The best answer we can give for now is Radical Optionality. This approach from BCG Henderson Institute’s Martin Reeves, Mihnea Moldoveanu, and Dr. Adam Job tries to dissolve the perceived trade-off between creating strategic flexibility and cost. The assumption has always been that we need to pay for having options. That we will have organizational inefficiencies if we don’t determine processes in detail. If you have another free article to read in the Harvard Business Review this month then make it Radical Optionality.
The article makes the case for upending some of the implicit centerpieces of developing strategies with the aim of turning the multi-dimensional complexity and uncertainty of our business environments into a potential source of advantage.
HR Has to Deal With Complexity and Uncertainty
Why would this be relevant specifically for HR? Because our traditional ways of HR planning and HR execution often fall short today. They were designed for static efficiency and not for complex and uncertain environments as we face them today. Just as in the strategy definition, upending some of the implicit centerpieces of HR planning might help turn multi-layered confusion into opportunities.
You don’t need to care though, if you can answer the following questions.
Which skills do the people in your workforce need in one year?
In which way do new technologies affect existing roles in your organization?
How can you find the necessary talent to execute your strategy?
How do you keep people motivated in times of constant change?
Does your organizational structure accommodate Gen Z’s ideas of a career?
New Perspectives for HR
If you do care, consider these five implicit assumptions underpinning today’s strategy-making – including HR strategies. The authors challenge our conventional thinking with new perspectives.
How to Apply Radical Optionality in HR Practice
Embrace external complexity
“Turning variation from an expensive inconvenience into a valuable source of information”. This could be, for example, the mass customization of compensation packages adapted to a multitude of situations regarding family, care, or interests, or skills-based career paths to raise retention and lower pressure in recruiting.
Simultaneously search and execute
“From thinking then doing to thinking while doing”. In HR, this would mean, for example, making strategic workforce planning a continuous dynamic process, lower in depth but higher in frequency. Or giving HR professionals space to explore the details of how to provide the best employee experience while using their feedback to improve it.
Facilitate, shape, […] the customer’s exploration process
An example in HR could be freeing time for recruiters to talk to people who don’t accept an offer or using a chatbot for talent to ask questions in the talent section of your website. Analyzing the feedback and the questions would put HR in a better position to improve the employee value proposition.
Optionality in Organizational Structures
It’s not a surprise that such changes would have implications for organizational structures. They have been built in the past to basically do the same thing slightly more efficiently every day. The automotive industry is a good example. Motors and production lines have been changing but the car as a whole didn’t. Now, in a complex, uncertain, constantly changing environment, HR needs to make sure that the entire organization becomes more fluid. You could three things:
Encourage organizational fluidity by cultivating a flexible structure that facilitates swift adaptation, fosters cross-functional collaboration, and enables efficient resource allocation. A well-designed job architecture feeding into digitally-enabled skills-based talent practices such as an internal talent marketplace can give you an edge. Culture also plays a critical role.
Harness the synergies of both humans and technology through a human-technology partnership. As employees are tasked to not only execute but also to innovate, technologies can take over routine tasks or support creative tasks for people to focus on improvements in their personal areas of responsibility. Again, culture plays a critical role to achieve this.
Create forward-looking performance metrics that prioritize future potential and adaptability. We tend to use historical indicators such as the number of deals closed or the quality of pieces produced for performance appraisals. These might not be the best indicators anymore if HR wants to continue raising its contribution to future business success.
If the secret to future business success is the development and exploration of options, then HR must revisit its assumptions about how to support the strategy with an organizational structure. Does information still flow according to traditional hierarchies? Are vertical career paths the most motivating option for people? Should learning be limited to the current job family? Which is the best tool to create agility, rather job design, job architecture, or maybe organizational design?
In any case, what uncertainty and complexity mean for business strategy, is also valid for people management. We should closely be monitoring non-HR leaders and keep learning from them.