this in the absence of a crisis. Now that would be an adaptable organization.
I like to make a distinction between operational agility, and strategic adaptability. Operational agility implies an ability to respond quickly to shifts in demand or customer preference within the boundaries of an existing business model. A great example of an initiative focused on agility would be Volkswagen Group’s new MQB manufacturing strategy. (Translated into English, Modularer Querbaukasten means Modular Transverse Matrix.) The MQB architecture allows a wide range of vehicles (Audis, Seats, Skodas and VWs) to be produced on a small number of platforms.
Strategic adaptability, by contrast, refers to a company’s capacity to reconfigure its underlying business concept, by dramatically rethinking . . .
- Its core mission
- Its primary value proposition
- The identify and nature of the end customer
- The method or channels of distribution
- Its revenue or pricing model
- The markets or industries in which it competes
- Its core competencies
- Its ecosystem of business partners
- The degree to which it is vertically or horizontally integrated
- The basic way in which it produces products and services
To take an example, we’ve all experienced Amazon’s operational agility—it’s ability to rapidly assemble our unique order from tens of thousands of SKUs and deliver it to us in day or two. But Amazon is also a case study in strategic adaptability. During it’s brief history, it has morphed from a Web-based bookseller, to an online retail platform, to a digital media powerhouse, and most recently, to a leader in cloud computing.
Amazon is rather unique in that it has changed its business model in the absence of a performance crisis. Usually, major strategic shifts are driven by a financial meltdown, or years of substandard returns. As I’ve said on numerous occasions, deep change in big companies usually happens the same way it happens in poorly governed dictatorships—infrequently, belated, and convulsively; and for the same reason—a top-down authority structure frustrates bottom-up change. All too often, by the time an issue gets big enough to attract the CEO’s attention, whether an opportunity or a threat, it’s too late to do anything but react. A case in point: By the time Google’s top brass roused themselves to do something serious about social media, Facebook had already built a nearly insurmountable lead. In my experience, the vast majority of corporate “change” programs are “catch-up” programs.
In my view, it shouldn’t require a financial crisis, swinging lay-offs, a clean sweep of the executive suite and a crippled share price to realign a company’s strategy. That’s why we need to change the way we change. Change needs to happen a whole lot faster and a whole lot cheaper than it does now.
To put it simply, we’re trying to maximize the following ratio . . .
Frequency and amplitude of strategic change
Time, treasure and trauma required to produce that change
To borrow from military doctrine, we’re trying to find ways of tightening the “OODA loop”—the time it takes in a dynamic environment to observe, orient, decide and act. On the battlefield, the army with the shortest OODA loop usually wins. The same holds true in business. If you can make sense of what’s changing more quickly, and redeploy your resources more rapidly, you win.
As the pace of change accelerates, so must the pace of strategic renewal. Indeed, one of the most important questions for any enterprise today is this: Are we changing as fast as the world around us? All to often, the answer is no. Hence this hackathon.
Given the primary role HR plays in many of an organization’s core processes (e.g., performance review, talent deployment, organizational development, change management, compensation), HR has the chance to be a true catalyst for strategic adaptability. So let’s push ourselves to imagine how HR can get out in front and raise the banner for the party of the future.
Dear hackathon participants, we’d love to hear what adaptability means to you (please provide your thoughts as a comment to this blog post). Here are a couple of questions to get you started:
- How would you define strategic adaptability?
- How would you tell whether an organization is truly adaptable (i.e., what are its distinguishing traits)?
It appears to me that highly legislative processes have paralysed some HR professionals from thinking outside of the box and fearful to let go of what - in a different time - was deemed good practice. Many of those processes today are causing the high volume of litigation scenarios leaving HR in a vicious cycle of fear and reinforcement of that fear. This leaves little time for thinking and planning to support the future workforce which has the potential to unlock the box and become more proactive, and as such prevent the problems of tomorrow.
HR too is evidence-driven meaning that unless proof already exists it may not be believed to be an effective solution. HR needs to be led by organisational system thinkers/mavericks if they are to make the necessary leap into the future.
Hi Jim, I really enjoyed your line "people are defined only in relationship to other people, not as distinct and disconnected objects" - I think this goes a long way to challenging some of the core beliefs of a section of practitioners and the philosophies and tools they employ. As you rightly say, for HR to recast it's role, I think some of the core assumptions behind HR need to be questioned and in some cases, resigned to history.
Likewise, you are right, HR is caught between the de-risking nature of legislation on the one hand and the desire to be strategic and a Business Partner on another. Whilst other support functions wrestle with similar administrative versus strategic debates, HR's unique given that its administrative items are so personal and are so important to each person. Understandably, people have high expectations when it comes to their salary being paid, holiday entitlements and if they are going to still have a job after a downsizing. None of the other support functions have to deal with these sorts of personal problems!
By implication, it seems like in order to excel at both the fundamentals and the strategic, that two functions might be a better option, one strategic and one operational/administrative. I'm sure all of this sounds like it's straight from Ulrich but I don't know of many examples where this has happened. Typically, a HRD will have responsibility for admin/a shared service centre and HR strategy and hence will always be caught between a rock and a hard place. Perhaps spliting HR into two and creating new roles, new titles, new processes, new departments and new offices might help make the distinction clearer and to the benefit of everyone, not just HR?
I've been studying Ronald Heifetz this year, in particular reading Adaptive Leadership and Leadership Without Easy Answers. So, my take on this question comes from that perspective. I'm looking at strategic adaptability from the vantage point of leadership, and the traits that comprise adaptive leadership as well as learning and adaptive organizations. The ability to be strategic comes from being adaptive, either as a leader or as an organization. Heifetz says the single most important skill in being adaptive is diagnosis - having the ability to 'get on the balcony' and see the whole as greater than the sum of its parts, and to recognize the gap between espoused values and values being practiced. When leaders and organizations practice adaptive leadership they learn versus react, and apply long-term, strategic, adaptive solutions versus short-term, technical solutions. HR and other leaders of change must hone and develop the skills of adaptive leadership if they are to be at the forefront of strategy.
I am a big fan of the aspiration that HR can be a potential catalyst for adaption in organizations. I also see a lot of "pain and suffering" when that aspiration is not realized. HR can be, perhaps should be, at the heart of cracking the code on adaptability. Imagine if HR were to stand shoulder to shoulder with line executives and take center stage to reinvent how the organization is governed? What if governance and management were fundamentally transformed in the organization so that governance adapted to stakeholder requirements at the pace of change of the marketplace? How long would it take Apple to transform its management model - 2+ years? Google? Big Global Bank- how high can you count? HR can and should focus on adaptability and I submit governance and management practices are fertile ground for delivering on the promise of high value from HR.
Let me articulate it in one sentence, adaptability is the ability of an organization to change its internal environment, its structure (how people are organized to get things done), its strategy (the guiding principles, related projects and processes), its resource allocations (resource distribution on its activities) in reaction to "related" trends in its external environment, the societies of customers and employees, the alternative means of providing its value to its customers, the alternative technologies, to orient and act on >.
I think HR has a major role when it comes to issues concerning people who form the adaptable organization, organizations are like individuals who need to be adaptable in their daily lives so that they keep on feeling meaningful, pursuing dreams and maintaining their income.
HR has the role of letting people in and out properly, organizing their working environment and structure, keeping people motivated and retained, and providing them with tools to accomplish excellent jobs.
HR need to work on three parallel paths:
- Supply side: Society namely expertise, life styles, moods, controls, values, income, tools trends
- Demand side: Understand and communicate what is the org. next "locus", and engage in activities of sensing markets and analysis of org. current competitive advantages and ways of making that happen
- HR distinctive value: Need to know what people are suitable for what kind of job, what the best structure is so that they do great job, how we can keep people feel engaged and effective, what resources are needed to accomplish that.
It is easy for HR to end up throwing too many initiatives so that to accomplish a larger number of goals, however people can't change collectively as fast, HR need to know what initiatives would result in larger impact on number of goals at once, and pursue them and do it over time maintaining the story in each employee's life.
I agree with the distinction between "operational agility" and "strategic adaptability" made by Gary.
They also agree on the naming of the OODA.
Starting from this premise, we need to focus on that the strategic adaptability includes a good dose of foresight, because to be successful, a company needs to get it ready by the change.
for this purpose it is important the first "O" of OODA: Observe, find all the information that allow you to shape the future as much as possible.
This implies a profound reengineering of the corporate structure and not just the HR function.
As regards the function HR, it is necessary to provide two levels of action: a general one, much narrower than the current, and a specific, peripheral, attributable to the individual middle managers of the various sectors.
Strategic adaptability to me boils down to the capability to move into new fields and to leave old (dear) games, on time and with less inertia than competitors.
I think you need to take care of three dimensions to be superior in adaptability. You need a sound foresight, a culture supporting the change and resources to speed up the change. With resources I refer mainly to people. You need funding, too, but if your people are not adaptable, competitors will likely use their funding better and beat you.
Foresight is on the agenda of boards and management teams, but culture and capabilities – as change enablers – are often not as well attended as they need to be, and here’s a big opportunity for HR. Do we hire people for the job only or for both the job and adaptability? Do we just value entrepreneurship or do we step further and systematically encourage and develop initiative?
Another starting point in evaluating the adaptability could be to assess whether the OODA loop is visible on all levels and functions of the company. You might name the process differently, as long as you recognize the substance. Going a bit further, does the OODA loop feed the organisation upwards and does the management take advantage of the process in their strategy work instead of just communicating the strategy downwards?
Noticed this interesting article yesterday on S+B - The Agility Factor, http://strat.bz/mxRqyKP
That got me thinking - In your view, How is 'Agility' related to 'Adaptability'?
Thank you!
Tojo, I think they’re pretty much the same thing, though perhaps agility is more about speed of movement, and adaptability is ensuring the organisation actually does move when it needs to do so.
Anyway, more generally, it’s great to see so many comments on here. I must admit I got a bit put off commenting by the lengthy intro from Gary which made me feel less sure that my opinion was really wanted than would have been the case otherwise. I’ve not wanted to share before as I know the spirit of the hackathon is about being positive and not criticising, and I want to support this as much as I can. But I still think it’s an important point, and, I’d therefore like to add:
For me agility / adaptability are about creating an organisation in which everyone can input on needs and opportunities to make a change in direction, rather than being given one person’s vision, and being allowed to comment - which is nowhere near as enabling. This isn’t about a free for all, but allowing maximum insight to be raised and shared before a decision is taken, which everyone is then expected to support (play their own role in helping to achieve).
Have come too late to this party to say something that hasn't already been said.
But just to say, I really like Neil Morrison's tanker/surfer analogy. While a lot of us are coming from an HR position, I'd assume, it's not about just the HR function being adaptable, but everyone in the business, being responsive to changes economically, socially, globally, ways of working, business practices, structures, people and not just in the direct market the business works in.
And being adaptable quickly - taking 12 months to catch up can leave a company dead in the water (there's a way to link that back to the tanker/surfer analogy if you can work it...).
If we're looking at how HR can help organisations be more adaptable, it's a case of mentality. Not saying "can't, because of..." but "can, and here's how". Or even better, identifying needed changes and new directions first and then saying "How about... "
Bruce
Thanks for your commentary. I really hope others in the thread take up and play with the concept of dividing HR into two distinct functions, one dealing with risk and administration and the other dealing with human capital optimization (or whatever term one chooses for the strategic side).
I have had the same thought, in fact. Actually, I don't think it's just straight from Ulrich. Rather, it takes Ulrich a major step further. Whereas Ulrich proposes dividing the HR function into distinct areas of competency, your idea is much bolder. It's like the difference between departmentalization and spin-off. Again, I think there's gold in them thar hills.
Hi Jim, thanks also for your thoughts too...
Whilst 'splitting' HR into it's various forms (e.g. shared services, centres of excellence, offshoring/outsourcing etc.) have been around since Ulrich (see this piece on Google's Three Third's HR Dept for a post-Ulrich example, I don't think it's been formalised (in the way that sales and marketing are justifiably different departments) because of the lack of robust, scalable, valuable and predictive HR strategy tool. There are lots of candidates for such a tool though, most of which have been around for 20 or more years, but none have built any noteworthy traction, at least not enough to justify the formal splitting of the HR department, or to approach anything like a Six Sigma type level of adoption and outcomes across different industries.
I've written some reasons as to the causes of this scenario in a piece called HR - Boom or Bust?. In terms of what a solution might look like though, there are some embryonic thoughts here - A Physics of People and The 5 Criteria to Transform Business.
Bottom line, without a new strategic tool, business process or any other way to add demonstrable value, not much is going to happen in terms of transforming HR.
Thank you for the introduction and the challenge Gary! I'll respond first and then I'll go back and read comments and comment there.
How would you define strategic adaptability?:
Maybe in addition to 'dramatically rethinking' shifts in strategic imperatives, strategic adaptability is one step or so beyond the rethinking and includes redesigning and/or reengineering through proactive insights about the future, and the way in which these functions exist or happen. This is likely a key intent of this hackathon. I also think that for organizations to truly be strategically adaptable, at the core of their mission and purpose must be this intent to allow for innovation as Amazon does through what is naturally part of how it does business through decentralized productivity. This is not suggesting that it be simply listed as a core value or goal, though that might be a place to start, but must be co-created across management and individual functions, and authentically emulated by senior leaders so that trust in such processes that foster an adaptable culture can exist and evolve.
How would you tell whether an organization is truly adaptable (i.e., what are its distinguishing traits)?
Holistic organizational viewpoint, a grasp on the future, tolerance and patience for a true co-creation process that nudges but also leads; leadership is truly plugged into key stakeholders (from the board to the front line) and aware of potential politics and reisistance.
When strategic change is defined as a need in any one or more areas, all areas of potential impact are considered, tested and/or challenged so that success is more likely. Traits would include: co-creation of input, terms, approach, and metrics that will define the change, patience by the change agents with the process of co-creation but courage to push when necessary and pull-back when resistance is detrimental to the success.
A case from a few years ago, that I will likely use throughout my sharing and learning as part of this hackathon is a healthcare organization whose senior leadership including senior level HR created a vision based on a model of well-being and health focus with reduction of hospitals, introduction of at-home models, wellness care vs. continuation of the nation's current sick-care model where hospitals are many and specialized services are many and where the sicker the patients are, the more the hospital makes. This was a bold attempt to shift the organizational strategy and focus and they failed. With hindsight, they failed because they underestimated the power of money as defined by physicians' historic framework of existence and the associated dependency of that framework by the rest of the organization. Additionally, while leadership development and coaching were at the core of their reframing the strategic imperative, senior leaders including HR did not have the 'pulse' of the organization's readiness and understanding about the pace for change. Their pace was much faster and without the connections required to ensure a shift vs. a mandate. With the perception of mandate came resistance, with resistance came a desire for 'the way it was' even if this current 'sick state' wasn't right.
Feels like we have lots of good input on what agility/adaptability really is, and HRs potential in enabling this. Intriguing comments re what I think of as the beyond Ulrich thinking. Can HR really deliver on the operational agenda and be truly strategic and working on the agility dimensions - should we split in to 2 (or more?) as Bruce is suggesting? I would like to think we can do both and I think other functions arguably do it, but it is easier if the HRD has the resources under them where they can have someone looking after the operational HR stuff and free them up for more of working on the big agendas. Where they are caught between these two 'rocks' may be as much due to how leaders across the business understand and want to use HR - even CEOs can divert their HRDs on to lots of 'operational' issues, and that is true for HRBPs. We need to get the views of business leaders on this as well and have the confidence to 'educate' them where we need to on the strategic importance of HR in building more agile organisations. But I think we have also been too focussed as HR in many organisations about shared services, CoEs, HRBPs and taking cost out of HR (which in terms of the total cost of the business is minimal anyway) and with much effort this has not always delivered much improvement in terms of real value to the business. We should take these ideas forwards in to following 'Sprints' which will bring together the real hack ideas on HR.
Yes Peter, my experience mirrors yours. HR in many organizations (with good intentions and sometimes immense pressure from the business), has focused more on how HR is delivered and less on what HR's highest value work should be. I cited one specific example in response to Gary's earlier questions about what HR's role in adaptability should be. I suggested that HR could/should help an organization re-design governance so that how the business is governed can adapt at the speed with which the marketplace is changing. How many major innovations in mature businesses get choked off by barriers that reside in how the enterprise is governed? Tangible contributions enabling real innovation and organic growth would be one way to change the game (and the conversations) about HR's value in supporting adaptability.
Strategic adaptability to me means to be proactively future focused on consumer wants and needs through empowered, engaged, innovative and overall healthy employees while maintaining the least disruptive environmental and community path.
Potential adaptable company traits might include:
- embedded into mission and values that builds connection with employees and customers
- customer focused, not worried what competitors are doing but carving its own path
- works smart, quick and with minimal waste
- encourages risk taking, embraces and learns from failures
- integrated not siloed, every department is on the same page working towards the same goals with the flexibility to make the necessary adaptations without going up the chain to keep moving forward
- transparent with both internal and external communities
- systems, resources, managers and top leaders that support and empower employees to develop, create, innovate discover, collaborate, experiment
- long-term growth, consistently at the top of its industry
- leaders found at all levels of the company and leadership readiness programs to ensure the company is in good hands for generations to come
I'm sure there are several important traits that I missed, but if I knew the magic mix I would be extremely wealthy by now! With that said, I'm not a believer in one size fits all, but I do think there is a solid foundation that companies can build from. Really enjoying the various perspectives on here and look forward to more meaningful conversations and idea sharing that will no doubt lead to a much needed shift in organizational (and HR) strategy and bring us closer to discovering what this foundation might look like.
Thank you Gary, for your contribution, and thank you, to all of you, for your responses and commentaries. They are very inspiring for me.
Thank you Doug and Khurshed for these personal characteristics that we need to valorize if we want to promote both agility and adaptability
To understand what is going to happen tomorrow we need to understand those who will define tomorrow - the next generation of leaders. When I look at my children I see the astonishing adaptability that they embody. They live in four environments - nationality Irish, born and early education in UK, moved to China for 5 years and now living in Bangkok. They move seamlessly between these four very different environments, speaking fluent Chinese, playing hurling, relishing Thai food and maintaining networks via Skype and FaceTime in all four. They manage the logistics of their lives - sport, music, academics, friends & family, extensive & frequent travel with the minimum of stress and with huge confidence and enthusiasm. They do not understand organisations, only networks, they see technology as a tool, they are excited by new and interesting ideas and experiences and they are caring and concerned about their world and the injustices they see. They live a life of privilege and work with the homeless and dispossessed. For me they embody the type of adaptability that is most relevant to the future.
Adaptability, in my simplistic view, is less of "Job Descriptions" and more of "Skill Requirements". While it is desirable to create a future or systems to gain an insight to the future, it is important for every individual employee to be rightly skilled to reduce the OODA Loop.
Distinguishing traits of an adaptable organisation is a young workforce in an otherwise 'age old' organisation.
What constitutes a young work force is an interesting question? I think age is a factor and more importantly for me it is the emotional maturity, adaptability, capacity, flexibity and depth of compassion of individuals, teams and organisations that make a siginificant difference.
This can be difficult to develop as it is a choice - conscious or unconscious and individuals, teams and organisations at different points do reach their limit in my experience in terms of how far they want to journey. As a coach and facilitator I challenge but the ultimate choice is not mine to make. This therefore impacts adaptability for organsations and the reality and 'how to' skill a workforce to reduce the OODA loop. Evolution springs to mind...
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