Tim Harford’s ‘Adapt – Why Success Always Starts With Failure’ – How are businesses putting it into practice?

I just finished reading Tim Harford’s latest book: ‘Adapt – Why Success Always Starts With Failure’. Harford is a smart man, as befits a leader writer for the Financial Times and a successful author of popular economics books. He has a particular gift for putting us in our comfort zone by first describing situations we are familiar with before revealing the economic forces at play underneath. He does all this in his trademark breezy and insightful style.

Probably the key issue in the book is: what is the best way to solve complex problems? The narrative flows around the solution to this question. Real-life challenges are explained, a proposed approach is offered (‘Adapt’) and plenty of examples are given to support Harford’s proposal.

As a starting point, Harford argues strongly against a culture of reliance on experts and centralised management in the face of complex problems. He cites research which demonstrates that the power of experts to make accurate predictions is poor. Harford uses both the USSR and Donald Rumsfeld’s stewardship of the war in Iraq as examples of spectacular failures of centralised control. Both were guided by top-down, all-knowing ideologies and both were intolerant of dissent. Consequently, both were incapable of learning what was happening on the ground and were blind to evidence that what they were doing was not working.

For truly complex problems Harford argues that a ‘trial-and-error’ approach to problem solving works best. He draws on evidence from biology (evolution), business and military warfare to support his case and outlines the three steps to follow, given here:

1. first, seek out new ideas and try new things (‘fail often’);
2. when trying out new things, do so on a survivable scale;
3. seek out feedback and learn from your mistakes

In supporting this approach, Harford stresses the value of having a  ‘worms-eye’ view of the situation, whereby those solving the problems get to see them up close. What implications does this have for business? It means that we need to encourage feedback from the coal-face of the operation. For example, we should consider: What is the true nature of the problem the customer has? What does the customer really value? We need, therefore, to harness the wisdom and experience of the employees who are working in the ‘value zone’ of the company. This is reminiscent of the Employees First Customers Second approach taken by Vineet Nayar and HCL Tech (http://blog.careergro.com/2012/03/14/the-employees-first-customers-second-phenomenon/) where Nayar is adamant that it is impossible for him, even as CEO, to know all the answers. Consequently, Nayar made conscious efforts to empower HCL Tech employees to take the initiative in and responsibility for solving the business’ problems.

In ‘Adapt’, Harford provides examples of companies which take a decentralised approach to the successful operation of their businesses. One is the UK high-street repair-service retailer, Timpson, whose business model is founded on a culture of transparency and on staff being empowered to solve customers’ problems as they arise. Timpson has gone so far as to remove EPOS systems from his shops because he wants the local outlets rather than head office to run the business.  The owner, John Timpson calls his approach ‘Upside Down Management’ and has, literally, written the book on the subject http://www.amazon.co.uk/dp/B003NX730G/ref=rdr_kindle_ext_tmb

A second example is W L Gore, which Fast Company magazine has labelled ‘the world’s most innovative company’. From the outset, W L Gore believed that engaging his employees was critical to his goal of Gore becoming an innovative organisation. To this day, Gore associates set their own career goals, self-commit to the work they choose to do and feel a deep association with the goals of the organisation. Gore is a perennial on the ‘great companies to work for’ lists. See an excellent interview with Gore CEO Terri Kelly by Gary Hamel here: http://blogs.wsj.com/management/2010/03/18/wl-gore-lessons-from-a-management-revolutionary/

What Timpson, W L Gore, HCL Tech and Whole Foods (also featured by Harford) each do, in addition to giving employees freedom and responsibility in the business, is to  make them accountable to each other. Each organisation places a lot of weight on peer-to-peer feedback. With bottom-up power comes peer accountability, it seems.

Thanks to Tim Harford for yet another good read. You can find out more details about him, his books and his other activities at http://timharford.com/

Gerard

Twitter: @Gerard_cpd

Career Development – Why Good Companies Care

What does career development mean to you and to your company? Why is it important? How to do it?

This is the first of two posts on the subject of career development practices in companies. First, I want to discuss the reasons why companies are interested in career development. In the next post I will move on to how they are going about it.

Deloitte Ireland

I recently attended Legal Island’s HR Symposium, at which Orla Graham and Dr. Mary Collins of Deloitte Ireland presented on managing talent in Deloitte. The Deloitte talent management strategy is

“To be the number one firm for career and personal development, where talented people can do their best work, progress quickly and fulfill their potential, whatever their background”.

The reason why career development is important was clearly expressed. There is a war for talent and the top two factors cited to succeed are ‘Career development’ and ‘Training and development’. Once in the company, developing capabilities is part of the talent management strategy (including deployment and collaboration) that delivers organisational capability, employee commitment, alignment with business goals and, ultimately, performance.

consultingmag.com: Career Development in Professional Services

Other examples from the professional services industry are given in a series of articles (Best Practices in Career Development & Best Practices in Career Development: Point B)  from consultingmag.com.  They examine seven leading firms and some of the reasons given for investing in career development are:

• “It’s what attracts people to come here and stay” – Russ Hagey, partner and worldwide chief talent officer Bain & Company.
• “Our philosophy is to support people in their career decisions. We hire staff for life. We are not a body shop.” – Aimee George Leary, director of learning and development Booze Allen Hamilton.
• “This is why our conversations with employees is about long-term career goals—not what needs to happen next week or next month.”  – Bill Pelster, managing principal of talent development for  Deloitte LLP. He adds that this flexibility has assisted retention efforts.
• “Sales and marketing can be broken down into twenty discrete things,” says Jeff Griese, principal and Chief Human Resources Officer, ZS Associates. “An expert to us is someone who has mastered each of these by doing them many, many times. We’re building depth of mastery.”

The common thread is attracting recruits, retention and performance, echoing the message from Deloitte Ireland.

Study of career development in progressive Canadian organisations

A benchmarking study of the human resources practices of fourteen Canadian of organisations, considered to be on the leading edge of career development, identified some common reasons why these organisations invest in career development.

Competitiveness

Leveraging their workforces’ talents and skills is the chief means of staying competitive in the face of global competition and rapid technology change. The authors state that the “quality, innovativeness and commitment of its human resources are what make the difference in terms of a competitive edge”.

Alignment with the business

Alignment between the individuals career development needs and the organisations  needs is critical. The career development process can make this alignment happen.

“In today’s ‘lean and mean’ business climate, development is a necessary survival strategy: it helps companies position themselves so they can adjust to rapid changes in their environment. …Development processes enable companies to meet such challenges quickly and effectively. … Organizational career development [is] a strategic process in which maximizing individuals’ career potential is a way of enhancing the success of the organization as a whole.” – (Organizational
Career Development: Benchmarks for Building a World-Class Workforce)

Attraction of recruits

A quote from one of the participants in the study illustrates the point.

“One of the key differentiators for an organization to become an employer of choice now and in the future … is the amount of avant-garde strategic development you do so that people will be learning the newest things that need to be learned in whatever field. … This is the value that people are looking for in terms of … corporate development or institutional development in any organization. … Offering career resiliency and offering opportunity to learn the best will be the attraction for
people coming into the job market. That’s what they are looking for. They’re looking for companies that will give them career resiliency.”

The common points are once again attraction of recruits, and performance. In this study the authors do not cite retention or engagement, however they do identify employee commitment as an important factor.

Career Development a Driver of Attraction, Retention and Engagement

Towers Watson presented the top eight drivers of attraction,  the top eight drivers of retention and the top eight drivers of engagement from their Ireland database, at Legal Island’s HR Symposium in February. I assume the results are similar in the UK.

Important attraction drivers were  ‘career advancement’, second, and ‘learning and development’, fourth. Pay was number one. Career development’ was the second most important retention driver, behind only pay. For engagement ‘career development’ was number four. Interestingly the top drivers of engagement were ‘leadership’, ’empowerment’ and ‘image’, all quite things that are difficult to change.

So why invest in career development?

If you’ve keep with me this far, you will have seen some common themes emerging as to why the best organisations are serious about career development. It boils down to

• Attraction

Career development and career resilience need to be on offer to compete in the war for talent

•  Retention

You need to have a long term view of your employees careers and allow career development happen if you want to retain the best people.

• Engagement

Commitment  comes from within, it’s not something that can be imposed on someone. Aligning personal career development needs with the needs of the business is key to an engaged employee.

• Individual Performance

Engagement and capability building depend on career development. These are drivers of individual performance.

• Organisational Performance

At the organisational level,  the alignment of business goals and individual goals lead to operational effectiveness today. The career development process facilitates this alignment.

Career development is essential, in the face of global competition and rapid technology change, to maintaining competitiveness for tomorrow.

Does your organisation take career development seriously? Why? Why not? I’d love to hear your experiences.

Why HCL leads the world – it’s ‘Employees First, Customers Second’.

I just finished reading Vineet Nayar’s important book,  ‘Employees First, Customers Second’ – Fortune magazine has hailed his company, HCL Technologies, as having the ‘world’s most modern management’.  The book covers the transformation of HCL into a global IT services powerhouse from the time Nayar took the helm as CEO in 2005. HCL is famous now for the democratic nature of its business. However, that is simply the What of the book – the revelations are in the Why and the How of the transformation. Here are my notes from Nayar’s story.

1. Why was a transformation necessary?

This is a good question because when Nayar took over in 2005, HCL was experiencing 30% annual growth. So, problem, what problem? However, Nayar has a healthy paranoia about business, believing that ‘unless a company becomes obsessed with constant change for the better, then gradual change for the worse goes unnoticed’. On a practical level, he observed evidence of complacency in HCL at the time and noted that its then growth rates were consistently behind its competitors.

Nayar believes that the asset base of knowledge-economy companies increasingly resides in the talent and creativity of its employees. In particular, for a service company like HCL, he identified the ‘value zone’ of the company as the interface between HCL employees and its customers i.e. where the knowledge and service which the customer values can be found.

2. How was the transformation accomplished?

With the value of hindsight, Nayar partitions the transformation into four stages. In practice, at the time, he and HCL were undertaking courageous organisational and behavioural experiments. Nayar proceeded with his innovations when he expected the benefits to outweigh the risks. At all times, he paid great attention to communicating broadly, at all levels of the organisation, and to getting feedback prior to implementing changes. Here are the stages HCL went through:

(i) Mirror-Mirror: Creating the need for change. Nayar insisted that HCL conduct an honest self-assessment and to look for things with which it was not satisfied in the company. In planning a move from point A to point B, he stressed that it is essential to truly know where you are starting from. Secondly, prior to moving forward, people require a vision of a better future to give them the confidence and the motivation to support the move. In HCL’s case, the vision was to move from being a discrete IT services supplier to a global IT integration company fit to compete with and succeed against industry giants like IBM and Accenture.

(ii) Trust through transparency: creating a culture of change. Nayar identified trust as a pre-requisite for any change program and identified building transparency throughout the organisation as the means to achieve it. HCL took transparency to unprecedented levels for a company of its size. For example: (a) employees were granted access to team level financial data across the organisation; (b) employees were empowered to pose questions to anyone in the organisation and to expect their questions to be answered, all in a transparent online forum; (c) a true 360 degree feedback process was established and, because it was focused on developmental opportunities rather than performance appraisals of individuals, employees were confident enough to post their survey results online; (d) ultimately, employees company-wide were given access to the policy and strategy formulation processes.

(iii) Inverting the organisational pyramid: building a structure for change. Nayar discovered that the then hierarchical structure of HCL was an impediment to success. He maintains that centuries-old hierarchies and matrixes are not fit for purpose in the knowledge economy because the value of such companies is not centralised or their value may not reside in their technology but rather in how it is delivered. According to his philosophy, functions like management, HR, finance etc. should be enablers for the people in the value-zone of the organisation. HCL changed their structure to make the enabling functions accountable to those who were creating value for the  company. He called this ‘reverse accountability’. HCL also took a radical approach to 360 degree surveys. Nayar was dissatisfied with conventional 360 degree processes because participants are either wary of the process or do not participate in a sincere way. HCL’s approach was different because: (a) they redefined it as a developmental process rather than an evaluation process; (b) they allowed anyone in the organisation to provide feedback to anyone else ; and (c) Nayar and the senior management team published their reports online to encourage transparency.  In following this approach, Nayar felt he was tapping into ‘the wisdom of crowds’ in getting broad feedback about development opportunities for individuals.  HCL made sure that this developmental 360 degree process was disconnected from the HR department and the performance appraisal process. Instead, it was conducted by a new entity called the Talent Transformation and Intrapreneurship Development team.

(iv) Recasting the role of CEO: Transferring the responsibility for change. Having come this far and having delivered exceptional growth to the company and value to its clients, Nayar focused on the sustainability of change. In this step, HCL achieved something remarkable by tapping into the values of the employees. Nayar realised that if he could engage people around their passions, beliefs and ethics they would be more likely to take responsibility for change. He was interested in engaging with the whole person. HCL worked to identify the core values of its people using custom surveys.  It then set up boundaryless Employee-First Councils organised around specific passions or interests. For example, councils were created around issues related to health, art, CSR, music etc. All the councils were run by employees. This process and the councils turned out to be hugely popular with staff – people welcomed the opportunity to be able to express themselves more. There was an unexpected pay-off for HCL too. Some councils were organised around business-related passions such as technology and many valuable business ideas were generated. Nayar realised that HCL had stumbled upon an unanticipated benefit: ‘unstructured innovation’.

This is a summary of the main points in the book. Great credit is due to Nayar and HCL for pushing the boundaries and empowering their employees to take responsibility for the success of the business. HCL’s courageous approach has paid off and it underpins the world-leading success it has achieved over the last seven years. By way of interest, I noted that HCL has been a Worldblu (www.worldblu.com) certified company since 2010.

‘Employees First, Customers Second’ is brief, just 208 pages, and is a brisk, uncomplicated read.  I am curious if we will see other large companies having the vision and courage to follow HCL’s path to success.

– Gerard

Twitter: @gerard_cpd

Career Development Plans

In 1979, interviewers surveyed new graduates from Harvard’s MBA Program and found that :

• 84% had no specific goals at all
• 13% had goals but they were not committed to paper
• 3% had clear, written goals and plans to accomplish them.

In 1989, the interviewers again interviewed the graduates of that class. The results were:

• The 13% of the class who had goals were earning, on average, twice as much as the 84 percent who had no goals at all.
• Even more staggering – the three percent who had clear, written goals were earning, on average, ten times as much as the other 97 percent put together.

(Source:  from the book What They Don’t Teach You in the Harvard Business School, by Mark McCormack)

The lesson was clear, in order to succeed we need to set down clear written goals for our future and plan actions to achieve them.