Adaptive management with dr john sullivan


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Adaptive management with dr john sullivan

  2. 2. 2My goal for today…To get you to rethink your recruitingapproach and strategy… so that itbetter fits a VUCA worldI’m from the silicon valley… so I’ll move fast today
  3. 3. 3When you started your career…was this considered normal?What is normal these days?Part I
  4. 4. 4Was this normal 10 years ago?Would a hoodie wearing dropout… ever becomea successful CEO that is worth billions?
  5. 5. 5Was this normal 10 years ago?Would 2 guys get $1 billion for Instagram...even though their firm never made a dime of profit?
  6. 6. 6Is this normal even today?Would a 17 year old HS student get… $30 million?
  7. 7. Didn’t compliance use to be a primary goal?77
  8. 8. 8Have you experienced turmoil in recruiting?Budget – increases, freezes and do more with lessHiring volume– switching betweenbooms & freezesQuality – shifting between cost… and qualityApplicants– flood of applications… to a war for talentApplicant expectations – changes with generationsObsolete tools– newspapers, app forms, remote work?New tools – social media, mobile, video interviewsGlobal – from a slogan… to a necessityRules – anti-poaching agreements okay… to illegalWP – from essential… to nearly impossible (VUCA)
  9. 9. 9Is this normal at your firm even today?Can we all agree thatthere is a newdefinition of “normal”
  10. 10. 10The next key question is…What is this crazy new businessenvironment called?Part II
  11. 11. A name for the last decade?What one phrase would best describewhat we’vebeen going through over the last decade?11Perpetual crisis
  12. 12. 12A more “scientific” name is…A Whack-A-Mole world… full of surprises
  13. 13. 13The military calls this environment V.U.C.A.(SNAFU)V for Volatility – major change will be frequent andsuddenUfor Uncertainty – there will be many surprises.Change and it’s causes will be hard to predict… andthey will not follow a predictable patternCfor Complexity – problems & opportunities will becomplex… with many different elementsA for Ambiguity – it will beconfusing / chaoticbecausethere will becontradictory information,data and advice… making mis-reads likely
  14. 14. 14BCG calls it a… turbulent environmentFirms that effectively respond to this turbulentenvironment are called… “Adaptive Firms”An Adaptive Firm is defined as… A firm that… learns and adjusts better, faster,and more economically… than it’s rivals to give the firm an “adaptive advantage”
  15. 15. 15Let’s shift to someempirical data that quantifiesthe levels of volatilityData from BCG’s…The Most Adaptive Companies 2012 - Winning in an Age of Turbulence, by MartinReeves, Claire Love, and Nishant Mathur III
  16. 16. Let’s start with 3 BCG data points aboutour turbulent environment161) Turbulence now strikes more oftenMore than ½ of the most turbulent quartersoverthe past 30 years…have been in the past decade2) Turbulence has increased in intensityVolatility inrevenue growth, in revenueranking, and in operating margins have all… morethan doubled since the 1960’s3) Turbulence today persists much longerThe average durationof periods of highturbulence... has quadrupled over the past 3 decades
  17. 17. 17Let’s look at 4 quick visual chartsto show the increased level ofvolatility in:1. Revenue growth2. Profitability3. Market cap4. Industry position
  18. 18. BCG data demonstrates the amount of turbulencein revenue growth18Volatility in the 5 year average revenue growth %%The flat growth line%
  19. 19. BCG demonstrates volatility in profit19Volatility in profitability5 year average EBIT margin volatility %%%
  20. 20. BCG demonstrates volatility in market cap growth20Volatility in market cap growth5 year average%%
  21. 21. BCG demonstrates volatility in industry rank21Volatility in industry position%%
  22. 22. BCG demonstrates volatility in industry rank22Volatility in industry position%%How long does firm dominance last?• No firm• Friendster 2002• MySpace• Facebook
  23. 23. 231. Technology and analytics2. Digitization3. Connectivity4. Trade liberalization5. Global competition6. Rapid copying7. Entrepreneurship8. Business model innovation9. The power of top talent10.The success of innovative firms10 drivers of turbulence
  24. 24. 24Another key questionIs it worth the effort…to become an adaptive firm?
  25. 25. Over 6 years there was a$3 trillion market cap differenceNon-adaptive firmsHighly adaptive firms$3 trillionMarket cap differences?
  26. 26. 26Who are the most adaptivefirms that thrive in chaos?
  27. 27. 27BCG’s list of highly adaptive benchmark firms
  28. 28. 283 key takeaways / learnings1. The “new normal” is… VUCA and a world full ofconstant surprises2. Large firms no longer dominate the smaller ones…instead fast adapting firms now dominate theslow changing ones3. In a VUCA world, if the overall rate of changeinside your firm… is slower than the rate ofchange occurring outside of it… your demise ison the horizon!
  29. 29. 29How do adaptive firmsneed to act?There are 10 key businesscapabilities of an adaptive firmPart IV
  30. 30. 30The 10 key capabilities of “Adaptive Firms”1.They target extreme rates of innovationIllustration – At Google a goal of “10 %improvement means that you are…guaranteednot to succeed wildly”Instead… “create products and services that are 10times better than the competition”Because a “1000% improvement requires…rethinking problems entirely, exploring theedges of what’s technically possible, and havinga lot more fun in the process” Larry Page
  31. 31. Question - Do the firms with the most innovationdominate in results?Which firms on this list do you find have thehighest focus on innovation?IBMHPMicrosoftGoogleFacebookApple31
  32. 32. Do the firms with the most innovationdominate in results?A comparison of employee output (rev. per employee)Average $208,000IBM $241,600 (22% above the average)HP $362,700Microsoft$775,900Google $931,600 (4.5 times the average)Facebook $1,310,000 (6 times the average)Apple$2,262,000 (11 times the average)Key learning - It takes 10 X more employeesatIBM… to produce the same revenue as Apple(Calculated using 2013 data from http:// )32
  33. 33. Does extreme innovation increase profit?Dollars of profit per employee (Profit per labor $ spent is a better measure)HP -38,125IBM $37,523Facebook $82,227Microsoft $164,457Google $199,346Apple $573,448Key learning - it takes nearly 15X more employeesat IBM…to produce the same profit as Apple(Calculated using 2013data from
  34. 34. 3410 capabilities of “Adaptive Firms”2.They set a broader target – rather than setting asingle targetnumber as a goal…instead, they estimate and prepare fora broadertarget covering a rangeof change… for each ofthe factorsthat impact them3.They identify precursors / signals – they have aprocess for identifying “the signals” that occurright before a problem or opportunity4. They respond rapidly – they monitorenvironmental / business factors and act just asthey shift
  35. 35. 3510 capabilities of Adaptive Firms5. They experiment and take risks – they try pilottests and experiments and use a high failure rateto learn and to find out what worksL Page - “I’d rather make the mistake in moving toofast than make no mistakes and move too slow.”Mark Z - “In a world that’s changing so quickly…you’re guaranteed to fail if you don’t take anyrisks. The riskiest thing is to take no risks”6. They include a scalable capability – they requireall processes and programs to be scalable…meaning that everything can easily increase ordecrease it’s capacity and cost structure
  36. 36. 3610 capabilities of Adaptive Firms7. They increase the speed of adaptation“Its not the strongest of the species that survive,nor the most intelligent,But the one most responsive to change."Darwin
  37. 37. Facebook’s CEO tells employees to be responsive37 “Move fast and break things”– “The idea is thatif you never break anything, you’re probablynot moving fast enough”
  38. 38. Facebook says move fast38
  39. 39. 3910 capabilities of Adaptive Firms8. They increase learning speed“The” critical corporate competency – theonlyfuture competency may be… rapid self-directed learning and the ability to adapt afterlearning!Organization learning speed – must be measuredand improvedSharing learning – what is learned (problems andsolutions) must be shared rapidly
  40. 40. 40Parallel benchmarking… learn from everyoneLearn from other functions (Supplychain, finance & social media)Learn from parallel industries (Speed & quality)
  41. 41. 4110 capabilities of Adaptive Firms9. Churn, they move simultaneously in 2directions– their programs and processes have thecapability of moving in multi-directions at thesame time (Volume, innovation, speed, costs, quality)They also have the capability of quicklyreversing direction by as much as 180 degreeswhen e-factors shift10.They rely on their partners - they work closelywith strategic partners, customers, vendors andothers outside the firm to learn and leveragetheir resources
  42. 42. 42The 12 key capabilities of an“adaptive recruiting function”Part VGrouped into 3 categories1. Strategic changes2. An external focus3. The required capabilities
  43. 43. 43Recruiting actionsStrategic actionsthat are requiredin order to create an “adaptable recruiting function”
  44. 44. 44Action #1 - An adaptive recruiting strategy Most recruiting strategies are fixedfor 1-2 years You must havea written adaptive strategicrecruiting plan that is tied into the business plan You must have abest & worst case scenarioandif - then plans for each of the 4 growth modesRetrenchment and cost-cutting modeSlow / no growth modeGrowth to rapid growth modeInnovationand “startup”mode into new areas
  45. 45. 45Set your yearly % rate of improvementtarget forHR… so that it matches or exceeds the rate ofimprovement of our products(Dell)What should the rate of change in recruiting be?
  46. 46. 46Action #2 – You must prioritize jobsPrioritizing maximizes business impact Identify the impact of each job family – workwith the CFO to calculate the dollar impact ofeach job family… andthen report it to managers(Ex. Zynga) Focus your recruiting resources – develop aprocess to handle priority jobs first, to assign themost resources and the best recruiters to them
  47. 47. 47Action #3 – Build a recruiting business caseContinually build a compelling business case foryour CFO and hiring managers You must demonstrate to cynical executives andhiring managers the impact that recruiting hason profit and other corporate goals >
  48. 48. Which HR function has the highest business impact?48
  49. 49. Mid and lower impact HR functions49Source: BCG/WFPMA -From Capability to Profitability: Realizing the Value of People Management, 2012
  50. 50. 50A business case (Continued)BTW - Because of the extra cost and effortrequired… executives won’t fund yourfocus onrecruiting top performers and innovators Unless you have calculated their performancedifferential over hiring “average candidates” >
  51. 51. What is the performance differential?51"The secret of my success isthat we have gone toexceptional lengths to hirethe best people in theworld… boy, does it payoff."Steve Jobs“The difference betweenthe average programmerand a great one”…its at least 25
  52. 52. What is the performance differential?One top-notch engineer isworth “300 times ormore… than the average”…“we would rather lose anentire incoming class ofengineering graduatesthan one exceptionaltechnologist.”52Alan EustaceSenior VicePresident, Engineeringand Research
  53. 53. 53Action #4 – You must learn rapidlyContinuous learning is needed because recruitingtools, best practices and knowledge quicklybecome obsolete Learning plans – each team and recruiter musthave a self-directed continuous rapid learningplan… to ensure that they stay on the leadingedge of recruiting (Google alerts on top firms/evolving practices) Continually identify new recruiting tools –identify and tracknew recruiting tools andapproaches… and their results
  54. 54. 54Action #4 – You must learn rapidlyContinuous learning is needed (Continued) “Forgetting” must be emphasized – in a fast-changing world, leaders must actively encourageall to act like everything in recruiting becomesobsolete… and to continually seek out new andbetter solutions Realize that learning is difficult in recruitinginnovation areas… because there is littleinformation available and leading firms refuse toshare
  55. 55. 55Recruiting actionsAn external focus is neededin order to create an adaptable recruiting function
  56. 56. 56Action #5 – You must track environment changesDevelop a process to track recruitingrelatedenvironmental factors including:Unemployment rates in your regionTurnover rates in your region (Use LinkedIn)Employer brand strength in the industry (Glassdoor)% of unfilled jobs or open days for your regionWhen top talent enters the market (others may leave)AlsoIdentify own firm’s projected revenue growth rateand the growth rate of key business units
  57. 57. 57Action #6 – Monitor your talent competitorsConduct a yearly competitive analysisto ensure thatyour rec. practices are producing superior resultsAlso track competitor actions& their precursorsWhen they adopt new hiring toolsChanges in their recruiting staff / strategyWhen new jobs open upRevised job descriptions with brand new skillsFreezes or ramping up hiringMajorproduct / project cancellations or othermajor problems (layoffs, a merger, CEO left)When “talent competitor” turnover rates go up
  58. 58. 58Action #7 – Use metrics and analyticsUsedata supported decision-making in recruiting Be suspicious of past recruiting practices – in afast-changing world… “the old way” and yourexperience may actually be harmful Real-time &predictive analytics can warn about• Internal positions that are likely to open up• When and wheremost openings will occur• Upcoming time to fill rates• Upcoming shortages /surpluses in key jobs• Source, tool and Q of H deterioration
  59. 59. 59Google the world’s only data driven HR function“All people decisions at Google are based on dataand analytics”We want to… “bring the same level of rigor topeople-decisions that we do to engineeringdecisions,“People analytics head Prasad Setty
  60. 60. 60Recruiting actionsRecruiting capabilities that are requiredin order to create an adaptable recruiting function
  61. 61. 61Action #8 – Adaptability in processes /programsRecruiting processes/programs are adaptableToolkits are required – rather than a single corp.solution, users should be given a toolkit… so thatmanagers, recruiters and employees can choose themethods or tools that best fit their situationBuilt-in obsolescence – every TA program,answer and tool must continually obsolete itselfFluid job descriptions – continually update jobdescriptions… so each job is constantly adapting
  62. 62. 62Action #9 – Target high-impact hiresTarget new hires in these areasLook for adaptiveness – add adaptivecapabilities and experience to your job postings,hiring criteria and assessment processesTarget innovators – because of their high impacton profitability, redesign hiring processes… sothat they successfully capture innovatorsBe careful of using "fit“ in hiring – because in achanging world… what fit’s today may beinappropriate in the future
  63. 63. 63Action #10 – Rapid hiring capabilitiesBe able to rapidly ramp up your hiringTalent pools and talent communities – to pre-attract and pre-screen talentContingenthiring – contingent hires can allowyou to quickly ramp up capabilities… orreducelabor costs(40%)1 day hire capability- when top talent is availableUtilize RPO’s – for overflow & low impact hiringReferrals use OPT – they should reach 50%
  64. 64. 64Action #11 – Conduct market researchUse market research to scientifically identify:Whatto talk about - you must use market researchto compile a list ofthe factors that top passiveand active candidates demand in a firm… andin a job(i.e. a great manager)Whereto place your messages - you must usemarket research to help you understandwhere toppassive and active prospects would see / readyour recruiting and branding messages
  65. 65. 65Action #12 – Supplements to hiringSupplement your hiring efforts with:Retention – so that you don’t need to recruitreplacementsAn “overflow” capability – cross-train andredeploy talent for short-term seasonal, fill in oroverflow needs (JetBlue)Consider technology as a substitute for labor –Before hiring, look at technology as an alternativeProactive internal movement– moveindividualsand teams to where they will produce a higherROI and better retention >
  66. 66. 66Example - Facilitated internal movementimproves adaptivenessUse a “career mobility team” – use your recruitersto proactively speed upinternal movement and tomore accurately place your top talent
  67. 67. Any questions ? 67Did I succeed in making you think?