The Strategic Advantage of Global Process and Practice Networks
6:42 PM Wednesday March 25, 2009
In our last post, we discussed talent development as an operational challenge. This time around we'll explore how the organization itself needs to change so that it develops a talent edge.
It goes without saying that no matter how much talent a company might have, there are many more talented people working outside its boundaries. Yet all too many companies focus solely on acquiring talent, on bringing talent inside the firm. Why not access talent wherever it resides?
Some might say there's no way of doing so without sharply increasing the cost of complexity. New institutional practices can reduce these costs, however, as companies become:
• Less transactional and more relational.
• Less "hardwired" and more "loosely coupled."
• Less focused on merely accessing external capabilities and more focused on rapid capability building for every participant.
• Less focused on the firm and internal silos and more supportive of richer cross-enterprise interactions and collaborations among workers.
By rethinking their institutional arrangements along these lines, companies can forge connections and carry out interactions less expensively and more rapidly and flexibly than they could through conventional institutional practices. They can also help their own talent connect more easily with other talent, beyond the four walls of the enterprise, to achieve higher performance levels.
In the past, executives have tended to be wary of cross-enterprise collaboration out of concern for a loss of intellectual property or disagreement over the distribution of rewards. However, these concerns are largely shaped by a zero-sum view of the world -- if one party gains, the other parties must inevitably lose.
Focusing on talent development helps to shift executives to a positive-sum view of the world -- as talent improves, more value gets created in aggregate and all participants have an opportunity to gain more than they had before.
But institutional innovations, while necessary, aren't sufficient. Companies must also participate in (and sometimes orchestrate) new organizational forms and structures called global process and practice networks. These play a key role in helping talent-driven companies access world-class talent beyond their boundaries.
The new generation of motorcycle assemblers emerging in Chongqing, China, is a leading example of a global process network. In this network, companies such as Dachangjiang cultivate rapid improvement in motorcycle design and performance through innovative working arrangements with their design partners. Rather than providing designers with detailed product blueprints, assemblers supply them with rough sketches accompanied by tightly specified performance requirements.
It's up to all relevant design partners to work together on their own initiative without the intervention of Dachangjiang to resolve issues and reach the assembler's aggressive performance targets. As highly specialized participants clash around ways to meet aggressive performance targets and still meet tight deadlines, creative new approaches emerge and learning increases across the network of participants. In the process, quality has gone up while costs have fallen by two-thirds.
Global practice networks, by contrast, are even looser forms of collaboration that involve participants from similar skill areas working on common performance issues. Global practice networks are emerging in such diverse areas as open source software and extreme sports.
Although they don't tend to refer to them this way, extreme surfers have used global practice networks to push the limits of their sport. In the 1950s, six-foot waves were considered challenging, yet today big-wave surfers successfully ride 60- to 70-foot waves. Big-wave surfers tend to congregate at specific beaches and breaks to learn their craft, and frequently connect at competitions and, increasingly, through the Internet. They gain from carefully watching each other and observing new techniques and practices under different wave conditions.
Their individual activities and interactions are more often than not orchestrated by commercial entities like surfboard makers and contest organizers, who define new challenges and motivate surfers to push their performance to the next level. Even where money is at stake, collaboration rules: At the 2008 Mavericks Surf Contest in Half Moon Bay, California, as the six finalists paddled out to catch the final set of waves, they agreed to share the prize equally, regardless of who was declared the winner.
Both kinds of global networks -- process and practice -- create opportunities for talent to come together and generate "productive friction": a powerful force that shapes learning, as people with different backgrounds and skills work together on real problems.
While many executives pursue the nirvana of a frictionless economy, aggressive talent development inevitably and necessarily generates friction. It forces people out of their comfort zone and often involves resolving differences among people with divergent views and experiences.
In designing these networks, several best practices are emerging:
First, organize the right environments to generate productive friction. In part, this requires:
1. Bringing together people with diverse experiences.
2. Investing the time required for them to develop shared understanding.
3. Defining aggressive performance requirements.
4. Providing employees with tools that help them negotiate the most promising approaches for achieving results.
5. Specifying action points that force participants to produce a solution meeting the performance requirements within a certain period of time.
Such actions are challenging enough when they occur inside a single firm, but things get all the more challenging -- and rewarding -- when companies connect talent across multiple institutional boundaries. Talented workers benefit from the broad range of experiences and approaches that diverse parties bring to a problem.
Second, innovate talent management within the firm. Leading companies recognize that today's career is no longer a straight shot up the corporate ladder. Instead, it involves what Cathy Benko and Anne Weisberg characterize as a "combination of climbs, lateral moves, and planned descents" along the "corporate lattice." They extend the concept of mass customization to a new approach for how work gets done and careers are built called "mass career customization."
In our next post, we'll look at the changes necessary at the strategic level to gain a talent edge. Meanwhile, what other organizational changes would corporations be advised to implement, assuming they were to take talent development as one of their highest priorities? What likely obstacles would they encounter as they seek to deploy global process and practice networks?