The only route to improved performance is by placing human resource at the centre of your strategic decision-making
Strategy is an often confusingly used term that may mean different things to different people. I have seen this happening in Sri Lanka, where crafting and executing strategy is cluttered by myriad jargons. We need clarity and commitment towards formulating and implementing strategy at corporate level as well as country level. It is people who design and deliver in driving results. Today’s column is an attempt to reflect on strategy formulation and execution in the Sri Lankan context.
Being strategic is of utmost importance in the business context. It essentially shows how ‘smart’ you are in ‘playing the game’. The roots are from the Greek word ‘strategios’, which means the art of the General. Obviously, it has a military connotation. How a general orders the troops to attack, or to withdraw or to surround the enemy, with the aim of winning the war in mind. A battle front and a business front have a lot in common, particularly with the sky-rocketing competition, globally as well as locally.
A game plan cannot be conceived or commissioned without people. In any organisation, we have physical, financial and information resources. All those three resources are not of any use if you do not have the most precious resource, its people. That is exactly, why people, to be precise, the ‘right’ people, are the most precious asset to any forward-looking organisation. How to acquire, retain, develop, and engage them have become increasingly challenging with the growing complexity associated with doing business in a globalised world. Hence, managing human resources has become a critical factor for organisational success.
Living strategy with people
“If ‘people are our greatest assets’, it’s time to make strategies that people can live in”, so says Prof. Lynda Gratton of London Business School, in her much-acclaimed book, ‘Living Strategy’. “People are our most important asset.” “We are a knowledge-based company.” “All we have is our people.” These are statements that we hear ever more frequently from more and more companies. Yet too many of the people who populate our companies, the reality of organisational life is that people do not feel they are treated as the most important assets and they do not feel their knowledge is understood or used. As Prof. Gratton emphasises, it is time we kept human capital where it really deserves to be.
“The only route to improved performance is by placing human resource at the centre of your strategic decision-making,” argues Linda. ‘Living Strategy’ shows you why and how to design strategies that have meaning and purpose for people, without whose commitment they remain drawings on the boardroom wall chart. She suggests that a new management agenda is crucial and shares the three tenets of human organisational behaviour.
For corporate strategy to live and work, people have to understand strategy, and strategy makers have to understand people. Prof. Lynda Gratton stresses the need to be aware of the ‘why’ and ‘how’ of putting people at the heart of corporate strategy. If companies want to increase their business performance, they need to recognise and develop the soul of the organisation.
How has Hewlett-Packard sustained 20% annual growth over a 10-year period, or GlaxoWellcome brought its products to the marketplace quicker by achieving significant reductions in its product development cycle, or Motorola kept its growth rate buoyant in China? Prof. Gratton raises a pertinent question. These are examples from across the globe but united by a common thread. If we had asked a similar question of companies in 1900, the answer would have been that these companies achieve success because they have the financial capital to expand into new and emerging markets.
In the ‘50s we could have spoken of their technological advantages, of the patents they hold and exploit. But in 2000, at a time when raising $ 1 million is a nanosecond away, when patents erode in months, the advantages of the past have little meaning. The new sources of sustainable competitive advantage available to organisations have people at the centre – their creativity and talent, their inspirations and hopes, their dreams and excitement. The companies that flourish in this decade will do so because they are able to provide meaning and purpose, a context and frame that encourages individual potential to flourish and grow.
“For some of us the idea that people are at the very centre of successful organisations is an overriding passion, for others it is something we feel deep down, at an intuitive level, or perhaps we believe that people are peripheral to success,” observes Prof. Gratton. “Over the years I have become increasingly aware that it is people who make great companies.” She further states that with this awareness has come a growing realisation that by putting people at the heart of corporate strategy we must acknowledge the very humanness of this resource.
As the book ‘Living Strategy’ vividly describes, there are examples from across the globe of how companies have created a human asset which is so intangible it cannot be easily described or imitated, but which is capable of accelerating the success of that company to bring competitive advantage. At GlaxoWellcome the speed with which products are developed and brought to the market has been drastically increased by virtue of people working closely across functions and trusting each other.
“We see at Hewlett-Packard a company which has at its very core the notion of the ‘HPWay’,” observes Lynda. This has created and sustained a level of commitment and inspiration which others can only observe and envy. At Motorola, we see a company which continues to flourish in China through the development of a Chinese workforce who are loyal, highly skilled, and, surprisingly for the super-mobile Chinese labour market, committed to staying with Motorola.
As the book reveals, what is fascinating about the way in which human potential is created and developed at HP is the subtle combination of the ‘soft’ and the ‘hard’. The ‘hard’ which forms the process backbone of the company is a performance management process which creates a shared set of strategic objectives and constantly aligns and realigns the behaviour of every individual to the business goals. This cascading of business objectives, termed the ‘Hoshin’, creates a relentless focus on growth and profitability.
“This focused performance management process brings short-term competitive advantage,” states Lynda. In fact, many companies benchmark against HP and share information with them in the hope of imitation. However, what we saw clearly in our study was that HP is able to balance this tight, highly focused and driven performance management process with the ‘soft’ of a value set the ‘HPWay’ which places dignity and respect for the individual employee at its centre.
In the broad context of strategy execution, what is termed as ‘paradox navigation’ by Prof. Dave Ulrich from Michigan University, makes much sense. As he explains, “Navigating paradox means accepting, exploring, and dealing with the inevitable tensions in a business. They have to help the business to be both short and long term, top/down and bottom/up, global and local, divergent and convergent, strategic and operational, etc. By navigating these paradoxes, organisations are more able to respond to the demands of change in today’s business context.”
In essence, ‘paradox navigation’ is the ability to steer amidst the many embedded tensions in complex organisational operations. We can raise a few vital questions relevant to people managers and HR professionals in particular. Does the HR professional effectively manage the tensions between high-level strategic issues and operational details? Does he/she effectively manage the tensions between internal focus on employees and external focus on customers and investors? Does he/she effectively manage the tension between taking time to gather information and making timely decisions? Does he/she effectively manage the tensions between global and local business demands? Does he/she effectively manage the tensions between the need for change (flexibility, adaptability) and stability (standardisation)?
The reality is that the HR professionals are constantly wrestling with embedded tensions that must be resolved in some circumstances and cultivated in other circumstances in order to help the business move forward. Wisely navigating through these surrounded strains becomes one of the central challenges for modern HR professionals.
Whither Sri Lankan managers?
As we saw, strategy formulation and execution should be confidently handled by competent people. The choice of connections over the competencies has been a perennial issue in the local arena, particularly in the public sector. There was a time when kith and kin of those who are at the helm appeared to be the favourites, with regard to filling the key positions. Has that custom really changed with the regime changes? Or has one set of loyalists been replaced by another set of loyalists with same basis as the selection criteria? Is it a case of consolidating power in offering powerful positions to favourites irrespective of their potential to perform? Such questions pose several points to ponder.
It is pertinent to mention what David Oglivy, the advertising tycoon, had to say with respect to hiring: “If each of us hires people who are smaller than we are, we shall become a company of dwarfs, but if each of us hires people who are bigger than we are, we will become a company of giants.” In order to hire people with potential, the hiring process has to be professionally designed and executed. This is true for both private and public sectors.
Sri Lankan organisations require to pay more attention to employ and engage people so that people ‘live the strategy’. Emphasis on processes and profit is fine but the fundamental focus should not be drifted away from people. Engaging employees with enhanced expertise should be the expected way towards excellence.
(The writer can be reached through firstname.lastname@example.org, email@example.com or www.ajanthadharmasiri.info.)