Stories of disruption typically fall somewhere in the tradition of David vs. Goliath. That is: A small, nimble and clever startup unseats an unsuspecting industry giant. Look no further than Netflix vs. Blockbuster, Airbnb vs. traditional hotel chains, or even Wikipedia vs. Encyclopedia Britannica.
But rather than wait for a disruptor to emerge, many large companies are looking for ways to disrupt from within—changing the status quo internally to stay competitive in the marketplace. Amazon and Adobe are just a few examples from Harvard Business review’s Innovation 20 list of companies that have developed new products, services and business models to improve financial performance.
But how exactly does HR help spur this kind of disruption from within? I recently interviewed Dave Ulrich on the topic. Ulrich describes himself as compulsive about organizational improvement and recently co-authored a book with Arthur Yeung called "Reinventing the Organization." He’s also a professor at the Ross School of Business at the University of Michigan and a partner at the consulting firm RBL Group. His answer is centered around people: their competence, their commitment and their contribution. By focusing on these keywords, HR can help ignite an organization-wide transformation.
Ulrich’s first rule of disrupting from within is to put the right people, with the right skills, in the right jobs, at the right time.
"If you hire the right people, a lot of the business challenges are [taken care of]," he says. HR needs to focus on matching people to available jobs and setting criteria for their success—that is, establishing objectives, expectations and accountability.
"My caveat," he adds, "Is always that people should not be overly competent for their position, a recipe for boredom and disengagement." Instead, there should be follow-up training, ongoing coaching and, unfashionable though they’ve become, regular performance reviews to ensure accountability. HR can play a role to make sure these conversations are happening.
A committed employee shows up to work and does what they’re asked to do. That’s important, of course, but to support an innovative organization, it’s not enough to simply be physically present—employees should also be energized and creative. HR can help facilitate these qualities by providing learning and growth experiences and offering clear pathways for employees to move in the organization. This does not always mean employees must advance. But are there opportunities for lateral movement to a new and challenging role? Is there sufficient autonomy for employees to own their work and feel motivated to perform it at a high level?
Employees with persistently low performance despite interventions, or who simply lack the necessary skills to thrive, need to be moved to a more appropriate role, or removed from the organization before they undermine the morale of their peers. Ulrich recommends grounding conversations in data: "Can you help me understand why you’ve been late with your work or why you’ve missed the last 5 meetings?" If firing is required, be proactive.
"It’s important for the sake of your employees that you take action," Ulrich adds. "If you don't do it, you not only hurt that employee, you're also hurting all the other employees who need to respect your ability to make hard decisions."
To maximize the contribution of each employee at the organization toward innovating, HR needs to help convey meaning.
"Sometimes people are 'committed' behaviorally: They show up, but they're not showing up emotionally," Ulrich says. Addressing that gap starts by communicating why the company does what it does. That is, answering questions like: What is the value of our work? Ulcrich says employees who understand and embrace the why, and who believe that there is value to others—customers, investors and stakeholders—are more likely to be high contributors.
"They commit not just with their feet and hands but with their hearts and minds," Ulrich says. They’re more likely to think creatively about how the organization can do better, and how it can reinvent itself to be of higher value.
4. People and Purpose Create Profits
Ulrich says the emphases are not profits and people, nor profits and purpose.
"It’s profits through people. Profits through purpose," he says. The goal of reinvention isn’t simply to reinvent. Instead, it’s to ensure the company’s ability to continue to thrive in its market rather than be unseated by a disruptor—whether that’s another company or even a new regulation or technology. But successful reinvention cannot be mandated. Instead, it has to come from the company’s people.