Post Meeting Review Notes - Organisation Agility

Organisation Agility

PRESENTER: Chris Worley, Professor, NEOMA Business School and Centre for Leadership and Organisation Effectiveness and Sr. Research Scientist, USC WITH: Placid Jover, VP Human Resources, Unilever John Buekers, VP HR (EMEA & Global Supply Chain), Hitachi Data Systems Gillian Pillans, Research Director, CRF Hugh Hood, Director of Leadership, BT David Young, Group Head of Leadership Development, BT

A CRF report by Chris Worley and Gillian Pillans was circulated online in advance of the meeting.

What is ‘organisation agility’?

The capability to make timely, effective and lasting changes – through anticipating and/or reacting swiftly to external pressures – that achieve sustained high performance relative to peers.

The Agility Pyramid – sustained performance requires a

bedrock of sound management practices, enhanced by capabilities that differentiate – being better than the rest – but agility only becomes manifest through adaptability – changing better and faster than others.

Achieving Agility – 4 critical ‘routines’  Strategizing – how leadership provides the framework, direction, aspirational purpose and resources to inspire and enable agility.  Perceiving – broad, deep and continuous analysis of the environment to sense changes, shared with decision makers at all levels so they can shape/adjust plans and processes.  Testing – how the organisation sets up, runs and learns from experimentation.  Implementing – the ability and capacity to effect change – incremental and discontinuous – and convert this into enhanced, sustained performance.

Greater performance – financial results, customer and employee satisfaction – derives from depth of usage within and across the four routines. Chris Worley summarised research into that usage in the US and among CRF members. (The CRF sample is more representative; the US sample was smaller and oriented to agile companies.)      

The strategizing routine was rated strongest, followed by perceiving, implementing and testing.

Nearly 36% of the CRF sample did not significantly use any of the routines; 22% used all four.

In the US sample, organisations using 3-4 of the routines were seven times more likely to have sustained levels of above average performance (1980-2012).

Even one strong agility routine has significant performance payoff.

On average companies rated themselves strongly in ‘encouraging innovation’, but are comparatively weak in allocating resources, testing and learning.

HR is in a good position to affect all four routines. The question is whether it is doing so.

Chris Worley concluded that there is much room for improvement. For more detail see the report. © Corporate Research Forum 2015

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Organisation Agility

Notable lessons to learn Achieving agility involves challenging several conventional beliefs and behaviours.       

Stock markets pressurise organisational leaders to maximise profits and growth. Yet this does not necessarily correlate with agility, which is key to sustainability.

Organisations are energetic and appealing when growing. Yet sustainability is tougher when, like people, organisations get very large – especially in the digital age.

Driving relentlessly for more profit can lead to poor investment and resourcing practices. Instead, truly sustainable organisations aim for consistently above average performance.

Doctrines such as ‘sustainable competitive advantage’ and ‘unfreeze, move, re-freeze’ tend to seek illusory comfort in stability. Agility requires constant re-invention and flexibility.

That said, ‘ambidexterity’ is a useful concept – milking currently successful products and services while actively developing new ones to replace them, which requires different supporting cultures.

This means allowing innovative parts of organisations to experiment, fail and learn, and have ‘spare resources’ to support invention. Being too ‘lean’ and cost-conscious kills innovation.

Knowing when to halt a project that is struggling is an important skill, but so is discerning that the problem is one of timing – 3M documents ‘failures’ carefully, as they could be future winners.

Unilever Placid Jover provided insights into how Unilever has placed sustainability at the centre of its strategy and corporate identity.     

Overarching goal – to double the size of the business whist reducing its environmental footprint and increasing its positive social impact.

‘Social impact’ includes addressing the health of over 1 billion people and sourcing all agricultural raw materials sustainably.

Brands and products – focus science and technology on benefit-led innovation, not just profit.

Delivering this in a world where customers and competitors are changing faster than can be anticipated.

Tensions to overcome in implementing its strategy include certainty vs fluidity, competition vs cooperation and scale vs intimacy.

Unilever defines agility as “enterprise capability that gives us the best chance of continuous success for many generations of technology and people.”

So far, the sustainable growth approach seems to be working. After a period of investment – in technology, people and strategic choices – following CEO Paul Polman’s arrival in 2009, positive results are accelerating in 2015.    

Guiding principles include focus, simplification, experimentation, empowerment and partnerships.

The ‘secret sauce’ combines people management with the power of effective analytics.

Key aspects are leadership behaviour, systemic thinking, data insight not overload, and the way performance is managed and capabilities developed.

The outcome is winning teams – alignment, great teamwork and smart risk-taking.

To support this, HR has simplified its structure and processes, re-focused roles and accountabilities, and invested in its own capability – from fundamentals to business acumen and skills for the future.

Work that does not add value has been halted, and businesses/geographies that need more support than others now get it – one size does not fit all. Double-hatting is spreading – it is both ‘leaner’ and builds capabilities. In these ways and more, HR must itself provide a great example of agility.

“HR practices, technology and measurement are now dedicated to enabling quicker, better business decisions, and supporting the new mindset – ‘who are we doing this for, how are we impacting lives’.” © Corporate Research Forum 2015

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Organisation Agility

Hitachi Data Systems HDS is headquartered in California, has operational autonomy, and leads the way within the Hitachi group in developing agile and globalised practices. Its purpose is to help customer organisations make data systems simpler, easier to manage and more cost-effective now and into the future.   

HDS has shifted its own services and capabilities hugely over recent years, expects to do so faster in future, and thus focuses on managing ever-faster cycles of change.

‘No fear of failure’ is part of the culture – test effectively, fail fast and move on. The 20% of ideas that succeed are enough to create financial success and fuel growth.

Sound management practices – the base of the ‘agility pyramid’ is vital, it’s not all experimentation.

For its part, HR has both streamlined its service centres and re-shaped the business partner talent pool. It also uses smarter analysis of data – e.g. from engagement surveys, Glassdoor, exit interviews, process mapping – to expose and remedy weaknesses in recruitment and management practices, and to strip out processes that were getting in the way. John Bueker explained “we want to focus on the critical 20% of HR work that really makes a difference. Hence, 75 policies were reduced to 15. Most of them weren’t even understood in HR. We were being policemen, not performance enhancers.”

For example, a simplified performance system is being launched shortly. A 12 page form has been reduced to 2 pages, and ratings have been dropped, given no evidence of positive results. “We were spending 21,000 hours yearly on a process that pissed people off. The only time I’ve been hugged by a business leader is when I proposed this! We probably couldn’t have done this 3 years ago.”

Investing more in development and smart analytics will help the organisation perform better.

BT Hugh Hood described how BT has been reinventing itself since a low point in 2008 – large losses in its Global Services division led to a profit warning, a huge share price plunge, and the danger of being taken over and asset stripped.     

Stage 1 (to 2011) – a strong focus on cost reduction and profit recovery was led by CEO Ian Livingstone; of necessity the management style was ‘command and control’.

Stage 2 – the priority now is investing in sustainable growth and profitability, through innovation and agility. Its style under CEO Gavin Patterson is shifting to meritocracy and empowerment.

BT seeks to be a cutting edge technology company, moving further away from its past as a stateowned utility.

An attractive purpose had to be developed –- making money is not enough. The aim now is “to use the power of communications to make a better world”, the challenge being to make this real for internal and external stakeholders.

The strategy needs both to continue to transform costs and address customer service – and develop a healthy organisational culture to do these.

It has been critical to address leadership capabilities and orientation in order to become more agile.

Analysis by McKinsey shows strong links between ‘top quartile leadership’ (supportive and challenging), organisational health and financial performance.    

“We now need to be 100,000 people who are paid to think.” (Hugh Hood) To paraphrase Machiavelli, behaviours which are rewarded become embedded. There was real fear among managers of losing control, and fear of empowerment among the managed.

Yet supportive and challenging leadership far outstrips authoritative leadership in yielding positive results, and should become the default – aiming high, coaching for success, energising.

De-layering is needed to enhance meritocracy – 30 levels have been reduced to seven.

© Corporate Research Forum 2015

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Organisation Agility

Focus on both performance and health David Young summarised the core components of BT’s leadership culture change programme.       

The world’s best thinking – cherry-picking experts, not using one supplier or business school.

Conviction – participants’ belief in the required change and that the alternative gets better results.

Reinforcement – through clear business, performance and development measures.

Step one – personal awareness, purpose, authenticity; identifying/overcoming personal blockers.

Learning and insight – followed by highly facilitated reflection and practice in small peer groups.

Common language and experience – content applies to all leadership levels.

Role modelling – top leaders demonstrate and teach/coach new leadership behaviours.

What has worked so far?

The clarity and appeal of the new purpose, the stimulus of re-focusing on innovation, and the development of support mechanisms, from online tools to internal coaches.

What has been learnt?    

More targeted and extensive support is needed than originally envisaged, to reinforce change and empowerment, and make real the necessary improvement to BT’s customer experience.

Some businesses progress faster than others – due to different contexts and quality of leaders.

Greater clarity of direction and strong CEO-level backing bolstered HR’s ability to support change.

“HR is much more of a strategic partner now, through asking great questions and helping people think, rather than generating processes telling people what to do.” (David Young)

Developing the capability for agility In concluding, Chris Worley highlighted three core ingredients – see the diagram below on the left – and indicated how the whole process should fit together.

© Corporate Research Forum 2015

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