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From the Editors

SHRM 2011 Strategy Conference: Day 2 and 3

October 10, 2011
Related Topics: Strategy and Management
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The SHRM 2011 Strategy Conference continued Oct. 6 with its third general session, a speech by Bridget van Kralingen, general manager of IBM North America. She opened by stating that the purpose of her remarks would be to highlight the lessons learned about transformation and longevity that can be gleaned from IBM’s brand story. As she pointed out, IBM represents a valuable case study in longevity, having turned 100 years old this year, a ripe old age that is rare for companies to achieve.

Having been around so long, IBM has evolved quite a bit over the years. Van Kralingen stated that today 50 percent of its revenue comes from outside the U.S. and 50 percent of its employees have been with the company less than five years, which is quite different from the New York-state-based company’s past legions of “company men” in blue suits. She said the company first began to change when it was taken over by Tom Watson Jr., son of previous IBM president Thomas J. Watson, in the early 1950s. He established IBM’s core values as centered on accountability and a focus on its clients, and asserted that what stays constant in business is your beliefs, not your leadership.

This approach made IBM a tech leader for decades, but by the early '90s the firm had stagnated. Van Kralingen pointed to a May 1993 Fortune magazine article titled “Dinosaurs?” that painted a picture of IBM and other tech giants in decline. IBM denied it had a problem, saying “Our products are the best; we just need to go out there and sell them to our clients.” The result was a further decline into near irrelevance in the technology industry.

So IBM transformed itself from a product company into a solutions provider. According to van Kralingen, it did this by acquiring a large number of software companies. She said IBM looks to make acquisitions and changes when it may not make sense from an outside perspective, such as during a recession: “Don’t move when everyone else does. Move when it’s lonely.”

All of this, van Kralingen said, was meant to provide context for IBM’s human capital transformation. Eight or nine years ago, IBM moved to take the company global. It had a global presence at that point, but van Kralingen said this meant it had “mini IBMs” in every country, each conducting all its own organizational processes. IBM integrated all of these processes, allowing it to better focus on clients. One of the first processes integrated was HR. The next step it took toward globalization was to begin running key functions globally. For example, its head of supply chain management is in Shanghai.

Another aspect IBM sought to change was its leadership. In the past, van Kralingen said, IBM’s leaders were strong functional and technical leaders organized hierarchically. To become solutions providers, IBM needed a more horizontal leadership structure, meaning it needed all of its employees to view themselves as leaders. So it moved to help people recognize their strengths, which it referred to as their “eminence.” It also began cycling leaders through its different divisions to build their experience with the company, which van Kralingen admitted might be uncomfortable but necessary for leadership growth. The effect was to make IBM’s leadership broad-based and integrated.

Van Kralingen described HR’s contribution to IBM’s transformation as follows:

  1. Providing behavioral guideposts in the form of competencies.
  2. Extending diversity beyond gender and race to be culturally inclusive by having leadership from all over the world.
  3. Transitioning to advisory services, so HR is not just managing processes but providing leadership development and succession planning.
  4. Broadening HR by having HR leadership manage both in silos and in areas that stretch across the company.
  5. Seeking talent and promoting the talent it has.

Van Kralingen finished with two thoughts:

  1. IBM has to get better at risk taking, learning to implement risks, assess them and move on.
  2. IBM is looking to innovate how it approaches collaboration. Van Kralingen said collaboration needs to change from how it had been in the past, defined by people “sitting around a table being collegial” to each other, and move toward speedy, virtual collaboration between players who may never meet. She called this “not your grandmother’s collaboration.”

The conference concluded the next morning, Oct. 7, with its fourth and final general session; a speech by Don Tapscott, author of Macrowikinomics: Rebooting Business and the World. Tapscott began his remarks by identifying himself as someone who has been trying to figure out how the Internet would change the world since 1978. Today, he said, we are working in a time of peril and danger but also opportunity. The corporation as it exists is going through a big change, and so will HR and talent management as a result. Tapscott asserted that the Internet is a new mode of production, not just of communication. He said it means talent now can be outside of a company’s boundaries, so the boundaries of an organization itself expand.

Tapscott said just as companies are changing, industries themselves are changing. A big one he pointed to is the financial sector, which has certainly been through an upheaval in the last three years. He quoted New York Times columnist Paul Krugman as saying that whenever a country goes through a financial collapse, it’s followed by a couple decades of slump, and cited as an example Japan’s recession of the early '90s.

Tapscott disagrees with this kind of thinking on business. “The future is not something to be predicted; it is something to be achieved,” he said. “This is not a business cycle; it’s a turning point in human history.” According to Tapscott, the U.S. needs to rebuild its institutions around new values and new means of communications. He cited the example of Local Motors, an automobile manufacturer with many comparatively small locations around the country that gets potential owners involved in the design of their cars. Tapscott said despite the collapse of the financial sector, the way Wall Street functions has not changed. Newspapers, meanwhile, are in a slow, steady collapse.

At this point, Tapscott took things back hundreds of years to the Agrarian Age, when people lived off the land, kings and queens ruled subjects and “for hundreds of years there was no progress.” The printing press changed this, allowing knowledge to spread, which according to Tapscott led to the Protestant Revolution, the American Revolution, etc. All of this advanced the standard of living and education. Then the Internet came along, which Tapscott termed “human intelligence connected” – he likened it to everyone owning a printing press. Amusingly, Tapscott observed that even the door to a hotel room has an IP address now.

From here, the basic thrust of his speech became “The Kids Are Alright.” Tapscott cycled through some basic observations; that children today grew up with the Internet; that the millennial population is large and will take over the world; and that children today are more into the Internet than television. He said the negative view that exists today of the effect of technology on kids is “a big problem.” He admitted “the lower third” of youth today can be violent and that is problem, but asserted that people can’t blame the Internet for that.

Tapscott then stated what he views to be “Net Generation Norms”:

  • Freedom.
  • Customization.
  • Scrutiny.
  • Integrity.
  • Collaboration.
  • Entertainment.
  • Speed.
  • Innovation.

According to Tapscott, President Obama understood these norms and used them to get elected, but then didn’t use them to change the way a president governs “and I think it hurt him.”

So what does all this mean for companies? Tapscott said in the past, companies did “everything from soup to nuts” for themselves, pointing to the broad capabilities of a company like Ford when it was first founded. Today, he said, vertically integrated companies have been unbundled into networks. He cited Boeing’s new Dreamliner as a good example of what’s possible when companies take this approach. Boeing approached its supply chain on the Dreamliner as a network of peers working toward the objective of the airplane, rather than companies simply designing parts of the plan to specs. The result was significant advancements in the airplane's efficiency and performance.

So what does all this mean for HR? According to Tapscott, applying these types of ideas to talent management means the human resource (i.e. people) may never actually enter the organization they work for. Tapscott advised HR leaders to not just recruit, but to start relationships. That way, when an organization moves to recruiting, it’s not so much a hire as a “boundary decision” – the person, who the company already had a relationship with, is brought into the boundaries of the company. He said that rather than training people, companies can make employees blog every day, which forces them to research new ideas and articulate them. He said money is now less important to new employees in looking at their overall attraction to and satisfaction with a company, and that primarily they are looking to be engaged and learn in a company.

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