In an exclusive interaction with Human Capital, Dave Ulrich, Rensis Likert Professor at University of Michigan, and Co-Founder & Principal of the RBL Group, shares compelling insights into the emergence of a new organizational form and its far-reaching implications on HR, why agility is the name of the game in today's dynamic and disruptive world, the need for HR practitioners to become organization architects, and how to adapt to an ever-changing work scenario. Get ready to inspired and enriched as the world's leading business thinker and management guru, who is also popularly revered as the 'Father of Modern HR', blazes a new path to navigate the changing paradigms in HR.
In your recent book "Reinventing the Organization", you critically examine the emergence of a new organizational form called the “Market-Oriented Ecosystem (MOE)”. What are the key building blocks of a MOE?
Any successful organization has to adapt to its context. Everyone acknowledges that business contexts are characterized by incredible change, uncertainty, volatility, etc. (VUCA on steroids). In almost every industry, there are many organizations that did not adapt to changing times and are now gone. But, there seem to be other organizations that have learned to survive, and even thrive, in the new business contexts. Arthur Yeung (senior advisor to Tencent and senior author of this work) wanted to discover why a handful of large organizations are doing so well. We found some of these organizations in China (Tencent, Alibaba, Huawei, DiDi) and some in the US high-tech sector (Amazon, Facebook, Google). So, we dove deep into these organizations to discover what they were doing. We uncovered what we consider a new organizational species called the “Market-Oriented Ecosystem (MOE)”. While many have experimented with parts of this new species, such as holacracy, exponential, amoeba, network, boundaryless, and so forth, we were able to synthesize and distill the principles of this new organization species.
In your book, you also write that “Agility seems to be the capability du jour”. Could you elucidate this? Also, how can HR professionals adopt agile methods and mindsets to survive and thrive in today’s fast-moving, complex times?
We found that the exemplar MOEs we studied had four critical capabilities: external sensing or the ability to acquire and use the information for decision-making; customer obsession or anticipating and delivering on customer expectations; innovation everywhere—from product to service to the business model; and agility.
Agility refers to the organizations’ ability to focus on the future, anticipate opportunity, move quickly, and learn always. These agile principles show up in strategy, organization, leadership, and individuals. They are reinforced and sustained through HR practices around people, performance, information and work. HR professionals with a complete roadmap of agility can instill this capability into their organization and ecosystem.
What are some of the common mistakes that you see large organizations repeatedly make in understanding the new workplace and workforce dynamics?
Sometimes, leaders try to solve new problems (e.g., to move quickly) with old solutions (e.g., using managerial processes of the past). When the external context is dramatically shifting, leaders need to reinvent how they respond. The MOE draws on legacy organization ideas but reorients those ideas to help the organization win in the marketplace. For example, the concept of “headquarters” as the top-down governor of resources in finance, IT, HR, etc., is replaced by the idea of a platform of resources that deliver value to customers through dedicated teams or cells. These market-oriented teams anticipate and respond to customer requirements quickly; then the MOE connects the independent teams or cells into an ecosystem to share information about customers, innovation, and agility experiences with one another. This way, the firm is both small and agile (with customer-centric teams) and large and scaleable (through the ecosystem).
What, according to you, are the most critical competencies for HR practitioners today? Also, how can HR leaders change negative, outdated perceptions about Human Resources to gain more influence and impact?
We have studied HR competencies for 30 years over 90,000 respondents in every part of the globe. We have focused less on the description of the competencies and more on the prescription for which competencies deliver which outcomes. We found that if an HR professional wants to be personally respected, s/he needs to be a credible activist. If s/he wants to deliver value to customers and investors, s/he needs to be a strategic positioner. If s/he wants to help their business deliver financial results, s/he should become a paradox navigator.
We also found that the quality of an organization (capability) that the HR professional helps create has four times the impact on business results than focusing on the individual (competence). Yes, four times! So, we see HR professionals needing to become organization architects even more than talent managers. We are beginning the next round of the study, and we hope anyone interested in joiningus would be in touch. Mike Ulrich is the project director for this next round ([email protected]).
As we step into the 2020s decade, what are the biggest trends and themes you’re watching out for in the HR space?
I think that the overall message for progress has been for HR to deliver value. And, many have worked on this HR value agenda for a long time by focusing on HR administrative efficiency, HR functional excellence, and strategic HR. We see the next pivot being HR outside-in, which means that HR professionals look beyond (or through) the strategy to customers, investors, and communities to identify emerging trends as the criteria for good HR. In addition, we see HR moving beyond merely the talent agenda (which is important) to deliver value through individual competence (talent) and organization capability (culture). We envision HR professionals at all levels of a company diagnosing and delivering value through talent, leadership, and organization so that customers, investors and communities are well served.
In workshops with both business and HR leaders, I often start with the question, “What is the most important thing your company (or HR department) can provide employees?” The answers are almost always around vision (meaning, purpose), growth (opportunities to learn and develop), and community (teamwork, partnership). I don’t disagree with these wonderful HR outcomes, but for me, the most important thing leaders and HR professionals deliver to an employee is an organization that wins in its marketplace. Unless and until the organization wins, the other very valuable employee experiences don’t happen
I also envision that the passion for HR technology and analytics will combine to go beyond descriptive HR work (e.g., a leader has these competencies) to a prescriptive guidance system (e.g., a leader needs these competencies to win with customers and investors). Finally, I believe the best for HR is yet ahead as HR departments, practices, and professionals strive ever more consistently to create value for all stakeholders.
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