IPOs and Organizational Leadership Capability

The book "The 2020 Workplace" by Karie Willyerd and Jeanne Meister discusses a future where organizational teams are hired intact into new organizations and where you are hired into an organization based upon your social capital. So it was with interest when I got a response from last week's blog on Leadership Capability Portfolio Management from one of my LinkedIn connections...Suranjan Benjamin Soans. He asked the following questions, which were intriguing:

"Keith, do you think sometime in the future, investors are going to have access to Leadership Capability Portfolio Management of companies? Or, is it better if that is treated as a company's secret? Do investment bankers take a good look at this (LCPM) before an IPO is issued?"

It's possible that understanding and measuring the overall organizational leadership capability as a critical component to an organization's financial rating in the future. Why? Let's look at some examples of why leadership capability already matters in organizations...

- Leaders impact the organization through factors such as employee retention and employee engagement. Both critical to organizational performance and financial performance.

- The 2010 IBM Global CEO Study indicates that CEOs continue to see the relevance of having a leadership capability that are creative, act under uncertainty, drive innovation and organizational performance.

While I study the impact of leadership and leadership development on organizational performance at the UPenn Chief Learning Officer (CLO) program, I know that before I invest in companies, I want to know what the company's leadership capability is. Companies leverage their position on such lists as Leadership Excellence's top leadership development programs and Fortune Magazines Best Places to Work when advantageous.

While award winning leadership development programs are good publicity, I reference Dr. Bradley Hall's quote from his book "The New Human Capital Strategy." There he states that "Success is not world-class leadership development but best-in-class industry leaders." If you believe that...we need an ability to measure the best-in-class industry leaders part of Dr. Hall's statement.

With this in mind, wouldn't you want to know whether an organization's leadership capability is having the intended impact on organizational performance...especially before you invest in it?

Cheers,
Keith

Twitter: JKeithDunbar
LinkedIn: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

Playing Talent Mad Scientist...

Greetings,

I recently came across a very cool game called Phylo. It was part of an article in Wired Magazine titled "Computer Games Makes You a Genetic Scientist." The intent of the online game is to take advantage of the prowess of the human mind's pattern recognition capabilities. As the article states:

"Phylo players move colored squares representing the four nucleotides of DNA to find the best alignment between snippets of DNA from two different species. These particular sections of DNA, called promoter regions, determine which parts of the genome end up as traits in the organism, whether it be blue eyes or heart disease."

The connection of this game to our role as Human Capital Management (HCM) and Talent Development leaders is interesting...Just as Phylo is leveraging the human ability to see pattern's, we should be doing the same. Looking for patterns in the volatile, uncertain, complex and ambiguous (VUCA) environment is difficult, especially when it is focused on talent that drives our organizational success. Driving to success in this type of VUCA environment, while difficult, is not impossible.

Dr. Charles Dwyer of the University of Pennsylvania and the Aresty Institute's Leading and Managing People Academic Director at the Wharton Business School stated recently at a session I attended, that leaders need to think strategically and systematically. This is no more apparent than it is now in relation to acquiring, developing and retaining talent to drive business and mission results. Effective HCM leaders are able to identify strategic capabilities needed to fuel innovation, agility and competitive advantage. They are able to understand and see patterns in their current workforce capacity in respect to the identified capabilities. With this knowledge, they are able to make informed engagement with organization leadership to recommend the right approaches in enabling Buy, Build, Rent and Partner decisions.

When I visualize this activity...I see a Talent Mad Scientist...identifying the basic talent DNA building blocks for organizational success. Attempting to find the right pattern that will make an evolutionary leap in capabilities for the organization...

When you think of the Talent Mad Scientist...what do you see?

Cheers,
Keith

Twitter: JKeithDunbar
LinkedIn: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

You Need a Leadership Capability Portfolio Manager...

Greetings,

So we know that the 2010 IBM Global CEO and CHRO studies identified that both groups believe that leadership and leadership development is important, but 2 of 3 CHROs didn't think their organizations were effective at doing it. Let's start to take a closer look at something that can help change that equation.

Learning can be directed in one of three areas based upon the Unit of Analysis. This is typically focused on individuals or teams, but it can also be at the organizational level. The linkage to today's blog is by taking this same approach in the management of the learning and in this case...focused on an organization's leadership capability.

Disclaimer - I am NOT a financial investments expert. That is why I pay for the service from the pros to help me manage my resources. So what I am about to say is my simplification in terms for today’s blog.

In the financial services sector, it is fairly well known that as individuals we can make investments in a number of different financial instruments like money markets, bonds, stocks, etc. Each of these involves a strategy to maximize the return on investment, but each carries a form of risk. Investment strategies are intended to develop a portfolio of financial instruments that can weather periods of volatility, uncertainty, complexity and ambiguity…like today’s global environment…for both short-term and long-term gains.

Now look at the investment your organization is making in leadership development. As discussed in previous blog posts, it is estimated that within the United States, that over $9.5 billion is invested in making leaders better. However, that investment is typically focused at the individual level. By investing in the individual’s leadership development, it is assumed we will reach a tipping point in the organization that will lead to maximizing the overall organizational leadership capability.

This doesn’t account for risk though. In the current global environment that is volatile, uncertain, complex and ambiguous…the VUCA environment plays havoc with the development of an organization’s overall leadership capability. In order to maximize short-term and long-term investments and returns on leadership development…a different approach is not only recommended, but required…that is portfolio management. Like a mutual fund manager, organizations need someone that can act as the Leadership Capability Portfolio Manager or LCPM.

To do this requires a strategic perspective by understanding the business strategy and the leadership capability needed to execute that strategy…so that is a no brainer. However, we know that most competency models that leadership development programs are based upon are focused on what leadership capability you need now and not building the kinds of leaders you need for future competitive advantage. Additionally, if you take a strengths-based approach to leadership development like me, you know that there are going to be some capabilities within your competency model that no matter how important they are…not everyone is or will be a 5 (On a 1-5 scale) in every competency. The law of diminishing returns kicks in and increased investment in developing a tactical execution focused leader into a strategic vision leader will be wasted.

Now enter the realm of the LCPM…Because this person or group in your organization understands the business strategy, HR/HC strategy, leadership competency model, future leadership needs to execute, etc. your team is better positioned to manage for risk in the leadership pipeline and make targeted investments in areas where more risk can be taken or areas where less risk is advisable. This approach also allows you to manage individuals as a true capability. For example, if you know that the business will need frontline leaders that are collaborative and with high emotional intelligence in the next 2-3 years and reduced change management because your future looks stable (OK…this is probably WAY unrealistic)…then you can afford to “divest” change management investment in the leadership development program in order to “invest” in more leader capability in collaboration and emotional intelligence.

Taking this approach shows a direct understanding of the business and future HR/HC needs o enable its continued success AND a prudent approach to human capital investment. So the only thing left is one question…

How are you managing your leadership pipeline?

Cheers,
Keith

Twitter: JKeithDunbar
Linkedin: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

Is HR too big to innovate?

Greetings,

A recent story on Google got me thinking about the state of our profession. In the story by Business Insider titled "Internally, Google Knows It Has an Innovation Problem", they discuss the key differences between Google and Instagr.am and their respective abilities to innovate. While the overall story made a number of key points, the one that caught my attention was this one...

"Google can’t keep its teams small enough. Instagram was started by two guys who rented a table at DogPatchLabs in Pier 38 (the first time I met the Instagr.am team was when Rocky and I did this video on Dogpatch Labs). The exec I was talking with said Google Wave had more than 30 people on the team. He had done his own startup and knew the man-month myth. For every person you add to a team, he said, iteration speed goes down. He told me a story of how Larry Ellison actually got efficiencies from teams. If a team wasn’t productive, he’d come every couple of weeks and say “let me help you out.” What did he do? He took away another person until the team started shipping and stopped having unproductive meetings."

The story of Ellison and his approach to innovation seems counter-intuitive as the author points out...it does to me, but I want you to think to some point in your past. Were you ever on an important HR team that was really attacking an important problem in the organization and feel like it was too big to make decisions or...yes...innovate? I have...

The recent 2010 IBM Chief Human Resource Officer (CHRO) Study identified three key areas requiring attention.

1. Cultivating creative leaders.
2. Mobilizing for speed and flexibility.
3. Capitalizing on collective intelligence.

All three of these focus areas will rely heavily on the ability of HR to innovate itself at a pace that keeps up with the global changes taking place. But a key question for HR is are we too big to innovate? Are we so focused on tactical and operational that it inhibits creativity and innovation in HR? I discussed this in July when talking about an HR Skunk Works approach.

My perspective is HR may be too "big" because it is burdened with a "little" thinking approach. A report from the Korn/Ferry Institute titled "Business Today Demands a Comprehensive Talent Strategy. Can HR Deliver?" argues that HR leaders need to be more strategic. To do that, then HR needs to build the right competencies for itself. The report specifically states the following:

"Developing Strategic HR Leaders - Strategic capability includes a number of competencies: business acumen; strategic agility; problem solving; perspective; and the ability to deal with ambiguity, to learn “on the fly,” to manage innovation and creativity, and to make quality decisions on complex issues that have long-term consequences."

The key for HR to innovate and meet customer needs in the future...find the right people and put them in charge! Find the right kind of people early in their HR careers...and nurture them!

Then it won't matter how big HR is in the future...

Nuff said!

Cheers,
Keith

Twitter: JKeithDunbar
Linkedin: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

Are CEOs and CHROs Aligned on Leadership?

Greetings,

So an interesting question that I pose. On the outside it seems a no brainer. CEOs have a business strategy and they know that the need leaders to enable the strategy in the organization. CHROs know that they need to deliver leaders through recruiting and development that can execute the business strategy. Yet here we are in 2010 and we find the appearance of misalignment...so let's review the bidding.

In 2008, IBM's CEO Study titled "Enterprise of the Future" laid out five key areas for consideration that organizations needed to be successful. These areas included Hungry for Change, Innovative Beyond Customer Imagination, Globally Integrated, Disruptive by Nature, and Genuine, Not Just Generous. There was a realization in this study that organizations needed a new breed of leaders. This was made explicit in the 2010 study. In May, IBM's Global CEO Study was released titled "Capitalizing on Complexity." In the study, CEOs identified "creative leadership" as a core need of their organizations in the future. This quote from the study shares some of the implicit thinking behind creative leadership...

"Creativity is often defined as the ability to bring into existence something new or different, but CEOs elaborated. Creativity is the basis for “disruptive innovation and continuous re-invention,” a Professional Services CEO in the United States told us. And this requires bold, breakthrough thinking. Leaders, they said, must be ready to upset the status quo even if it is successful. They must be comfortable with and committed to ongoing experimentation."

Then in October 2010 comes IBM's Global Chief Human Resource Officer (CHRO) study titled "Working Beyond Borders." In it, CHROs continued to indicate the importance of developing leaders in the organization as captured in this piece from the study...

"Building an organization with flexibility and dexterity requires leadership with the creativity to adapt to a constantly changing environment. These leaders must be able to negotiate through a maze of differing cultures, complex inter-generational dynamics and varied communication styles...Creative leaders share a set of common characteristics that help them innovatively lead their organizations. They challenge every element of the business model to realize untapped opportunities and improve operational efficiency. Leaders grow their businesses through the exploration, selection and execution of diverse, even unconventional, ideas about the potential of new markets. They leverage new communication styles to motivate talent and reinvent relationships, both internally and across the supply chain, to create collaborative productivity. They focus on the bigger picture — the global marketplace — and how to lithely optimize the collective skills of their organizations."

So there appears to be alignment in the need for creative leaders or at least that CHROs read the CEO study. But then 2 of every 3 CHROs admit their organizations are ineffective at developing future leaders (See the attached graphic from the IBM Global CHRO Study). That is surprising (IBM thought so as well)...

So taking a different perspective based upon the CHRO study is important, because admitting that we are ineffective at leadership development has ramifications. First we are saying that the estimated $9.5B per year we are spending on leadership development is being wasted. Second we are saying that what is most important to CEOs we are not good at doing for them. Are these the messages we want to communicate to our bosses and organizations? Kind of doubt it, but that is how it came out...

Are CHROs and their teams ineffective at building leaders? Probably not...In an earlier post here titled "Leadership and Organizational Performance...Lack of Linkage" I raised the aspect that academic research had problems, for a variety of reasons, in linking leadership to organizational performance and by default leadership development programs have the same challenge.

So how do we adjust and meet expectations? For starters, as Human Capital Management (HCM) leaders we have to get serious about defining leadership capabilities needed to execute the business strategy and workforce analytics needed to measure whether we are being successful. In fact, the effort put towards measuring the impact leadership development should equal the effort we put into leadership development itself. Without the key metrics, we are unable to determine impact or make adjustments in leadership development programs...this is critical to changing the perspective we have set for the organizations we serve.

Nuff said...

Cheers,
Keith

Twitter: JKeithDunbar
Linkedin: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/

I'm Looking for Great Leadership...Not Just Effective Leadership...

Greetings,

The role of leadership in organizations is recognized as a critical need for their evolution. This has become even more important in a world so complex and volatile as the one we operate in now. CEOs taking part in IBM’s 2010 Global CEO Study titled “Capitalizing on Complexity” admitted the following:

“In our past three global CEO studies, CEOs consistently said that coping with change was their most pressing challenge. In 2010, our conversations identified a new primary challenge: complexity. CEOs told us they operate in a world that is substantially more volatile, uncertain and complex. Many shared the view that incremental changes are no longer sufficient in a world that is operating in fundamentally different ways…Today’s complexity is only expected to rise, and more than half of CEOs doubt their ability to manage it. Seventy-nine percent of CEOs anticipate even greater complexity ahead.”

Yet, our current leadership model is hurting our ability to deal in a world loaded with volatility, uncertainty, complexity and ambiguity…a VUCA world. I recently read a blog post by Ted Coine on his 21st-Century Business blog. In his blog titled “Management is War? Make That Was.” Ted discussed the role of World War II in creating our current organizational structures in the private and public sectors. Watch HBO shows like “Band of Brothers” and “The Pacific” and you will see it…command-and-control leadership. People with experience and capability are put in positions of authority to get goals accomplished. Whether storming beaches or taking a town one house and street at a time…the great thing about command-and-control leadership in World War II is it got results. Missions were achieved and the war won…But according to Ted it has created challenges and an overall inability to leverage the talent in our organizations as noted in his comments below….

“Here's the thing, though: top-down leadership creates vast waste of human talent. It motivates us to do what the big boss orders, but it also turns off our inner drive to exceed when no one's watching, or monitoring, or counting one acute measurement of our output.

Order your people around, and they'll do the bare minimum to keep their jobs. Measure their performance by the numbers, and they'll give you those numbers - and very little more. Think for them, and they'll stop thinking for themselves - they'll stop thinking for you, for your company.”

The importance of leadership has never been more important in our country than it is now. Yet, we find ourselves wanting for great leadership. This was recently brought home for me when the Partnership for Public Service announced its 2010 Best Places to Work rankings for the Federal government.

While many factors are considered in the overall index ranking for organizations...the key factor shaping how employees see their workplace, for the fifth time in a row, was effective leadership. Much of what you would expect is rolled into determining the grades for this category. The survey asked about the ability of senior leaders and supervisors to generate motivation, commitment, opportunities for employees to lead and developmental opportunities. Scores for the largest Federal departments and agencies varied from 73.5 at the Nuclear Regulatory Commission (Who was recognized as the #1 place to work in Federal government) to 46.5 at the Department of Housing and Urban Development. But there is something deeper as Ted Coine sees from his perspective of the private sector that is even more prevalent in the public sector.

When you look at scores for large Federal organizations in "Effective Leadership"...It's kind of sad...for the top 28 organizations with scores it averaged out to the following overall grades for "Effective Leadership" in the Federal government since 2007:

2010 - 55
2009 - 53.2
2007 - 51.7

While there has been improvement in the average scores since 2007, even if you grade on a significant curve...a 55 is a failing score (Let’s be honest…the 73.5 that the Nuclear Regulatory Commission scored is just average). These kinds of scores speak to what can only be seen as a leadership gap not because people are leaving positions, but because they are in them!

So why don't we have more of it in the Federal government? Could be any number of reasons. My experience and perspective tell me this...in top-down driven, bureaucratic organizations where the working environment is about rules, standards, process and tasks driving organizational activities, senior leaders and supervisors are more like a boss than a leader. I discussed this in a previous blog post on my DNA of Human Capital blog titled "Is Your Boss Your Leader?" There is a big difference between the two and what benefits they bring to an organization. Leaders inspire people engagement and drive innovation and results by leveraging talent in the public sector and not wasting it. In the future, Federal government organizations will need great leadership and not just effective leadership to create and fuel the kind of results that efficiently manage resources and effectively achieve results that drive the United States. The kind of great leadership that is transformational...The American citizen requires no less.

Cheers,
Keith

Flexible Human Capital Response Options...

Greetings,

The world is filled with volatility, uncertainty, complexity, and ambiguity (VUCA) as I have discussed several times. This kind of environment makes agility and adaptability a premium in being able to deal with this environment and prevent what Nassim Nicholas Taleb calls "Black Swan Events." Taleb's theory "refers only to unexpected events of large magnitude and consequence and their dominant role in history. Such events, considered extreme outliers, collectively play vastly larger roles than regular occurrences."

The United States Intelligence Community (IC) and military understand the importance of trying to identify Black Swan events early and prepare plans that allow commanders Flexible Deterrent Options (FDO) in the deployment of available forces. These show of force operations usually involve the build-up or deployment of forces, an increase in readiness and level of activity. The concept of Adaptive Planning provides the following:

"The adaptive planning concept calls for development of a range of options during deliberate planning that can be adapted to a crisis as it develops. Where the crisis builds slowly enough to allow, appropriate responses made in a timely fashion can deter further escalation or even diffuse the situation to avoid or limit conflict. Where such options fail to deter or there is not time to execute options, a stronger response may be required to protect vital interests. The eventuality of attack without prior warning must also be considered."

So in understanding this approach and why it is used in the Department of Defense, I turn to Human Capital Management(HCM). The current economic environment has created challenges in looking at strategy as a "long-term" need. In some respects during the initial stages of the financial meltdown...strategy was emerging on a weekly basis in many organizations. In that context, it was difficult for HCM to be proactive and support the business and really precipitated reactive tendencies.

So this provides the context for application of adaptive planning in creating flexible human capital response options (FHCRO) in private and public sector organizations. HCM leaders must start by getting into the organizations strategic planning cycle. Playing a proactive role in this process by understanding the organizations short-, mid-, or long-term strategy allows for defining the human capital capabilities (knowledge and skills) required to execute the business strategy. This however, is just to start...to create FHCROs, HCM leaders should conduct scenario planning sessions that seek to identify the most and least likely human capital situations aligned to the strategy. This allows thinking about potential Black Swan events and their effect on the organization's human capital.

By combining scenario planning and business requirements definition, the HCM leader can develop a series of tailored FHCROs that are agile and adaptable enough to adjust to quickly changing events. Because in the future...organizations that can adjust the fastest to VUCA environments will be the ones best positioned to excel.

Cheers,
Keith

Twitter: JKeithDunbar
Linkedin: http://www.linkedin.com/in/jkeithdunbar
DNA of Human Capital: http://dna-of-humancapital.blogspot.com/