Delivering Strategy Execution Through Human Capital Architecture

1. Delivering Strategy Execution Through Human Capital Architecture Edward B. Yost, Ph. D., SPHR November 2013

2. Step #1 Determine the Critical Components of Strategy Execution

3. Strategic Success Hierarchy

4. Defining the Business Strategy Strategy is: The central, integrated, and externally oriented concept of how we will achieve our objectives. (Hambrick & Fredrickson)

5. Strategic Success Looking for operational, financial customer, workforce success through… • Betting on the incompetence of competitors • Acquiring and utilizing the resources & competencies of others • Using existing resources & competencies differently

6. Organizational Resources and Competencies • Tangible and intangible resources and capabilities that enable the organization todevelop, choose and, implement value enhancing STRATEGIESthrough resource deployments, systems and processes that cannot be imitated.

7. Strategy Simplified Resources Cost Advantage Value Creation Distinctive Competence Differentiation Advantage Capabilities

8. What is Strategic Success? • Delivering high value results to significant stakeholders Financial Success = Market Value; ROI Operational Success = Costs; Quality Customer Success = Value Added Workforce Success = Q.W.L.; Performance

9. What is “Strategic Competitive Advantage?” Enacted or Utilized Distinctive Competency that: • Allows the organization to differentiate itself from competitors • Cannot be readily duplicated or imitated • Provides a positive economic benefit(s)

10. Action Item #1 Building the Strategy • What Resources does your organization have?   • What are your organization’s Key Capabilities and Competency? • How are the resources, capabilities and competencies used to create value (the strategy)?

11. Strategic Success Chain The Ultimate Goal is Survival Sustainability Goes beyond the traditional financial measures of firm performance and shareholder value - focused on achieving high levels of success in the short term without compromising the future

12. Strategic Success Chain Strategy Execution Competitive Advantage Sustainability

13. Strategy Execution • Enacted responses (behaviors) to internal requirements and external constraints by individuals and teams based on the existing capabilities in the workforce moderated by the underlying culture of the organization that drives organizational performance We will see this again later!

14. Human Capital Components Strategy Execution Competitive Advantage Sustainability Human Capital Capabilities Human Capital Behaviors Workforce Culture (Performance Drivers) Pivotal Positions Pivotal Talent Pools

15. Constructing Human Capital Architecture Pivotal Talent Pool(s) Strategic Direction Pivotal Position Strategy Execution Pivotal Role Challenges Implement & Adjust HCA Capabilities Behaviors Culture Congruence and Consistency of HCA Components

16. Step #2 Effectively Managing, Talent Pools, Human Capital and Pivotal Positions

17. The Secret Revealed! What is the SECRET of obtaining a Strategic Competitive Advantage? Not just having a strategy but executing the strategy All depends on the Human Capital Architectureto enhance the exploitation of these resources and capabilities.

18. Human Capital & Strategy Execution • Resources + Capabilities = Human Capital • Systems + Processes + Practices = Human Capital Architecture • Human Capital X Human Capital Architecture = Strategy Execution

19. Talent Segmentation • Talent segmentation involves identifying pivotal talent pools where human capital makes the biggest difference to strategy execution • Where would a significant improvement in quality or availability make the BIGGEST difference to strategy execution?

20. Pivotal Talent Pools • Talent segmentation is as vital as customer segmentation • Pivotal Talent Pools are embedded in the Primary and Support activities of the Value Chain

21. The Value Chain

22. Research & Development Group Critical Outcomes for Strategy Execution at Big Pharma 1. New Product Applications 2. Reduce Time to Market

23. Focus on a Strategic Business Unit at Big Pharma Strategy Execution Enables the Value Proposition for Stakeholders Operations Research & Development Marketing Human Resources

24. Pivotal Talent Pools • Identify two pivotal talent pools in your organization using the “Value Chain Model”

25. Constructing Human Capital Architecture Pivotal Talent Pool(s) Strategic Direction Pivotal Position Strategy Execution Pivotal Role Challenges Implement & Adjust HCA Capabilities Behaviors Culture Congruence and Consistency of HCA Components

26. Action Item #2Pivotal Talent Pools and Critical Outcomes (from item #1) Pivotal Talent Pool Critical Outcome A? Critical Outcome B?

27. The Importance of Human Capital Pivotal Talent Pools Pivotal Positions Determine the Pivotal Positions to Deliver Strategy Execution

28. What is Human Capital? • Talents and abilities • Knowledge and skills • Social networks (capital) • Desire and visions

29. Human Capital Defined The collective sum of the attributes, life experience, knowledge, inventiveness, energy, and enthusiasm that people choose to invest in their work. Weatherly 2003

30. Human Capital Has Value “People are our most valuable asset INVESTORS!” PROVE IT! Must be demonstrated by management practices and actions that compose the Human Capital Architecture

31. Human Capital and The Bottom Line • To create value through Human Capital requires a fundamental change in how it is recognized and managed in most organizations. • The firm’s human assets have a value that corresponds to the present value of future net cash flows and are derived from the skills, motivation and adaptability of the firm’s workforce.

32. Constructing Human Capital Architecture Pivotal Talent Pool(s) Strategic Direction Pivotal Position Strategy Execution Pivotal Role Challenges Implement & Adjust HCA Capabilities Behaviors Culture Congruence and Consistency of HCA Components

33. What is a Pivotal Position? • Not necessarily the highest paid/ranked position • Not necessarily most critical • Not necessarily the most common/number • Not necessarily the most visible • Not necessarily the most obvious • Not ever a person

34. Talent Segmentation • Talent segmentation is as vital to strategic success as customer segmentation. • Talent segmentation involves identifying pivotal positions where human capital makes the biggest difference to strategy execution

35. Pivotal Positions • Positions in the organization where qualityor availability of human capital makes the biggest difference to strategy execution • Positions that leverage the strategy execution

36. Pivotal Positions • Those talent pools that with a 20% improvement in quality or availability (quantity) would make the biggest difference in strategy execution and organizational success

37. Drill Down More • What are the Pivotal Positions for executing strategy? • Provides the most significant (relative to others) improvement in strategy execution • Leveraged by the HCA • Research Scientist

38. Talent – Performance Yield Yield Curve - understanding where differences in quality or quantity of talent and organization have the greatest impact on strategy execution (steepness, elasticity, D, slope) Find the Pivotal Position

39. Yield Curve Big Pharma Worst Sales Rep Best Sales Rep Strategic Value Sales Representative Best RS Research Scientist 20% Worst RS Performance

40. Finding Pivotal Positions Clearly understanding where differences in quality or quantity of the talent pool will have the greatest strategic impact (steepness, elasticity, D, slope)

41. Action Item # 3 - Finding YOUR Pivotal Positions Identify a Pivotal Position from within the Pivotal Talent Pool. Provide a rationale for this selection based on the critical outcome for strategy execution from Action Item #1

42. Step #3 Pivotal Role Challenges: The Performance Drivers of Strategy Execution

43. Constructing Human Capital Architecture Pivotal Talent Pool(s) Strategic Direction Pivotal Position Strategy Execution Pivotal Role Challenges Implement & Adjust HCA Capabilities Behaviors Culture Congruence and Consistency of HCA Components

44. Talentship • Talentship requires a redefinition of the traditional service role of HR managers in organizations. • This involves a process of "talent segmentation" and the need to focus managerial attention on "pivotal positions". 

45. Research & Development Group Critical Outcomes for Strategy Execution at Big Pharma 1. New Product Applications 2. Reduce Time to Market

46. Pivotal Role Challenges – Research Scientist • New Product Applications • Discovery of unique and patentable uses of existing products • Identify new markets for existing applications • Seek and process information from diverse sources

47. Performance Drivers • Capability • Behavior • Culture • Pivotal Role Challenges

48. Finding Performance Drivers • Starting with the critical talent pools focus down to pivotal positions • Within that position look for the pivotal role challenges • Identify the specific capabilities, behaviors and culture necessary to succeed at the pivotal role challenge.

49. Strategy Execution Enables the Value Proposition for Stakeholders Identify the required Culture & Mix of Capabilities & Behaviors Behavior Capability Culture Determine the most critical Capabilities, Behaviors, and Culture to support Strategy Execution for the Pivotal Position

50. Constructing the Factors of Strategy Execution • Capability= knowledge, skill, ability or competency inherent in a unit of human capital • Behavior = Actions, reactions, interactions exhibited by a unit of human capital • Culture= a system of shared values, understandings and affect that distinguishes the unit that contains human capital