Strategy Analysis for Organization and Talent Resources
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Strategy Analysis for Organization and Talent Resources

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Strategy Analysis for Organization and Talent Resources Strategy Analysis for Organization and Talent Resources Presentation Transcript

  • Strategy Analysis for Organization and Talent Resources Center for Effective Organizations Teleconference February 6, 2008 John W. Boudreau Center for Effective Organizations Marshall School of Business University of Southern California 213-740-9814 john.boudreau@usc.edu © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategy Analysis at the Center for Effective Organizations Strategic Partnership with Impact: Strategy Analysis for Organization and Human Resources March 12-14, 2008 CEO Web Site: http://ceo-marshall.usc.edu © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Competitive Success Increasingly Depends on the “Talent” Market Value Creation Strategy Offerings Talent Money Value analysis in this market is critical © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Define the “Talent” Resource The potential and realized capacities of individuals and groups and how they are organized, including those within the organization and those who might join the organization. Source: John Boudreau and Peter Ramstad, Beyond HR: The New Science of Human Capital. Harvard Business School Press. Forthcoming © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Distinguishing Professional Practice from Decision Science Value Creation Strategy Offerings Talent Money Professional Human Practice Sales Accounting Resources Decision Marketing TALENTSHIP Finance Science © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Mature Professions Evolve Toward a Focus on Competitive Decisions, Not Just Functional Practices © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • How Human Resource Measures Could Support Decisions  Provide frameworks and tools to guide talent decisions made inside and outside of the HR function  Differentiate talent pools and talent based on the strategic context and potential return  Identify initiatives to improve the value obtained from the human capital of the firm © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Talentship Focuses on Decisions  To increase the success of the organization by improving the decisions that:  Affect, or  Depend upon Human Capital © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Are Your Business Leaders Talent Strategists? Do you make decisions about your people with the same rigor, logic and confidence as your decisions about money, customers, products and technology? © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • CEO-HRPS Survey: Talentship (“Achieving Strategic Excellence” 2006, Lawler, Boudreau & Mohrman) To what extent are these statements true about Average Average Strategic Strategic your organization? (HR sample) (Non-HR Role Role Sample) (1= little or no extent; 5=very great extent) (HR sample) (Non-HR Sample) Business leaders’ decisions that depend upon 3.1 3.5* .40*** .23 or affect human capital (e.g. layoffs, rewards, etc.) are as rigorous, logical and strategically relevant as their decisions about resources such as money, technology and customers HR leaders identify unique strategy insights by 3.1 3.1 .44*** .47*** connecting human capital issues to business strategy HR leaders rate business leaders significantly lower on Talentship than business leaders rate themselves. HR leaders relate business-leader talentship to HR’s strategic role more significantly than do business leaders. © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • CEO-HRPS Survey: Talent Principles (“Achieving Strategic Excellence” 2006, Lawler, Boudreau & Mohrman) To what extent are these statements true Average Average Strategic Strategic about your organization? (HR sample) (Non-HR Role Role Sample) (HR sample) (Non-HR (1= little or no extent; 5=very great extent) Sample) Business leaders understand and use sound principles when making decisions about: Motivation 2.9 3.1 .50*** .16 Development and Learning 2.9 3.3** .46*** .18 Labor Markets 2.9 3.2* .34*** .28* Culture 3.1 3.4* .40*** .07 Organization Design 3.0 3.3* .41*** .17 Business Strategy 3.7 3.5 .44*** .15 HR managers rate business leader human capital decision principles significantly lower than non-HR managers. HR managers relate business leader human capital decision principles to HR’s strategic role, but non-HR managers show little relationship. © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategy Level Core Concept Portfolio Strategy: Enterprise Creating a portfolio that is more competitive together than they would be independently, Strategy through strategic resource coordination. Competitive Strategy: Business Unit Building and executing compelling value propositions and business models to generate Strategy returns in targeted markets. Operational Strategy: Functional Building specific operations that uniquely support the competitive positions within the targeted Strategy markets © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategy Level Illustration: Disney Enterprise Disney Corporation Strategy  Theme Parks Business Unit  Broadcasting (ABC, ESPN) Strategy  Movies Specific functions within each of the Functional business units (e.g., Entertainment within Strategy Theme Parks, Network Operations within Broadcasting, etc.) © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategy Level Enterprise Strategy Enterprise Resource Strategy Business Unit Strategy Functional Strategy © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Different Tasks Strategy Formulation Strategy Analysis  Establish the  Determine the competitive strategy talent implications of a given strategy  HR a key participant  HR as a process leader, with line and other functional leaders as participants © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Business Unit Strategy Analysis Organization Strategy Talent Strategy Analysis Implications of Elements Lenses the Strategy Industry Definition and Industry Context and Marketplace Assumptions Lens Trends Pivot Points Pivotal Talent Pools Competitive Positioning & Strategic Positioning & Intent Differentiator Lens Pivotal Talent Requirements Organizational Enterprise Resource Planning Resource Lens (Input, Conversion, Output) Design Boundary and Coordination Issues Operational Implications Business Process Lens Strategy and Initiatives (Constraints and Boundaries) Communications Strategy Consistency around Functional Financial Projections Growth Algebra Lens Business Units © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategy Elements: Business Unit Level Strategy Analysis Element While examining strategy through each lens on the left, determine where having better talent than the competition is most critical Industry • What are the most important industry assumptions? Context • What are the major external assumptions within the strategy? •Are there critical areas where you are making assumptions about the industry that are different than key competitors? Competitive • What unique value do we create within this industry? Positioning • What makes our advantage difficult to duplicate? • How do we generate returns from the value created? Resources • What are your sources of competitive advantage? • What resources do you have that competitors want? Vice-versa? Processes •Where does the performance of specific business processes/sub-processes most directly limit the results we intend to achieve (I.e., which constraints are most critical)? Growth Algebra • How do you intend to grow revenues? - Enter new markets - Increase product lines within existing markets - Grow distribution channel(s) © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Decision Quality Becomes “Scaleable” Through Shared Mental Models Built on Rigorous Principles © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • The Power of a Consistent Logic  Finance: ROI, EVA, NPV  Marketing: Segments, Product Life Cycles  Talent: ??? Unscientific Logical / Strategic © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Shared Mental Models in Financial Markets duPont Return on Equity (ROE) Model Profits Profits Sales Assets Return on = = Equity __________________ __________________ x __________________ x __________________ Equity Sales Assets Equity Margin Asset Leverage Productivity © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • THE HC BRidge FRAMEWORK (Boudreau/Ramstad) Logical Connections Between Talent Investments and Sustainable Strategic Success © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Three Anchors in Decision Analysis Anchor Points Impact Effectiveness Efficiency © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Three Anchors in Decision Analysis Anchor Points Impact EFFICIENCY Where will specific Effectiveness improvements in resource investments most enhance the Efficiency portfolio of policies and practices? © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Three Anchors in Decision Analysis Anchor Points EFFECTIVENESS Impact Where will specific improvements in the Effectiveness portfolio of policies and practices most enhance the performance of talent and Efficiency organization? © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Three Anchors in Decision Analysis Anchor Points IMPACT Where will specific improvements in talent and organization Impact performance most enhance sustainable Effectiveness strategic success? Efficiency © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • HC BRidge® Framework ANCHOR LINKING POINTS ELEMENTS Sustainable Strategic Success Impact Resources and Processes Organization and Talent Interactions and Actions Effectiveness Culture and Capacity Policies and Practices Efficiency Investments © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Leadership and Strategic Assumptions © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategic Assumptions: Example from Commercial Aircraft Customer Demand Satisfied Airbus Market Assumptions: Incremental utility well above 500 Boeing Market Assumptions: Goes flat at about 400 to 500 passengers Aircraft Capacity © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • The Power of Constraints © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • The Disney Theme Park Value Process Arrival Hotel Trans- Waitin Rides Char- port g Line acters Where would improving the guest experience have the greatest effect on their surprise and delight? © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Example: Disney Theme Parks Business Key constraint: Processes Minutes spent in line • Reduce Waiting “What • Make Waiting Delightful constraints must be resolved?” © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Talentship Approach: “What is Pivotal? Where would improvements in talent quality or quantity make the biggest difference in the most pivotal processes for the Disney theme park business? © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Example: Disney Theme Parks Talent Pools Park Designers? Ride Engineers? • Affects Key Characters? Resource • Relieves a Key Sweepers!! Constraint • Performance Differences Matter © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Example: Sweeper at Disney Aligned Sweepers Responses • Stop sweeping and talk to guests “What employee • Give accurate information behaviors make • Create delightful encounters the biggest • Fix problems before they occur difference?” • Bring information to product design teams © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Pivotal and Important Are Different Best Mickey Mouse Strategic Value Worst Mickey Mouse Best Sweeper There is more value in Worst improving Sweepers than Mickey Mouse. Sweeper Performance © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategic Resources  The “building blocks” of differentiated strategy  The sources of competitive advantage  What do you have that your competitors would most like to have? © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Pivotal Talent Summary: FedEx Landing Rights Resource Pivotal Landing Rights Resource Vital Issue Build Extended Hours Relationships With Local Resource Communities Pivotal Community Leader Organization / Talent Liaisons © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • FedEx Liaison Quality More Pivotal than Pilot Quality at Community Relations Best Pilot Pilots Strategic Value Community Worst Liaison Pilot Best Liaison There is more value in Worst improving liaisons than Liaison pilots. Performance © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Examples of Pivot Points Identified With Talentship  Manufacturing Engineers in Central Europe  Product Integrators in Financial Services  Couriers and Dispatchers in Package Shipping  Technical Service Associates  Soldiers In Coalition Forces  Technical Experts Who Listen  Aircraft Engineers Who Build Global Teams © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Pivotal Talent Defined Important effects occur where a CHANGE in a resource has a significant effect in CHANGING organizational effectiveness. For HR, this means finding places where the CHANGE in talent can have a significant effect. Quality Pivotal Quantity Pivotal Changes in talent Changes in talent quality or quantity or performance affect availability affect strategic success. strategic success. © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • If Talent Segments Have Different Impact, Equal HR Investments are Not Optimal Under Investment $$ Actual Talent Over Investments Investment Optimal Investment Levels Low Impact High Impact Talent Pools Talent Pools © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Style of Organizational Engagement Decisions HR systems that achieve goals by Services “teaching” participants HR implements and providing the tools changes by to improve decisions Control “encouraging” Talentship HR systems that achieve goals by Human “requiring” participants to do what they must do Resources Personnel 4 © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • HC BRidge® Framework ANCHOR LINKING POINTS ELEMENTS Sustainable Strategic Success Impact Resources and Processes Organization and Talent Interactions and Actions Effectiveness Culture and Capacity Policies and Practices Efficiency Investments © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Business Unit Strategy Analysis Organization Strategy Talent Strategy Analysis Implications of Elements Lenses the Strategy Industry Definition and Industry Context and Marketplace Assumptions Lens Trends Pivot Points Pivotal Talent Pools Competitive Positioning & Strategic Positioning & Intent Differentiator Lens Pivotal Talent Requirements Organizational Enterprise Resource Planning Resource Lens (Input, Conversion, Output) Design Boundary and Coordination Issues Operational Implications Business Process Lens Strategy and Initiatives (Constraints and Boundaries) Communications Strategy Consistency around Functional Financial Projections Growth Algebra Lens Business Units © 2008 Boudreau-Ramstad Partnership. All rights reserved.
  • Strategy Analysis at the Center for Effective Organizations Strategic Partnership with Impact: Strategy Analysis for Organization and Human Resources March 12-14, 2008 CEO Web Site: http://ceo-marshall.usc.edu © 2008 Boudreau-Ramstad Partnership. All rights reserved.