Strategy Analysis for Organization and Talent Resources

© 2008 Boudreau-Ramstad Partnership. All rights reserved.

Strategy Analysis for

Organization and Talent Resources

John W. Boudreau

Center for Effective Organizations

Marshall School of Business

University of Southern California

213-740-9814

[email protected]

Center for Effective OrganizationsTeleconference

February 6, 2008

mailto:[email protected]


Strategy Analysis at theCenter 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

http://ceo-marshall.usc.edu/




Competitive Success Increasingly Depends on the “Talent” Market

Value Creation

Strategy

Talent Money

Value analysis

in this market is critical

Offerings


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

Define the “Talent” Resource


Distinguishing Professional Practice from Decision Science

Value

Creation

Strategy

Talent Money

Sales

Marketing

Accounting

Finance

Human

Resources

TALENTSHIP

Professional

Practice

Decision

Science

Offerings


Mature Professions Evolve

Toward a Focus on

Competitive Decisions, Not Just

Functional Practices


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


Talentship Focuses on Decisions

To increase the success of the organization

by improving the decisions that:

Affect, or

Depend upon

Human Capital


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?


CEO-HRPS Survey: Talentship (“Achieving

Strategic Excellence” 2006, Lawler, Boudreau & Mohrman)

To what extent are these statements true about

your organization?

(1= little or no extent; 5=very great extent)

Average (HR sample)

Average (Non-HR

Sample)

Strategic

Role

(HR sample)

Strategic

Role

(Non-HR

Sample)

Business leaders’ decisions that depend upon

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

3.1 3.5* .40*** .23

HR leaders identify unique strategy insights by

connecting human capital issues to business

strategy

3.1 3.1 .44*** .47***

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.


CEO-HRPS Survey: Talent Principles (“Achieving

Strategic Excellence” 2006, Lawler, Boudreau & Mohrman)

To what extent are these statements true

about your organization?

(1= little or no extent; 5=very great extent)

Average (HR sample)

Average (Non-HR

Sample)

Strategic

Role

(HR sample)

Strategic

Role

(Non-HR

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.


Strategy Level Core Concept

EnterpriseStrategy

Portfolio Strategy:

Creating a portfolio that is more competitive together than they would be independently,

through strategic resource coordination.

Business UnitStrategy

Competitive Strategy:

Building and executing compelling value propositions and business models to generate

returns in targeted markets.

FunctionalStrategy

Operational Strategy:

Building specific operations that uniquely support the competitive positions within the targeted

markets


Strategy Level Illustration: Disney

EnterpriseStrategy

Disney Corporation


Theme Parks

Broadcasting (ABC, ESPN)

Movies

FunctionalStrategy

Specific functions within each of the business units (e.g., Entertainment within Theme Parks, Network Operations within Broadcasting, etc.)


FunctionalStrategy


EnterpriseStrategy

Strategy Level

En

terp

rise

Re

so

urc

eS

trate

gy


Different Tasks

Strategy Formulation

Establish the competitive strategy

HR a key participant

Strategy Analysis

Determine the talent implications of a given strategy

HR as a process leader, with line and other functional leaders as participants


Business Unit Strategy Analysis

Strategic Positioning & Intent

Industry Definition and

Marketplace

Trends

Operational Implications

and Initiatives

Financial Projections

Industry Context and

Assumptions Lens

Competitive Positioning &

Differentiator Lens

Business Process Lens(Constraints and Boundaries)

Growth Algebra Lens

Pivot Points

Pivotal Talent Pools

Pivotal Talent

Requirements

Organizational

Design Boundary

and Coordination

Issues

Strategy

Communications

Strategy Consistency

around Functional

Business Units

Organization

Strategy

Elements

Strategy

Analysis

Lenses

Talent

Implications of

the Strategy

Enterprise Resource Planning Resource Lens(Input, Conversion, Output)


Strategy Elements: Business Unit Level

Strategy

Element

AnalysisWhile examining strategy through each lens on the left, determine where having better talent than the

competition is most critical

Industry

Context

• What are the most important industry assumptions?

• 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

Positioning

• What unique value do we create within this industry?

• 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)


Decision Quality

Becomes “Scaleable” Through

Shared Mental Models

Built on Rigorous Principles


The Power of a Consistent Logic

Unscientific Logical / Strategic

Finance: ROI, EVA, NPV

Marketing: Segments, Product

Life Cycles

Talent: ???


Shared Mental Models in Financial Markets

duPont Return on Equity (ROE) Model

Return on

Equity=

Profits__________________

Equity

=Profits

__________________

Sales

Sales__________________

Assets

Assets__________________

Equityxx

Margin Asset

Productivity

Leverage


THE HC BRidge

FRAMEWORK(Boudreau/Ramstad)

Logical Connections Between Talent Investments

and Sustainable Strategic Success


Efficiency

Impact

Anchor Points

Effectiveness

Three Anchors in Decision Analysis


Effectiveness

Impact EFFICIENCY

Where will specific

improvements in

resource investments

most enhance the

portfolio of policies and

practices?

Anchor Points

Efficiency



Efficiency

ImpactEFFECTIVENESS

Where will specific

improvements in the

portfolio of policies and

practices most enhance the

performance of talent and

organization?

Anchor Points

Effectiveness



Effectiveness

Efficiency

IMPACT

Where will specific

improvements in talent

and organization

performance most

enhance sustainable

strategic success?

Impact

Anchor Points



ANCHORPOINTS

LINKINGELEMENTS

Sustainable Strategic Success

Resources and Processes

Interactions and Actions

Culture and Capacity

Policies and Practices

Investments

Organization and Talent

Impact

Effectiveness

Efficiency

HC BRidge® Framework


Leadership and Strategic Assumptions


Strategic Assumptions:Example from Commercial Aircraft

Custo

mer

Dem

and S

atisfied

Aircraft Capacity

Boeing Market

Assumptions:

Goes flat at about 400

to 500 passengers

Airbus Market

Assumptions:

Incremental utility

well above 500


The Power of Constraints


The Disney Theme Park Value Process

Arrival Hotel Trans-port

Waiting Line

Rides Char-acters

Where would improving the guest

experience have the greatest

effect on their surprise and

delight?


Key constraint:

Minutes spent in line

• Reduce Waiting

• Make Waiting Delightful

BusinessProcesses

“What

constraints

must be

resolved?”

Example: Disney Theme Parks


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?


Park Designers?Ride Engineers?Characters?

Sweepers!!

Talent Pools

• Affects Key

Resource

• Relieves a Key

Constraint

• Performance

Differences

Matter

Example: Disney Theme Parks


Sweepers • Stop sweeping and talk to

guests

• Give accurate information

• Create delightful encounters

• Fix problems before they occur

• Bring information to product

design teams

AlignedResponses

“What employee

behaviors make

the biggest

difference?”

Example: Sweeper at Disney


Pivotal and Important Are DifferentS

trat

egic

Val

ue

Performance

Worst

Mickey Mouse

Worst

Sweeper

There is more value in

improving Sweepers

than Mickey Mouse.

Best Mickey Mouse

Best

Sweeper


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?


Pivotal Talent Summary:FedEx Landing Rights Resource

Pivotal

ResourceLanding Rights

Vital Issue Build Extended Hours

ResourceRelationships With Local

Communities

Pivotal

Organization /

Talent

Community Leader

Liaisons


FedEx Liaison Quality More Pivotal than Pilot Quality at Community Relations

Str

ateg

ic V

alue

Performance

Pilots

Community

LiaisonWorst

Pilot

Worst

Liaison

There is more value in

improving liaisons than

pilots.

Best Pilot

Best

Liaison


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

Examples of Pivot Points Identified With Talentship


Quality PivotalChanges in talent

quality or

performance affect

strategic success.

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.

Quantity PivotalChanges in talent

quantity or

availability affect

strategic success.

Pivotal Talent Defined


If Talent Segments Have Different Impact, Equal HR Investments are Not Optimal

Over

Investment

Actual Talent

Investments

Optimal

Investment

Levels

Low Impact

Talent Pools

High Impact

Talent Pools

Under

Investment

$$


Style of Organizational Engagement

Decisions

Services

Control

HR systems that

achieve goals by

“requiring” participants

to do what they must do

HR implements

changes by

“encouraging”

HR systems that

achieve goals by

“teaching” participants

and providing the tools

to improve decisions

Personnel

Talentship

Human

Resources

4


ANCHORPOINTS

LINKINGELEMENTS

Sustainable Strategic Success

Resources and Processes

Interactions and Actions

Culture and Capacity

Policies and Practices

Investments

Organization and Talent

Impact

Effectiveness

Efficiency

HC BRidge® Framework


Business Unit Strategy Analysis

Strategic Positioning & Intent

Industry Definition and

Marketplace

Trends

Operational Implications

and Initiatives

Financial Projections

Industry Context and

Assumptions Lens

Competitive Positioning &

Differentiator Lens

Business Process Lens(Constraints and Boundaries)

Growth Algebra Lens

Pivot Points

Pivotal Talent Pools

Pivotal Talent

Requirements

Organizational

Design Boundary

and Coordination

Issues

Strategy

Communications

Strategy Consistency

around Functional

Business Units

Organization

Strategy

Elements

Strategy

Analysis

Lenses

Talent

Implications of

the Strategy

Enterprise Resource Planning Resource Lens(Input, Conversion, Output)


Strategy Analysis at theCenter 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




Strategy Analysis for Organization and Talent Resources

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