maximizing business success through organizational agility

Maximizing Business Success Through Organizational Agility Nicholas Born Kasey Kovack Matthew Olson April 28, 2015

Cornell UniversityILR School


Center for Advanced Human Resource Studies (CAHRS)

A Story About the Evolution of Payment

How do you respond?

How do you foresee what’s next?

How do you reinvent yourself to not fall behind? PRODUCT

INNOVATION REGULATORY

CHANGE

01.


02.


T I M E L I N E

The average lifespan of a company listed in the S&P 500

has decreased from 67 years in the 1920s to 15 years today.

-Richard Foster, Yale University

24% The Business Case For Agility

Sources: (1) Richard Foster, Yale, (2) Fortune 500 (1987-2012), (2) Fast Company, April 2011

In 10 years, 40% of the Fortune 500

will no longer exist.

T I M E L I N E


03.


The Need For Agility


Presentation Overview

01. What is organizational agility?

02. Where is agility needed?

03. What types of agility exist?

04. How do you embed agility?

05. How do you measure agility?



04.


28 Interviews

23 Unique CAHRS Organizations

Insights from

8 Industries

(Tech, CPG, Financial Services, Manufacturing, Retail, Pharma/Healthcare,

Oil & Gas, Consulting)

60 Minute

Interviews



01. What is organizational agility?

01. What is organizational agility? 02. Where is agility needed? 03. What types of agility exist? 04. How do you embed agility? 05. How do you measure agility? 06. Conclusion


05.


What is organizational agility?

The ability to respond to market conditions and environmental changes.

IS IS NOT A sustained capability to adapt A static, one-time change effort

Strategic nimbleness Fixed strategy

Proactive planning to enable timely responses

Reactive, uncoordinated responses

Embedded flexibility in all dimensions of the organization

Rigid processes and policies



02. Where is agility needed?




Agility on a Spectrum

06.

NE

ED

S

CA

PA

BIL

ITIE

S

Industry Need

Functional Need

Company Size

Employee Base

Technology Financial Services

R&D Accounting

Large Small

Large Small

L E V E L O F A G I L I T Y LO W H I G H

Foundational Elements None Many



03. What types of agility exist?



07.


MICRO-LEVEL AGILITY

Bilateral Perspective of Organizational Agility

MACRO-LEVEL AGILITY TRANSFER

Found In: •  Multiple functions •  Entire organizations Examples Requiring Macro Agility: •  Larger strategic changes •  Company relocation •  Wide-spread regulation •  Restructurings

Found In: •  One department •  Smaller teams Examples Requiring Micro Agility: •  Continuous innovation •  Changes in customer preferences •  New rivalry •  Loss of key accounts or suppliers



04. How do you embed agility?




Our research has identified 3 COMMON CHARACTERISTICS of agile organizations:

External Focus

Experimentation

Embracing Change

1.

2.

3.

08.



External Focus

Experimentation

Embracing Change

09.

TALENT

STRUCTURE

ENABLERS

•  Talent Capabilities 1.

2.

3.



External Focus

Experimentation

Embracing Change

10.

STRUCTURE

ENABLERS

TALENT

•  Organizational Structure

•  Team Design •  Work Processes

1.

2.

3.



External Focus

Experimentation

Embracing Change

11.

ENABLERS

TALENT

STRUCTURE

•  HR Levers •  Organizational

Processes •  Company Practices

1.

2.

3.



External Focus

Experimentation

Embracing Change

12.

1.

2.

3.

S T R AT E G I C A L I G N M E N T

I N F R A S T R U C T U R E

TALENT

STRUCTURE

ENABLERS



13.

STRATEGIC ALIGNMENT

Understanding the Business Case for Agility

Inspiring Vision, Mission & Culture

Leadership Competencies & Unity



14.

INFRASTRUCTURE

Global HR Infrastructure

Communication & Information Sharing

Future Focus

Analytical

Diverse Perspectives



EXTERNAL FOCUS TA L E N T S T R U C T U R E E N A B L E R S

Maximize External

Touchpoints

Build External Partnerships

Empower Local Teams

Capture Customer Voice

Anticipate Unconventional

Competition

Systemically Share Insights

15.

Fail-Quick Mindset

Growth Mindset

Design Thinking



16.

EXPERIMENTATION TA L E N T S T R U C T U R E E N A B L E R S

Separated Core & Experimental

Businesses

Network Structure

Local Team Structure

Avenues to Voice & Assess

Ideas

Differentiated HR Practices

Courage

Comfortable with Ambiguity

& Change

Enterprise Thinker



17.

EMBRACING CHANGE TA L E N T S T R U C T U R E E N A B L E R S

Cross-Pollination

Change Teams

Nimble Structures & Resources

Standardized Approaches

Talent Change Preparation



05. How do you measure agility?



18.


Organizational Measures

Business Measures

Proxy Metrics



Measuring Agility: A Case Study

Industry: •  Medical Device Manufacturer

Situation: •  Customer consolidation •  Federal regulations •  Product commoditization

Key Question: •  How do you measure whether your

organization is agile enough to respond?

19.


20.


Organizational Measurements: Strategic Alignment

External Focus Experimentation Embracing

Change

Organizational & Team Effectiveness X Organizational Design X X Cross-Pollination X X Change Management X Talent Capabilities X X X

Selecting Proxy Metrics


21.


Business Measurements:


Strategic Alignment

External Focus Experimentation Embracing

Change

Customer X X X Market Share X X X Innovation X X Labor Cost X Overall Business Success X X X X



06. Conclusion




22.


Thank you. Q&A




Academic Perspective on Agility

Highly agile executives have 25% higher

profit margins.

Sources: (1) Korn Ferry, “Developing Learning Agility” (2) MIT, (3) McKinsey Organizational Health Index

Executives with high levels of learning agility are

5X more likely to be highly engaged.

+37% +30%

Faster Revenue Growth.

Higher Profits.

Agile organizations have:

(vs. non-agile firms)

2x more likely to outperform peers on margin, book value & income growth.



STRATEGIC ALIGNMENT

Understanding the Business Case for Agility •  Burning platform issue •  Building optionality into your strategic agenda Inspiring Vision, Mission & Culture •  Consistent communication of a factually based and emotionally inspiring business

case •  Broad goals that encompass strategic optionality •  Company-wide behaviors, competencies & values that promote agility

Leadership Competencies & Unity •  Clear alignment among ELTs •  Essential leadership competencies include the ability to inspire, overcome risk

aversion, communicate effectively, offer support and cover, empower local decision-making & drive change



INFRASTRUCTURE

Global HR Infrastructure •  HR Technology

•  HRIS, technology-enabled performance management, engagement survey data, real-time talent database, & proactive org. effectiveness

•  HR Processes •  Strategic workforce planning, standardized performance management, &

proactive competency assessment •  HR Operating Model Structure

•  Shared resources with regional flexibility

Communication & Information Sharing •  Knowledge management •  Customer and market insights •  General communication technologies



EXTERNAL FOCUS TA L E N T S T R U C T U R E E N A B L E R S

Maximize External Touchpoints •  Co-locate employees with

customers •  Dedicated insights-driven

strategy team External Partnerships •  Outsourcing •  Industry collaborations •  Thought leaders Empower Local Teams •  Defer decision making to

local leadership •  Utilization of regional

operating models

Capture Customer Voice •  Establish customer intimacy

to understand needs/goals •  Pilots and iterations

incorporating customer feedback

Anticipate Unorthodox Competition •  Closely monitor emerging

competitors in adjacent industries, technologies and markets

Systemically Share Insights •  Advisory council to the CEO •  Leadership conferences •  Knowledge-share technology

and platforms

New Capabilities •  Future focus •  Analytical •  Diverse perspectives

New Capabilities •  Design thinking principles •  Fail-quick mindset •  Growth mindset



EXPERIMENTATION TA L E N T S T R U C T U R E E N A B L E R S

Separating Core & Experimental Businesses •  Silo new businesses to allow

for unique culture and way of working

•  Differentiation in HR systems •  Use as talent exporter to

service macro-level agility

Networking Structure •  Reconfigurable, on-demand

teams •  Leader support for short-

term, project-based assignments

Local Team Structure •  Using sprint, scrum and pilot

teams that focus on iterative design

•  Pushing down decision making authority for real-time evaluation of ideas and action

Avenues for Voicing & Assessing Ideas •  Formal – Summits, innovation

councils, Shark Tanks •  Informal – 3D printers, crowd

sourcing, CS cards Differentiated HR Practices •  Performance Management/

Goal Setting (Broad goals, short-term goals at end of sprint, frequent 360 feedback)

•  Training (Innovation Champions, scrum leadership training, etc.)

•  Compensation tied to strategic goals & reward experimentation

New Capabilities •  Courage •  Comfortable with ambiguity &

change •  Enterprise thinker



EMBRACING CHANGE TA L E N T S T R U C T U R E E N A B L E R S

Cross-Pollination •  Leverage network structures

to flow ideas, culture, change capability throughout the organization

•  Deliberate talent movement across core and experimental businesses

Change Teams •  Assessment of change

capability and status (pre-, during and post-)

•  SMEs, SWOT teams, Change champions

•  Leverage toolkits and share information

Nimble Structures & Resources •  Flex resources as priorities

evolve •  Flatter – can make own

decisions and move quickly

Standardized Approaches •  Remove non-value work •  Common operating principles •  Change management

processes (Data driven inspiring message, learning maps, cascading goal setting)

•  M&A processes Talent Change Preparation •  Cross-training promoting

enterprise thinking •  Leadership simulations •  Rapid reskilling •  Contingency planning •  Upskilling HR to support



Organizational Measurements: Strategic Alignment External Focus Experimentation Embracing Change

Organizational & Team Effectiveness •  Understanding of role, strategy, vision •  Understanding of work processes X Organizational Design •  Span of control •  Layers in the organization •  Decision making authority X X Cross-Pollination •  Job movement •  Turnover/Retention •  Net promoter score (EE promoting company)

X X Change Management •  Change capability assessment •  Change readiness •  Change adoption

X Talent Capabilities •  Skill usage gaps/work climate gaps •  Ready now leaders •  Succession pipelines based on new capabilities

X X X




Business Measurements:


Strategic Alignment External Focus Experimentation Embracing Change

Customer •  Account maintenance •  Account risk level pre/post change •  Speed of customer acquisition

X X X Market Share •  Market share in recently entered region/business

line/product offering X X X Innovation •  % of sales from NPIs •  Speed to market •  Usage rates of new products

X X Labor Cost •  FTE/non-FTE ratios •  Variable and non-variable pay/cost X

Other •  Revenue growth •  Market share •  Profitability, etc.

X X X X

maximizing business success through organizational agility

Leadership & Management

types of agility

agility sources

yale university

fast company

richard foster

minute interviews

business case

business success