Strategic Response - Andrew Marritt

Third in my series of an ongoing attempt to respond to the wonderful comments that are being offered on the “Strategic HR” series.

Andrew Marritt is a bright light in the chaos of the blogosphere. His biography describes him as an economist by training, which is a rare starting point for a career in the qualitative world of HR. I started reading his blog (Resourcing Strategies) before I started writing my own, and often have felt that the clarity of his thinking and force of his arguments would be a high standard to meet indeed. Andrew works for a big company (another situation where I could tell you more, but then he would have to kill you and me both). He works in the recruigting department there, and therefore has an inside scoop on the realities of trying to make HR a strategic corporate asset.

Andrew and I have always had a cordial correspondence, but in his comments to my post It's Not About the Plan Andrew really let me have it. I can’t tell you how excited I was to get his comment. Andrew is absolutely spot-on to question whether I know what the hell I am talking about. I tried to clarify some of what I am trying to accomplish here , but his detailed comments deserve specific treatment.

The traditional media view of strategy being set from on high is only partly accurate. Mintzberg's excellent book 'Strategy Safari' is a great overview of recent strategic thinking. Many models of strategy are based on strategy being set at the front-line in response to changes in the market. Strategy is itself only worthless if you take a narrow definition of strategy and view that the company has no influence on the market.

My overall point is that strategy is worthless without execution, not that strategy in-and-of-itself is worthless. But the larger point is that all strategy must flow from purpose, and in the modern corporation, it is the chief executive’s job (in concert with the shareholders via the board) to set the purpose and direction of the company. Someone has to provide clarity about the business that the corporation is in, why that business is compelling for investors of all stripes and why they think the corporation can win over there an extended period of time. I am not advocating for a top-down strategy model. In fact I believe in the models that Malone describes in his book The Future of Work (http://ccs.mit.edu/futureofwork/). I am at a loss to respond to the specific issues raised in Mintzberg’s book (as I have not read it), but I have a hard time believing that he is advocating that executives abandon the responsibility of setting the strategic context for planning.

However, you do raise some excellent points. First, any effective strategic context allows for the rapid redeployment of resources, capital and talent by front-line managers. In that case it can be said that the strategy has been shifted from the bottom-up. But I don’t think such a change occurs in a vacuum. The designers at Apple may have secretly been developing a really cool new computer under their CEO’s nose (the first iMac) which would take Apple away from its more corporate-centric strategy back towards the consumer. But they didn’t develop a new tool to tune cars and insist that Apple was now in the automotive business. The overall context has to remain coherent, and the context starts with the definition of purpose. On the flip side, the corporate anti-bodies that usually prevent rapid responses to changing market demands or opportunities can often tie their destructive behavior to a slavish devotion to some charter or overall strategy. Witness PARC’s failure to bring out the first Mac – the business people running the research department thought they were in the business of making copiers, so all the great stuff out of PARC went elsewhere (Ethernet to 3Com, GUI to Apple, etc.). It was only once Xerox realized they were in the information business that they were able to explore the depths of what PARC had to offer.

Your description of a McKinsey view of strategy is misguided. Most consultancies will view stakeholders as the focus, as illuminated by Kaplan. See Strategy Maps for a good overview. Secondly, McKinsey's own 7S model would show that for a long time shareholders have not been their only view. Your comments, however, might be applicable to Mercer and their shareholder value approach.

I wasn’t commenting on how McKinsey views strategy. I was commenting on how they sell the results. CEOs do not engage in large strategy projects unless they can go to the board with a return for the shareholders. I understand how the strategy process works in most places. But I also understand that at the end of the day, capital is king. If it isn’t going to inflate the share price it probably won’t get done. Again, I am talking about large-scale strategy projects here, not about a localized, functional or departmental strategy development process.

Companies have strategies. For a department like HR there is an interest in being strategic. I would argue that this is ensuring that departmental approaches are aligned to the company strategy, not strategy in their own right.

The topic is broader than just an aping of corporate strategy. Getting the HR strategy aligned with the corporate strategy is absolutely critical, but getting HR to be a player at the corporate strategy development table is a more complex and (IMHO) important topic. HR is often not viewed as strategic because the leaders in the function don’t have the credibility to be at the table, not because they can’t hire a firm to publish a plan that is coherent with the strategic direction of the organization.

Given that I would argue that your view of strategic is not whole. Customer facing staff may ask your decision and take advice yet that advice might not be aligned to the business strategy. In a certain stages of industry maturity the business strategy may focus on cost reduction or leaving a market & therefore the desires of the front-line staff might not in themselves be aligned with the strategy.

I was never advocating for HR to be outside the strategy tent. With the exception noted above (line management or workers taking strategy into their own hands to take the organization in a different direction), all departmental and functional strategy should flow from corporate strategy. But that still doesn’t answer the questions around translation of strategic to tactical, the proper valuation of an individual’s contribution to strategy and the willingness of the people developing the corporate strategy to hear your point of view. I am certainly open to the fact that my definitions and exploration may not be creating a whole picture, or that my definitions may not whole. But since most strategy consulting firms don’t sell translation capability, valuation metrics or the political skills to change people’s perceptions of a role, I stick by the fact that most strategy development leaves a lot wanting.

Some resourcing initiatives can be described as strategic. Identifying where to build a centre or where to locate a team based on labour market data could be described as strategic. Taking a team from a competitor which a gave dramatic increase in market share might be viewed as strategic if without that hire the market would be difficult to enter.

I agree with you. But none of that changes the view of HR as a strategic asset. I have worked with many HR departments that have done all of the things you list and still find themselves on the outside of the overall strategy development process. The outcomes you describe are all strategic (in that they increase investor value – I don’t know that any of these outcomes would produce sustainable advantage). But this doesn’t make HR strategic.

I'm not arguing that most use of the term strategy in HR is nothing more than misguided, nor am I suggesting that implementation is not more valuable than strategic analysis. What I will through out is that without solid strategic analysis your implementation might be the wrong thing implemented in the right way. The two need to go hand in hand.

Well said Andrew! Thanks again Andrew for the wonderful comments. I really appreciated them and hope that this response sheds some light on my meaning and intention.

Comments

[Andrew Marritt]

Brilliant response - if you weren't at the other side of the world I'd buy you a beer. Maybe one day.