Future competitiveness will be determined by firms’ ability to fuse both their human and technological capital in novel ways, argues Professor Jonathan Trevor from Said Business School. So how must HR transform to survive?
Business and management innovation comes in waves.
The mainstream introduction of the hierarchy and Taylorist work design in the early 20th century was eventually superseded by a focus on people as humans and not merely impersonal cogs in a machine.
The mid-part of the century was dominated by “hard” rational planning and structures and then, latterly, by a focus on “soft” aspects of organisation, including culture, leadership style and what we now refer to as human resources. Indeed, the 1980s, 90s and early 00s might be looked back as the zenith of HR function (HR) prestige and influence. Never before had there been calls for HR to have a place on the board; and, if we are honest, never has there been since.
In the quest for competitive advantage, the focus has shifted towards the development and deployment of information technologies.
The repositioning of HR
Communication, big data, automation, artificial intelligence and a whole host of transformative technologies are enabling a level of connectivity and innovation that is disrupting the established patterns of virtually every industry. While securing and developing leadership talent remains a constant priority, the management of human resources more generally has been relegated to a secondary concern and with it the prestige and strategic importance of the human resources function. This is a mistake.
Today’s business environment requires enterprises – whether commercial, governmental, social or increasingly a hybrid of all three – to be more capable than ever to survive and thrive. Savvy customers are demanding more of vendors than simply value for money. They reward those who offer enhanced choice, smart bundling and personalisation with vocal loyalty. New and non- traditional competitors emerge more rapidly than ever before as traditional industry structures are broken down and reshaped. Global threats and opportunities are omnipresent, even for domestic firms.
Why human capital is your advantage
In this challenging environment, firms seeking to outmatch rivals are rushing to develop technological pre-eminence. It is a fool’s errand because even the most advanced technology is easily commoditised and quickly obsolete.
An enterprise’s people – their human capital – remains the greatest source of sustainable competitive advantage. When aligned to a distinctive business strategy, an enterprise’s people can become over time an enduringly rare, unique and inimitable source of valuable organisational capability. Thus, it behoves an enterprise’s leadership to think strategically about the combined development and deployment of complementary technological and human capital to support the implementation of their business strategy – an approach I refer to as strategic alignment.
Competitiveness in future will be determined by the ability of firms to fuse both their human capital and their technological capital in novel ways to make themselves uniquely capable. By necessity, some enterprises are early embracers of this approach.
A report by the United States Air Force concluded that: “Although humans today remain more capable than machines for many tasks, by 2030 machine capabilities will have increased to the point that humans will have become the weakest component in a wide array of systems and processes. Humans and machines will need to become far more closely coupled, through improved human-machine interfaces and by direct augmentation of human performance”. In future, functional independence and specialisation will necessarily give way to resource integration and interdependence – it is a brave new world for sure.
A new mindest for HR?
Resource integration and interdependence requires new competencies from the HR function as well as new ways of working.
First, the HR function needs to cease being all about people.
Instead, it should be all about how people combine with other core resources to develop strategically valuable organisational capability.
This requires enterprise-wide thinking and an understanding of the attributes of other functional areas (such as technology) as well as the overall business strategy.
Secondly, all corporate functions, and enterprise leaders, need to align to a common conception of their enterprise and its purpose and strategy and engage in joined-up decision-making using a common language and set of priorities.
Like an enterprise’s people and technology, the specialised corporate staffs which are their functional custodians must become integrated to the point of being indivisible if required.
Thirdly , HR, if it will continue to mean anything in future, must become functionally ambidextrous.
In this case, 'ambidextrous' means that HR must become effective at executing its immediate responsibilities (not dropping the payroll ball, for example), but equally adept at long-term strategising, innovation and change on an enterprise-wide basis.
The future of the HR function is to go beyond people concerns alone and to form part of a larger whole – a whole enterprise which is far more valuable (for which read more capable) than the sum of its parts when integrated and aligned to a meaningful enterprise purpose and winning business strategy. There is no other way to secure a seat at the table in the next wave of the future enterprise.
Join the Linkedin live lecture
The Changeboard network are welcome to attend a webinar with Professor Jonathan Trevor – 15 November, 12:00-13:15 GMT – by registering at https://align.sbs.ox.ac.uk/webinar/
Align: A Leadership Blueprint for Aligning Enterprise Purpose, Strategy and Organisation by Professor Jonathan Trevor is published by Bloomsbury and available from 14 November 2019.
About Dr. Jonathan Trevor
Dr. Jonathan Trevor is an Associate Professor of Management Practice at the University of Oxford’s Saïd Business School, specialising in strategy and organisation. He works extensively with executive leadership teams to put his research into practice. He holds a PhD in business and management from the University of Cambridge and was a visiting scholar at the Massachusetts Institute of Technology.