New competitive realities: How successful leaders respond

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New competitive realities How successful
leaders respond

• Athens, Greece
• Fall 2005
• Dave Ulrich
• dou_at_umich.edu

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Goals for today

• THINK
• About new competitive realities that shape what
  leaders need to know and do
• BEHAVE
• Do little things that make a difference
• FUN
• Enjoy the experience together

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Outline for the Session

• 5 competitive realities
• Competitiveness does not equal strategy, but
  strategy organization
• Organization does not equal structure, but
  capability
• Capabilities are not defined by the giver, but
  the receiver through the value they create
• Leadership is not an event or person, but a brand
• HR practices, departments, and professionals must
  respond

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1. Competitiveness is not just strategy, but
strategy organization

• Formulation of strategy
• Unique position in industry
• Importance of clarity
• Focus on growth or costs
• Execution of strategy
• Simple is not easy
• Knowing is not doing

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1. Competitiveness is not just strategy, but
strategy organization

• Leader role create a logic for strategic
  thinking that focuses on content (what is our
  strategy) and process (how we set our strategy)
• Vision define where we are headed
• Goals set targets and milestones
• Actions create a menu of choices
• Follow up measure, track, and
• communicate

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1. Competitiveness is not just strategy, but
strategy organization
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1. Competitiveness is not just strategy, but
strategy organization
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2. Organization is not structure, but capability
Define an organization less by its hierarchy than
by its capabilities Capabilities represent what
the organization is known for and/or good at
doing Capabilities turn strategy into action and
sustained results (a pattern, not an event)
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2. Organization does not equal structure, but
capability
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2. Strategy/capability/action framework
CURRENT STATE
FUTURE STATE
1
4
STRATEGY
2
5
CAPABILITY/ ORGANIZATION
3
6
ACTION
RESULT
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2. Organization does not equal structure, but
capability

• Possible Capabilities
• TALENT Intellectual capital, know how,
  competencies, skills, commitment, workforce
• SPEED Agility, adaptation, flexibility, cycle
  time, responsiveness
• SHARED MINDSET Culture change, transformation,
  firm identity, firm equity, firm brand, shared
  agenda
• LEARNING Knowledge management, sharing best
  practices,
• COLLABORTION boundary-less, teamwork, sharing
  information
• INNOVATION Administrative innovation, product
  creation, strategic innovation
• ACCOUNTABILITY Performance, execution,
  implementation
• LEADERSHIP Competencies, bench strength, quality
  of management, leadership brand
• STRATEGIC CLARITY Shared competitive agenda,
  strategic priorities, shared point of view
• EFFICIENCY Reengineering, reduce costs
• CUSTOMER SERVICE Customer focused organization,
  customer centric or intimacy

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2. Organization does not equal structure, but
capability
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2. Organization does not equal structure, but
capability
Reference Capitalizing your capabilities,
Harvard Business Review, June 2004
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2. Organization does not equal structure, but
capability
OUTCOME OF AN ORGANIZATION/HR AUDIT

• Defining and prioritizing the organizations
  capabilities required for success
• Gaining alignment from key stakeholders about
  what organization is required to succeed
• Figuring out where to allocate resources to win

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2. Organization does not equal structure, but
capability

• Leaders role in capability building
• See strategy as three, not two steps
• Audit capabilities
• Create capability plans that turn strategy into
  action

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2. Organization does not equal structure, but
capability
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2. Organization does not equal structure, but
capability
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3 Capabilities are defined by the receivers more
than the givers
Capabilities come from the value they deliver to
key stakeholders Value is defined by the
receiver more than the giver
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3. Capabilities are defined by the receivers more
than the givers
Value is defined by the receiver more than the
giver
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3. Receivers of value that leaders create
Customer Share
Employee competence and commitment
Investor intangibles
Leaders
Line manager Organization capabilities
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3. Receivers of value that leaders create
Service External sensing
Customer Share
Talent Accountability Learning
Quality of leadership
Employee competence and commitment
Investor intangibles
Leaders
Market value
Speed Shared mindset Collaboration Innovation Stra
tegic clarity Efficiency
Line manager Organization capabilities
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3. Capabilities are defined by the receivers more
than the givers

• Leaders role in defining value
• Focus on value created more than activity
• Recognize that there are multiple
• stakeholders in determining value
• Manage the paradoxes of competing stakeholders

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3. Capabilities are defined by the receivers more
than the givers
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4. Leadership is not an event or person, but brand

• Define what leadership means
• Specify why leadership matters
• Lay out an agenda to be a branded leader or build
  a leadership brand

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4. History of Leadership Theories
2000s Whats next?
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99
1,9
80s/90s Universal Principles
70s/80s Situational
1,1
9,1
1
60s
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One best way
40s/50s
Great Man theory of leadership-
mental/physical attributes
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4. Leadership as a Brand

• 1. Product
• 2. Firm
• 3. Leadership

Insert Nestle logo
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4. Leadership as a Brand

• What the metaphor of leadership brand offers
• Brand focuses outside/in and the impact of
  leaders
• Brand puts leadership into business language
• Brand applies across all levels of leaders
• Brand is sustainable in the organization not a
  person, but a leadership brand for all leaders
• Brand has efficacy it has to be real or it does
  not last
• Brand adds value and focuses on value created
• Brand is unique and tied to strategy and not
  generic
• Brand evolves over time to meet needs of
  customers
• Brand turns firm brand into actionable choices
  and decisions

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4. Leadership as a Brand
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4. Leadership as a Brand
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4. Leadership as a Brand
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4. Leadership as a Brand
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Leadership brand higher stock price
Bob Nardelli
Jack Welch
Jim McNurney
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19 GE stars immediately added an astonishing
24.5 billion to the share prices of the
companies that hired them with no change in GEs
share price..
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4. Six Components to Be or Build the Leadership
Brand
1. Compelling case for leadership
Need
2. Declare leadership needed for strategic
results
Declare
6. Ensure reputation
Leadership Brand
Measure
3. Assess leaders and leadership
5. Measure impact of investment
Invest
4. Invest in leadership capability
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4. Leadership Brand
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4. Leadership Brand
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5 Changing HR role(HR is not just for HR)

• Views of HR
• HR practices
• People
• Performance
• Information
• Work
• HR department
• Strategy
• Structure
• HR professionals
• Roles
• Competencies

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5 Changing HR role(HR is not just for HR)
Invest in people practices

• People competence commitment
• Competence assessment and investment
• Commitment engagement and productivity

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Competence Investment
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Commitment Investment

• Sources of commitment
• Information
• legitimate, credible, consistent
• Behave as if
• Engagement, participation
• Reinforcement
• Financial, non-financial

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5 Changing HR role(HR is not just for HR)
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5 Changing HR role(HR is not just for HR)
Invest in performance practices

• Setting standards
• Allocating rewards (financial and non-financial)
• Providing follow up and feedback

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5 Changing HR role(HR is not just for HR)
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5 Changing HR role(HR is not just for HR)
Invest in information practices

• Communication strategy
• Information transmission

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5 Changing HR role
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5 Changing HR role(HR is not just for HR)
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5 Changing HR role(HR is not just for HR)
Invest in work practices

• Who does the work? (organization structure,
  reporting relationships)
• How is the work done?(teams, work processes)
• Where is the work done?(work space)

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5 Changing HR role(HR is not just for HR)
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5Assuring HR professionalism (HR roles,)
Play the right HR roles
Strategic partner
Change agent
Functional expert
Administrative expert
Employee champion
Employee advocate
HR LEADER
Strategic partner
Human capital developer