1. New competitive realities: How successful leaders respond
Athens, Greece
Fall 2005
Dave Ulrich

2. Goals for today
THINK:
About new competitive realities that shape what leaders need to know and do
BEHAVE:
Do little things that make a difference
FUN:
Enjoy the experience together

3. Outline for the Session
5 competitive realities
Competitiveness does not equal strategy, but strategy * organization
Organization does not equal structure, but capability
Capabilities are not defined by the giver, but the receiver through the value they create
Leadership is not an event or person, but a brand
HR practices, departments, and professionals must respond

4. 1. Competitiveness is not just strategy, but strategy * organization
Formulation of strategy
Unique position in industry
Importance of clarity
Focus on growth or costs
Execution of strategy
Simple is not easy
Knowing is not doing

5. 1. Competitiveness is not just strategy, but strategy * organization
Leader role: create a logic for strategic thinking that focuses on content (what is our strategy) and process (how we set our strategy)
Vision: define where we are headed
Goals: set targets and milestones
Actions: create a menu of choices
Follow up: measure, track, and
communicate

6. 1. Competitiveness is not just strategy, but strategy * organization

7. 1. Competitiveness is not just strategy, but strategy * organization

8. 2. Organization is not structure, but capability
Define an organization less by its hierarchy than by its capabilities
Capabilities represent what the organization is known for and/or good at doing
Capabilities turn strategy into action and sustained results (a pattern, not an event)

9. 2. Organization does not equal structure, but capability
Individual
Organizational
Technical
Individual Technical Abilities
e.g., manufacturing, sales, finance, IT, marketing
Organizational Technical Competencies
e.g., marketing, manufacturing, finance
Social
Individual Social Abilities
e.g., sharing information, making decisions, managing conflict, getting work done
Organizational Social Capabilities
e.g., talent, leadership, collaboration, efficiency,

10. 2. Strategy/capability/action framework
CURRENT
STATE
FUTURE
STATE 1 4
STRATEGY 2 5
CAPABILITY/
ORGANIZATION 3 6
ACTION
RESULT

11. 2. Organization does not equal structure, but capability
Possible Capabilities
TALENT: Intellectual capital, know how, competencies, skills, commitment, workforce
SPEED: Agility, adaptation, flexibility, cycle time, responsiveness
SHARED MINDSET: Culture change, transformation, firm identity, firm equity, firm brand, shared agenda
LEARNING: Knowledge management, sharing best practices,
COLLABORTION: boundary-less, teamwork, sharing information
INNOVATION: Administrative innovation, product creation, strategic innovation
ACCOUNTABILITY: Performance, execution, implementation
LEADERSHIP: Competencies, bench strength, quality of management, leadership brand
STRATEGIC CLARITY: Shared competitive agenda, strategic priorities, shared point of view
EFFICIENCY: Reengineering, reduce costs
CUSTOMER SERVICE: Customer focused organization, customer centric or intimacy

12. 2. Organization does not equal structure, but capability
Capability Audit
Given our strategy, how important are each of the following capabilities?
Importance
(1= low;
7 = high)
priority
Talent: the ability to have people who are competent and committed and in the right jobs at the right time
Speed: the ability to make change happen, fast --- to respond to market conditions quickly and adapt and adopt new programs
Shared mindset: the ability to create or change a culture; to undergo transformation and change the identity of the firm; to shift the firm brand
Learning: the ability to generate and generalize ideas with impact
Collaboration: the ability to make the whole more than the sum of the parts through 1+1 = 3 or 1+1 = 1 (e.g., mergers, acquisitions)
Innovation: the ability to try and do new things in strategy, product, and/or administrative process

13. 2. Organization does not equal structure, but capability
Capability Audit (continued)
Importance
(1= low;
7 = high)
priority
Accountability: the ability to set and meet commitments on time and within budget
Leadership: the ability to build a leadership brand of both attributes and results at all levels of the organization
Strategic clarity: the ability to form a clear strategy for growth that is shared throughout the organization
Efficiency: the ability to reduce costs
Customer Service: the ability to serve targeted customers and gain customer share
TOTAL:
Reference: Capitalizing your capabilities, Harvard Business Review, June 2004

14. 2. Organization does not equal structure, but capability
OUTCOME OF AN ORGANIZATION/HR AUDIT
Defining and prioritizing the organization’s capabilities required for success
Gaining alignment from key stakeholders about what organization is required to succeed
Figuring out where to allocate resources to win

15. 2. Organization does not equal structure, but capability
Leader’s role in capability building
See strategy as three, not two steps
Audit capabilities
Create capability plans that turn strategy into action

16. 2. Organization does not equal structure, but capability

17. 2. Organization does not equal structure, but capability

18. 3 Capabilities are defined by the receivers more than the givers
Capabilities come from the value they deliver to key stakeholders
Value is defined by the receiver more than the giver

19. 3. Capabilities are defined by the receivers more than the givers
Value is defined by the receiver more than the giver

20. 3. Receivers of value that leaders create
Customer
Share
Employee competence and commitment
Leaders
Investor intangibles
Line manager: Organization capabilities

21. 3. Receivers of value that leaders create
Service
External sensing
Customer
Share
Talent
Accountability
Learning
Quality of
leadership
Employee competence and commitment
Leaders
Investor intangibles
Market value
Speed
Shared mindset
Collaboration
Innovation
Strategic clarity
Efficiency
Line manager: Organization capabilities

22. 3. Capabilities are defined by the receivers more than the givers
Leaders role in defining value
Focus on value created more than activity
Recognize that there are multiple
stakeholders in determining value
Manage the paradoxes of competing stakeholders

23. 3. Capabilities are defined by the receivers more than the givers

24. 4. Leadership is not an event or person, but brand
Define what leadership means
Specify why leadership matters
Lay out an agenda to be a branded leader or build a leadership brand

25. 4. History of Leadership Theories
What’s next? 9
1,9
9:9
80’s/90’s
Universal Principles
70’s/80’s
Situational
1,1
9,1
Figure out what decade you are in based on your response to the last question.
50’s Great Man Leaders have certain physical and mental attributes
60’s One Best Way Leaders are theory X or theory Y; 9:9 managers
70’s Situational Leaders know when to be high task and when to be high collaborative
80’s
& 90’s Universal Leaders follow certain key principles
Principles
Review 50’s draw a circle;
60’s: draw a matrix with task and people with dot in upper right;
70’s: draw a bell curve on the 60’s diagram;
80’s and 90’s: put a dot in the middle of the bell curve.
Before doing 2000’s, ask, “what is common so far about leadership?”
What is occupation of people who write theories about leadership? Blake and Mouton, Hertzberg, etc. psychologists
What do psychologists write about: individual issues, motivation, etc.
Show previous page responses: what decade is this list from?
What’s next?
2000’s What’s next in leadership development?
60’s 1 9
One best way
40’s/50’s
“Great Man” theory of leadership-
mental/physical attributes

26. 4. Leadership as a Brand 1. Product 2. Firm 3. Leadership
Insert Nestle logo
Point out some product brands in the room; What’s average price difference between a generic and a brand? 30%
Firm Brand: Dick has talked to you about this. Name companies that have external brand image consistent with internal culture? SW Airlines; Nordstrom’s etc. Culture that resonates with customers. Example: male who is wearing something from Nordstrom’s? who made the product? What’s it worth to have customers who have this kind of trust?
Leadership Brand: leadership pipeline that builds investor and customer confidence in the future.
All 3 levels have a common formula for strength of brand:
Does this product/firm/leadership do what it promises to do AND how many people are aware of it. Efficacy X awareness.
What company consistently gets high marks for strength of leadership brand? GE. Let’s look at what happens.

27. What the metaphor of leadership brand offers
4. Leadership as a Brand
What the metaphor of leadership brand offers
Brand focuses outside/in and the impact of leaders
Brand puts leadership into business language
Brand applies across all levels of leaders
Brand is sustainable in the organization; not a person, but a leadership brand for all leaders
Brand has efficacy; it has to be real or it does not last
Brand adds value and focuses on value created
Brand is unique and tied to strategy and not generic
Brand evolves over time to meet needs of customers
Brand turns firm brand into actionable choices and decisions
Point out some product brands in the room; What’s average price difference between a generic and a brand? 30%
Firm Brand: Dick has talked to you about this. Name companies that have external brand image consistent with internal culture? SW Airlines; Nordstrom’s etc. Culture that resonates with customers. Example: male who is wearing something from Nordstrom’s? who made the product? What’s it worth to have customers who have this kind of trust?
Leadership Brand: leadership pipeline that builds investor and customer confidence in the future.
All 3 levels have a common formula for strength of brand:
Does this product/firm/leadership do what it promises to do AND how many people are aware of it. Efficacy X awareness.
What company consistently gets high marks for strength of leadership brand? GE. Let’s look at what happens.

28. 4. Leadership as a Brand
Point out some product brands in the room; What’s average price difference between a generic and a brand? 30%
Firm Brand: Dick has talked to you about this. Name companies that have external brand image consistent with internal culture? SW Airlines; Nordstrom’s etc. Culture that resonates with customers. Example: male who is wearing something from Nordstrom’s? who made the product? What’s it worth to have customers who have this kind of trust?
Leadership Brand: leadership pipeline that builds investor and customer confidence in the future.
All 3 levels have a common formula for strength of brand:
Does this product/firm/leadership do what it promises to do AND how many people are aware of it. Efficacy X awareness.
What company consistently gets high marks for strength of leadership brand? GE. Let’s look at what happens.

29. 4. Leadership as a Brand
Point out some product brands in the room; What’s average price difference between a generic and a brand? 30%
Firm Brand: Dick has talked to you about this. Name companies that have external brand image consistent with internal culture? SW Airlines; Nordstrom’s etc. Culture that resonates with customers. Example: male who is wearing something from Nordstrom’s? who made the product? What’s it worth to have customers who have this kind of trust?
Leadership Brand: leadership pipeline that builds investor and customer confidence in the future.
All 3 levels have a common formula for strength of brand:
Does this product/firm/leadership do what it promises to do AND how many people are aware of it. Efficacy X awareness.
What company consistently gets high marks for strength of leadership brand? GE. Let’s look at what happens.

30. 4. Leadership as a Brand
Point out some product brands in the room; What’s average price difference between a generic and a brand? 30%
Firm Brand: Dick has talked to you about this. Name companies that have external brand image consistent with internal culture? SW Airlines; Nordstrom’s etc. Culture that resonates with customers. Example: male who is wearing something from Nordstrom’s? who made the product? What’s it worth to have customers who have this kind of trust?
Leadership Brand: leadership pipeline that builds investor and customer confidence in the future.
All 3 levels have a common formula for strength of brand:
Does this product/firm/leadership do what it promises to do AND how many people are aware of it. Efficacy X awareness.
What company consistently gets high marks for strength of leadership brand? GE. Let’s look at what happens.

31. 4. Leadership as a Brand
Point out some product brands in the room; What’s average price difference between a generic and a brand? 30%
Firm Brand: Dick has talked to you about this. Name companies that have external brand image consistent with internal culture? SW Airlines; Nordstrom’s etc. Culture that resonates with customers. Example: male who is wearing something from Nordstrom’s? who made the product? What’s it worth to have customers who have this kind of trust?
Leadership Brand: leadership pipeline that builds investor and customer confidence in the future.
All 3 levels have a common formula for strength of brand:
Does this product/firm/leadership do what it promises to do AND how many people are aware of it. Efficacy X awareness.
What company consistently gets high marks for strength of leadership brand? GE. Let’s look at what happens.

32. Leadership brand = higher stock price
Bob Nardelli
Welch retires at GE. In contention for his job are Jeff Immeldt, Bob Nardelli and Jim McNurney.
Immeldt gets job at GE.
Nardelli goes to Home Depot and McNurny to 3M
What happens to stock price?
Recent article in Economist tells the story.
Jack Welch
Jim McNurney

33. “19 GE stars immediately added an astonishing $24
“19 GE stars immediately added an astonishing $24.5 billion to the share prices of the companies that hired them… with no change in GE’s share price..”
Transition:
How do you create leadership development process that has this impact?

34. 4. Six Components to Be or Build the Leadership Brand
1. Compelling case
for leadership
Need
Publicize
Declare
2. Declare leadership
needed for strategic results
6. Ensure reputation
Leadership
Brand
Assess
Measure
3. Assess leaders
and leadership
5. Measure impact of
investment
Invest
4. Invest in leadership
capability

35. Assessment of Leadership Brand (source www.rbl.net)
Score lo=1/hi=7
Priority
Create a compelling case for leadership
To what extent do we link quality of leadership to the performance of our business?
2. To what extent have we articulated a leadership value proposition for our company?
3. To what extent do we avoid leadership loss leaders (e.g., doing events rather than changing processes)?
Craft a declaration of leadership
4. To what extent do we have a clear statement of the desired attributes of successful leaders in our company?
5. To what extent do we have a clear statement of the required results of successful leaders in our company?
6. To what extent have we declared a leadership brand that includes both attributes and results?
Assess quality of leadership pipeline and leaders
7. To what extent do we have a process in place to identify the quality and quantity of our leadership pipeline?
8. To what extent do leaders receive feedback on their performance from multiple stakeholders?

36. Assessment of Leadership Brand (cont.)
Score lo=1/hi=7
Priority
Invest in Leadership
9. To what extent do we offer educational experiences to help leaders develop?
10. To what extent do we offer developmental experiences to help leaders develop?
11. To what extent do leaders have an individual development plan for their development over the next 2 to 3 years?
Measure impact of leadership investments
12. To what extent do we measure the impact of the leadership investments we make?
13. To what extent do our leaders deliver the results that our strategy suggests we should?
Ensure awareness and reputation
14. To what extent do our leaders have a reputation that matches our strategy?
TOTAL:

37. 5: Changing HR role (HR is not just for HR)
Views of HR:
HR practices
People
Performance
Information
Work
HR department
Strategy
Structure
HR professionals
Roles
Competencies
Point out some product brands in the room; What’s average price difference between a generic and a brand? 30%
Firm Brand: Dick has talked to you about this. Name companies that have external brand image consistent with internal culture? SW Airlines; Nordstrom’s etc. Culture that resonates with customers. Example: male who is wearing something from Nordstrom’s? who made the product? What’s it worth to have customers who have this kind of trust?
Leadership Brand: leadership pipeline that builds investor and customer confidence in the future.
All 3 levels have a common formula for strength of brand:
Does this product/firm/leadership do what it promises to do AND how many people are aware of it. Efficacy X awareness.
What company consistently gets high marks for strength of leadership brand? GE. Let’s look at what happens.

38. 5: Changing HR role (HR is not just for HR)
Invest in people practices
People = competence * commitment
Competence: assessment and investment
Commitment: engagement and productivity

39. Competence Investment
Given competencies required for the future, how will we assure them?
Insert 5 B’s tool
Step 1: how well are we doing on each of these?
On this list, what 2 items could we do from each of these?

40. Commitment Investment
Sources of commitment
Information:
legitimate, credible, consistent
Behave as if:
Engagement, participation
Reinforcement
Financial, non-financial
Given competencies required for the future, how will we assure them?
Insert 5 B’s tool
Step 1: how well are we doing on each of these?
On this list, what 2 items could we do from each of these?

41. 5: Changing HR role (HR is not just for HR)

42. 5: Changing HR role (HR is not just for HR)
Invest in performance practices
Setting standards
Allocating rewards (financial and non-financial)
Providing follow up and feedback

43. 5: Changing HR role (HR is not just for HR)

44. 5: Changing HR role (HR is not just for HR)
Invest in information practices
Communication strategy
Information transmission

45. 5: Changing HR role

46. 5: Changing HR role (HR is not just for HR)

47. 5: Changing HR role (HR is not just for HR)
Invest in work practices
Who does the work? (organization structure, reporting relationships)
How is the work done? (teams, work processes)
Where is the work done? (work space)

48. 5: Changing HR role (HR is not just for HR)

49. 5 Assuring HR professionalism: (HR roles,)
Play the right HR roles
Strategic
partner
Change
agent
Administrative
expert
Employee
champion
Functional expert
Employee advocate
HR *
LEADER
Strategic
partner
Human capital developer