New Rules and Roles for

Let’s start our conversation about agility with a look backwards. We started this conference in Spring of 2008, and I remember well we were in the the war in iraq. We talked that year about “buidling the enduring organization” and we talked about the five keys to success: leadership, management, learning, systems, and HR. Facebook was only 18 months old and had around 50 million users. Twitter was about a year old and no one knew what it was.Then the recession hit and in 2009 we came to Florida and talked about Talent Strategies for Transformative change. Bear Stearns and Lehman went bankrupt, Bank of America acquired Merrill Lynch, the banking industry restructured, and we talked about how to deal with business transformation. And I remember one of my keynote themes was ‘how to do less with less.” And LinkedIn was just a startup!Then in 2010 we started the recovery, and only around 350 of you came. Our foucs was on rebuilding skills. We had Ted Hoff the CLO of IBM and Don Vanthournout the CLO of Accenture discuss their reskilling and talent strategies., The IPAD was introduced… … and our theme was the “New Imperatives for HR” – talent segmentation, recruiting tunnel, business-integrated HR. 2011 we talked about the emergence of the borderless workplace, and we were right on. Today the workplace truly is borderless. LinkedIn hit 100 million users and Facebook hit 500 million, and there were around 4 bilion cell phones. We talked about globalization and Innovation as the new themes for this decade. We had Lori Sweere from UHG describe the transformation taking place in one of the world’s biggest healthcare companies.Now here it is in 2012, we are entering a global recovery, and the borderless workplace has now become real, dramatically changing the way organizations work. Facebook is going public with more than 800 million users, LinkedIN with nearly 200 million professionals, and there are more than 8 billion cell phones. And Apple, a company I remember as a fledgling startup early in my career, is now the most valuable company in the planet.Today companies are making money again, the auto industry is back, and the stock market is nearing new highs. We have entered the new world of highly interconnected business.

As I start to explain how business and HR has changed, its important that we first look at three huge trends impacting our organizations.First, accelerated globalization – it’s happening even faster than we anticipated. Second, growing imbalance of talent in the world, coupled with a much younger and highly diverse workforce. Third, the explosion of BigData, a new opportunity for competitive advantage (or of falling behind).Let me explain these for a few minutes.

And these developing economies are quickly maturing. China is now the largest market for cellular phones and one of the fastest growing markets for Mercedes and BMW. And this maturity means that these countries will need more mature talent and recruiting strategies as well.Our advisory board told us that their #1 issue this year is “how to globalize our HR and talent strategies.”Do you believe you can take a US trained manager and expect him to succeed in China or the Middle east? Do you know how to train leaders in the middle east and why and how they are different from leaders in Europe, the Far east, and India? Do you understand the role of the patriarch in middle-eastern organizations? Globalization is one of the key themes of our conference this week. Globalizing our talent strategies, but localizing their implementations.One of our clients, Wal-Mart, has totally re-engineered its leadership strategy to help globalize its business. Matt Milbrodt, the senior director in the international people group from Walmart, will talk with us tomorrow about how WalMart has now globalized its talent management, talent mobility, and leadership strategies.

The second big issue we face is a global talent imbalance. I call it the “talent paradox.” Even with today’s high unemployment rate, companies tell us that hiring great people is harder than ever – despite high unemployment, recruiting teams increase their budgets by 6% last year. This is happening for three reasons. First, the demographics around the world are out of balance. In the emerging economies there are lots of young people and older people, and a lack of available talent in prime working ages. In developed countries like the US, we have mid-aged workers, but their skills are atrophied from the recession.Second, the developing countries are suffering from an atrophy of skills, driven largely by the recession. Siemens and Boeing, for example, tell us they cannot find manufacturing workers, so the have developed apprentice programs to build hands-on technical skills.And Kevin Wilde, the head of TM at General Mills, told us that moving executives to expatriateassignments is one of the biggest derailers of executive talent.Accenture, Ford, and SAP, have all opened education centers in India to help train young people in the ways of their business. But the talent imbalance is further being greatly exacerbated by a third factor. One which is very profound. We are becoming a workforce of specialists.

The vast amount of connectivity now availability in the world, experts can now be shared and used all over your organization. And that has led to a new key to business success: deep levels of expertise (and specialization).Intel, Accenture, IBM, Qualcomm, Pfizer, Ford, General Mills all tell us that their competitive advantage is now dependent on building deeper and deeper levels of expertise.Pfizer created an internal marketplace for technical specialists (statisticians, scientists, organ experts) who can be shared among Pfizer workers – called Pfizer Works).Accenture can no longer compete by just hiring smart people – they have to be world class experts. Accenture has implemented a 7-level capability model they use for all consultants, and they understand that people will take 10-12 years or more to reach level 7. This has worked: two weeks ago the company announced record revenues and profit and upgraded its financial guidance for the rest of 2012..The trend toward specialized work reached the consumer market as well.Today a fast-growing startup in California called Task Rabbit lets you find experts to do your laundry or assemble your furniture from IKEA. Today we recruit for skills, not just talent.We have entered the expertise economy. Expertise is the new currency of success. And as you will see in a few minutes, building and rewarding expertise is one of the most important things you can do to make your organization more agile.

And the world has also become much younger. By the end of 2017, nearly half the workforce will be under the age of 35. This alone is transforming our organizations.Young people not only bring new ideas, but they also bring a whole new way of communicating. IDC now believes that Text Messaging, Facebook, and Twitter have already replaced email as the #1 way people communicate. We can expect this shift to move much faster into the future.And… young people also bring new expectations and a different set of demands from employers. They want meaningful work, and they are not afraid to switch jobs. Nearly a third of young people are planning on switching jobs once the recession is over, and only 55% think that their employers are a good long term place to work.So now we have to focus on engaging people in work, to drive both job satisfaction and what we call discretionary effort. Discretionary effort is what makes you competitive.Brenda Kowske and Charlie Goretskiwill be launching our new engagement research this week. Our research shows that there are many models for engagement, but ultimately it is one of the most important assets you have.Two sessions I want to point out: ManonKebodeaux from Baker Hughes is going to talk about the power of building diversity, and LauriKwilos from Sage, Peter Jones from Bristol Myers Squbb, and Carol Robinette from the Red Cross are going to talk about managing contingent workers.

The third radical change which will define the next few years in business is the emergence of BigData. McKinsey’s research on this topic points out that today there are more than 15 EXABYTES of data in us corporations (an exabyte is 40,000 X the entire library of congress) and this data is will grow by 44 times in the next 8 years. For example, there are more than 8 billion photos uploaded to Facebook every month.And this information affects you. Within your own IT systems are millions of data points about your own employees, their performance, and where and how they best impact your business. But our research shows that only 6% of you feel that you have mastered the ability to analyze talent data. So this will be a major area of focus for HR and L&D in the coming years.We have started a working group called BigData in HR for our research members and this week we are publishing a major new research report on the four stage maturity model for a world-class talent analytics function. In this week’s conference we have four sessions about bigdata. In particular I would like to highlight the panel entitled Making Better Decisions: Data, BigData, and You, featuring Jim Rayburn the head of LinkedIn product strategy, Sean Dineen the head of analytics for Luxxotica, Dan Samtulski the lead HR technologist for AT&T and Marc Williams the head of statistics for workforce analytics at Capital One.As Mckinsey points out, we are at an inflexion point. Companies that understand how to manage big data will dramatically outperform those who don’t.

So we’ve talked about globalization, specialization, youth, and engagement. How are these workforce changes affecting top business leaders? The answer is, they are very worried.Late last year Lloyds of London asked 500 CEO’s to rank their top 100 business risks for the coming year.The #1 risk they stated is loss of customers, which I will explain in a few minutes. But the #2 risk they state is talent and skills shortages.This means skills shortages are a larger risk than sovereign debt, currency devaluation, cyber terrorism, flood, earthquake, raw material shortages, and 90 other areas of risk. We really are in a global skills and talent crisis, and it appears to be getting worse.

So what does all this mean? We now work in a borderless workplace filled with communication technologies. Our workers are younger, more specialized, and they want to be trained and engaged. They often work at home or in cities far away from their manager, yet we need them to stay aligned, execute, and deliver high performance.Well we have entered a world where the nature of work itself is different. People now work in high-performance virtual teams, they collaborate across the world, and managers play hands on roles throughout the company.What our research shows is that this new environment demands a new model of management: something we call the Agile Enterprise.

Let me explain. Historically the invention of management started in the 1800s, when Andrew Carnegie, the British Empire, and the Railroad magnates defined the role of the professional manager. The “professional manager” was a hired gun who came in to supervise the labor (or employees as they are now called).These professional managers were called upon to put in place a “system” which enabled semi-skilled workers to operate efficiently, and when someone did not fit, they were simply replaced. ITT coined the idea in 1965 (not that long ago) that “the goal of management is to make individuals as predictable as capital assets.”This period marked the beginning of the field of “Human Resources.” If you think about the name Human Resources, it is actually somewhat degrading. It implies that people are resources like raw materials and capital. They just happen to be Human. The Human Resources department manages these “resources” – in a way similar to the way Finance manages financial resources and Logistics manages physical resources.Of course today this sounds absurd. We know that people are very different from physical things: we are an appreciating asset. We don’t wear out, we get more valuable as we build greater skills in the organization. And the more engaged and excited we are, the more “discretionary effort” we contribute. So many of the original principles of HR (such as ranking, rating, appraisal, etc.) are built on an old, rapidly obsoleting model.In addition to this, something else huge has happened. I would argue that manager no longer really “run” companies – customers do. The great transparency of information in the world now makes it very easy for customers to compare products and shift from you to your competition. So the companies that win, in this “new world” of borderlessness, are those who are highly customer centric, are able to respond immediately to new customer needs, and act as “agile” organizations.This is a new model for management, and it is dramatically changes what HR must do. Let me show you how urgent it is that you take these trends seriously.

Late last year the Economist asked CEOs to define what makes their businesses agile.They cited four key criteria: Rapid ability to make decisions, A high performing culture where people deliver for each other, A flexible management structure that lets teams reorganize quickly, And the transparent availability of financial, workforce, and customer information.

When these same CEO’s were asked to rank their business functions in their contribution to agility, the story was a little frightening. The most highly contributing part of the organization was Sales, followed by marketing. Then the other business functions were ranked, and at the very bottom of the list was the legal department. And at the bottom was HR.The message here is simple. If we as HR and learning professionals want to add more value in this new management world, we have to reinvent what we do, why we do it, and how we do it.

What are the new rules and roles for HR?Well our organizations are moving from a “hierarchy” where decisions are made on top, to what one pundit calls a “wirearchy” where people operate in high-performing teams.Teams: Have you ever been on a high-performance team? Maybe a sports team? Or flown an airplane? Or worked on a small project team? It’s among the most exciting and fulfilling things we do in our lives.These small teams (and Yale professor Richard Hackman has proven that these teams should be six people or smaller), must be what is called “self-organizing.” They decide how to set themselves up, they create their goals, and they manage themselves. Mission and Culture: The organization must provide them great degrees of shared mission, value, and culture to ensure alignment – but in an agile organization we want these teams fully empowered to directly meet customer needs (internal or external) and run at their own pace.These teams also provide their own rewards systems, they rate and rank each other internally, and they set their own ever-changing goals. They deliver their work in customer-centric iterations.Old Fashioned Ideas: This is why the old-fashioned ideas of top down goal alignment, hierarchical talent management and leadership, and formal performance ratings are falling apart.If you are operating in a traditional management hierarchy on the left, your job in HR is to create alignment, control, and execution. That may work for some companies, but fewer every day. Pharmaceuticals, oil and gas, automotive, media, insurance, entertainment, technology, professional services are all industries which are going through massive changes as a result of this “customers and data-centric” revolution. So my guess is that your company may look like it’s on the left, but it’s trying to become like the one on the right.

Two industries best implement agile management practices today: Media and Software.Media, because it operates in a 24x7 always-on environment, is agile by nature. New tools like Twitter and Skype have now made even the traditional TV cameras too slow. Tomorrow Dana Tomechko is going to talk with you about how HR at NBC news is actually driving agility, not holding it back. She is going to tell us some stories about how twitter and other tools have actually been quite disruptive, forcing her to take an open, agile approach to HR and management.Another great example of a media company I want to highlight is the YES network. This is a regional sports network that is owned by the NY Yankees, started in 2004 and now worth more than $2.5 billion.Peter Dolgin, the CEO of YES, talks about the “reverse peter principle.” Rather than promote people to their level of incompetence, he does the opposite. He hires experts (the “Steve Jobs” of each department, he calls it) and gives them the leadership of a very small team – which is flat. They operate as team mates and he avoids promoting them.Our leadership development program at Bersin is modeled this way. We believe greatly in hands-on management.

Of course the other industry that one thinks of when we talk about speed is software and there is no more exciting software company to talk about than Facebook.Facebook, which we are all going to hear a lot more about when it goes public, calls its management model “The Hacker Way.” And if you read about the hacker way, Zuckerburg talks about speed, customer centric iterations, and small teams.In fact, the Like button, the most widely used icon on the internet, was developed by only three people. These principles apply to you, so let me explain them a little more.Jeff Bezos, who has now replaced Steve Jobs as the #1 CEO in the world, tells his team that if you need more than one pizza at a meeting, the team is too big.Have you ever wondered how many iphone apps there are? Half a billion. And how do you think all these software programs are being developed? They’re being developed using a revolutionary new model, called AGILE.

Back in the 1980’s Fred Brooks, one of the inventors of IBM’s mainframe operating system, wrote a book called “The mythical man month.” Brooks found that when you added more engineers to a software project it slowed down, ultimately to a halt. This original work evolved, and in 2001 an engineering manager named Jim Southerland and some other engineers refined the model and named it Agile. As part of their management philosophy, they wrote a small booklet called The Agile Manifesto.Today there are more than 1600 books on Agile and nearly every software engineer and student in the planet learns about this model. More than half a billion iPhone apps have been built in Agile. And in fact we have adopted the agile model in our research, our publishing, and to a degree in our consulting.The agile model simply states that engineering teams should be small, they should deliver near-term features every few weeks, they should communicate in person (not over email), they should be honest, and they should have defined roles such as the “scrum master” who manages the process. The scrum master is a senior engineer, not a professional manager. He or she also writes code.This model has been explosive. It has created a revolution in software development, to the degree that nearly every major company, including the US government, has now adopted Agile.

Fundamental to Agile are some basic management principles – and these will sound very familiar to you. First, Agile, Like The Toyota Way, puts people before process and tools. People can stop the production line, they decide what to do, and they talk to each other. Every day there is a “standup meeting” (where people stand up so they don’t waste time) which lets people talk about what they need to do that day and what challenges they face.Second, Agile focuses on delivering working software (product) before heavy documentation. In the words of Mark Zuckerberg,”ship software” He calls it “keep calm and hack on”. Action.This is a fundamental difference in process design: by shipping products fast, the organization designs itself to respond quickly and therefore iterate quickly. Quality is continuously improved through customer-centric iterations.Third it focuses on customer collaboration over negotiation. Rather than doing a lot of anonymous customer research, Agile says that the engineers work directly with customers. This is what IBM did when I worked there, and what all good companies do. And fourth, Agile talks about how the team defines its success by rapidly responding to change, not simply following a plan. Rather than “watching a train wreck” – which is what I saw take place in some of my prior employers, the culture is one of “stopping the train and fixing the boiler NOW.”These practices sound simple, but they are not. Let’s look at how these new agile management principles change the fundamentals of what we do.

Show how does Agile affect what we do? Let’s now look at how the Agile model affects management, leadership, learning, recruiting and HR itself.

Last year I was in Stockholm last December and had the opportunity to meet Corinne Danner the head of leadership and talent management at Grundfos. Grundfos is a highly successful $3 billion global manufacturer of pumps and other hydraulic equipment. What Corinne showed me was a highly evolved management model where all employees in the company go through leadership development. They are assigned one of three categories of role (and related competencies) – innovator (engineering, sales, manufacturing), specialist (internal operations), and management (people in supervisory roles).As you can see from the model, the three role categories overlap significantly – showing that all employees need similar leadership capabilities whether they are project managers, sales people, engineers, or supervisors. Grundfo’s goal is to innovate, attract great people, develop a strong sense of business acumen, and create an enduring and consistent organizational culture. This is a company that weathered the European debt crisis, the global recession, and the energy crisis with continued growth and is over $3 billion in revenue around the world. Amazing company.I had a similar discussion with the head of leadership development at Verizon a few weeks ago – where they are revamping their entire leadership program to touch more than 80,000 people. Both AT&T and Verizon have totally revamped their leadership program to put leadership skills into the hands of leaders and specialists throughout the organization, driving organizational agility and empowerment.

Before I wrap up, let me make a final point.Building an agile organization means taking time to rethink the way you do business. Over the last ten years in our HR and L&D we have seen many “sacred cows” continue to roam, but others are clearly going away.The most important thing I can advise you to do is learn. Just as the agile models of management are new to business leaders, you too must learn new ways to add value in your company.I can tell you right now that if you focus on the practices I mentioned here – those of building organizational collaboration, training leaders at all levels, driving culture and engagement as a strategic weapon, using data strategically, and developing a globalized local business model for HR – you will thrive.The US dept of labor predicts that the HR profession and all its sub-specialities will grow by 22% over the next 8 years, vs. only 10.5% for the rest of the US workforce. This means that your job will be more important than ever for the decade ahead. Think about what the agile enterprise means for your organization, and I hope the next few days give you new insights, new ideas, and new friends to learn from.Our mission is to keep you current, give you insights, and make sure you have the tools and information you need to drive bottom line impact in your organization.Thank you again for coming, have a wonderful conference.