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Oracle HR Board Report

Thursday 18th April 2013, The Ritz, London

HR Imperatives: Creating a High Adaptability Culture


The Oracle HR Board series was established to drive best practice and thought leadership in the profession, bringing together HR leaders from some of the UKs most admired organisations to discuss the challenges and opportunities facing HR today. More than five years into the economic crisis, the future for UK organisations remains extremely unclear. The government has a limited number of levers at its disposal to re-ignite prosperity, and volatility in domestic and global markets continues to have unpredictable ramifications. Adaptability is the key to survival and growth, but for large, established organisations, achieving it is more easily said than done. We need to create an environment that allows the organisation to adapt quickly and effectively to changing circumstances. How can HR encourage High Adaptability? That question formed the theme for the evening, which was again facilitated by Dr Max McKeown, author of The Strategy Book and Adaptability, one of Personnel Todays Stars of HR, and an expert consultant specialising in innovation strategy, leadership and culture. We were delighted to welcome Max back to the HR Board to help us further explore the potential for HR leaders to shape business strategy in a world defined by constant change. The following report captures the key themes and discussion points from the evening. I hope you will find it useful and thought-provoking. Guy Cunnington HCM Sales Director, Oracle Corporation

How Can HR Shape a Better Future?


The focus of the evenings discussion was the future: not necessarily what is going to happen, but how we can prepare for it and even shape it. HR Board members agreed that the future is very uncertain: we cant predict what will happen, nor over what timescales. We can be sure of more volatility, and while some things will inevitably remain constant, we dont know what those things are. Its hard to prepare for future eventualities, but at the same time we all have an idea of what we would like the future to be like for ourselves and our organisation and that means we can act in ways we think will make that future happen.

2. Survival: the organisation manages to get by dayto-day, but with little reward or enjoyment for anyone involved. 3. Thriving: the organisation does well within the established rules of its industry or market. 4. Transcendence: a paradise state in which the organisation succeeds in rewriting the rules in its own favour, changes the way the industry/market operates, and reaps significant benefits.

Four Possible Futures


Reprising a theme from the September 2012 HR Board meeting, Max McKeown proposed that the future holds four broad possibilities for our organisations (and also for ourselves as individuals): 1. Collapse: the organisation fails completely and ceases to exist.

To be a transcending organisation you have to do something that only you can do and only you can understand. For that to happen, strategy and culture have to eat breakfast together.
Max McKeown

Sometimes a crisis can have good effects. Look at the Enron scandal: the partners at Arthur Andersen got good jobs at the other Big Four firms and they got an even bigger share of the market. Not being able to see the future coming worked out well for them!
- HR Board Member

No organisation or individual is an island, though, so even thriving and transcending organisations may not be immune to changes happening in the wider environment. The financial crisis overwhelmed many apparently stable and successful companies. Stability can be a dangerous illusion when viewed from a wider perspective (usually the perspective of hindsight).

Powerful Principles for Shaping the Future


Believing that we can shape the future is the first step towards achieving it. People who believe they can create a better future generally do; a common trait among entrepreneurs, for example, is a firm belief that they make their own luck. But to be truly effective in shaping the future in our favour, we have to recognise that the way we usually approach it is likely to be deeply flawed. Thats because: We use the past as a guide to what will happen in the future. Most business plans are based on extrapolating figures from previous years. As soon as something unexpected happens to buck the trend, the plan becomes useless. We do things out of habit. Even when we recognise our bad habits, we end up doing the same things and making the same mistakes. (HRBoard members admitted they often made the same mistakes repeatedly.)

HR Board Member

Few of us in the City of London saw the future (crisis) coming. We were all operating in the now. No one anticipated it.

Failure is in vogue. Some businesses are experimenting with throwing away the rulebooks, encouraging experimentation and celebrating failure. But organisations with no rules cant pull together to find a way forward, and failure can only be helpful if lessons are learned from it (and those lessons are acknowledged, shared, and put to productive use). Leadership styles persist. Many leaders make the mistake of perpetuating the same strategy and management style as their predecessor, even when the environment is changing wildly and new thinking is needed. Whats been successful in the past is not guaranteed to be successful now.

A Better Approach: Encouraging High Adaptability


If the current environment is all about volatility and change, it follows that the organisations that will thrive and transcend are those that can adapt quickly and well to changing circumstances. Encouraging adaptability among the workforce should therefore be an imperative for HR leaders. What do we mean by adaptability? Its the ability to do three things very well: 1. Recognise the need to adapt 2.  Understand the nature of the adaptation required 3. Do whats necessary to make it happen

Adaptability as a Differentiator
Adaptability is a hugely desirable attribute, but it also needs to be paired with achievement. Individuals and organisations must be capable not just of adapting, but of adapting in a way that produces better results than similar efforts at competing organisations: pioneering successful new business models; developing innovative products and services; capturing untapped markets; finding less expensive, more reliable and less risky ways of doing things, and so on.

Once, performance management was seen as the primary way for HR to shape the success of the organisation, but nowadays, everyone does performance management. Its no longer a Each of these three stages is critical. Simply differentiator. By identifying high-adaptability, recognising the need to adapt is not enough: time high-achieving individuals - what McKeown calls must be invested at the second stage to work out HAHAs working within a high-adaptability what kind of change will produce the best results culture, what McKeown calls a HACK - HR leaders (rather than reacting in a knee-jerk way to the changing circumstances). And no plan for change will can create the conditions for future success. They can help their people to more successfully adapt. be any good if its not actually put into action. HR can help people learn to adapt faster and smarter. That may seem obvious. But the reality is that in many organisations, its the opposite kind of behaviour that is praised and rewarded. Lowadaptability individuals are seen as good soldiers, as stalwarts who put the hours in, do what they have always done, and keep the organisation on an even keel. But as weve seen, in a chaotic environment, stability is a dangerous illusion. Recognising the need to change and making the right changes as a result is whats needed now for the future.

The HR Imperative: Enabling High Adaptability

The next step is to identify high-adaptability individuals within the organisation and allow them to show the way. Such individuals thrive on Because of its focus on skills and behaviours, adversity, and dont respond well to being cosseted HR is ideally placed to create a high-adaptability or mentored. The way to motivate them is to set organisation. The goal should be to embed them impossible challenges that will lead to what the three-stage model of adaptability into the McKeown refers to as a making point: breakthroughs organisational culture, so that everyone can recognise the need to adapt, take time to understand HAHA individuals achieve when challenged. what kind of change needs to happen, and put that The third step is to encourage higher adaptability change into action. among individuals and teams who currently display low adaptability. HR Board members provided But how can HR take the organisation from its some suggestions for how to do this, including: current state (which the majority of HR Board attendees admitted was low-adaptability) and create a high-adaptability culture? The first step is to measure the current levels of adaptability within the organisation, to create a baseline for assessing subsequent improvement. There are various methods of doing this, and HR Board members agreed that a future workshop on those methods would be useful. (A good start, though, is to examine what kind of behaviours lead to dismissal and what kind of behaviours lead to promotion within the organisation. If people are being dismissed for challenging the status quo and promoted for maintaining it, the organisation has an adaptability problem.) Focus on the people who dont yet have a lot of experience. Give them a difficult task to have a go at and see how they perform. If you tell them the task is impossible, they wont fear failure. You have to take the risk out of it: succeed or youre dead isnt a very motivating message!

Leaders have less desire for change, because theyre already in the top position. Theyre focused on getting better results, rather than rewriting the rules. Better to try to influence the management rung below, who have more desire to change and innovate. We encouraged the workforce to be more entrepreneurial by giving business units P&L responsibility. But it backfired: they got into competition with each other and wouldnt share information even though sharing would have been for the greater good of the business.

See how they deal with ambiguity. Some struggle, others deal with it well and use that ability to innovate different solutions. Unite against a common external enemy like a competitor or around a common goal or vision. The speaker added that an effective strategy is to create a vision of how the organisation could be and ensure that everyone understands it and, crucially, has permission to question it. By painting a simple picture of the ideal state of the organisation #1 in the market, the most admired company in the sector, the best customer service in the world and reminding everyone of that aim, its easier for everyone to understand what they need to do make it happen.

Shaping the Future


If future success is about rewriting the rules of the game in the organisations favour, HR leaders must also create an environment in which possible futures can be imagined and game-changing strategies explored. Some organisations have something like a Doomsday room, where you imagine the worst that could happen how could the business fail? and what could be done now to prevent that happening. Some allocate resources and innovation funds for experimentation with new ideas: Heres 10 people and 50 million, go off and see what you can do. Others look for ideas from all across the workforce: Toyota pools one million ideas a year from its employees, and implements 97% of them. Enabling the entire workforce to contribute is essential: some of the best ideas come from those on the factory floor or the customer-facing front line. However, many organisations lack a framework for allowing new ideas into management thinking. Another imperative for HR is to create an environment for allowing new ideas to be identified, tested and implemented: whether they come from the workforce or from an external source.

At our organisation, we always ask people to think how a thing could have been done better, even if it worked well. Its a simple approach that encourages new ideas and we need that to stay successful.
- HR Board Member

The HR Board was reminded that an Apple employee didnt invent the mp3 player, and Oracle didnt invent the relational database but those organisations were capable of seeing the promise in those radical ideas and harnessing them for game-changing success. The ability to allow in new ideas and make them fly is the essence of the highadaptability, transcendent organisation.

We stay close to competitors. Look at what theyre doing, how can we grow faster than them?
- HR Board Member

An organisation that has a high adaptability culture or HACK will respond to threats and opportunities with intelligence and imagination. And thrive in an ever-changing world.
- Max McKeown

Another crucial part of creating a high-adaptability environment is to make sure that lessons are learned from mistakes, failures and misses. Many organisations have no framework in place for recording, examining and learning from mistakes they simply move on and hope things will go better next time. But as habits and learned behaviours die hard, this may well not happen. HR leaders should also examine the rhythm at which people-related processes happen in the organisation. The pace of the external environment is always changing: speeding up and slowing down. Processes like performance review cycles, recruitment cycles and workforce planning should be able to flex with the pace of the environment. In a highly-volatile environment, an annual performance plan will be woefully out of step with the need to adapt and change direction.

Watching for undercurrents of change is another imperative. Keeping a close eye on competitors successes and failures, on whats making people within your own organisation unhappy, on what customers are doing and saying all these things can highlight a need for change which can then be enacted as part of the three-stage adaptability process.

Conclusion
In a volatile environment, successful organisations are the ones that can adapt quickly and effectively to changing conditions. But large organisations tend to be set in their ways. Its hard to create a culture that can recognise the need to change, quickly identify the best course of action and implement it before competitors do, or before circumstances overwhelm the organisation. Thats exactly what makes it so valuable, because high adaptability sets you apart from your competition. HR has a key role to play in enabling high adaptability, by creating an environment in which new ideas are continuously tested and implemented, adaptable individuals feel challenged and rewarded, and the emphasis is on continuously finding better ways of doing things.

Join the Oracle HR Board


Further HR Board meetings are planned throughout 2013. If you would like to join a select group of private and public sector HR leaders to discuss ways to take the profession forward, please contact Sue Good on +44 (0)7810 830629 or susan.good@oracle.com.

About the Oracle HR Board


Oracle established the HR Board series to drive best practice and thought leadership in the HR profession. Regular Board meetings are attended by HR leaders from organisations including: AstraZeneca BSkyB Co-op DHL Financial Conduct Authority Home Office Logica Nationwide Royal Bank of Scotland Rolls-Royce Sainsburys Standard Life Virgin Group William Hill

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