Wednesday 20 January 2010

European HR Directors Business Summit: Thomas Stewart and Dave Ulrich on ‘Capabilities’


    I’ve just got back from the last couple of days out at the HR Directors Business Summit in Birmingham, UK.  I’ve got a couple of posts coming up but wanted to start with the role of capabilities which were a key theme in both Thomas Stewart’s opening, and Dave Ulrich’ closing keynotes.

You know Ulrich, but might not know Stewart.  He used to be editor of Harvard Business Review and has written two very insight-packed books, ‘Intellectual Capital’ and ‘The Wealth of Knowledge’.  He now works as Chief Marketing and Knowledge Officer for Booz & Company.

I’ve long been supportive of Stewart’s writing – and included one of his quotes in my HCM book (pictured above).

In Stewart’s words, capabilities are a ‘source of essential – as opposed to transient – advantage’ - they ‘shape the right to win’:


Ulrich emphasises that capabilities are outcomes – which provide a more appropriate focus than activities.  But I think both speakers would agree with each others’ descriptions.

Beyond these points, however, Stewart and Ulrich mean quite different things.

For Stewart, capabilities are tools, processes and people:


For Ulrich, capabilities are more like behavioural competencies, ie social (inter-personal) rather than technical, but organisational rather than individual.  They’re what you should see as the focus of an HR vision:


Out of these two definitions, I prefer Ulrich’s definition of capabilities.  Take a look at some examples:

  • Talent: intellectual capital, know-how, competencies, skills, commitment,workforce
  • Speed: agility, adaptation, flexibility, cycle-time, responsiveness
  • Share mindset: Culture change, transformation, firm identity, firm equity, firm brand, shared agenda….


These capabilities are really just about people (or at least the ‘organisation’ – rather than the ‘business’).  And I think that’s what they should be.  People really are the ‘source of essential – as opposed to transient – advantage’.   They are ‘our most important asset’.  They are the providers of our organisations’ capabilities.

Of course, the people focused capabilities need to be supported by the right processes and technology.  But in my view, we should select our capabilities based upon our people, and then worry about getting the right processes and technology, not mixing these all up beforehand.

My support for Ulrich’s form of capabilities is why I focus so much on human, and on social, capital – which I think are the two most important aspects of capabilities.

Where I disagree with Ulrich is his view that capabilities are “what line managers think will make the company successful”.

Behind this is Ulrich’s view that value is defined by the receiver (the business) more than the giver (HR).  I think this is a problem - yes, of course, HR needs to listen to, and satisfy, the rest of the business.  But…

Ulrich uses talking to his children as an analogy for this. If he says ‘clean your room’, they say ‘get out of my room’ and the conversations doesn’t go anywhere.  You can’t impose value on someone.

I don’t get the analogy.  You can’t impose room cleaning on your children (I can’t on mine anyway) but you can educate and incentivise them to want to do this for themselves (OK, that’s the theory anyway).

HR can educate business leaders and managers too.  It can propose certain capabilities to the rest of the business, it can explain how these capabilities would create value for the business, and it can identify the actions that can be taken to develop the capabilities which have been agreed.

HR can create value, as well as add it.  And it’s by creating value, proposing these opportunities for competitive advantage to the business, that HR becomes truly strategic.  Until this point, it’s still just a more up-market order taker.



Tomorrow I’ll provide a little more on Thomas Stewart’s definition of capabilities (which I still think is extremely useful for HR to understand) - taken mainly from a one-to-one meeting with Stewart following his session.

I’ll also be attending a seminar organisation by Kenexa, so I’ll probably be posting on that.


Then there will be more posts reporting on and following on from the HRD’s Business summit going into the weekend.  So keep tuned for more.





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