Talentism

John O'Neil: Leaders

I had the good fortune to get to know John O'Neil during my start-up days. His wisdom, grace and humility belied a keen intellect and broad understanding of business. I just ran across one of John's most recent articles entitled "Virtues and Character Markings of Future Leaders", and I highly recommend it.

John's vision of leadership is spot on. I would love to say that there is no way to run a successful creative age organization without following his advice, but Apple proves that is not true. Even so, the Apple model is not broadly replicable. But we could see a lot more profitable companies if we followed John's insights.

Declaration

(Author's note: This is an essay about the urgent need to challenge the assumptions that limit businesses ability to sustainably create wealth. I am not attempting to justify the morality or rationale of empire, or make a case for colonialism. The reader’s temporary suspension of resentment against, or devotion to, the founding fathers is deeply appreciated.)

233 years worth of yesterdays ago, a group of rebels made a simple declaration: "The assumptions are wrong." We call them patriots, but on July 4 1776 many thought of them as heretics. Our founders were questioning the very foundations of a system that was taken for granted as essential for safety and commerce. But the system couldn't adapt and so it was challenged.

Our "traitors" weren’t just demanding lower taxes or a chance to have their voice heard.  They were demanding that the very people who had profited most from British colonial rule challenge the very assumptions by which they had been granted power and influence. They were asking people to question themselves and the world they lived in.

The British monarchy had delivered wealth and power to its figureheads and supporters. And the people who were challenging that system, our founders, had prospered under that system. They were challenging themselves.

It is difficult to conceive just how extraordinary it is for a group of people invested in the status quo to stand up and proclaim "The assumptions are wrong." And yet that is exactly what gave the founder’s Declaration power and resilience: the insurgents were the insiders. The Declaration was created and supported by the elites at the core of the establishment. This insider status gave credibility to their revolt.

When the pillars of the establishment say “The assumptions are wrong”, if those most invested in the present system are willing to risk their prosperity for a better future, even though the fruits of that future be nothing but dreams and promises, then perhaps that is worth notice.

Our elites, our founders, stood and claimed "The assumptions are wrong." They stood against the long-held belief of the inevitability of monarchy and enumerated many complaints against the status quo. Perhaps the most compelling of those arguments was that their comfortable system, the system of divine monarchy that had made most of the insurgents powerful and rich, was not suitable for the future. A young people, standing on the edge of an entire continent of wealth and opportunity, yet to unleash their full creative potential and to bring forth a greater prosperity than could have been imagined before; those people could not achieve their potential under the yoke of tyranny.

The heretics challenged the assumptions of power by asserting Locke's argument that power arises from the governed, not the government, and only the governed can grant license of power through their own free will. Yet the desire that compelled that argument from theory to practice was a feeling that the people needed to be free to do even more. "Unshackle us so that we may rise to the opportunity offered by our future." The old system was holding them back.

And so America’s founders acted upon the belief that more people would receive more benefit over time from a new system based on new assumptions than from the old system based on old assumptions.

The assumptions they challenged had been withstood the tests of time, written in stone in churches and meeting halls in countless cities on every populated continent at the time. These shibboleths had fostered a set of institutions, structures, principles and cultural norms that were successful by many measures. The old assumptions, that all power derived from monarchs, that those monarchs were unassailable in their wisdom and purpose, and that there was no law greater than the monarch's will... those assumptions had lead to the defeat of the Spanish Armada, the discovery of new lands and the enrichment of many people.

Were the founders crazy to question their benefactors? Weren’t they sure to kill the proverbial goose that was laying their golden egg? Are people who stand to profit from the present crazy to demand a different, better future? Certainly. But the belief that the monarchical system was more limiting that a democratic system was ultimately proven to be true. Only time tells whether one is crazy or visionary. 

Today, 233 years and some days later, here we are, pillars in a system of our own making, a system that is showing signs of wear and that may no longer be equipped to deliver the most benefit to the most people. That system is the western economic system of business, our business system. It is a system based on certain assumptions: the efficacy of central planning and central control, distributed power that is granted from the top, distribution of wealth largely based on fealty to the system and ability to manage personal risk, selection based on congruity to past masters, the primacy of profit over purpose, functional alignment of work, and workers as important, but ultimately interchangeable, pieces of a whole. These assumptions, and the system they helped create, have produced an extraordinary amount of wealth and progress for millions of people. It is not a system to be challenged lightly.

And yet the future we bequeath to our children must provide at least as much opportunity as the past and present that were created for us. We cannot sit idly by and ignore that the business system is rapidly coming unhinged. Its not just perp walks and bailouts and the growing disparity between rich and poor and the extraordinary amount of waste that is being poured into our skies and streams. It is not just our feeling that business institutions are not worth the investment of our hope and spirit, ineluctably devolving from creators of wealth to temples of mindless greed and intellectual torpor. Those reasons have meaning, but ultimately they are tainted with outsider reasoning and outsider language. The people within the present business system, the ones chartered by the system to protect the flanks and staff the barricades, can easily dismiss the critiques of those who have little invested in business’s success even as they demand cheaper products and services.

Intellectual insurgents such as Gary Hamel and Michael Malone have sought to work within our present system, to participate and therefore become accepted, only then to point out that the present system isn't working well for ANYBODY. Hamel helps managers understand that companies that challenge the old assumptions are doing better over the long run. Malone helps us to understand how many different ways there are to organize work, and how authoritarian systems are not always the fastest or most efficient. They have delicately sought to point out that the present system all too often has not produced optimal returns on investment, not generated the needed levels of innovation and failed to create a platform for sustainable profits for the next 5 years, no less the next century.

And yet, those gentlemen, mighty as their pens may be, are ultimately ensconced in their ivory towers. They are people who have the time and luxury of developing theories and challenging dogma as academics and executive consultants. This is what is expected of them. And their contribution, while significant, still lacks the credibility developed by the people who struggle and innovate to survive as they serve internal and external customers. If the revolution is going to turn from declarations to a constitutions, then we must include the property owners, pamphleteers and generals. We must find our Washingtons, Jeffersons and Henrys.

These new business insurgents must confront the present business system’s inability to meet with increasingly unpredictable and complex change. They must proclaim that what the 21st century business system, the new way, needs is institutions, principles, structures, strategies and owners who evaluate financial and legal risk, market opportunities and brand identity through the lens of talent first and foremost, and not only through the lens of lawyers and accountants. Who view all people, whether they be customers, shareholders, employees or contractors, as investors who are freely giving of their own time, attention and money based on a expected and personally relevant return. Leaders who are clear with everyone about the purpose of their enterprise and what that means for all investors.

These heretics will demand that the needs of the talent investor be brought into alignment with the requirements of the financial investor with the demands of the customers investor, and that all three will be aligned by the defined and practiced purpose of the enterprise, not by get-rich-quick schemes and the worst devils of our nature. Marketing will be a two-way, transparent dialogue between the different investors, and PR will constantly be asking questions rather than trying to create an emotional need for something of little value.

The new founders will say enough to our consumerist miasma, which has built so many  chimerical organizations and so created so much unnecessary suffering. They will demand the end of a system that mindless seeks to profit from people who are buying things they don’t need, with money they don’t have, from vendors they don’t trust. And finally and perhaps most importantly, these founders will see that it will no longer be advisable to achieve individual prosperity by shifting costs onto communities, burying the inefficiencies and waste of their operations and processes in the air, the water and the people.

It feels a fleeting dream, all the more so because this revolution will not start in the board room, or in the executive staff. How many times have we desperately looked up in the org chart and demanded that they change their ways? It will never do, for the reality is that pressures of the present systems demand that these lofty insiders are enlisted to be the ultimate defense against change. We, the HR insurgents, must be the first to take to the barricades, to positively and persuasively, but forcefully nonetheless, to show our clients a better way, a better system of commerce. We are the translators between the talk of the boardroom and the voice of the talent.

Yet HR, more than any other function except possibly finance, is typically aligned with the protectors of the status quo. Our assignment, which we often blindly accept, is to keep the insurgents out, to ensure that management’s law is enforced through policy and fiat, and that the finance department’s need to react to a spastically distracted Street be taken for granted as the ultimate purpose to work towards.

The assumptions are wrong. We fail to question the belief that head management is the same as cost management, and thus our friends lose their jobs and fall into despair. We nod in mindless agreement when managers demand that we only hire people like them, and thus those who haven’t been to the right schools and developed the right friendships are confirmed in their belief that they have no opportunity. We bow low when investors tell us that the only thing that really matters, the talent, OUR talent, is a cost to be controlled and minimized and not an asset to be explored and optimized. We cry and wail that people don’t get talent, just don’t understand how to treat people, even as we secretly wink in our own social circles about how it is always, ALWAYS, HR that is the worst at people-focused capabilities and accountabilities. We berate managers when we tell them that they have to share their talent and compete for the best, even as we jealously hide our own talent and lash out blindly at those who would dare to try to “poach our people.”

We are part of our own business system, the old system. We don’t do these things because we are evil or have bad intent. We do these things because they worked in the past, sometimes despite the assumption and sometimes because of it, but always as one and the same. We have been taught by time, practice, custom, mentorship and habit that this is what HR does, that this is who HR is. We are told in a thousand different ways “You are not the rebels! You are the administrative functionaries who do the evil bidding of the CFO and don’t understand the business and think about payroll and picnics! You are HR, the paper pushers and people executers and job fillers! Get back to your work. Your value is in how fast you react to my frightened whims. We will let you know when we need you next!” And eventually, like a guard who is no longer horrified at the thoughtless jailor they have become, we assume that this is us, and this is what we do, and that because we do it, it is right.

No. The assumptions are wrong.

The assumptions are wrong. It is us, you and me, who bear the responsibility to challenge the system and bring about a more prosperous and sustainable world. We cannot afford to sit in the shadows and let our consciences die with the memories of our dreams. It is us, because we have the biggest club, the largest lever, the loudest bullhorn. We have talent. We are talent. 

Yes, the change will start with talent: with the way we identify and engage the people investors of every type. That is our job, our purpose. The primacy of capital, of avoiding risks to capital at the expense of our humanity and expertise, and of accruing ever more capital to a special few, that day must give way to the day of talent. Capitalism must become Talentism, or we will need to find another purpose.

Change is never easy, but in our case it will be especially hard. Many of us, including myself, have tripped and fallen into our present roles. On my way to be a writer I found myself sitting at a security guard’s desk during the swing shift at a friend’s company. Yes, I started in HR in the security department. Your story is different, but we most likely share a common experience of finding ourselves in HR on the way to some other place. Some of us are closet social workers, trying to feel that our work makes a difference as we leave the messy business of commerce to the “B school guys.” Others tried to put a foot in both worlds, working the craft of compensation while still wanting to be close to the business of people. I have met psychologists and sociologists, frustrated economists and resigned sales people. Whatever your story, you may have felt the sting of the outsider, knowing that your work makes a difference no matter how much the bean counters whisper otherwise.

It is not just that we feel we are ill-equipped to meet the challenge of revolution. It is not just that we didn’t sign up for the fight. It is that the ability to be insurgents has been trained out of us. We have been evaluated, taught and counseled that our role in HR is to develop new policies, new procedures, new systems and new guidelines. We have been trained like Pavlov’s pets to salivate at the first sign of complex, enterprise level “strategy” work. Our value is reinforced by the rewards we get from making things bigger and more complex.

Yet this is another trap. Insurgents do not bring about change by lining up in rank and file and forming more elaborate formations. As insurgents we must heed the words of Einstein who said “Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius -- and a lot of courage -- to move in the opposite direction.” We must fight the assumption that putting together a enterprise-wide engagement program is more important than showing the courage of fighting against waste in our own departments.

We must constantly be on guard against the grand design that accompanies local ignorance. Ask yourself... When was the last time you went up to someone in your department and asked them “What did you want to do when you were a kid? How can I help you turn that passion into something of value for this company?” Perhaps the most recent project to quantify the people around you has made you forget that simple questions, kindness, empathy and genuine desire to make other’s lives better are by far the most powerful motivating tools we have at our disposal. But our assumptions, the assumptions of our system, is that only the self-important engagement program with its measures and metrics will bring about greater productivity. The assumptions are wrong.

Life is truly unfair. We find ourselves confronted with a situation we never really wanted to be in, deep inside a system that rewards us for doing the wrong work. But if we fail to rise  beyond our state of continual victimization, our angry murmurs about not being at the table drowning out our own desire for real significance and meaning, then we will all be irrelevant. Transactions get automated. Dishes go in dishwashers, payroll is cut by computers, and people are starting to turn to computers to answer their benefits questions. Managers are being told by their managers that it is cheaper to source, hire, manage and fire themselves than it is to rely on the perpetually backwards HR department. We, you and I, are betting that complete people transaction technology and automation won’t become implemented before we retire. Yet that is surely a more fantastical dream than believing we can help make tomorrow’s businesses better than todays.

And so the moment is now, for our children’s future but also for ours. We hope that we can hide and believe that some day some magical soul will rise through the ranks, climb the ladder, and they will “get it” and save us from the future. And yet time has always taught that those who rise through the ranks, who claw their way to the top, must comply with the pressures of the old system or lose their ability to have any influence whatsoever. And so we sit there, waiting for the savior, whispering that the day will come when the crisis of leadership will end. And all the time, we were the crisis. Not our leadership, the pillars of today. It was us, the solution for tomorrow.

It is us. Us is we. And if we don’t undertake to challenge our assumptions, to build a more sustainable system, then we will live with the consequences. You cannot hide from your own system. You may hope to rise with it’s successes, but we will all definitely fall with its failure.

The assumptions are wrong. But you can change that.

First Ask Why

You start a new project. The team sits down together and the narrative begins. The leader asks:

What, when, who, how and maybe why.

The leader is responsible for results. He wants action. The team wants approval. So everyone starts with what. What is tangible and deceptively easy to describe. No messy language, no feelings. Just rough descriptions punctuated with waving hands. The team is following the leader, the leader is fulfilled. The project starts.

The leader asks when?  When are you going to give me what?

The team agrees, and the deadline is set. The people who are results focused start fantasizing about implementation details and heroic rescues. But some intrepid souls venture further.

“Who are our customers?” someone asks. Or maybe “Who will use this?”

The leader acknowledges the question. The brave soul is rescued. A quick answer ensues.

The critical project questions have now been answered. The experts are ready to deliver on how. They hope that how is delayed to another meeting.

And finally, drinking lattes and looking smugly at their new Volvo’s, a few tweed wearing bearded philosophical masochists ponder “Why?” But silently and with great confidence.

What, when, who, how, why. It’s the way it works. Except for one thing: it doesn’t work that well. Things are changing too fast. The project fails.

The new project team sits down. The new narrative begins.

Why, how, who, when, what…

Why would anyone start on a project without knowing the problem to be solved, or the opportunity that needs to be created? Why would anyone want to begin work without naming and considering the system? Why is purpose. Without purpose there can be no alignment. Without alignment there can be no success.

Purpose leads to potential. How is potential. Not how to get what done. How are we going to work with each other? How can I make you successful? How will we know when we are done? How will we let the insurgents in so we create the future, instead of repeating the past?

From purpose to potential to people. People are who. Who has the problem we are trying to solve? Or... who will be helped if we create this opportunity? Who are they? Do we know their stories? Are their stories heroic, desperate, banal or romantic? Who will our work matter to?

Purpose, potential, people and then place. When is place. Is this the right time to do this? Are stars in the system aligned? Is the environment right? Can we afford to wait? When would be better?

Purpose, potential, people, place and then finally, product. Product means what. If we know why we are here, and we know how we will work with each other, and we know who our work will matter to, and we believe that when is now… then what are we creating together? Only now should we focus on what. What is last. Because while what is what who will touch, why and how are how what has meaning when everything changes.

When time moves slowly, and there are powerful people and weak people, and the powerful can predict the future… then submit to “what first?”.

But when the clock spins faster, and the weak make your market and only the enlightened can tell you what tomorrow brings… then first ask why.

Start: 20 Rules for Recruiting in the Creative Age

Time to start a new adventure. First published on March 1, 2005, this will be part of the frame of the future conversation.

Does your company operate in the creative age? Does it attract customers, defend its market position, deliver value and create investor return by monetizing human creativity? Then the answer is a definitive "yes" - your business operates in the creative age. If you are recruiting in the creative age, then you might want to consider the following:

20 Rules for Recruiting in the Creative Age

1.) Talent is more expensive than capital.

2.) A portfolio is more important than a diploma.

3.) Recruiting is a sales function, not an administrative function.

4.) Recruiting is a fundamental business driver.

5.) Recruiting must run as a separate P&L within the business.

6.) Talent is defined by production, not opportunity ("Real artists ship").

7.) A requisition is a non-critical financial document designed to manage risk.

8.) Great recruiting organizations design for reward.

9.) Bad recruiting organizations operate to manage risk.

10.) Quality is not a measure of satisfaction. Quality is a measure of the frequency and range of variation to a specification.

11.) The recruiting "specification" is a job description. There is never scientific rigor applied to the creation of job specifications. That is why recruiting can't be held accountable for quality. That is also why recruiting needs to be accountable for organizational development.

12.) Talent is not a person. Talent is a capability.

13.) Talent is not an employment contract. Talent is the delivery of the capability.

14.) In every recruiting sale there are three customers: the company, the client (hiring manager) and the candidate. All three must be closed simultaneously.

15.) Time to fill is a worthless statistic. It measures administrative cycle times. "Strike zone" is the appropriate measure - hitting the defined specification for delivery of talent.

16.) Cost per hire is a worthless statistic. It measures neither the contribution of good recruiting nor the cost of bad recruiting. This is why recruiting must be a P&L function.

17.) Management should have no insight into recruiting budgets, nor any control over any recruiting headcount or line items. Recruiting must be profitable. Period. How that gets done is up to the recruitment management, as long as it is consistent with regulation and the organization's values.

18.) Recruiting does not exist for the candidate or the client (hiring manager). It exists for the company.

19.) Most companies have no idea how to define, defend, attract, integrate and manage talent. So recruiting generally exists for something that isn't even there: the company's understanding of the value of talent.

20.) Talent is more expensive than capital. This simple fact will change the world in ways not envisioned since the 1800s.

Thoughts on This Week's Time Magazine

Perusing through the last issue of Time Magazine and had some thoughts:

Arnie Duncan may be the Apostle of Reform, but is he Peter or Judas? I like the focus on student achievement, but the lack of clarity around “achievement in what?” makes his statements a placebo at best. He is also falling into the trap that most education reformers are – comparing our scores to other countries. That is less than pointless – it is destructive. We aren’t competing against Finland – we are competing against ourselves. But even more, external factors such as culture are as important as education in a country’s success. The objectives of our education system must be aligned with our culture, so comparative test scores are not the way we should measure success.

Logging on to the Ivy League. Nice article. Here is what I think it means:

• The brand of a fancy college won’t mean much when your content is evaluated by a broad community. Guys like me don’t care about the Ivy League – if there is a better content provider at San Jose State, then I’ll get my content there. Finally, a real market for knowledge, where the validity of knowledge is not based on who said it.

• The students will be grading the educators within the next 10 years. Finally. This will start to undo some of the upside down market dynamics of the education system.

• Some people love to talk up “choice” but then don’t do anything about the structural tyranny of the present bad system. Why are some people so caught up in socialist boogey men when real socialism (in corporations and formal education institutions) goes completely unchallenged? Maybe because the light is better where they look.

• What happens when you get your education from the web? You have a “What not Where”  situation, because having content expertise about a subject is not the same thing as being a good teacher. So when you break the “Where” of teaching into “Whats” you get people who specialize in conveying information and other people who can match excitement to skill to opportunity, and then others who can excite students about learning. And when you put the content purveyors in the web, increase the percentage of people who are telecommuting, and look at other effects of putting gigabit into the home, you end up with a situation where kids can get their content when and where they need it, and then they will work with other kids on projects to solve real problems under the guidance of guidance experts (i.e. a person who can recognize their specific talents and match them to specific future needs) and real teachers (i.e. people who can encourage children to pursue a life-long love of learning).

Stacktacular – is it just me, or does the increasing speed of innovation mean not only greater technical opportunities, but also physical and emotional as well?

Spinning a New Strategy. Even a mundane business like spinning yarn can be competitive if it moves from mechanical and knowledge work to creative work. Patrick Yarns is the only major textile firm left with major operations in the U.S. because they focused on solving problems, not blaming everyone else for their crappy management. This story is probably the best story I have seen to demonstrate that mechanical and analytical jobs will go overseas, but creative jobs can stay here, even when the industry started in the mechanical age (read the first post on the Three Ages here).

What Not Where

Recently I was watching an episode of the TV show "Lie to Me" and I had an epiphany about the future of work: work will be defined by what, not where.

The lead character of "Like to Me" (Dr. Cal Lightman, played by Tim Roth) has a skill that is much in demand*: he can detect the truth by analyzing a person's face, body, voice and speech. The show centers on how Lightman and his team use that skill to solve different problems. Often the problems are crimes, but the fictional team also use the skill to solve hostage negotiation stand-offs, disaster rescue operation bottle-necks, mysterious romantic entanglements and business negotiations gone wrong. In the show Lightman has built an entire business around this one skill, and it looks like the business is thriving. It also looks like the limits of the opportunities afforded by application of the skill exists only in the writer's imagination. Apparently being able to tell when someone is lying is much in demand.

One evening I was turning the show over in my mind, thinking about how cool it would be to have that particular skill (my kids would beg to differ), and then it struck me: "Lie to Me" is a dramatic revelation of one of my central problems working in a big company. That problem is that a "job" is a concept focused on groupin a bunch of problems that really don't have much in common, but that somehow define what value you can provide to the organization. In other words, the modern concept of a job places a premium on "where" you work (i.e. finance), and devalues "what" you do (i.e. tell if someone is lying).

In most companies you are labeled by what group you work in, not by what you do. Your brand is about your domain, not your skill. HR is a great example. A good HR function has people who are good at quantitative reasoning (comp), effective social interaction (employee relations), and systems thinking (workforce planning). Anyone of these skills can be applied in almost any domain, including operations, finance, engineering and manufacturing. But if you work in HR you are "an HR person." Which means that it doesn't matter whether you are good at math, or great at systems analysis or a great negotiator. What matters is that what someone thinks about HR, and what they think about HR (or finance, or engineering, etc.) is what defines your opportunity to apply your skill to the greatest advantage for the company.

Let us take the fictional Dr. Lightman as an example. If he came to work for a big company he would likely go into sales, because he would make the most money sitting across from the table with prospective buyers, quickly determining whether the prospect was going to really sign the deal and what the optimum price point would be. But since Lightman would be sitting in sales, he probably wouldn't be asked by business development to help figure out whether a critical partner was secretly looking at a competitor's deal. And he certainly would never be asked to talk to an engineer who was leaving the company in order to best figure out how to retain that person.

Of course selling is very important. But it may not be as important as keeping a key partner in place, or saving the organization's top talent. The company would be far the poorer for it's inability to internally source a valued skill for a problem that would get the best return for the shareholder. But it wouldn't matter, because Lightman would be thought of as a "sales person", even though his skill of "truth teller" is so much bigger and more important. In other words, no matter how valuable his skill, he would be reduced to being identified with a domain. He would be a "where", not a "what."

The problem with the "where" orientation to determining a person's potential value to a company are many. But among them are:

Lack of Engagement - People usually enjoy application of particular skills more than the preservation of a particular domain. This is easy to prove. Go talk to anyone within your company and ask them "What do you really enjoy doing?" The answer will not be "engineering" or "human resources." It will be instead "solving complex problems" or "helping people find a better job." Engineering and HR are domains. Problem solving and job placement are skills.

Poor Performance - When work is oriented around domains it means that problem sets are artificially aggregated based on a belief in the commonality of the work. For instance, HR work is about people, finance work is about money, etc. But this means that a person who is in finance has to do a lot of work that has nothing to do with money, including negotiating what chart of accounts to accrue something to, how to apply certain financial regulations in certain circumstances and making presentations about financial data. None of those is a "money / math" skill, but because they are aggregated under the header of finance, a person in finance can be expected to do any one of those things.

Expensive - The "where" orientation causes companies to compensate individuals regardless of what value they provide. For instance, the head of finance usually gets paid a lot. But what do they really do as the head of finance? It may be that they are only good at financial forecasting and that they have progressed up the career ladder by finding themselves in situations where forecasting saved the day and brought rewards and recognition to this individual. But the reality is that financial forecasting as a skill is not really worth that much. Supply probably roughly meets demand. So you are paying the head of finance much more than you need to based on their title in their function, not based on the skill they posses. The hierarchy of the function artificially inflates the compensation range relative to the value of the applied skill.

But the trouble with "where" just starts there. Like many ironies of the present business system, big companies spend more on talent than small companies but get less out of it. There are many reasons for this, but one of the most significant factors is that as a company gets bigger it places less of a premium on what a person can do and more of a premium on their job type, title and location. By comparison, a start-up must make the best use of its investment dollar, and will constantly look for the best person to solve a problem or innovate their way to a solution, regardless of their title or specific domain. For example, in a start-up the head of engineering may get to do the big marketing presentations because it turns out they are better with certain audiences than the CMO. That would never happen inside a large company. The "what" (presentation skills) would be far less important than the "where" (engineering vs. marketing).

Think about it: don't you have a skill or competency that you really enjoy, that makes a difference, that can be applied across many different domains or specialties and that has value for a company? Most people do. You may not know how to think about it in that way, but trust me, it is far more likely that you have one of these skills than that you are expert in a domain. It is far more likely that you like what more than where.

If you are willing to take a moment and put on your "what" hat, I would love to hear comments about how you think your job would change.

Reorg or Regret?

Anyone who has ever been through a reorg, or run a reorganization process, knows the feeling. Things don't quite fit. It's like you are building a piece of Ikea furniture: what you end up with looks OK, but there are left over parts and you are never quite sure if you put it together correctly. The only way you find out is when it falls apart.

Your typical organization structure is based on the military, but instead of generals you have CEO's and instead of privates you have your average employee. Like most things that are currently broken about business, the system made sense at the time of its implementation but quickly gained a life of its own and now seems so critical to the smooth operation of a business that it is beyond the pale of questioning. Grandiose hierarchies were a critical control in a world where the ultimate risk is to life and limb and where you need to deploy large-scale resources in a coordinated fashion. Early companies needed to create long-supply chains across huge distances (like the trusts during the late 1800's and early 1900's that combined control rail networks with control of production of oil and refining capability), just like an army. Early companies also needed to have one coordinated resource deployment, making sure that hundreds if not thousands of employees would all pull the same lever in the same way at the same time to get the same specified result.

Times have changed, and most companies (at least in the U.S. and Western Europe) do not get competitive advantage from large coordinated workforces doing manual labor. Our economies are service and innovation systems, and there is nothing that kills the human spirit like control, group-think and managers who get to the top through tenure and corporate politics.

Reorgs are based on the theory that you can take different units of management, composed of people who perform tasks, and rearrange them to achieve some objective more effectively and efficiently. Some companies, like Microsoft, reorg frequently as a way to get their people focused on customers, ideas and problems rather than manager status. But most companies ossify their organization structures because changing them is difficult and often takes time away from productive work (at least that's the theory). In this way experimentation in organization structures rarely comes from the very place that needs org structure innovation the most: large companies.

Org structures should first and foremost be a tool to align what Henry Blodget calls business risk and investment risk. Simply put, you want your employees to win when the investors win, and you want your employees to lose (but especially management) when the investor loses. Sadly, this is rarely the case.

So what does our present org structures of generals and privates get us? A perpetual system that places employees needs, the personal goals of management and the monetary goals of the investor at odds. Here are two of the most significant examples.

Title = Status. There is an implied assumption in most organizations that the way to get to the next title, the next rung in the ladder, is to make money for investors. We all know this is the exception, not the norm. Even when promotions are not due to favoritism or negative corporate politics, the reality is that it is very difficult for a manager to know exactly why their employee is successful. The manager is left with their instincts (usually an emotional response subject to wide variation based on mood and factors not associated with employee success), the input of peers and the need to solve a problem quickly (i.e. "I need this task done because my boss is chewing my butt about it, and I think Susan is the best person to do it.") All of this boils down to a systemic gap between what the investors care about (sustainable competitive advantage that delivers predictable returns above the cost of capital) and what employees care about (making sure that the stars align so that I can get a promotion and a raise). This means that reorgs often become a competitive, rather than cooperative, exercise. Everyone understands that the potential chaos of a reorg provides an opportunity to put oneself in a better position to succeed. The basic military org structure will always reinforce this behavior, no matter how much a good manager tries to work otherwise.

Artificial Barriers: Because employees understand that they don't win by focusing on investor objectives there is a huge pressure to ensure that "ownership" (as opposed to accountability) is first and foremost in most reorgs. But the nature of work is changing, and there are many times when a work product or service must de facto be the result of multiple groups working as an organic whole. Organic group direction has been written about and spoken about for a long time, but in a company it tends to run headlong into the reality that "organic" is short-hand for "no one to blame when things go wrong" and "no one to get the credit when things go right." As we have discussed, this matters a lot in a military org structure because getting ahead (and therefore getting more prestige, money and control) means that the person who is going to make the decision about whether you should get ahead or not needs to like you and feel comfortable with you. So the present org structures create artificial barriers between groups that almost always increase inefficiency and decrease agility and speed of response.

As has been written in this blog before the cure to this is to replace managers with markets. Buyers can rarely afford to be as free with their money as managers can. Buyers have to specify the outcome they want, what that outcome is worth to them (cost benefit), how they will measure whether the outcomes are being achieved (contract and / or SLA), ongoing negotiations around payment based on delivery and direct feedback about performance (since the personal relationship that frequently develops between manager and employee is harder to sustain in a buyer / vendor relationship).

Final thought on this is that the present economic downturn will likely start sorting some of this out. We are likely to see the total regular full time workforce as a percentage of the population decline and never recover, as more people move to independent and contractor status. Managers will increasingly have to spend their time selecting the right vendor, and spend a correspondingly decreasing amount of time managing reorgs.

Getting the Right Stuff Done

(Thanks to those of you who reached out via email and phone and welcomed me back to blogosphere!)

HR often feels caught between two worlds. In the world of payroll and picnics, HR practitioners measure their importance by how busy they are and how they make employees feel. In the world of grand strategies HR looks for an excuse to “be at the table”, to be a part ongoing discussions and decisions that affect the business. In the world of "Strategic HR" we develop complicated programs to influence culture and long-range talent decisions. My experience has been that all too often these programs are really just smoke and mirrors; fancy PowerPoints and tricky language to convince executives of HR's business relevance. This leads to executive smiles and platitudes, and ends with boardroom conversations about cutting HR as a cost center.

Regardless of whether you live in the world of pinics or the world of strategies, your world is being abandoned. Picnics can seem silly when people are losing their jobs and critical corporate programs are being cut. And any senior HR practitioner approaching a business person with big plans for cultural change is likely to get a blank look and a speech about how those programs will be brought back in better times.

In an economic meltdown “making people happy” and “being at the table” are luxuries that the business can ill afford. Regardless of industry or geography, there is only one truth in the world of business today: fear has replaced planning. Business planners feel as if they are groping around with a lighter and a hand-drawn treasurer map in an unfamiliar dark place. This is leading the people responsible for operating the business to cut most high-level engagement programs, since the prevailing wisdom is that people can’t find jobs and likely won’t be leaving. When you can't tell your CEO what the next quarter is going to look like, your CEO isn't likely to want to plan multi-year change intiatives

In the end, it doesn't matter whether you are into engagement or talent strategies: today's economy means that HR is getting whacked.

Or does it? As we discussed, HR needs to Get Shit Done (let’s call that GSD from this point forward, and turn our profanity into “stuff” so the kids can read at home). HR needs to move from grand pronouncements about “culture is everything” and “being at the table” to focusing on getting work done. GSD is more important now than ever. In fact, I will maintain that HR is more important than ever. But that doesn’t mean that we need to be happy with payroll and picnics.

Economic challenges do not suspend the laws of business physics. If anything, a shrinking top and bottom line drives a greater need for focus on results and accountability, two things at which HR have not typically excelled. Going back to doing busy work that someone else could do faster, cheaper and / or better is not a recipe for HR success. We definitely need to GSD. But GTWSD (Getting the Wrong Stuff Done) is often more expensive than doing nothing. It would be far better to have to HR professionals dressing up in cheerleader outfits and doing yells in the hall than having a group of talented HR employees committing their time, money and attention to activities which actually hurt the productivity of the employees.

HR needs to GSD. But more importantly, HR needs to be Getting the Right Stuff Done (GTRSD).

Now is the perfect time to evaluate what exactly the "right stuff" is. Any entrepreneur can tell you that chaos brings opportunity. When things are going well people get into a routine and feel comfortable. Convincing someone who is enjoying their job and getting praise for their work that they need to rethink the way they doing things is a very difficult task. Four years of tilting at windmills on this blog have taught me nothing if they haven’t taught me that when times are good, change is hard, no matter how badly it is needed.

But times are no longer good, and many good HR practitioners are looking forward to what comes next. Over the next couple of weeks I will use the idea of “Getting Stuff Done” and the current economic calamity to talk about what HR can being doing now to set itself up for success in the future. No grand pronouncements, no picnics. Just a hard-nosed look at the best work to be doing right now for generalists and specialists, including comp, recruiting, training and systems.

27

I have never met a two year old that lacked imagination and curiosity. I have met very few 40 years that still posses either.There is this little voice in a parent's head that tells them that seven million years of biology can't be all wrong, that perhaps the very reason we have schools and jobs is because human beings are just naturally curious and inventive. We have this sneaking suspicion that seeking to normalize thoughts and feelings, begging all the while for external validation and the warm embrace of group-think may not be the right way to go. It's not just all the counter examples to the conventional wisdom: the Curries, the Sanders, the Einsteins, the Kings, the holy writings and yes, even the Gateses. Its the feeling that we are all just going to Abilene, that someone, somewhere started all this with a rather silly (and perhaps even sinister) notion and that now we are all just feeding upon the group's validation of something that may be very wrong. And like the paradox shows, the group think effect has to start somewhere. People far smarter than I have developed almost as many theories around this as there are children struggling in school. But my purpose here is to link building a better business on a better economic model with the lack of talent to make that happen. And therefore, I propose that the problem starts with us. We are doing it. Recruiters and HR people. We can’t put together a job description or a reliable method for improving performance, but we sure as hell know that if someone went to Harvard they are going to be right for the job. Corporations can’t tell you exactly how they built a culture that fostered creativity and innovation, but they know for sure that if you finished a project at Cisco you must be a high-tech titan. It is our own incompetence, our own ability to decipher and describe reliable criteria for success, our own inability to look at an individual’s past and figure out whether they will be successful in our future that drives us to this incredibly destructive behavior. Am I saying that because we can't write a good job description we are strip mining our most precious natural resource for the most mundane and common ore? Yes... I am.

26

(With an apology to my international readers...)

As a parent you are caught between society's rock and the soul's hard place. Every SUV driving, Eddie Bauer clad super-parent guzzling their third latte by 8:00 a.m. will tell you confidently that if you didn't get your child into the right pre-natal school they are doomed to a hopeless future of dead-end sanitation engineering jobs.  The conventional wisdom about how to ensure that your child will be the next Gates allows for no mealy-mouthed weakness, nothing other than a dutiful sieg heil to the super-parent's delusion that they can accurately predict the future .  Dutifully we parents continue to demand that our children strip away their creativity and individuality, their ability to play and interact and problem solve in complex environments. We schedule them from waking to sleep, and we listen as pop culture tells us that we just haven't done enough today to make our child into the next Nobel laureate. And yet most parents are harboring this secret fear that all this will indeed make Johnny a dull boy. Their kids are turning into narcissistic automatons that  don't much resemble kids at all, just small investment bankers that have trouble keeping their rooms clean. And while these little drones are getting the right grades in the right schools, hanging with the right friends and doing the right activities, Will Wright becomes a demigod whose success tells them "Crap, this may all be wrong."