· 3 min read · Features

Beyond culture to organisation reinvention

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Dave Ulrich and Arthur Yeung explain the need for organisation reinvention, and the five roles HR can play in achieving this goal

Our research has consistently shown that the 'organisation' (culture, capability, workplace, processes) adds more value than the 'individual' (talent, competence, workforce, people) in bringing about business results. The most valuable thing HR can give to an employee is an organisation that wins in the marketplace. Our focus on the war for talent should pivot towards victory through organisation (as defined above).

To help HR professionals deliver value through organisation we have focused our work on helping them build the 'right' culture, which is the identity of the firm in the mind of key customers made real to employees. As such, the 'right' culture turns an external brand into internal agendas for all HR practices.

In more recent work we have discovered that 'organisation' requires not just cultural transformation but a much broader application. In today’s world of incredible change, volatility, disruption and turbulence, leaders need to reinvent their organisations to become ever-more responsive to dynamic market opportunities. In our study of leading firms (e.g. Amazon, Facebook, and Google in the US; Alibaba, DiDi, Huawei, and Tencent in China; and Supercell in Europe) and by synthesising others’ work in this area (with concepts like holacracy, boundaryless, agile, ambidextrous, network, and exponential), we have defined a new organisational form called the market-oriented ecosystem (MOE) that addresses this broader reinvention need.

Instead of being organised by divisions where a chain of command allocates resources, the MOE organisation has a platform of resources (money, people, technology, data) that is dedicated to market opportunities. Each market opportunity is assigned an independent team (or cell) where employees anticipate customer requirements and move quickly to respond to them. Historically, this organisational logic might be seen as holding companies – with a hub and spokes. But the MOE connects the independent teams and platforms into an ecosystem to share vital information, resources and expertise to fuel customer obsession, innovation, and agility. The MOE is a novel way of designing organisations to be both small (agility through independent teams) and large (economic scale through platforms), innovative (new market insights discovered in market-oriented teams) and learning (sharing information across teams and platforms).

HR plays five major roles in helping reinvent an organisation to be a MOE (see figure below).

Build a business case for MOE

HR can help business leaders see that the quality of organisation makes a difference in employee, strategic, customer, investor, and community results. HR can track the impact of reinventing the organisation for each of these stakeholders and make a business case for adopting the MOE logic.

Define and audit MOE dimensions

HR can help define what it means to be a MOE and audit the company’s current adherence to MOE principles. We have identified six dimensions of the MOE (below) along which HR can facilitate an assessment among senior leaders and a cross section of other employees.

Offer guidance on governance processes

HR can identify and improve the firm’s choices on six areas of governance identified in the diagram below. Note that these six areas include culture, but the right culture alone is not enough to institutionalise MOE principles. For each of these six governance areas HR can provide specific insights, choices and processes to ensure that the transition to a MOE occurs.

Coach, advise and develop MOE leaders

HR can help leaders recognise the importance of paying attention to their behaviours to ensure their behaviours are consistent with the MOE logic. Doing so will help ensure both leader and employee behaviours reflect MOE principles because employees will observe and often do what their leaders do.

HR can assess individual leaders and collective leadership against identified MOE behaviours. Further, HR can design and deliver development experiences for leaders that may include personal coaching, formal training and learning experiences to help them acquire MOE leadership skills. Finally, HR can measure the impact of leaders acquiring MOE leadership skills and measure the extent to which those skills create a MOE that delivers intended results.

Craft and implement a MOE transition plan

As agents of change, HR professionals can guide the MOE transition process by bringing in insights about change from the organisation development field that make a successful transition happen. Those principles include starting small, assigning a transition team, managing a dual organisation logic, drafting a roadmap of the change journey, and learning forward.

We continue to find in our research and experiences that HR adds value not only through individuals (talent) but through organisation (culture). But to fully reinvent an organisation to become the emerging market-oriented ecosystem (MOE) HR should go beyond culture to a complete overhaul of the structure of the organisation. This reinvention offers both great opportunities and challenges for HR professionals who want to have greater impact.

Dave Ulrich is Rensis Likert professor at the Ross School of Business, University of Michigan. Arthur Yeung is visiting professor of management at China Europe International Business School. They are co-authors of Reinventing the Organization: How Companies Can Deliver Radically Greater Value in Fast-Changing Markets