Leadership, Intangibles & Talent Q4 2010 - Four Groups


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Welcome to the final round-up of 2010. In this issue we have brought together an assortment of provocative articles focusing on;

Systems Thinking
Being Counter-Intuitive

Featured in this issue are articles from: Steven Johnson, John Hagel, Peter Senge, Richard Donkin and examples include HCL, the NHS, Minnesota public schools and the Roman Empire! Read online or download here.

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Leadership, Intangibles & Talent Q4 2010 - Four Groups

  1. 1. Four Groups QuarterlyUpdateLeadership, Intangibles and TalentQ4 2010
  2. 2. Four Groups Quarterly Update - Q4 2010 2010 – The year of complexity Welcome to the final round-up of 2010. In this issue we have brought together an assortment of provocative articles focusing on; • Complexity • Training • Systems Thinking • Innovation Featured in this issue are articles from: Steven Johnson, John Hagel, Peter Senge, Richard Donkin and examples include HCL, the NHS, Minnesota public schools and the Roman Empire! Questioning Current Beliefs “…as far as I can see, recruiters One of the strongest themes running continue to rely too readily on the through articles in 2010 has been outcomes of tests that can be easily that organisations are still poorly faked or misinterpreted.” prepared and ill-equipped for dealing with major change of any sort. I think that there is more to it than that The main criticism is that business and the potential for faking answers is leaders continue to try and solve only one area that throws doubt on the complex and intangible organisational use of traditional psychometric tests for issues through analytical approaches recruitment. Donkin cites an article2 on designed to simplify and standardise the OPRA Learning Blog, which rounds systems and procedures. up some of the most recent academic research into the link between Unfortunately for businesses, evidence psychometrics and job performance: is gaining that the simple or most obvious course of action is unlikely “Business leaders still continue to be to be the best option. Throughout caught up in the cult of personality and the year we have seen many believe that there is a huge array of articles that have questioned some differences between various measures of the fundamental beliefs about when they amount to the same thing.” organisational behaviour. For example, Richard Donkin has a blog post1, where “Personality tests are far more similar he questions the widespread use of than they are different. To pay psychometric testing for selection: exorbitant amounts for something that accounts for a mere 4% of variance related to performance is just mindless. 1 http://www.fourgroups.com/ 2 http://www.fourgroups.com/ link/?210 link/?211 2
  3. 3. Four Groups Quarterly Update - Q4 2010 As always, we should blend research recent findings from Gallup survey on with practice to determine usefulness.” the importance of relationships and in particular the role of friendship in the So who is to blame for this state of workplace: affairs? Clearly the main culprit has to be the testing companies, however it “Those who had best friends at work would be churlish of accusing them (only 30% of Americans) were 7 of obfuscation of the facts when they times more likely to be engaged are clearly only guilty of acting in their with their job, they exhibited higher own self-interest and in all honesty are sales and profitability, better engaged doing a very good job of it. Instead, I customers, produced higher quality can’t help but think that HR has sold work, had greater commitment to the business a duff one here. On the the firm’s mission, had better safety one hand, psychometrics can be very records (since friends often made useful in some situations, however sure they were complying with safety those HR professionals advocating precautions), were happier at work, the use of traditional psychometrics and had a higher chance of sticking for selection are clearly guilty of with a firm. If workers didn’t have a misunderstanding the key drivers of best friend, only 8% of them were successful selection. engaged in their job.” One of the problems here is that I do believe however that there is for many, the use of psychometrics some light at the end of the tunnel represents a beguiling proposition to and we are getting much closer to employers where hugely complex being able to predict performance in variables are boiled down to a few a particular role far more effectively. metrics. Thanks to new technology and improved understanding of social My own view is that success in dynamics, we are starting to see a new a particular role is dependent on breed of tools that take into account so many more variables than the these complex variables to provide a personality or even the abilities more effective means of predicting and experience of the individual in performance in the workplace. Tools question. Arguably, factors such as such as our own 4G methodology4, and corporate culture, economic conditions companies such as Evolv Technologies5 and particularly working relationships and Data Hug6 all represent advances combine to play a key role in in this area and look beyond the performance. beguiling yet simplistic factors such as previous experience and personal A good example of this is a recent profile information that have been posting by Thomas Sander on the misguidedly used to indicate future Social Capital blog3 where he discusses performance. 3 http://www.fourgroups.com/ 4 http://www.fourgroups.com/ link/?212 5 http://www.evolvondemand.com/ 6 http://www.datahug.com/ 3
  4. 4. Four Groups Quarterly Update - Q4 2010 Training designing material around something that seems akin to astrology.” In addition to psychometrics, another major area of HR responsibility, Systems Thinking training, has also come under scrutiny this quarter. In the always entertaining Building on the idea that traditional myhellisotherpeople7, anonymous approaches to complex organisational blogger The HRD writes: issues are insufficient, we are seeing more articles advocating a more “I’ve come to a conclusion. A holistic approach to problem solving. conclusion that worries me less than The traditional strategic approach to it probably should. Training doesn’t such problems where one would look work. Well not in the sense that to gain control of an issue through it is suggested that it does. It is a standardisation and simplification complete crock of shit and waste of is coming under increasing scrutiny. time. Most training interventions are A number of these ideas are well little more than a placebo. At best summed up in this detailed piece on employees go away with a sense complexity theory10 by Dave Pollard: of having been “invested in” at worst they go away with a sense of “Complexity theory argues that bafflement and confusion and having simple, complicated, complex and been “done to” by the organisational chaotic systems have fundamentally big brother.” different properties, and therefore different approaches and processes are In a similarly provocative style, Johnnie needed when dealing with issues and Moore on his blog8 takes aim at challenges in each of these types of another HR holy cow, learning styles. systems.” In this blog post, he discusses Ruth Clark’s recent book9: “the more complicated manufactured systems become, the harder they “Ive long had a visceral dislike of become for humans to ‘manage’. these kinds of classification systems Large organizations (businesses, public and the way people seem to present organizations and governments) themselves as if they have to learn therefore become inherently more and things in a certain way. Were a lot more dysfunctional (and less resilient) more complex and versatile than these the larger they grow.” pigeonholes suggest. And I shudder to think of the money that is still “As we come to understand complex being invested in profiling people and predicaments better, we’re learning 7 http://www.fourgroups.com/ that the best approaches to them are link/?213 very different from what works best 8 http://www.fourgroups.com/ for simple or complicated problems. link/?214 9 http://www.fourgroups.com/ 10 http://www.fourgroups.com/ link/?215 link/?216 4
  5. 5. Four Groups Quarterly Update - Q4 2010 Because all the variables cannot be John Seely posted an interesting piece known, and because cause-and-effect on the HBR blog12 on a number of relationships cannot be established ideas based around what they term in complex situations, analytical “propensity” but can also be directly approaches (like systems flowcharts) related to the above descriptions of used in complicated problem-solving complexity and systems thinking. simply won’t work.” “In thinking about mindset, propensity The ideas that Pollard highlights are has two key components: A dynamic reflected in another good blog posting verses static view of the world: from Jamie Notter11. In it he discusses everything is in a state of becoming. A Peter Senge’s book The Fifth Discipline focus on relationships versus objects: which focuses on an idea called the process of becoming is shaped by systems thinking: context and relationships to others.” “We are all operating within systems, “The org chart is an exercise in control, and too often when we try to figure attempting to pin down objects out whats happening or whats (individuals, positions) in a fixed not working, we dont see how the hierarchy that completely misses not bigger-picture system dynamics are only the frequent changes in personnel generating the results we dont want. but the more informative informal We try to fix the parts of the system, relationships and flows of information but it never gets fixed because the within and without the company.” system itself pushes in a certain direction.” These are not new problems or issues, throughout history people have “The reason culture "eats" things like struggled to deal with organisational strategy or process, I think, connects design. Indeed I have recently finished to systems thinking. Culture is like the reading Adrian Goldsworthy’s excellent architecture of our systems, and we account of the fall of the Western create strategies that make perfectly Roman Empire13. In his conclusion, good sense, but run counter to the Goldsworthy points to the inherent architecture, thus they dont work. The difficulties in managing any large problem is, the architecture typically organisation. He points to the fact that makes sense as well. Its good. Its as individuals, we lose track of the big what we want. It just creates an picture and this applied as much to environment where, interestingly the Roman Empire as it does to large enough, we end up not getting what organisations and governments today: we want.” Again, another article picks up a similar tone where John Hegel III and 12 http://www.fourgroups.com/ link/?218 11 http://www.fourgroups.com/ 13 http://www.fourgroups.com/ link/?217 link/?219 5
  6. 6. Four Groups Quarterly Update - Q4 2010 “All human institutions from countries Francesca Gino and David Hofmann to businesses, risk creating a similarly was highlighted in this article on short-sighted and selfish culture. It is Knowledge@Wharton14 discussing easier to avoid in the earlier stages of the situational aspect of leadership expansion and growth. Then the sense and in particular the situations where of purpose is likely to be clearer and extraverted or introverted leaders are the difficulties or competition involved best suited: have more direct and obvious impact. Success produces growth and, in time “When employees are proactive, causes institutions so large that they introverted managers lead them to are cushioned from mistakes and earn higher profits. When employees inefficiency.” are not proactive, extraverted managers lead them to higher profits.” “Targets themselves will over time tend to distort this sense of the wider This in itself makes sense, the problem goals even further…..As often, the is that within the normal corporate targets are chosen because they are environment, it is the introverts who something that can be measured.” maybe do not self-promote themselves or network as effectively as their “The targets become ends within extroverted colleagues that struggle to themselves, robbing individuals reach senior positions. within the system of any initiative. Improvements in communications Whether some organisations make it easier for those at senior level actually require leaders is posed by to intervene and send instructions Inder Sadhu15 on the Forbes blog. to those lower down and this has a He discusses the Avalon School in similar tendency to destroy initiative.” Minnesota is run by its teachers: This argument is one that we have “Unlike other institutions, the public highlighted in many articles over the charter school has no principal, no full- past year and has particular relevance time administrators and no director. to the way in which organisations Instead of superintendants and district engage and manage their people. supervisors, educators make decisions regarding budgeting, hiring, curricula Counter-Intuitive and more.” One of the things that we have tried Although clearly not for everyone, to focus on in this review over the I do wonder how many smaller past 12 months are the ideas that organisations would benefit from such run contrary to popular opinion. an approach? Another area of complexity that defies easy solution is the idea of 14 http://www.fourgroups.com/ link/?220 leadership within the organisation. 15 http://www.fourgroups.com/ Recent research by Adam Grant, link/?221 6
  7. 7. Four Groups Quarterly Update - Q4 2010 Innovation innovation in itself, perhaps the best course of action is to develop Innovation is another example of a an environment that optimises the complex problem that has continued likelihood of positive encounters as a notably popular topic throughout and interactions. Surely this has the year. Increasingly, we are seeing implications both transparency within that there is a broad consensus organisations and also the extent to emerging that acknowledges the which new technology and social highly complex and intangible nature media are deployed. of innovation. Writing in the FT, Steven Johnson16, discusses his new book Furthermore, another idea organisation Where Good Ideas Come From (there need to take on board is that is a nice animation17, who looks at the innovation is unlikely to come from environmental factors that encourage formal or senior management or discourage innovation. initiatives. Johnson also talks about an idea called “scenius” which was coined Some of the points he makes include by the musician Brian Eno: the idea that innovation rarely comes from one person but is more often a “… to describe the unusual pockets collision of ideas and thoughts that of group creativity and invention that come together and coalesce over a emerge in certain intellectual or artistic long period of time. Johnson argues scenes” that at the heart of innovation lies chance, and the most organisations “The serendipitous ingredients for can do to encourage innovation is scenius are hard to control. They increase the likelihood of positive depend on the presence of the right chance encounters. Interestingly, early pioneers. A place that is open, Johnson states that new technology but not too open. A buffer that is and in particular social networking tolerant of outlaws. And some flash rather than harming the innovation of excitement to kick off the virtuous process by shortening attention spans circle. You just can’t order this.” and the ability of individuals to focus is likely to increase the chance of Johnson recognises that to understand innovation inspiring serendipitous innovation you need to draw on a encounters. number of different fields and areas of specialisation. From anthropology, I think that this has a number of scientific history and network theory. implications especially for large To this I think that we can also add organisations looking to encourage complexity theory. or foster a culture of innovation. Rather than try to directly encourage So why innovate in the first place? Surely the purpose of innovation is 16 http://www.fourgroups.com/ to deliver prolonged competitive link/?222 advantage to the organisation? This 17 http://www.fourgroups.com/ link/?223 7
  8. 8. Four Groups Quarterly Update - Q4 2010 brings us nicely to this piece over at “Most companies have relied on Strategy + Business18. The discussion business strategists for strategic starts off with a short description of answers. But now we see that we the inherent contradiction in trying to have to generate our own answers — sustain competitive advantage, among our own theory of the right to win for the points made are: each company, with its unique identity and circumstances.” • Competitive advantage is transitory • Strong coherent culture is a One person who seems to get this pre-requisite for competitive is Vineet Nayar at HCL Technologies, advantage and differentiation in we have discussed his “Employees the marketplace First, Customers Second” approach • Strong coherent culture is also in previous issues, there is however a huge barrier to change and a good interview with him over at ongoing adaptation Strategy + Business19. This article then moves on to an “Calling our policy Employees First, enjoyable potted history of strategy Customers Second was our way of trends of the past 50 years and makes defining this attention as our primary a number of interesting points. Again, aspiration going forward. It was also the ideas discussed in this article draw a statement about the relationship parallels with an acknowledgement between leaders and the people of the inherent complexity of who execute. How do you maximize organisations and that adopting a the experience that customers have particular “strategy” that happens to in the value zone where they meet be flavour of the month is unlikely to your company’s work? We think the be successful. answer is for management to see itself as an enabler, and for employees “The answer is not to keep adopting to see themselves as “doers” with new theories in hopes of finding the a great deal of accountability and right answer, but to develop your own autonomy: the ability to choose much capabilities-driven strategy: your own of what they do. In this way, we create theory of coherence for your business.” organizations in which employees are aligned with the customer.” “How can your company gain the most from considering all these theories Tying it all Together of the right to win? Only by stepping back, away from any particular As we move into a new year, what answer, to look at your company’s strikes me is that all of the topics identity as a whole, encompassing most commonly featured in this the way you expect to compete, review such as: talent, engagement, the capabilities with which you will HR, innovation, M&A integration all compete, and the portfolio decisions 19 http://www.fourgroups.com/ that fit.” link/?225 (registration required) 18 http://www.fourgroups.com/ link/?224 8
  9. 9. Four Groups Quarterly Update - Q4 2010 share a number of common features. to move people and funds into Firstly by Dave Pollard’s definition completely new types of organisation. they are all complex problems and These new bodies will have enough therefore require an approach that trouble just working out what they are takes into account all these variables supposed to be doing. Much of the and requires detailed knowledge of an organisational memory and expertise organisations idiosyncracies. from NHS trusts and local authorities may be lost. If existing organisations Another common feature is that are struggling to make efficiency all these issues are also people- savings, what hope do the GP based in nature. By definition people consortiums and urban parish councils and their ability to work together, have?” collaborate and innovate is the key to performance, on the flipside people That’s all for 2010. As always also the cause of poor performance comments and feedback is most and failure. What is required therefore appreciated. is a complex solution to the people issue, not one that is steeped in the analytics and metrics of old. This leads us back to the beginning of the article, rather than sticking with traditional approaches such as the use of psychometrics for selection, HR needs to get out there and help solve these complex problems. These are all real and practical issues, and the deeper into 2011 we go, the more we are going to see the practical implications of the lack of self-knowledge and understanding that most organisations have about their own activities and identities. For example in the UK, government spending cuts are likely to have a significant impact on thousands of public sector employees across the country during 2011. The blogger at Flipchart Fairytales20, draws attention to the upcoming organisational disruption about to hit the NHS: “But the government isn’t just planning a few mergers. It intends 20 http://www.fourgroups.com/ link/?226 9
  10. 10. Four Groups Quarterly Update - Q4 2010 Written by Michael Folkman, Director michael.folkman@fourgroups.com About Four Groups Four Groups have developed a new approach called 4G to understand behaviour, relationships and culture. 4G provides its users with insight into personal characteristics, how relation- ships develop within teams and groups and how culture can be best defined and managed. 4G provides organisations with infor- mation on how best to deploy and op- timise the performance of their people. It also enables preventative measures to be taken which minimise the less productive aspects of interaction and group dynamics such as friction and misunderstanding between colleagues. 4G represents a systematic approach to managing the intangible aspects of organisational behaviour. The method- ology is easily replicable and can be implemented quickly and efficiently. Four Groups Ltd. 5 St John’s Lane London EC1M 4BH Tel: +44 (0) 20 7250 4779 Email: contact@fourgroups.com © Four Groups Ltd. http://www.fourgroups.com All rights reserved. No part of this document Company Number: 4650494 may be reproduced without written permission VAT Number: 817 7962 85 from Four Groups Ltd Registered in England and Wales 10