It has become very fashionable to talk about disruption and I am cynical about fads. Having said that I saw this image, drawn by Richard Watson, which shows the sheer volume of disruptive forces. The implications for almost any organisation are potentially game changing so what role does HR need to play?
The implications are that organisations cannot treat disruption as a project after which everything goes back to normal. Instead they have to create a new capability within their organisation, not to respond to disruption, but to be the disruptor. Indeed if we define HR’s purpose as ‘not doing HR stuff but building the capability of an organisation to deliver its strategy, then building a disruption capability surely has to be one of HR’s key roles.
So what do I mean by a capability? It’s more than a bunch of people. It’s something that operates across the whole organisation, which is difficult to copy, is systemic and interdependent and is made up of a set of interlocking elements. I am agnostic about different models but I like McKinsey’s 7S model. Strategy drives the staff you recruit, their skills, their style, the organisation’s core systems and structures as well as its shared values (I prefer the word culture but a 6S and 1C model doesn’t sound as elegant). This is a tool beloved by all strategy professionals but which element isn’t core to what HR does?
This has a major implication for HR. HR is not just the people function. It’s the people and organisational function that isn’t driven by so-called HR best practice but by the organisation’s strategy. I would argue that for any organisation these massive disruptive forces in the external environment must be a factor in driving its internal strategic response and therefore where HR needs to focus. This response must be tailored to your current capabilities as well as your desired future state so there are no universal answers. I would however highlight four implications: hyperawareness, collaboration, agility and risk taking.
In terms of staff you must look beyond technical skills, important though they are, to recruit people who welcome disruption, whose style is curious, courageous and flexible. This is where cognitive diversity moves beyond political correctness to become a business imperative.
In a world of disruption it’s not at the centre that change is happening but on the peripheries of your organisation, where weak signals give a hint of what’s coming. You need to ensure you are picking up these weak signals through your people’s insights, hyperawareness as someone called it.
In Zara shop assistants are trained to ask customers questions about what they plan to buy in the future. These are fed back into the store manager who in turn feeds them back into HQ in Spain. These insights are analysed in real time to respond almost instantly to changing customer needs. Zara’s hyperawareness is a deep capability that allows them to disrupt their industry by getting from design to shelf in 25 days, but what is also interesting is it is an established business in a very traditional sector. Not all disruptors have to be high-tech start-ups but if you’re not thinking about disruption there’s a danger you’ll be skewered by some new technology you’ve never even heard of.
There has been a lot of debate recently about performance management but the debate has been side tracked into whether to use ratings or not. What we should ask is ‘how does a system like performance management support our strategy?’ The cloud has meant Microsoft needed to move to a collaborative capability but their old ‘stack ranking’ approach drove internal competition. They’ve redesigned their whole approach to performance management not based on whether to get rid of ratings but on how to drive collaboration. Between 2012 and 2014 they measured dramatic increases in collaboration in part down to changes in their performance management system. HR needs to look at all the organisational systems, compensation and bonuses, planning and budgeting, especially strategic workforce planning, and ask if they support our ability to disrupt.
A key implication of disruption is the need to be more agile and organisations like Spotify have created more agile organisational structures based on clear principles, autonomous but aligned squads, rapid prototyping using ‘scrums’ and leaders who are coaches not managers. But I hear you say ‘that’s easy in a small start up like Spotify’. What’s interesting is how a large bank like ING, which can trace its history back to 1845, has adapted agile to a very traditional business.
Finally let’s look at culture, especially how to encourage risk taking. If you look at companies that are good at innovation such as 3M it’s their culture that sets them apart. In the case of 3M this is part of their heritage dating back to one of their longest serving leaders, William McKnight who established a set of principles that encouraged collaboration but also tolerated failure: “Management that is destructively critical when mistakes are made kills initiative and it is essential that we have many people with initiative if we are to continue to grow”. In 3M there is a recognition that risk taking will result in failures but failure is seen as critical to the process of innovation, ‘fail more often so you can succeed quicker’. What other organisation would tolerate Spencer Silver’s failure in developing a glue that didn’t stick? They would have missed the Post It Note.
In conclusion if HR has an internal locus focused on doing the sort of HR stuff that HR does it is doomed not only to irrelevance but to become a blockage in helping their organisation deal with a totally disruptive environment. HR needs to focus on bringing an outside in view of the world helping the business to build a disruptive capability where disruption becomes the new normal.
* Article first published by DANSK HR, October 2017Back to top