There is no knowledge leader I admire more than I do Ed Lawler. In this book, he makes what I consider to be his most important contributions thus far to our understanding of how to gain and then sustain a competitive advantage by finding, hiring, and retaining the right talent with the right structures, systems, processes, and practices in place. Only then can organizations “perform so well and change so fast that they string together a series of temporary advantages.” Lawler asserts (and I agree) that “fewer and fewer companies can be successful by practicing an old-school bureaucratic [structure-centric] approach to management.” What does he recommend to decision-makers in most (but not all) organizations? The human capital centric (i.e. HC-centric) business model.
What does it look like? “To begin with, it is important to understand what its core is. Above all else, an HC-centric organization is one that aligns its features (reporting systems, compensation, division and department structure, information systems, and so on) toward the creation of working relationships that attract talented individuals and enable them to work together in an effective manner.” Unlike in a bureaucratic, structure-centric organization,
1. “Business strategy is determined by talent considerations, and it in turn drives human capital management practices.
2. Every aspect of the organization is obsessed with talent and talent management.
3. Performance management is one of the most important activities.
4. The information system gives the same amount of attention and rigor to measures of talent costs, performance, and condition as it does to measures of equipment, materials, buildings, supplies, and financial assets.
5. The HR department is the most important staff group.
6. The corporate board has both the expertise and the information it needs to understand and advise on talent issues.
7. Leadership is shared, and managers are highly skilled in talent management.”
However, every organization is a “work in progress.” Although these seven attributes may describe an organization today, but that by no means ensures that they will be true of it tomorrow. Hence the meaning and significance of Lawler’s reference to stringing together “a series of temporary advantages.” They can be achieved only if there is sufficient talent and if the right structures, systems, processes, and management practices are in place to develop and retain that talent while attracting whatever other talent may be needed. The extent to which an organization is and remains HC-centric will determine the extent to which it will not only achieve but sustain a decisive competitive advantage.
What Lawler provides in this volume is a combination of information and counsel that will help decision-makers to determine whether or not their organization should be HC-centric. Then, if the choice they make is affirmative, Lawler’s book will guide and inform their efforts to design, build, and then manage such an organization. Throughout his narrative, Lawler correctly reminds his reader of the difficulties of doing that. “Structures need to change, and practices need to change, but even that is not enough. People inside and outside the need to change the way they think about the organization. The organization needs to become recognizable from all angles as HC-centric.” People change organizations, books don’t. (The author or co-author of more than 40 books himself, Lawler is well-aware of that.) Moreover, unless there is high involvement in the transformation process, at all levels and in all areas of the given enterprise, the ultimate objectives cannot be achieved.
Do not be misled by the reference to “corporation” in the title. What Barbara Bund provides in this book can be of substantial value to decision-makers in any organization (regardless of size or nature) which has an urgent need to achieve “breakthrough results” by gaining a much better understanding of — and then becoming much closer to — those of greatest importance to its success. Thus, healthcare providers would think in terms of becoming patient-centric, trade and professional associations (e.g. chambers of commerce) would think in terms of becoming member-centric, etc.
As she explains in the Preface, “The primary objective of this book is to help business managers use [her various] insights effectively in practice. It is to share the outside-in discipline — to provide a road map for managers to follow in creating and leading outside-in corporations, even in organizations where the unfortunate inside-out perspective has prevailed in the past.” (page xviii)
Bund carefully organizes her material within 13 chapters which begin with a probing analysis of “the bad habit of inside-out thinking” and conclude with a summation of “the bad news and the good news” followed by provision of four additional “outside-in tools” and then a recommended process to establish and then sustain an “outside-in discipline.” I especially appreciate the fact that Bund provides recommended “Outside-In Actions” at the end of each chapter. These sections reiterate key points, of course, but they can also serve as invaluable self-audits if completed with appropriate rigor and (yes) candor.
“The most important thing about this definition [of strategy based on a marketing mix of product, price, communication, and distribution] is that it requires that the strategic tools must be chosen to address the needs of one or more market segments. There must be a clear customer foundation, based on customer needs and behavior. In addition, the components of the strategy must fit with one another and work together; they must be consistent and coordinated.” In this volume, Bund cites a number of exemplary organizations (e.g. Costco, Dell, eBay, FedEx, and GE) that “have an explicit customer-based reason for everything [they] do in the marketplace.” Guided and informed by the outside-in discipline, they have better strategy design, better communication of strategy to others, and better ability to adapt when there are changes in the competitive marketplace. They have achieved breakthrough results because they understand, really understand why their customers are “the key.”
To repeat, I think this book can be of almost incalculable value to decision-makers in almost any organization (regardless of size or nature) if — huge “if” — they make and then sustain a total commitment to becoming and then remaining customer-centric. Of course that won’t be easy. Barriers must be overcome. One of the worst is what Jim O’Toole once characterized as “the ideology of comfort and the tyranny of custom.” Hence the importance of Bund’s counsel. The game plan she recommends is cohesive, comprehensive, and cost-effective. Certain modifications of that plan will be necessary, of course, but the outside-in discipline must never be compromised. At least some organizations will achieve breakthrough results this year. Why not yours?
If I were to make a list of the five most important books ever published in the subject of knowledge management, this would be one of them. Published more than a decade ago, it is even more relevant – and more valuable – now than it was in 1998. O’Dell and Grayson wrote this book for several important reasons, including their determination to help all organizations (whatever their size and nature may be) to take full advantage of their “beds of knowledge” which are “hidden resources of intelligence that exist in almost every organization, relatively untapped and unmined.” They suggest all manner of effective strategies to “tap into “this hidden asset, capturing it, organizing it, transferring it, and using it to create customer value, operational excellence, and product innovation — all the while increasing profits and effectiveness.”
Almost all organizations claim that their “most valuable assets walk out the door at the end of each business day.” That is correct. Almost all intellectual “capital” is stored between two ears and much (too much) of it is, for whatever reasons, inaccessible to others except in “small change.” Worse yet, those who possess this knowledge function as human silos, disconnected or at least insufficiently connected with compelling needs for that knowledge.
O’Dell and Grayson organize their material as follows:
Part One: A Framework for Internal Knowledge Transfer
Part Two: The Three Value Propositions [i.e. Customer Intimacy, Product-to-Product Excellence, and Achieving Operational Excellence]
NOTE: Part Two will be even more valuable when read in combination with Michael Treacy and Fred Wiersema ‘s The Discipline of Market Leaders.
Part Three: The Four Enablers of Transfer
Part Four: Reports From the Front Lines: Pioneer Case Studies
Part Five: The Four Phase Process: Or, “What I Do on Monday Morning”
In the Conclusion, the authors assert that “there is no conclusion to managing knowledge and transferring best practices. It is a race without a finishing line.” They are right, now and especially in years to come. In the concluding chapter, the authors share ten “Enduring Principles” which should inform and direct the formulation of any plan by which to manage knowledge and transfer best practices. During implementation of the plan, everyone involved must be willing and able to make whatever adjustments may be necessary. Perhaps the authors would agree with me that an 11th “enduring principle” affirms that change is the only constant. Those who share my high regard for this book are urged to check out O’Dell’s The Executive’s Role in Knowledge Management written with Paige Leavitt as well as Peter Senge’s The Fifth Discipline and The Dance of Change, and William Isaacs’ Dialogue.
In case you missed them, see which articles have been most popular with—and most discussed by—The McKinsey Quarterly‘s readers in the second quarter of this year. Read them today and join the conversation. To read any/all of these articles, please click here.
1. STRATEGY: How to test your decision-making instincts
Executives should trust their gut instincts—but only when four tests are met.
2. MARKETING: A new way to measure word-of-mouth marketing
Assessing its impact as well as its volume will help companies take better advantage of buzz.
3. STRATEGY: Five forces reshaping the global economy: McKinsey Global Survey results
The core drivers of globalization are alive and well, but executives are still grappling with how to seize the opportunities of an interlinked world economy.
4. BUSINESS TECHNOLOGY: Why business needs should shape IT architecture
To get the most out of these programs, organizations must ensure that they are led by people with the right skills, connections, and attitudes.
5. STRATEGY: The case for behavioral strategy
Left unchecked, subconscious biases will undermine strategic decision making. Here’s how to counter them and improve corporate performance.
6. MARKETING: The basics of business-to-business sales success
B2B customers say they care most about product and price, but what they really want is a great sales experience. For sales reps, that means getting the basics right.
7. STRATEGY: Strategic decisions: When can you trust your gut?
Nobel laureate Daniel Kahneman and psychologist Gary Klein debate the power and perils of intuition for senior executives
8. STRATEGY: When companies underestimate low-cost rivals
Attackers are threatening premium players in market after market—and not only at the low end.
9. CORPORATE FINANCE: Five ways CFOs can make cost cuts stick
Successes in cost cutting erode with time. Here’s how to make them last.
10. MARKETING: Unlocking the elusive potential of social networks
To realize the marketing potential of virtual activities, you have to make them truly useful for consumers.
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Lawler is a Distinguished Professor of Business at the University of Southern California Marshall School of Business and founder and director of the University’s Center for Effective Organizations (CEO). He has been honored as a major contributor to theory, research, and practice in the fields of human resources management, compensation, organizational development, and organizational effectiveness. Lawler is the author or co-author of 41 books which include Achieving Strategic Excellence: An Assessment of Human Resource Organizations co-authored with John W. Boudreau and Susan Albers Mohrman, Human Resources Business Process Outsourcing – Transforming: How HR Gets Its Work Done co-authored with Dave Ulrich, Jac Fitz-enz, and James C. Madden V, Treat People Right! How Organizations and Individuals Can Propel Each Other into a Virtuous Spiral of Success, and Built to Change: How to Achieve Sustained Organizational Effectiveness co-authored with Christopher G. Worley. The New American Workplace was co-authored with James O’Toole. His most recent book is Talent: Making People Your Competitive Advantage, published by Jossey-Bass (2008).
Morris: First, an observation. Most people do not seem to fear change; rather, what they fear is the unknown. Your opinion?
Lawler: I agree. There is no “fear of change” gene. In fact, many of us seek out change. What people fear, or resist, is change that worsens their situation. Given ambiguity and lack of information and knowledge, people often fear change that may indeed turn out to be a positive for them, but they don’t know this, and as a result, resist the change. The message from this analysis for people who are leading change is quite clear: in order to overcome resistance to change, it is important to have people who like change, and perhaps more importantly, to create situations in which the future looks better than the present.
Morris: In much of your brilliant work, you examine various changes in the American workplace. In recent years, which change seem to be the most significant? Why?
Lawler: If I had to pick one change, I will pick information technology. It has changed so many aspects of the workplace that it is hard to argue that it is not the most important. It has changed the way business is done, the way people work, and its influence will continue to grow over the coming decades. Not surprisingly, information technology has had both positive and negative impacts on people and the workplace. It has clearly boosted productivity, led to the growth of many economies, made information exchange much easier, and caused the internal processes and structures of organizations to change dramatically. Jim O’Toole and I look at this issue in much more depth in our new book, The New American Workplace, published in 2006.
Morris: Given your response to the previous question, how have these changes required senior-level executives to lead and manage differently?
Lawler: Information technology has provided tremendous new management tools for senior executives. In the area of leadership, it has allowed them to communicate in many more ways and much more effectively than they have been able to do in the past. It has also allowed them to create new organization structures that are more efficient, customer focused, and knowledge based. It has also created significant challenges in the area of leadership and management. One area that we don’t know very much about is virtual leadership, but there is no question that executives need to get better at it and understand it better. Given that frequently they may not have a great deal of face-to-face contact with the individuals they are leading.
Morris: Competition for talented people is probably greater now than ever before. Based on your extensive experience as well as what your research indicates, what seem to be the best strategies for retaining highly valued employees?
Lawler: I am not going to argue that there is a silver bullet for retaining highly valued employees. I don’t believe there is one. There are a series of things, however, that an organization can do and should do in order to be sure that it retains its most highly valued employees. The first is to identify who they are, and the second is to create an employment proposition that is at the top of the market. This can be expensive, so the key is to give rewards and benefits that have a significant positive impact on individuals. Often the best way to assure maximum value received for rewards and activities that are designed to retain individuals is to individualize them. This means letting individuals shape their own employment deal or contract through the choices they make. This is clearly one way of ensuring that they get what they value.
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Here is an excert from an article appeared in the September 2008 issue of O, The Oprah Magazine. To read the complete article, please click here.
IDEO, one of the planet’s most innovative design firms, has brought us the Apple mouse, the first laptop computer, and the Palm V. The team’s legendary creative process was once showcased on Nightline when they dreamed up an entirely new high-tech shopping cart, going from idea to working model in five days. IDEO’s general manager (and brother of the company founder) Tom Kelley explains how the rest of us can apply the firm’s creativity-generating techniques to get unstuck.
— As told to Jancee Dunn
Forget Making a List
Lists often come from the organized, analytical left side of your brain, and to solve an intractable problem, you want to engage the right, the creative side. Make a mind map instead. Get a big piece of paper and start in the center with a circle that contains the original problem. Write different solutions, and follow paths outward on the page, limb by limb, pushing beyond the obvious. To plan a party, for example, I put “A great dinner party for friends” in the middle, and among the many branches, one went: “Make your own sundaes → mashed potatoes → have dessert first → sit on floor → indoor picnic.” Another branch went: “Progressive dinner → go to different restaurant for dessert(s) → show up at friends’ houses uninvited → scavenger hunt to find food.” A third: “Teach something → learn something → juggling → magic trick → expert invitee on food/wine.” Your to-do list will just get you from point A to B.
Keep a Journal, But Not Just Any Journal
Good to Great author Jim Collins asked people who felt stuck, “What are you born to do? What are you passionate about?” A lot of them would look at him blankly. So he’d explain: As a kid, he was really into science and jotted down observations in lab notebooks. When he grew up, he worked at Hewlett-Packard—a great company—but he just wasn’t happy. While he was trying to figure a way out of his situation, he bought a new lab notebook, wrote his name on the front, and studied himself as if he were a bug, trying to understand what kind of bug was this thing called Jim. Each night he’d write the answer to this question: When during the day did I feel bored; when did I feel engaged? After a while, he noticed that his favorite moments involved teaching people. So he went off to do that and lived happily ever after. When you start paying attention to when you’re at your best (it can take a while to find a pattern), the results can open up unexpected new territory.
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To read the complete article, please click here.
Tom Kelley is general manager of IDEO. the widely admired design and development firm that brought us the Apple mouse, Polaroid’s I-Zone instant camera, the Palm V, and hundreds of other cutting edge products and services. He’s also co-authored with Jonathan Littman two outstanding books on innovation that share the secrets of IDEO’s success: The Art of Innovation: Lessons in Creativity from IDEO, America’s Leading Design Firm and The Ten Faces of Innovation: IDEO’s Strategies for Defeating the Devil’s Advocate and Driving Creativity Throughout Your Organization.
Those who have read Thomas Friedman’s The World Is Flat no doubt recall an assertion he makes in his introduction to the second expanded version: “My use of the word `flat’ does not mean equal (as in `equal incomes’) and never did. It means equalizing, because flattening forces are empowering more and more individuals today to reach farther, faster, deeper, and cheaper than ever before, and that is equalizing power – and equalizing opportunity, by giving so many more people the tools and ability to connect, compete, and collaborate. In my view, this flattening of the playing field is the most important thing happening in the world today, and those that get caught up in measuring globalization purely by trade statistics – or as a purely economic phenomenon instead of one that effects everything from individual empowerment to culture to how hierarchical institutions operate – are missing the impact of this change.”
In this book, Victor Fung, William Fung, and Yoram (Jerry) Wind explain how to build an enterprise for a borderless world, one that can “embrace the flat world” and understand how it works so as to take full advantage of the many new opportunities it offers. “Those that cannot adapt quickly enough to these new realities will fall behind or be bought out by those who have learned how to compete in a flat world. The opportunities are as broad as the world.” They then pose the question to which their book is a rigorous and eloquent response: “How do you need to remake your organization, management, and mindset to seize these opportunities?”
The material is carefully organized and then presented within twelve chapters, followed by a Conclusion in which they ask their reader, “Are you ready to compete flat out?” Those who read, absorb, and then apply Fung, Fung, and Wind’s advice will be well-prepared to answer that question in the affirmative.
Of special interest to me is what they have to say in Part III as they focus on value creation. Specifically, in Chapter 9, how to capture the “soft 3$” by looking beyond the factory:
“Markdowns are a flaw in the manufacturing process. They mean that a product has lost value because it was not the right product at the right time at the right place.”
“In a flat world of unpredictable demand, avoiding markdowns, stockouts, and expensive whipsaws in the supply chain is harder and more important.”
And then in Chapter 10, how to sell to the source by bridging marketing and operations:
“For companies that are sourcing from China, India, and other emerging markets, sometimes insights from emerging consumer markets come from the floors of their own factories or call centers.”
“The challenge is to ride the wave of consumer market growth without getting too far ahead or behind.”
“Sourcing can [also] offer insight into many different areas, including regulations and policies, risks, competition, detailed market information, and market shifts.”
As I hope these brief excepts indicate, Fung, Fung, and Wind are relentless empiricists and hardcore pragmatists who identify the “what” of “flat-out competition” but devote most of their attention to explaining the “how” of achieving and then sustaining success.
Put this in my “I wish I had time to read every book that interests me” category.
Here’s a question: “can you trust the numbers you read?” The answer, apparently, is “no.” And this stance of “distrust” is one that we should probably take in the business book arena.
Here’s the info. It comes from Jack Shafer, from Slate.com this morning: By the Numbers: A terrific new book of essays encourages us all to be skeptical about statistics. Here’s an excerpt:
If you’re a journalist, a gluttonous consumer of news, or are easily swayed by the slapdash, stop what you’re doing and go buy a copy of Sex, Drugs, and Body Counts: The Politics of Numbers in Global Crime and Conflict. Set aside a couple of hours tonight to read three or four of the essays that academics Peter Andreas and Kelly M. Greenhill collected in it. Then, sit down in front of your computer and send me an e-mail to thank me for helping to end your enslavement to the dodgy numbers that taint journalism and public policy. It’s not just a good book. It’s a great book. And it belongs forever on your bookshelf.
That is just about the strongest endorsement of a book you can read. Will I have time to read it? It sounds like I need to make time.
What are the implications for business books/business studies? I think the thinking goes something like this. We are all starved for data. We have been taught to distrust anecdotal data. We want hard data. But, what if the hard data is softer than we think? What if the numbers are not reliable?
In the book (according to Shafer), journalists and authors have a tendency to accept numbers that are repeated by others, without going back to get the hard, firm source. And the editors/authors of this book discovered, in many instances, that numbers were… well, consider this paragraph:
Sex, Drugs, and Body Counts performs similar forensics on the assertion, oft-repeated in government reports, that al-Qaida allots 10 percent of its budget to operational costs and 90 percent to administration and infrastructure. When you trace the claim to its origin—a report on terrorism—you find no footnote or sourcing at all. The author apparently concocted it from thin air.
“Concocted from thin air.” That qualifies as a reason to be skeptical about the numbers you read. And it reminds us of this cautionary tale. Did Tom Peters, in In Search of Excellence, fake some data? Maybe he did. A Fast Company article says that he said he “faked the data:”
This is pretty small beer, but for what it’s worth, okay, I confess: We faked the data.
Whether Peters faked some data or not, there is little doubt that other authors have relied on data that was faked/fudged/made up/manipulated in a multitude of ways. So, at least, here is my recommendation: be very wary of accepting numbers that you read. If “distrust” is too strong a warning, then at least make “Trust, but verify” your mantra.