The purpose of this article is to give you some ideas that will hopefully inspire and stimulate you as you go forward. I’m going to start with two assumptions.
The assumption I want to start with was shared in a group recently in a master’s class. What’s the best thing that HR or a business leader can give an employee today? What’s the best thing we can give an employee? We had some wonderful discussions around all of the tracks. Employee wellbeing, talent, opportunity, vision, relationships, and teamwork I’m going to challenge your assumption. The best thing we can give an employee today is an organization that wins in the marketplace. Unless and until our organization wins in the marketplace, the employee has no meaning. They have no purpose; they have no agenda.
The employee has to win in the marketplace. And that’s what I want to write about today. How do we reframe HR as a way to help us win in the marketplace? And in that logic, I have five or six things I’m going to cover. I’m going to write first about why that organization is so critical. So, here’s my second assumption: When we, as HR professionals, go to a business meeting, formal or informal, what is it we talk about? I believe there are three things. This article highlights those three things.
First, we talk about talent. Do we have the right people with the right skills, the right abilities, the right engagement, and the right experience? We have great talent, and that’s the key. This field has been called the human capital field. The field of talent Second, we talk about organization or culture. Do we have the right culture? Do we have the right capabilities? We’ve got talent, and we’ve got organization.
I’m going to give you a test. We’ve got good talent. We’ve got organization and systems. Which one matters most to helping the organization win in the marketplace? Is it talent, or is it organization? Talent or organization? When I ask this question in groups, the result is often 50/50. We have no clue. However, scientists have done the research, and the scientific answer is organization. What drives that outcome? The best thing we can give an employee is a company that wins in the marketplace. Is it the talent that wins the war for talent, or is it the organization? By the way, there’s a hint in the title of the book, Victory through Organization.
My sense today is that when I, as an HR professional, engage with my business team, I want to ask them, “Do we have great talent? Do we have the right systems? Do we have the right talent? Do we have the right people? Do we have the right organization and the right culture? And do we have the right leadership? Let me explain just for a minute why I think the organization is so critical. What do all of the following have in common? The hotel you slept in, the food you ate at dinner for breakfast, the Uber that takes you to where you go, the airline that flies, the clothes you’re wearing, the social media system What’s common among all of those strange things? They were created and delivered by an organization. Your book has not yet been published. It’s a personal copy. This building does not exist in the absence of an organization. The food doesn’t get to our tables at restaurants without organization. The restaurant doesn’t exist without organization.
Probably the greatest power in the last 100 years has been the power of organizations. And our job in HR is to create and navigate that organization. Our job is to make that organization good. By the way, good talent and good people working together create great organizations.
Let me give one example. I’ve used it before. Are you a football fan? Okay, that is a gender question. Obviously, I didn’t intend it to be. How often is the leading scorer in the Super Bowl a talent on the team that wins the Super Bowl? I’ve asked this before in numerous groups. How often is it the great talent on the team that wins? Not often. That is a terrific answer from a strategist with no data; that’s called an analog answer. The answer is 20%. It’s the same rule of thumb. 20% of the time, talent wins, and 80% of the time, teamwork wins.
I was going to use an example from two Super Bowls ago of a team that didn’t get along very well as a team. They sort of argued with each other. They didn’t get along well, and they didn’t make it out of the preliminary rounds. So how do you create an organization in today’s very volatile world? That’s the problem I want to give you as you leave this article. How do I create and build an organization that wins? We’ve been studying that. I’ll share the research as we were studying it.
I came across a video where a woman is on the beach with her two sons, eight and ten, and her mother. The boys go out in the water. They get caught in a major riptide. They’re being pulled out of the ocean. The mother jumps in. She’s in the riptide. The grandmother jumps in. She’s in the riptide. Have you ever been in a riptide? Do you think it’s scary or not scary? It is scary. Five people from the sidelines in the water jumped in to save these four. Now there are nine people in a riptide. Michael Phelps, the greatest swimmer in history with 20 gold medals, could not have saved him. So, 80 people joined arms, and they went 300 meters into the water and saved the nine people. By the way, what a cool story. That is an organization. Those 80 strangers formed an organization going after a market challenge—an opportunity to save the nine people. They saved them. And then they disbanded.
The question I have is: how do we create that kind of organization at scale?
You see an opportunity. You pull people together. You move. How many are in a company with over 1,000 people? How well do you move quickly from opportunity to opportunity? And here’s the issue: If you don’t, how many have a company with over 10,000 people? How quickly do you move to new opportunities? You don’t even try to move. You tell the world to move toward you.
The challenge is, how do you create that? So, I decided to do research for my study. What do you have to do to build this organization that wins 80%? More important, four to one over people that win over time I decided to study some of the most successful organizations in the world. I found some in North America, Google, Amazon, Facebook, Europe, and Supercell. But you know what’s interesting? The most innovative, scalable organizations I found were in China. They’re not state-owned enterprises or big bureaucracies, nor are they multinationals. I list Tencent, Alibaba, the equivalent of Uber, and Huawei. How have these organizations done? Let’s look at the data.
This is, for me, an amazing chart. I went to these organizations. Their average age is 97. That’s 22 years old. That’s a child in organizational life. They’re young. The average number of employees was $158,000. They’re double the size of BP. These are large companies. Their market valuation averaged $400. Whatever that is, it is 2,430 billion U.S. These are incredible companies. Now you say, “Well, supercells are not that big. They’ve only got 213 employees. And they have a market valuation of 10 billion U.S. That’s 500,000 employees. These are incredible companies.
I wanted to figure out, “What do these organizations do?” and “How does HR help drive these organizations? Here’s what I discovered: There’s been a linear progression in organizational thinking. On the left is the hierarchy of bureaucracy. You have roles, you have rules, and you have structure. You have an organization chart for re-engineering. The organization tries to re-engineer the fact that, according to Max Weber, the hierarchy exists.
Who do I report to? Who do they report to? Then you shift your thinking to a systems model. There’s a star model. You try to connect the elements of the organization. McKinsey had a seven-year model. McKinsey today has an organizational health index. Then you begin to shift to capabilities. What are the capabilities our organization is known for and good at? And those capabilities define us. Disney is known for its guest service. Google is known for innovation. Amazon is known for its distribution. And then I begin to say, What’s the new organization? As an HR professional, I’m going to help deliver talent, leadership, and organization. I need to figure out what this new organization is. So, I looked at these eight companies and tried to say, “What does that new organization look like? How does it operate? How does it work? I call it reinventing the organization. How do you reinvent an organization? Here’s what I discovered in the spirit of simplicity: And somebody said that’s a future for HR. I found that there are six things that an organization has to be able to do. And again, our job in HR when I’m sitting in a meeting is to navigate these pieces so that I can help you succeed in the marketplace.
I believe these are six things that I, as an HR professional in the next generation, should pay attention to. I can do an assessment. One to ten as I meet with my business.
Does my business understand the opportunities in the environment?
Does my organization understand the environment?
Do we have strategic agility?
Have we identified a rebuilding capability?
Do we have the right morphology and structure?
Do we have good governance?
And do we have good leadership?
Here’s my view of HR: Next, we’ve got to have good talent. It’s a given that the employee experience has to work. It helps us win in the marketplace. We’ve also got to have the right organization.
My job in HR is to be the organizational architect. Provide the blueprint, provide the framework, and help my business leaders learn how to use the organization to win in a changing market so I can assess how well we do it. How important is it for us to get it done? We can begin to look at those six characteristics—environments, strategy, capability, and morphology—and say, “How well do we do it? Effectiveness, business impact, low to high We can begin to prioritize what we have to do to build an organization. I’ve just done one piece. I’m now going to take you through each of those six very quickly. Let me go back. Here are the six dimensions:
Think about your job in HR. Am I able to understand the context in which my company works? Do I know what’s happening next? Am I able to help my company articulate a more agile strategy? Am I able to frame and build capabilities to shape the right morphology, to build governance that sustains it, and to establish leadership? For me, those six things will become the HR of the future. Notice that I don’t disagree with talent. Talent is a subset of governance. But boy, do I want us to build organizations that win. And the eight companies I looked at are doing that very well.
And this is my hope for us as HR professionals. When we sit with our business leaders, we not only talk about talent and leadership and all the great things you’ve heard in this HR article, but we also talk about creating a great organization. I’ll start with the environment.
This is a problem. We don’t want to move faster. With what we’ve done, the world has changed. There are two ways to approach the environment. One is inside out. Competing from the inside out
The inside out. Logic says to figure out what you’re good at doing. Disney is good at running a theme park. Where do you leverage that internal competence? They now have cruise ships.
Marriott was very good at providing service in hotels. They had Marriott retirement communities. You leverage your core competence. You leverage from the inside out. But in today’s world, when the world is changing so quickly, you go outside. What are the opportunities the environment gives us? You heard yesterday about Philip Morris. What a great example! The external world is changing. They’ve got to change. They’ve got to adapt. They’re now building with Charles’s guidance. He’s, I think, brilliant in what he said. They’re now building an outside-in approach to respond. My job in HR and the future of work is to understand the external demands facing my company and to turn those demands into opportunities. What’s happening socially—lifestyle, how we work, where we work—and what’s happening with technology? This incredible digital age
Is there a company that the digital age is not affecting? How many here are being affected by the digital age? Almost everybody. I had a Zoom conference recently, and I said the digital age affects every company. Five business leaders from the largest toilet paper company in Latin America were on the call. I said I don’t think digital is changing the toilet paper industry. Now, don’t imagine that’s too complicated, because it’s just a horrible thought. And the man raised his hand. He said, “Sir, I disagree. Digital is dramatically changing our industry. I need help because I can see how digital changes retail and shopping, automobiles and driving, manufacturing, and diagnosis in healthcare and education. But, toilet paper, he said, let me tell you what we’ve learned. All technology does is give you information. So, we now have the technology to know by household in Latin America how much toilet paper you use, when you need it replaced, and what type you use. We know by name what you need. We will now go to those households because we have digital information, and we’ll say to you, “We know the toilet paper you use and how often you use it. Would you like to get a discount and buy a subscription? I don’t know if, where you live, Uber eats, Uber distributes food, or DD distributes food. Now it’s called Uber toilet paper. They will deliver your toilet paper.
And they said we can actually go to someone and say, “Give your partner a gift this Christmas if you celebrate Christmas or Hanukkah after Ramadan: an annual subscription to toilet paper. In fact, we get a 99% renewal rate. We’ll give you a discount for a five-year subscription, and we get a 99% renewal. We can now take those future earnings to the bank and borrow against them. We’re going to go from managing toilet paper to completely reinventing the bathroom. Because of digital, our whole industry has changed. I said, I stand corrected. Toilet paper is never going to be thought of the same way it is in a digitally enabled industry.
Digital is changing. The economic trends are huge, and the political trends are huge and terrible. Are there any countries in the world where there are political disputes today that are just driving people crazy? Can you name them? Hong Kong? Brexit? Britain? Could you explain Brexit? No? How do I create a company to survive in that area? We have environmental responsibilities and demographic changes. My job in HR is to understand that context and succeed.
So, I understand the environment. When I’m sitting in a business meeting, talk about what we have to do to win in the marketplace. We have to have good talent, leadership, and organization, and they all start with context. The content is the king, but the context is the kingdom in which the king or queen works. Strategy.
Do we have strategic clarity if strategy is not planning? Do we have alignment? Do we have capabilities where we’re headed now? And the buzzword that’s getting so much attention is strategic agility. Can I, in HR, help shape strategic agility? How do you build agility? Focusing on the future anticipates opportunity.
Move quickly and always learn. How do you do that with your strategy? Do I need NHR to help my business shift its position in the industry? We don’t want to be the experts. We want to be the shapers. I think there’s an ocean color you’re supposed to have with that red, blue, or purple. Whatever it is, shape the industry with customers. Do we want to move from market share to market opportunity? Do we want to look inside or outside? Do we want to get ahead of the competition? We don’t want a benchmark to learn what they’ve done. We want a benchmark to move ahead of where they’re going.
Do we combine our offers? Do we meld the things we do, and do we have a process for engaging? My job in HR in the strategy world is to clarify and facilitate the creation of strategic agility. I believe in these six things to build this organization in the future. Environment. Appreciate and anticipate strategy, which clarifies and facilitates capability. An organization is not known for its structure. It’s known for its capability. These are a bunch of words that you can use to describe an organization. Their help, their types, and their teamwork combine into a capability. A capability is simply what you’re known for and good at doing. The Marriott Hotel, the Novotel, where I’m often staying, is known for exceptional service. Marriott Disney is known for its great guest experience. Amazon is known for rapid and efficient delivery. Google is known for innovation.
What’s a company that you admire because they’re so innovative? Probably an English retail organization called John Lewis. John Lewis, where the company was given away to all the employees in 1928. They’re all shareholders. Cool. And if they’re still alive today, that’s a company I want to work for. Because I will still be, by the way, I don’t know, John Lewis, but they’re good at innovation.
Yeah, that’s an embedded culture. It’s an embedded capability. It’s the way they are. Those capabilities become critical for an organization’s success. In my research, with those eight leading companies, there were four critical capabilities.
They all demonstrated. One is customer responsiveness. They were constantly looking at Amazon. Who’s the customer? What do they want? How do I respond?
Google, Tencent, and Alibaba for innovation. Innovation is a capability. That’s the lifeblood of a company, not only around products and services but also around business model speed and agility. They move quickly, and then all of that is driven by external sensing or information. The underlying theory of analytics is to have information. My job in HR is to drive and deliver those kinds of capabilities.
And you see that the other ones listed are not as poignant. Those are the capabilities we discovered. External sensing. Am I helping my company acquire, analyze, and apply information from outside customer anticipation? Am I focusing my company outside in on the client and what we do to win innovation? Am I focusing on possibilities enabled by technology to innovate products and services, how we play, where we win, and channel and agility in everything? Am I helping my company move? I’ve just given you three pieces of the six-piece puzzle. If I want to create an organization that wins my job in HR, it’s not just talent but organization.
One organization manages the environment, anticipates it, and appreciates it. Get ahead of it. It’s the context, clarity, and focus of strategy on agility, not analysis. I diagnose and embed a set of capabilities around those four things. Customer innovation, agility, and information
The companies that do that have the capacity to reinvent themselves. Number four: change the morphology; change the structure. When I ask people to draw an organization, what they almost always draw is some form of hierarchy. They almost always say an organization is a hierarchy with roles. Here’s the organization chart. Here’s what we’ve learned in the organization: The future.
You’re not a hierarchy. You’re an ecosystem. Instead of starting at the top of the page with headquarters, start in the middle of the page with the platform. Here’s our platform: The platform often has a shared set of enterprise values. It has shared processes. It’s almost like the centers of expertise do well in HR, and it has technology.
That platform is a set of resources. Then a group of employees sees a market opportunity. The swimmers are caught in a riptide. 80 people joined arms. Half a dozen of us, as employees, see a market opportunity. We form a team. We take resources from that platform, go out, and try to move into that market opportunity. We then create allies or others who work with us. The platform with teams in the organization species of the future My HR department is able to articulate and create that kind of agile organization. It’s customer-centric because the teams are against customers. It’s innovative in terms of opportunity. It’s agile because each of those teams moves quickly to that opportunity and shares information.
What’s fascinating to me This is Amazon’s example. They have a platform. They have Fire, TV, Web services, Zappos, Kindle, Whole Foods, Echo, and Alexa. The lines that connect them are their capabilities. And so, what happens at Amazon with this platform? Let’s just take these six major businesses. They have more.
Well, let me use Tencent. Tencent in China has about 300 sales teams. There are 50 of the biggest teams. The most prominent teams The CEOs get together about every six weeks. And what do they discuss when they get together? They discuss external sensing. What are you seeing in your cell with outside customers? Market conditions.
They discuss customers. How are clients changing? They discussed innovation: what’s working? What’s not? And they discuss how we speed. The lines in that platform model or ecosystem represent the capabilities. This is not a multi-divisional firm with a hierarchy. It’s not a holding company with six separate cells. It’s a market-oriented ecosystem. Now I have to do a short aside.
There are a lot of phrases out there. Holacracy Amoeba. Team of teams’ ambidextrous exponential Each of those terms that we are getting about this has a piece of this organizational system.
I get one dollar. That changes my life. This is not a traditional multi-divisional firm, nor is it a holding company. I believe that this model of a market-oriented ecosystem is a fundamentally new type of organization. It’s got a different approach to strategy, headquarters, divisions, and control systems. My job in HR is to take those principles about platforms, businesses, teams, and partners and create capacity to move quickly into new market opportunities.
That’s the morphology. Somebody asked me in one of my group trainings. What about organizational design? This is the next phase of organizational design.
I’ve taken you through a lot of stuff. Hang with me. I’ve got two more to go through. Governance? How do you architect and make this new organization happen? We’ve discovered there are six things.
By the way, these should be familiar to HR. It’s not. Do you have a culture? You have the right culture. Well, I hope you get the data on that from the master session. Culture is not just a set of values and norms. It’s the values and norms that help us win in the marketplace. Do we have positive performance accountability? We had a great session on that this morning.
That is the goal of performance accountability. Is not the rating scale or the system. It’s a positive conversation around feedback. And where we’re going, do we generate ideas? Well, do we have a system that creates ideas? Do we have a great talent pipeline? Are we getting people who can live in this agile, flexible organization? Do we share information across those cells? And do we have collaboration? Tencent has this kind of organizational logic. They have a platform, and they have cells; the 50 CEOs get together every six weeks. And in those lines, they share their knowledge about those capabilities.
And that’s what makes that organization successful. And they build those six governance mechanisms. And finally, leadership matters. We all know that we’re in HR. Who’s sitting next to their boss? Zero to ten. How good is your boss? It’s late in the day.
We looked at those six companies and tried to say, “What set of skills do leaders need to have at all levels? The model is not complicated. You’ve got to be a strategist. Strategy is not just for the top leader. The founder of Google, the founder of Tension, and the founder of Alibaba, Jack Ma It’s creating strategic thinking all the way through. You’ve got to be an organization architect who can shape those governance mechanisms and morphologies. You’ve got to be an incredible talent manager who can inspire, motivate, and engage your people.
You’ve got to create culture. And it’s not just culture. It’s the right culture. And in the middle, you, as a leader, or any leader all the way through, need to be personally proficient.
Let me go back to what I’ve done. Here’s my assumption: What’s the best thing we in HR can give an employee today? And my answer in this article is an organization that wins in the marketplace because it has four times the impact of talent on winning. So, what is it? I need to know and do as an HR professional in the future to create that value. I’ve just suggested six things. I need to anticipate and understand the environment. What’s happening? Where are we going? What’s the context? I need to facilitate and clarify strategic agility.
I need to define and embed four capabilities: customer innovation, agility, and external sensing. I need to create a morphology or structure that’s incredibly agile, has a platform, and is stable on that platform. The sales are flexible.
It’s not a divisional firm. It’s not a holding company. It’s a new organization. I need the government to do six things: create the right culture, create performance, create accountability in a positive way, manage ideas, manage talent, manage information, and build collaboration. And ultimately, I need to coach and embed leadership. I believe that when we in HR can do those six things, we begin to create the organization of the future that allows us to go forward. Now that’s a weird way to end an article.
Here’s what I’m imploring you to do: push yourself. The best is yet to come. Take what you’ve learned in those tracks and use that knowledge so that we can create an organization that wins in the marketplace. And as a result, when I, as an HR professional, sit down with my business leader in her team or his team, and they’re talking about winning and the challenges we face, I can help them not only get great talent, which we’ve talked about, but also great experience, great hiring, great training, and great performance.
I can help them create an organization that is bigger than the parts, and that organization is like those swimmers who were saved by people joining arms.
I think that’s a challenge for HR. Many of us are not there yet. But as we get there, we redefine the value that we create.
People have asked me once, “Why do you like HR? And this is the answer we have at our disposal. The tools and the insights to do these six things brilliantly.
We have the tools and the insights to anticipate and create an environment to shape our future, to design and deliver a strategy to deliver and embed capabilities that outlast the people, to structure the right organization and morphology to govern so that these ideas happen, and to sustain leadership at every level of the company.
I’m going to end with these words: The best is not yet here. The best will come. I wish you well on that journey.
Thank you for reading. amirkohan.com
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