Wednesday, 26 June 2019

The human focused workplace and competitive success



This is the second of my articles on Making HR truly strategic on HR Zone: 


HR is now not just a driver of competitive success in your business – it’s the driver.

So please do not call HR a support function. It is not helpful, as it just closes in our thinking. And it is not true.

In the days when our businesses competed on competitive positioning we were, by definition, a support function. But now that firms compete on organisation capability and health, we are by definition the most strategically important function your business has.


This isn't just me saying this, but the world's pre-eminent firm of business strategy consultants too (sort of).



This was my first article in the series: People centricity vs business support.


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Saturday, 22 June 2019

Digital HR Transformation training




I'll be running this session on digital HR transformation in Dubai at the end of October.

We'll be talking about use of digital technology in HR, but I'll also be emphasising that the bigger shift is down to changing business models, with businesses finding new ways to get closer to customers, developing ecosystems, and yes, using new digital technologies, data and analytics to do this. And also the changing workforce, with people being more proactive in asking for what they want, working in new relationships with organisations, and also using digital technologies themselves. This means our organisation models need to change, developing horizontal teams, communities and networks.

HR in the digital world, as opposed to pure digital HR, is then responding to all of these changes too.

It's a big agenda and I'm pleased I get three days to cover it all.

Contact info-mea@informa.com for details.


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Thursday, 20 June 2019

Speaking at Business Process Management




And the next conference after that is this one, because I love spending time at the periphery of our profession, and also because I do quite a lot of process design and management work (including this training session).

But even so, attending the other speakers' sessions is going to be a really interesting experience for me, and should hopefully result in some great learning.

I'll be tweeting and posting here as normal.



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Tuesday, 18 June 2019

HR's Strategic Value and the Connected WorkSpace




I'm featured in an excellent article on HR's role in organisational collaboration published by the new WorkSpace Connect conference in Dallas (where I'll be keynoting this September), also featuring comments from Harald Schirmer from Continental.

"IT and facilities may seem the natural cohorts for driving and overseeing connected workspace initiatives, but HR leaders have a vital leadership role to play, tooif they’re willing to step up to the challenge. Not only can HR help foster a culture of collaboration, but it can turn itself from a support organization to a true value-driver in the process.

In HR parlance, what Ingham and Schirmer are talking about is social connectedness. Just as the group, or team, relationship is at the center of the modern, collaborative business today, so too must it be at the center of HR 'Lots of people still talk about the primacy of knowledge workers in today's business, but actually knowledge is going the way of the dodoyou know, robots, artificial intelligence... can do knowledge much better than us,' he says. The real opportunity or, rather, requirement, he adds, 'is to create the right connections, relationships, or conversations.'"

The Continental case is about the successful migration from an IBM enterprise social network to the Microsoft Office 365 platform for 150,000 employees by facilitating 1,400 volunteer change agents and 350 cross-functional teams including HR, IT and communications. 

I also talk about Microsoft 365 linking their inner and outer loops framework to centralised, decentralised and distributed organisations and suggesting the missing piece from Microsoft's framework is community.

"The second approach to decentralized work is more of a 'volunteer' nature. Perhaps Joe in Accounting, Sue in Marketing, and Paul in Sales are all passionate about wellness in the workplace. They can work as part of a decentralized group dedicated to wellness projects. 'This taps people’s intrinsic motivation rather than needing to extrinsically motivate them, which tends to be the case in teams. [Work] gets done in communities, traditionally communities of interest or communities of practice, but increasingly more proactive ones, which I call communities of performance, as they can achieve important outputs for a business,' Ingham explains. 

At some organizations, communities of expertise have begun replacing centers of excellence. 'These can be around the same size as teams but operate from a different basis and with a different dynamic,' Ingham says."

The article is well worth reading, both for insights on social collaboration, and also HR's strategic, value creating role in developing this, and you can download it here (the whitepaper at the top right).

And of course you can read more in The Social Organization too.

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Monday, 17 June 2019

Speaking at Teneo HRcoreACADEMY




I'll be speaking about social HR and The Social Organization in a session titled 'Creating Value through Relationships' at Teneo's HRcoreAcademy in Amsterdam on 16 October.

There are some other really interesting speakers there to, so do come along and look us up.





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Tuesday, 11 June 2019

Overall Reflections on Creating Inspirational Business from WOBI




I really enjoyed WOBI (World of Business Ideas) last week, and it's definitely had me thinking. I don't think I've changed my mind on anything, but I've connected a few things together a bit differently.

So what were my main insights? Firstly, that there wasn't a lot of focus around the conference's non-social media tagline, Exponential. I might go for something like Inspirational. I'm not saying it was, though I wouldn't say it wasn't, but I'm not one of those who look for inspiration from speakers, I look for insight. But there was a lot of focus on running business in a way that will inspire employees (Hamel, David, Sinek and SMR Covey) customers (Lindstrom) and society (Porter).

So how do you create an inspirational business and / or organisation? Well, I think in a number of ways Hamel got very close. I do think becoming more human is the key. I just don't agree that eliminating bureaucracy, especially managers and management layers, is the main way to achieve this. Managers do add costs and layers do make businesses inefficient, but they're not the biggest thing to point at. Using Porter's ideas they're part of operational effectiveness or execution, they don't impact strategy. Using my terminology, they're value for money, not adding or creating value.

Layers are becoming more important with an increasing focus on being more human, and on employee experience, etc. And I accept that if you were to design an organisation just to develop a compelling experience, you probably wouldn't invent hierarchy to do it. But hierarchy doesn't really get in the way of experience that much. I don't agree with Hamel that being 8 layers down in an organisation feels like being buried under the other 7. I accept that organisational life is often awful and we do need to be more ambitious the way we sort that. But do we really need to start with layers to do that. In my view, not so much. For one thing, hierarchy provides some really useful benefits that it's still difficult to provide as easily through other means. Eg I thought Porter made a very good case for a hierarchical aspect to strategy in our interview.

I'm absolutely not saying that we don't need to redesign our organisations. As Hamel says, our business models have changed but our organisation models haven't done so to anything like the same extent. They now need to do so. That's why I think the opportunity of applying Porter's thinking about business strategy to our organisations is so important.

I loved the way he described this in our interview: "Competition is about what you actually do in the marketplace to achieve value for the customer. Then you back up and that’s where the resources are. There is a cause and effect. We can keep on going further and further back up, keep going upstream to look at cause and causes. Supporting every piece of the value chain there’s another value chain like activity which are the steps you take to get there. And as get more about insight about management we have more insight into what some of those things are. What’s helpful is that we’re getting up the causal chain. Business strategy is about what you do in the marketplace but how you get to doing that is a fascinating question. That’s why I’m interested in the dynamic view of strategy."

We need to start thinking about creating unique and differentiated organisational strategies by developing best fit activities in the organisation value chain. These activities then need to provide the right outcomes which will add and create value for the business. Porter seemed to agree with this perspective too, saying: "if they’re good resources they can be an advantage, part of doing it better."
 
But as well as what our organisation needs to provide, we also need to think about how it is going to do this. So Hamel is absolutely right in suggesting that we need to set clear organisation principles. These provide an additional driver for our organisation design.

And because employees are now more important we need to include their expectations as the third main driver, so that we don't just end up trying to make horrible organisations less awful for people through things like journey mapping (putting experience lipstick on a nasty pig). Or, and this may be the one change I have come away with, we introduce more of a shared value perspective by focusing on societal expectations here.

If these three objectives indicate that we need to reduce hierarchy then so be it, but in my experience that's not the main result most of the time. What I think is a more common result is that we align our organisational groups with the business that needs to get done, including through the use of horizontal teams, networks and, as Hamel mentioned, communities. Doing this ensures that people can get their work done easily and provides a much better basis for their engagement than worrying about bureaucracy.

I think the above steps need to take place before we do anything else, but they're not the most important thing. Hierarchical thinking is a bigger problem than hierarchical structure. And sorting this is about developing David's emotional agility, Sinek's infinite game or Covey's trust and inspiration. Which could of course be principles for  the organisation design. Or simply deeply embedded leadership behaviours getting people to act differently and to provide time and attention for themselves and each other. My worry is that this is difficult to achieve unless you've got the right organisation in place first, so again, I think redesigning the organisation is the most urgent thing. But then you can move on to the most important (I admit I was inspired by SMR Covey's father) and ensure people are acting in a human way in the newly human organisation. (In The Social Organization I call this these the organisational society and architecture).


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Monday, 10 June 2019

Interview with Michael Porter (part 3)



I interviewed Michael Porter at WOBI London this week. This was partly on my main areas of interest in his work and the links between our ideas, and also the points made in his presentations and recent articles:


So to start with, there are increasing claims that it is becoming harder to gain to sustainable competitive advantages for example from Rita McGrath on the end of strategy. Are you seeing this?

MP: No, I don’t understand what Rita is saying. The data is very clear that there are wide and sustained differences in profitability in the same industry. And that it lasts for a long time, not all the time, sometime it’s easy to imitate. And it’s ubiquitous throughout the economy. And I get a little tired being everybody’s foil for everybody to make their name.

There is going to be a dynamic about how long you can sustain things. IKEA has publicly disclosed their strategy for at least 30 years and no one else has come close to it. Because the things that they do are very hard to construct and completely different to the way any other furniture company operates because they’re made those trade-offs.

Part of sustainability is about things you can control. And part of it has to do with what you’re basing your advantage on. Those things can be very different. If you’re Google and you’re competing in the search business it’s a natural monopoly, the more data you have the more valuable your search is. And if you get out ahead nobody will ever catch you. But for other things, if you just have some good people providing a certain level of customer service or support then other firms can find good people to and maybe do it even better by enhancing the technology.

I think there is a highly variable set of circumstances. Every case is different. But you do see companies that have sustainable advantage. And right now, the big GAGA, these big platform models. the whole idea is scale, if you get too big they can’t catch you because your scales too big. It’s a self reinforcing process. So for Uber, the more drivers they have, the less you have to wait, the more convenient the service, There are a lot of businesses now that people see that have these scale effects on the demand side. We used to see scale effects on the supply side but now we’re seeing the demand side can create these scale effects. The trouble with these is that we’re in another internet bubble type phase where we have all these companies that are trying to play these games and the they’re finding out they can’ make money.

And if you apply the five forces model to something like Uber, you’ll see that who is going to capture the profitability is the drivers. To make money you’ve got to able to charge a price that’s great than full cost. We forgot that during the internet period. People were keeping score and thinking you were a success if you had a website with massive number of visitors. But that doesn’t actually produce revenue.


What about the suggestions that the resource based view is becoming more important?

MP: The resources are just one level down. All the things I was talking about today, how you compete, how you do your HR, how you do your service, all those things are that strategy. That’s the choice and actual impact you’re having on the world. All the resources allow you to do those things. So if you’re going to have a superior salesforce with superior technical support then you need a certain type of resource, certain people in order to do that. It involves a set of resources and technology that enables that activity.

Competition is about what you actually do in the marketplace to achieve value for the customer. Then you back up and that’s where the resources are. All the components in the value chain are going to be resources. And if they’re good resources they can be an advantage, part of doing it better. So I never thought the resources was a competing view of strategy. It’s about the level at which you’re looking at the analysis. There is a cause and effect. We can keep on going further and further back up, keep going upstream to look at cause and causes.

We are expanding all the time our understanding of how to best configure and manage and motivate people to do these things. Right now the biggest thing about people is making them excited about working for the company and a lot of that relates to the culture view of the world. Hopefully employees will be pushing their companies to be more shared value and less window dressing. So I’m liking the trends I’m seeing now. More and more people are thinking this way.

For me it’s all about ideas. It’s ideas that move the world and it’s ideas that help people do things better. So I’m in the ideas business, with the idea that the ideas are always evolving as opportunities and technologies change.


So are things like core competencies, or McKinsey's Organisation Health an important idea in strategy?

MP: What does core competency mean, what does it really mean? It means you’ve got some asset and some way of doing something that is distinctive and unique, it’s the same thing, it really is. These people are making up distinctions that aren’t real. It’s not that they not good people I mean they’re great people. And I think different lenses and different ways of looking at things and explaining them is very helpful as it forces people to figure out what they really think and where the cause is and where the effect is and so forth. But unfortunately in the management thinking industry there’s all kind of efforts to create distinctions where maybe there isn’t such a distinction and actually it’s all the same thing.  I’m not mad at anyone, I’m just trying to help people understand not to think that if you use a resource based view of a firm you don’t need a strategy. It’s just about where the roots of the advantage are embedded.


You also suggest in ‘Towards a Dynamic Theory of Strategy’ that creating a theory of strategy involves a the chain of causality. Is it valid or useful to think about customer value chains or workforce / organisation value chains which inform your business value chain?

MP: That’s fine. Strategy is about what you ultimately do at the end of the day to compete in the market How you ultimately get there, I think there is a lot we can learn about that. But it’s so unique and there are so many different nuances.  It’s been less powerful but I’m totally of the view that to get to this kind of salesforce delivering this type of value with these kind of unique strengths there’s a long process, you’ve got to hire these people, you’ve got to figure out how to hire them and how to equip them  with technology and so forth. Underneath every piece of the value chain there’s another value chain like activity which are the steps you take to get there. And as get more about insight about management we have more insight into what some of those things are.

What’s helpful is that we’re getting up the causal chain. Strategy is about what you do in the marketplace but how you get to doing that is a fascinating question. That’s why I’m interested in the dynamic view of strategy. We also find that very few companies that have a great strategy figured it out in advance. It’s partly some core  insights that you have and then you learn how to do it better, so it’s a dynamic process.


And has the role of business leaders and CEOs been changing? For example, Gary Hamel was talking about everyone in a company needing to think strategically. Is there now a need to get more people involved in strategy, rather than just the CEO or a small planning department?

MP: In general a top down view to strategy doesn’t work so well because the people who need to work on it, need to execute it, need to contribute to it, need to be involved in fine tuning the net view.

What has always been important and always will be important that everyone involved in the company needs to understands the strategy. Somebody needs to be able to articulate it, make is explicit, make sure it comunicated, and in multiple ways engage all the different parts of the organisation. Or you’re going let each function of the company drifting off in whatever direction is cool in that function.

What do CEOs do? What’s the job, what’s success? What are the activities involved in this role and how do they work with these massive number of other people involved in these companies as they can’t engage everyone, how do they best create leverage? And strategy turns out to be one of the major uses of CEO time. Because it’s the way they get alignment and get all the people in the organisation to understand who we are and what we do and who we’re serving. Otherwise they’re taking a risk that people drift of in whatever direction is cool because they get a deal but the deal’s not consistent with the where the company is going.

Strategy is one of the tools for developing social capital, for getting alignment and most CEOs invest a lot of time in that, they particulate activity in the strategy process, they’re always out there talking about the strategy, and reminding all their employees whenever they do out and meet with thousands of people, they’re telling a consistent story and they want everyone to hear the same story.

CEOs spend a lot of time on strategy, reviewing businesses, operating reviews, they start with the numbers but also understanding how well is this business doing and why and usually the analysis ultimately it cuts through to strategy issues.

So I’m fascinated by the role of a leader in a company employing 200,000 people - what do you do? We have these enormously complex enterprises now, and lots of really small interesting companies that are growing up. But the key thing we have to have to do, we have to have some higher level guiding principles otherwise we get lost in idiosyncratic discussion that’s not anchored in the real world and what competition is really like - for example, if you are going to have a sound strategy you need to figure out what customers you’re going to serve and so on.

Ultimately, strategy is a creative act, it’s a group of people figuring something out that nobody figured out before because if someone had figured it out it wouldn’t be distinctive and it wouldn’t lead to success. So I always talk about strategy as an act of innovation, involving a lot of different people in a complex system called a company. So how do you get people opened up to think creatively?


But between creating the strategy and implementing it, does it need to come back to a small group of people or person:
 
MP: Somebody has to be able to see the whole and help articulate articulate the whole and make sure there is alignment across all the functions. Any part of a company, product department, quality control, sales force, there’s a certain logic in salesforce management and without clarity on the strategy they’ll just do that. So if the cool thing to do in marketing now is to do social media they’ll just do that. But then the question what is the purpose of the social media  and to what is it contributing and how does that work? So there is a need for a holistic thing to ensure that the whole company is contributing in some consistent way to some consistent strategic positioning.

 
And does that person who can see the whole need to be the CEO?

MP: Not necessarily, there are multiple levels of strategy, business strategy, group strategy, etc. But ultimately the CEO of that business unit is the only one who has right perspective. Everyone else at last somewhat worried about their part. They want to preserve their importance as Chief Marketing Officer or Head of Logistics. The CEO is the only one who is actually neutral and only cares about does all this come together into something distinctive and important and are we reinforcing ourselves rather than fragmenting ourselves?

You can have a lot of people involved in the process but ultimately the people need to come together with the overall company success at issues, not their function, how many people they get to hire. You need to get people away from the functional logic. So there’s a certain good practice on what a good supply chain looks like. Well, it tuns out a good supply chain really depends on the strategy. Do you need to be there every day, do you need to show up on time? - there’s lots of different variations in the supply chain. There’s no such thing as a good supply chain, only the supply chain for this strategy. That’s a point I have to make all the time because people don’t understand that.

We talked about a few other things indlcuing national competitiveness, Brexit and clusters, but I think the above points are the main ones which will interest readers of this blog.


These were my other posts on Michael's presentation:





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Saturday, 8 June 2019

More from Michael Porter: Shared Value (part 2)



Part 1 of this post described Michael Porter's points on business strategy at WOBI London this week, as well as my additions on organisational strategy.  However the session was really on shared value, but I think Porter needed to go through all of his earlier thinking in order to make his input on shared value make sense (since creating shared value is really just strategy, in an environment where the broader community is more important).


So competitive strategy is still really useful, but these days it isn't enough. There are growing societal problems which everyone is aware of, and a growing NGO movement etc.  But businesses aren't doing enough and its image and people's trust in it are declining. Young people are being turned off capitalism because it's not what they want their society to be like. Even the desire of company leaders to do something has changed dramatically.


Aside from the ongoing technological revolutions this is the biggest shift and strategic opportunity companies need to respond to. We need to contribute to society rather than greedily take away from it.  Business is the only instrument that can meet needs like this at scale, whilst also making money. Doing this means that we need to link society and core business strategy. We can then regain the acceptance of capitalism, and make our businesses more strategically successful too.  


Creating shared value takes our involvement in society to a new level. It addresses societal needs through business and the business model - doing this and making a profit, seeing it as part of doing business. So not just doing business and making a profit but innovating the way a company is dealing with a social issue at a profit. It moves business from Milton Friedman's concept of business just being to maximise profits, and where philanthropy is not our job, as well as from a focus on CSR which is often just window dressing and gives away money rather than earns it, and even having a social purpose which tend to be very vague, and doesn't connect with the business or how to succeed. Can shared value be something customers value, or a differentiator for the business?


Walmart is a good example. It used to be seen as company than exploited its workers. Now it pays better than average, and has introduced career paths so that lower grade workers do not get stuck. But of course, this is really just what Walmart should have always been doing anyway. So actually, all CSV is, is doing business strategy with an eye on the broader community. Or perhaps recommending a shift from low cost to differentiated competition.

And, of course, companies are only going to invest in shared value when they make a profit too. If one opportunity comes with high shared value but a low or long-term profit and another with low shared valued but high and short-term profit it's obvious which they're going to pick. It's still an inelegant way to help the world do what it needs to do. We really need to be putting that extra value at a higher, or at least at the same level as the profit.


And Porter suggested that investors are crying out for companies to do more of this, and talked about Larry Fink's letter to CEOs. But that wasn't received uncritically. Or look at the problem Paul Polman had at Unilever trying to get their investors to back that company's social approach.

It's why on balance, that for the workforce at least, I still prefer my approach based on the organisation value chain which I addressed in my last post. I like the way shared value sees people as an intrinsic good not just an instrument to achieve profit. But companies are only going to invest in shared value when it provides profit anyway, so this is a very minor distinction. And I think the organisation value chain helps companies understand the investments they need to make more clearly.

Part 3 of the post will focus on my press interview with Michael. Up next.

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Friday, 7 June 2019

Me and Michael Porter on Strategy (part 1)



I last saw Michael Porter present at the CIPD conference in Harrogate over 20 years ago and seeing him speak again was one of my main reasons for attending WOBI.  And if you're wondering, given the title of the post, no, I wasn't talking with him (you'll understand the reason for that title later on). Porter kicked off with an overview of his ideas on strategy, which were good to hear again.


Business strategy is about deciding on whose needs and which customers you are going to serve and then on how to do this uniquely well. If you're going head to head you're not going to win. Mission statements, a desire to be #1 or 2 in a market, etc, are not strategies. Strategy is a concrete set of choices about your business in order to deliver unique value to whatever customers you want to serve. You can't serve all customers or meet all needs so you need to be distinctive about where you're going to play.
 

If you compete on price and that's the only thing then Porter feels sorry for you as you're likely to enter into a race to the bottom. So ideally you want to differentiate, to create something unique about you meaning that you can charge a premium price. This depends on a unique value proposition supported by a value model which enables you to deliver the unique proposition efficiently. Often this will require trade-offs too. And everyone needs to know the answers to these questions or your sales people will go and talk to the wrong people etc.


Ie you need to tailor the primary and support activities in the value chain around this proposition. Eg how do you manage your human resources and what type of human resources are you trying to attract? You can't do what everyone else is doing. This provides a new operating model. 


Strategy is not execution. Porter hears things like it's all about execution, and execution eats strategy for lunch that it doesn't even bother him any more. But choices are different to execution. If you can't figure this out you've got a problem. There's no one best strategy, just whether it offers unique value to the customers it wants. And integrating these choices through the value chain and activity system to provide fit. There's no such thing as a good Marketing or HR strategy, only good HR for the overall strategy, so it all fits together as part of an overall holistic system.


I really enjoyed the session and was disappointed to overhear a couple of people later suggesting it was like listening to their lecturers at college. I wanted to tell them: believe me, your lecturers weren't even in the same galaxy as Porter. And what did they expect anyway. As Porter said, strategy is used too loosely, at a very high level. But it's actually incredibly specific. About how it relates to your industry, your choices and how you position yourself. If you're Simon Sinek speaking about a need to change your mindset you're just going tell a few stories (this is me again now). If you're Gary Hamel and you want to get people excited about a problem that doesn't really exist then you're going to share some research evidence and case studies.  But if you want people to understand a precise way of doing strategic management then you're going to need to share some models.

(This is probably also the reason that the leadership competency framework used by Hamel in his presentation only showed 'Thinks strategically' as an executive level competency.)

But I suppose the main reason I enjoyed the session is that I often talk and write about Porter's ideas, in fact, this, coincidentally, was published today. Please do go there and read it as you'll want that background to fully understand the rest of the post. Because I also apply Porter's thinking and models to HR and organisation design.

In ‘Towards a Dynamic Theory of Strategy’ Porter writes that his thinking recognises his value chain is based on a chain of causality:


"A fundamental issue in creating a theory of strategy is where to focus the chain of causality, A stylized example will illustrate. We might observe a successful firm and find that its profitability is due to a low relative cost position compared to its rivals. But the firm's cost position is an outcome and not a cause. The question becomes: Why was the firm able to attain this cost position? Some typical answers might be that it is reaping economies of scale, or has moved aggressively down the learning curve. But again, the question becomes why? Some possible answers might include entering the industry early, or the firm's ability to organize itself particularly well for cost reduction. Once again, however, the question becomes why? And we could continue moving along such a chain of causality even further. 

The literature in both strategy and economics addresses many different points in this chain of causality. Indeed, many differences are less conflicts than theory positioned at different points in the chain, as we will see later. Any theory of strategy must grapple with how far back in the chain of causality to go. The answer may well be different for different purposes. A theory that aims very early in the chain may be intractable or lack operationality. Also, aspects of the firm that are variable in the long run may be fixed or sticky in the short run. Conversely, a theory oriented later in the chain may be overly limiting and miss important possibilities."



I use this argument to suggest a sequence of four value chains (taken from The Social Organization), and in particular that there is an organisation value chain. This chain describes the inputs, activities and outcomes that relate to the management of people within an organization.


Organisation strategy is about deciding on what needs in your business you are going to serve and then on how to do this uniquely well. It is a concrete set of choices about your organisation in order to deliver unique value to whatever business needs you want to serve. You can't meet all needs so you need to be distinctive about where you're going to play.


If you compete on cost and that's the only thing then you're likely to enter into a race to the bottom. So ideally you want to differentiate, to create something unique about you meaning that you can provide a premium contribution to your business. This depends on a unique value proposition supported by a value model which enables you to deliver the unique proposition efficiently. Often this will require trade-offs too. And everyone needs to know the answers to these questions or your managers and business partners will spend time with the wrong people etc.

Ie you need to tailor the primary and support activities in the value chain around this proposition. Eg how do you manage your HR department and what type of HR people are you trying to attract? You can't do what everyone else is doing. This provides a new HR operating model.

Strategy is not execution. Choices are different to execution. There's no one best strategy, just whether it offers unique value to the business it supports. And integrating these choices through the organisation value chain and activity system to provide fit. The organisation strategy describes good organisation and people management for the overall strategy, so it all fits together as part of an overall holistic system.

Ie most of the logic used by Porter for business strategy applies really well for organisation strategy too. In fact this is the way I suggest we deal with Hamel's point that whilst business models have changed, organisation models haven't. It's because not enough people understand or use tools like the organisation value chain to change and develop best fit, differentiated value chains. My and Michael Porter's logic shows the way to do this.

I had a press interview with Michael Porter at the conference and asked him about the above. However. I'm going to report on that later on...








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Thursday, 6 June 2019

More from Gary Hamel and Humanocracy @WOBI #WBFLON (part 2)



This is the second part (part 1 is here) of a review on Gary Hamel's session discussing Humanocracy at WOBI's first conference in London. I've been trying to be really appreciative, as I do think Hamel makes a lot of sense (the fact that I've felt the need to do two posts on one session is evidence of this), and also critical, where I do have other views.

But one of Hamel's points which I really, really agree with is about the importance of principles (for any problem, you need principles, processes and practices to provide performance). Hamel suggests that the principles of bureaucratic organisations get in the way of change and innovation, and in people bringing their passion and creativity to work. We therefore need new principles for post-bureaucratic, humanocratic organisations. I completely agree with this - principles are part of the secret sauce of organisational transformation and are generally much more useful in gaming traction that organisational value.


(However, Hamel talked a little about Ray Dalio from Bridgewater who is probably most famous, in OD circles at least, for his list of what is it, a hundred and something principles. Don’t do that - 10 is quite sufficient. But I did like Bridgewater’s use of ‘dots and polls’ where people give their colleagues a rating against 7 or 8 criteria during the normal course of work. The average person gets well over 2000 ratings during a year. This helps separate competence and entitlement, and supports the development of different hierarchies for different things.)

But whilst I support the idea of meritocracy, I don’t see the problem with using hierarchy to get it. Hamel suggested bureaucratic organisations, the bigger the title the bigger the decision but this doesn’t need to be the case.

Hamel talked about one organisation which sent out a competency framework to 70,000 employees, therefore telling them that 95% of the organisation doesn’t need to worry about new business models or unmet customer needs. But that’s actually much more about the challenge in fitting something meaningful into one slide. All employees need to do strategic thinking but the organisation doesn’t expect the same level of competence it does from executives.


Hamel also suggests that by the time an organisational issue has captured attention at the top it’s often already too late to take advantage of it. But there’s nothing in hierarchy which says all decisions need to be taken by the CEO.  Plus these days there are ways of getting that information shared around quickly. And hierarchy doesn’t stop everyone acting as leaders, or the top team acting as a team.

And there’s an article by P&G’s former CEO AG Lafley in HBR suggesting that there are some opportunities only CEOs can see, some calls only they can make. Which Hamel calls horseshit. So who are you going to ask about whether you should acquire another company or another big strategic issue  in the business then? For me, bigger titles will generally take broader decisions because they have a higher level (strategically, not just hierarchically) perspective, and this will often correlate with bigger decisions too. But that’s not the intent of logic of the allocation. Anyway, I’m going to ask Michael Porter about this today and will report his view back to you to.

I do, however, particularly like the inclusion of community in Hamel’s post bureaucratic principles. The UK is undergoing a loneliness epidemic (I spoke about this on a webinar last week). You would imagine that organisations are a place that people can find connection. But it turns out not. Only 2 out of 10 employees have a close friend at work.

Today’s problems cross functional boundaries and we need to build up social capital - employees who care about each other, trust each other, are emotionally invested in each other and are therefore more prepared to go the extra mile. Without this, businesses can’t solve these new problems.

I also liked the suggestion that moving to humanocracy needs to be human and social too, about building a coalition of the willing by starting with the people around you. People who have power are often reluctant to give it up. Don’t expect change to come from the CEO or HR (ahem!).

There was a lot more but I’ve summarised more than enough. My final and very small point would be that whilst I’m a great fan of Hamel’s work, particularly The Future of Management which I still think is brilliant, and I’m eagerly looking forward to reading Humanocracy as soon as I get a review copy, I do wish he wouldn’t talk about humanocracy in such a hierarchical way (non stop, no questions, no interaction). Both Susan Black and especially Simon Sinek actually demonstrated humanocracy in practice much, much better.

Read more on the need for principles, community, and social capital and network based change in The Social Organization. I do write about reducing hierarchy too but for me, modern organisation design isn’t as simple as moving from hierarchies to networks. Instead, we need to supplement (not replace) traditional functional design (which I don’t think has to be inhuman or bureaucratic) with horizontal teams, communities and networks, but tend to be less hierarchical. Delayering or moving to self management is often a result not the objective of good design.

And often, it’s no organisation design which is required. We just need more of that emotional, social and prosocial perspective Hamel, David and Sinek all talked about - Sinek probably the most clearly. I’ll be posting on that next...

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