There are tough challenges for HR Leaders in these uncertain times. The key questions relate to how we understand the future and plan our capabilities. By understanding how the future can unfold, we can build an agile organisation and supportive culture

1. Three Questions "Living Organisation" s
of the to ask your
HR Leader in Uncertain Times
The challenges are Plu
tough for HR leaders in
s ca
se s
these uncertain times. tud
y
The key questions relate
to how we understand
the future and plan our
capabilities.
By understanding how
the future will unfold, we
can build an agile
organisation and
supportive culture.
Dr Norman Chorn | norman.chorn@centstrat.com | www.normanchorn.com
Who’d want to be an HR Leader today?
These are tough times for executives who lead people! If you’re having difficulty in figuring
out where the market and your business is going - can you imagine how difficult it must be
for your people who may not have the benefit of your perspective and understanding?
It’s not an easy gig to be the leader of people or the HR leader right now. You face three
important challenges that have to be addressed in order to take the organisation forward:
1. how will you plan the organisation’s future capabilities in these uncertain
times?
2. what are you doing to develop an innovative and agile organisation?
3. how will you shape a culture that supports the business strategy moving
forward?
These are some of the questions that we have to answer to move our organisation forward
in these tough and uncertain times.
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2. Facing the challenge
There are ways of answering these questions. They relate to the way in which we do our
capability planning; how we can increase agility and innovation in our organisation; and
how to shape culture so that it aligns with the future business strategy. We’ll deal with each
in turn.
1. How to plan forward in uncertain times?
It’s clear that conventional planning doesn’t work in times of great uncertainty. Most
conventional planning regimes are based on a series of assumptions that are made
at the outset of the process - these assumptions effectively try to predict the future.
As soon as the assumptions prove invalid (as they often do in changing markets
and conditions), the plans become irrelevant and are usually ignored.
An alternative approach is to build a series of alternative futures facing the business
(we call this FutureBuilding), and then to identify the capabilities required in each
of these futures. Once these capabilities have been identified, we backcast to the
present - and here we notice an important feature of this approach. Notwithstanding
the divergent nature of the alternative futures, there is usually some 25 - 40%
overlap (commonality) in the capabilities required for the different futures.
These common capabilities will be required in any of the alternative futures.
Accordingly, we can now commence building these capabilities immediately, since
we will require them in any of the alternative futures facing our organisation.
Our case of a major building and construction materials business illustrates the
FutureBuilding approach. The high Australian dollar made imported product
cheaper for their customers, and the uncertainty surrounding economic activity
made it difficult to predict building and construction activity. Accordingly, the
business was struggling to understand future market conditions and the source of
future growth.
Through an exercise of FutureBuilding, four alternative futures were identified over
a five-year horizon. These related to the relative strength of the Australian dollar
and the different levels of economic activity. A simplified version of the four futures
is outlined below:
High A$ (high imports)
‘Dog% ‘Choice%
fight’% fruit’%
Low economic High economic
activity activity
‘Building% ‘Boom%
basics’% 9mes’%
Figure 1
Low A$ (low imports)
2

3. ‘Boom times” reflects an extremely favourable outcome for the industry, with high
levels of economic growth coupled with low levels of imports. Local producers fare
really well in this scenario.
‘Choice fruit’, on the other hand, represents a situation where the attractiveness of
lower cost imports means that only the premium end of the market is available for
local producers.
‘Dog fight’ is a market where high imports are combined with low levels of
economic activity. The local producers are effectively involved in a dog fight for
survival.
‘Building basics’ is a market where imported product is too expensive, and the low
level of economic activity means that the local producers operate to provide low
cost solutions for the basic requirements of the building and construction industry.
Faced with these alternative futures, the business identified a ‘winning’ strategy and
distinctive capabilities under each scenario. The capabilities were then ‘back-
casted’ to the present, and the common capabilities were identified. These then
formed the basis for the capability plan moving forward.
(Choice%fruit)% (Boom%1mes)%
• Winning% • Winning%
strategy% strategy%
• Required% • Required%
capabili1es% capabili1es%
(Dog%fight)% (Building%basics)%
• Winning% • Winning%
strategy% strategy%
• Required% Common% • Required%
capabili1es% capabili1es%
future%
capabili1es%
Figure 2
2. How to develop an innovative and agile organisation?
In general, innovation and agility are strongly related to the way in which leaders
are able to engage staff in the thinking about the future. This is not to say that the
organisation’s systems and processes cannot shape the innovation ecology of the
organisation (see my earlier article “How to drive innovation through your
organisation”), but there are ways in which we can stimulate innovation and agility
even though the formal organisational systems and processes have not been
specifically designed to support it.
When using a process such as FutureBuilding, it is important to recognise that
monarchies seldom foment their own overthrow - ie: leaders don’t often envisage a
future in which they play no role within the organisation. And so, it is more useful to
use groups of staff who are close to the customers and technology, and who do not
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4. necessarily hold senior management positions. We call these Pathfinder groups,
and they are specially convened for this purpose.
The Pathfinders are engaged in a structured process of developing the alternative
futures faced by the organisation. By drawing on a broad cross-section of staff, we
get a richly diverse set of perspectives that can then be crafted into a series of quite
divergent scenarios for the future. We have found that once an individual has been
involved in a scenario planning process such as FutureBuilding, they develop new
perspectives and insights. Apart from learning much about the organisation and its
business, they forge new perspectives and insights from the interactions they have
with other members of the group.
These new perspectives and insights develop greater innovation and agility in their
thinking and the way they see the future of the business. Importantly, they now have
a ‘picture’ of the alternative futures and some of the key features for each of these
scenarios. These key features might be likened to a set of leading indicators -
indicators that allow them to understand which of the alternative futures are
unfolding before them. An example might be an astronomer who is able to
recognise different constellations in our heavens - whereas to the untrained eye it
appears just as a random pattern of stars.
Our experience is that involvement in a FutureBuilding exercise produces a series
of benefits such as higher levels of innovation, more thinking agility, and a better
level of understanding about the environment and how the organisation needs to
respond.
In our case study, the initial Pathfinder group was divided into four teams, each
focused on understanding and developing one of the four scenarios. Over a series
of workshop, the four Pathfinder teams:
• generated a model that represented four alternative futures faced by the
business (see the model in fig 1 above)
• developed a particular scenario of the future and presented this to
management
• devised the ‘winning’ strategy for that alternative future
• together with management, developed a set of capabilities to successfully
implement the winning strategy.
This has resulted in significant benefits for the business. Management reports
much higher levels of understanding of the market and strategy. Importantly, the
business has developed increased responsiveness to changing customer
requirements and changes in market conditions. As the CEO said, “..its almost as if
we had practiced this in a dress rehearsal! ”
3. How to build a supportive culture
Building a culture to support business strategy has been a long sought after goal for
leaders and their organisations. It depends, in part, on recognising some key
principles about culture and its relationship with strategy.
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5. These key principles include:
a) Culture shapes organisational capability and strategy. We’re not suggesting that
culture is the only driver of capability and strategy, but rather that it shapes a
significant portion of it, particularly in knowledge-based organisations.
b) Each strategy has a corresponding culture. This suggests that certain cultures fit
certain strategies, and not others. So, a culture that supports one strategy will
not necessarily support another. There is no single universally “best” culture - as
there is no universally best strategy 1.
c) Some aspects of culture don’t mix well with others. Culture is made up of a
series of “behavioural and psychological opposites” that don’t mix well within the
same part of the organisation. In these cases, they are best separated by a
purposeful organisation design2 .
d) Organisations seldom have ONE culture - they are usually made up of several
cross-cutting cultures. This is contentious, as leaders often desire a single
culture running through the organisation3 . However, as culture shapes capability,
it makes sense to recognise that the organisation may need different cultures to
support different strategies in different parts of the environment.
Given these principles, culture is linked with strategy in the following way:
The environment and conditions within which the
Scenario / future
organisation operates
The strategic response to this environment - ie
Value proposition how does the organisation add value to its
environment
What the organisation does particularly well that
Distinctive capability delivers the required value proposition into the
market
The patterns of behaviour, values and assumptions
Culture that shape the particular organisational capability
Once we have identified the value proposition and distinctive capabilities that are
required, we can then determine the appropriate culture(s). If there are different
sets of distinctive capability and strategy required, we will need to accommodate the
correspondingly different cultures within the organisation design.
The relationship between value proposition, distinctive capability and culture is
illustrated in our case study.
1 See Strategic Alignment, N Chorn, Woodslane Publishing, Australia, 2010
2 See my earlier article, A question of focus, not balance.
3 Our research shows that a single culture is not only very difficult to achieve, it isn’t necessarily desirable.
Culture is NOT the glue that binds the organisation together. It is the strategic vision and common purpose
that holds the different parts of an organisation together.
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6. Once the four teams had worked out the details of the alternative future scenarios,
they outlined the winning strategy for that scenario. The winning strategy was
represented in each case by an underlying value proposition, ie - the core value
add offered to the market in that competitive environment.
From there, we worked with each team to identify the distinctive capabilities that
delivered these value propositions, and finally, the supportive cultures.
Scenario ‘Dog fight’ ‘Choice fruit’ ‘Building basics’ ‘Boom times’
Strategy / We take your risk We work closely with We offer low cost We provide a suite of
value away and keep you to add value in solutions and are solutions for your low
proposition the costs down the important parts easy to deal with cost as well as your
of your project specialist, high value
projects
Distinctive • Lowest cost • Strategic • Lowest cost Two business units
capabilities supplier partnerships with supplier with different
• Standard range customers • Web-enabled capabilities:
with short • Specialist designs ordering for a) Low cost,
delivery times and products ease of ordering standardised
• Standard range solutions
with short b) Premium solutions
delivery times with specialised
products and
designs
Culture • emphasis on • focus on creativity, • explicit Two cultures to be
action, innovation and processes and accommodated in the
responsiveness entrepreneurial operating organisation design:
and speed behaviour procedures • emphasis on action,
• willingness to go • proactive approach • measurement responsiveness and
the extra mile to identifying and and systems speed
• explicit solving customer orientation • explicit processes
processes and problems • focus on people and operating
operating • focus on people and teamwork procedures, and:
procedures and teamwork • participative, ----------
• measurement • participative, consensus based • focus on creativity
and systems consensus based decision making and proactive
orientation decision making approach to solving
customer problems
The final piece was to identify the common capabilities and cultural requirements
across the four scenarios. In summary, these were4:
“A” “B”
Capabilities lowest cost supplier; small, premium design capability; specialised
standard range solutions and products
Culture explicit processes and standard proactive approach to customers;
procedures; systems orientation participative and consensus decision making
4 The solution pointed clearly to (at least) two separate units - each focused on a different value proposition
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7. What does this all mean for people leadership?
To answer this, it is best to return to the three questions at the outset.
1. How can we plan forward in uncertain times?
We need different approaches to strategy and planning in uncertain times. Rather
than pursuing conventional business planning (SWOT analysis, setting objectives
etc), our approach should embrace uncertainty and recognise that the future can
unfold in different ways. By defining our winning strategy in these alternative
futures, we are well placed to consider our future capability requirements.
2. How to develop an innovative and agile organisation?
By deploying a wide range of staff in a FutureBuilding process, new perspectives
and insights are developed. These new ways of looking at the business and the
environment foster greater innovation and thinking agility. Once someone has been
involved in scenario planning, they seldom view the organisation in the same way.
And the creativity spawned by the diversity in thinking has its own benefits!
3. How to build a supportive culture?
Recognising the clear linkages between strategy and culture helps us to understand
that one size does NOT fit all. The culture should be designed to support the
specific capabilities and value propositions delivered by the organisation.
Organisations are made up a several cross-cutting cultures and these differences
should be accommodated by purposeful organisation design. Furthermore, a clear
common purpose and vision is the best integrator of a diverse organisation.
These are important guidelines for leaders and organisations in these difficult and
uncertain times. As difficult and complex as these approaches might be, they pale into
insignificance when compared with doing more of the same.
Norman conducts workshops and mentoring in planning and building
capabilities for the future.
Contact: norman.chorn@centstrat.com
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