Why Does Netflix Outperform? They are a "Dynamic Organization." Here's What We've Learned.

January 27, 2024 00:25:00
Why Does Netflix Outperform? They are a "Dynamic Organization." Here's What We've Learned.
The Josh Bersin Company
Why Does Netflix Outperform? They are a "Dynamic Organization." Here's What We've Learned.

Jan 27 2024 | 00:25:00

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Show Notes

In this podcast I discuss our Dynamic Organization research and how this new way of running a company is rapidly growing around the world. As the title points out, Dynamic Organizations are 31X more effective at bringing innovations to market and far outperform their peers (Netflix is discussed in detail). But this is not as easy as it seems. This podcast is a summary of 200+ discussions we had with HR leaders this week, talking about speed and agility in organization design, Irresistible Leadership, and the urgent need for a more dynamic operating model for HR which we call Systemic HR. I encourage you to listen because it brings together these three pivotal ideas and will help you build a more productive team and company as the labor market gets hotter this year. Additional Information HR Predictions for 2024: The Global Search For Productivity Introducing The Systemic HR™ Initiative Building A Dynamic Organization Companies Have Been Neglecting Their Leadership, And It Shows    
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Episode Transcript

[00:00:07] I have a lot of really fun stuff to talk about today. Now, you know that last week we introduced, or this week we introduced the big predictions report, 15 important imperatives for 2024. I encourage you to read the infographic. Get your hands on the report by joining the JBA or a corp of membership. There'll be a replay of the presentation available in a couple of weeks. We have the micro course you can take, but within those 15 things are three big topics that I want to talk about today, and they're all related like a triangle. The first is what we call irresistible leadership and the way leadership is changing. The second is what we call the dynamic organization, the way organizations are dynamically changing to become more agile and much more productive. And the third is systemic HR, which is how HR is changing to respond to what changes the organization needs to make. And I won't give you the business case for all this because I talked about it in the article I wrote last week, the PwC survey, that says that 60% of ceos now believe that the company they're running as it exists today will not exist in ten years. Last year it was 49%. So that's about a 1520 25% growth rate in the number of companies that can see themselves going through massive transformation. So let's talk about these three topics, and the reason I'm so excited about this is we are having one of the most exciting big reset programs ever. We've now had 14 six week sprints of the big reset. This particular one, we have probably 300 of the world's biggest companies and many small companies and government agencies participating. I just finished listening to the sessions in all three topics and they're just so inspiring. So let me talk about first dynamic organization. Now, most of you have probably seen the maturity model here, but essentially what we've talked about in that research is the way organizational structures reward systems and careers have to become more dynamic inside of a given company, going from what we call the static model, to the collaborative model, to the team model, to the full dynamic model. And the reason that companies move up those four levels. And by the way, the return on investment of moving up those levels is the highest return on investment of any maturity model we've ever done. Of all the maturity models we've done, none of them have the leverage of this 131 times higher performing when you go to level four. The reason, of course, is that there aren't many businesses left, except for maybe WD 40, who doesn't seem to need to change anything that aren't being attacked or disrupted by a competitor, a technology change or a change in the market, consumer goods, financial services, energy, retail, healthcare, et cetera. So I won't go through all the industry issues. So the question is, how do you move to a dynamic model when really the company is rewarded for execution, as is the financial markets? The stock market rewards you for hitting the numbers today. And if you're messing up the numbers today to get ready for tomorrow, you get penalized in the market. Well, as the dynamic organization, research shows you, you have to start architecting the company as a change company. In other words, you have to be architected for continuous change. Now, in most of the business writing and consulting firms in the past, we looked at change as an episodic thing. Oh, we have to transform ourselves from point a to point b. Let's bring in McKinsey, Deloitte, whoever. Let's get a bunch of consultants in here. Let's figure out what's the difference between a and b. Let's change the structure, let's change the jobs, let's change the roles. Let's reskill people. Let's move people around. Let's get rid of the people that are part of a that can't make it to b, and then we'll become b. That's not the way it works anymore. It's a continuous process. You may have some of those big transformations to do, which I'll talk about in a minute, but you're going to have to keep transforming all the time. I mean, AI is only a year old, and most of you are probably struggling right now with how it's disrupting almost everything you're trying to do inside of the company. And there'll be continuous things like this going on. And what you see in the research is that the way you become dynamic, frankly, comes down to the people. We have to support and sustain and develop people so that they can build a t shaped career and a t shaped set of capabilities. The t shaped skills model means that you are probably deep in one domain. Whatever the job is you're in now, you probably know a heck of a lot about it, and you're learning more and more about it all the time. But at the top of the t, you also know some things about the roles that are peripheral to you and related to you in other parts of the company. And the more balanced your t is. You can have a t with a narrow top or a t with a broad top. [00:05:19] The more balanced or broad the top of your t is, the more likely you are as a professional or as a business person, whatever your role may be, to be able to and be interested in moving to something new. And as one of the people said in the session that was going on this morning, what really holds companies back in transformation is fear. People saying, I don't want to take a new job. What if I don't know how to do it? What if I fail? Will I get laid off if I move to that group? What if that group gets shut down? What if I don't like the manager over there? What if I decide I don't actually like it? Can I come back to the job admin now? There's a whole bunch of fear, sort of sustainability, well being, things that lock people in place. And so, among many things that have to happen in a dynamic organization, we have to convince people that we as an Organization, are going to take care of them and help them transform themselves while the company transforms. Now, I have lived through, I've probably worked for eight or nine companies in my career, and in every single case, there were periods of time where the company had significant problems and a lot of people were laid off and new people were brought in. And that may seem like the way to become dynamic, but actually it's not because you suffer an enormous productivity hit when you do that, because new people don't really understand the past, and you lose all of the institutional knowledge of the people that were there. When the company is well run, when you're dynamic, there are training programs, there are support systems, there's a talent marketplace. The managers are coaching oriented. People don't mind losing their staff to another group if they can get rewarded somewhere else. Managers are there to develop. People, and leaders themselves rotate through the organization. I mean, one of the characteristics of really dynamic companies is the actual leaders move around. We'll talk about leadership in a minute. So that's sort of the first of these triangle issues. And interestingly enough, there's all sorts of stories in there about different companies. Most companies in the group, this was about 30 companies in this particular group were sort of level two, level three. One of them said, well, we were just acquired. We were a level three or level four company. But now that we've been acquired, we're level one because we've been put into a box. And so there are cycles and periods of time when a company becomes static again, for example, when the business is really bad and things are really not going well and you're losing money, there is a tendency to batten down the hatches and say, okay, we're going to get rid of all of the noise here, and then we're going to just focus on making money again. In some sense, that's a dangerous move because you lose the dynamism you need to transform into the future. So lots and lots of things to think about here, and we're going to talk about that some more. But I really want to talk about the relationship between the other two topics. The second topic we talked about is irresistible leadership. And I was taking notes on all the conversations there. So again, we had about 30 companies, very senior HR people, talking about leadership. And it was very interesting to me that the one thing that was common in everybody's opinion about leadership is that great leaders inspire and enable and create change. They give you a vision, an energy, and a sense of confidence that we can get there from here and there is a place we're trying to go. This is something I do all of the time for our company, and I think I probably do it for a lot of you. It is a really important role of leaders. And it came up again and again and again, and everybody was very inspired by that. In fact, one of the people made the comment that leaders allow you to see opportunity by taking on uncomfortable responsibilities. In other words, they don't just show you a vision, but they incent you to do something that's a little bit out of your comfort zone, to stretch yourself, to develop yourself so that you become part of this vision and you develop in the process. And what that does, of course, is it makes your ability to change good for you. And you suddenly look at the transformation going on in your group or the company as a great opportunity for yourself personally. And you don't worry about being penalized or losing your old job or whatever it may be. Now, those are part of the characteristics of great leaders, is knowing how to do that. Now, one of the other things that came up a lot, of course, is what we call human centered leadership. And we've had a lot of white papers on this and a whole playbook on this. But the way I like to interpret it is back in the 1950s, and there were a lot of books written on leadership of the ilk, of Jack Welch and GE, Ram Sharon and other leadership thinkers at the time. And that was when forced ranking, succession plans, the Peter principle, balance, scorecard, cascading goals, some of the things that we still have in companies today were designed as leadership tools, leadership models, leadership practices to run highly efficient, highly scalable, successful companies in the industrial business models. And that was GE. In fact, one of the things that was cool about GE, and I've interviewed a lot of people at GE over the years, was, although they had a lot of those older, now sort of static management models, they did move people around a lot. They later found out that one of the problems they had was that they were dynamic in leaders but not dynamic in the company. And what happened at GE, and I talked to quite a few people about this, was there was so much mobility at the leadership level. This idea that anybody in GE can run any business, that actually that was proven to be false. You need the t, you need the depth of the t as well as the width of the t. And so great leaders do move around throughout the company, but they develop depth as well. They take enough time to get to know the business and they move beyond that kind of Jack Welch model. Now, if you watch the predictions presentation I did this week and read through the report, what you'll see is a lot of those leadership practices that were institutionalized in books and a lot of HR tools are not really current anymore because we're now living in a world where most businesses are in the IP and services and consulting and design and customer intimacy business. I mean, we build products. I ordered some shoes from Nike and they allowed me to customize every part of the shoe. I mean, everything. I could get the shoe to be exactly the colors and the type of shoelaces and everything I wanted. That is a business that is not industrial scale. That's in a business that's personalized to every single consumer. And when you become a service and IP and consulting and design oriented and productivity oriented company, the endurance and the feelings and the skills of the individuals are a bottleneck if they're not going well. And so human centered leadership says, we're not going to tell people that if they don't hit their numbers, we're kicking them out of the company. We're going to say, look, if you're not hitting your numbers, we'd like to know why and we'd like to help you learn how to do better at this job because we think you're capable of doing much, much more than this. And so irresistible leadership is not just having a vision and a real great strategy and talking people into doing things, but it's also knowing how to take care of people and support them as they make their personal journeys in the direction that the company is going. Now, I've learned through my own career, my own personal experiences, running our company twice and working at Deloitte and a lot of other places and talking to many, many of you, that this is not easy, because irresistible leaders are adaptable. At times they're very hard nosed. At times they're very clear, crystal clear. At times, they're really good listeners. One of the people on the call made a comment that the best leader she had ever worked for was someone who, in the middle of a cris, when a whole bunch of people were laying off, listened to some feedback and said, you know, we may not have done this right. Let me take a little bit of time, let me interview some more people and let me understand what's happening, because maybe we made some mistakes. There is a part of this that is humility, that is caring, that is sensitive, that is flexible. That is forgiving. That is also part of leadership. That was not in the Jack Welch model, and that was not in the pre industrial or industrial age leadership model. And so your ability to be dynamic, which we talk about in a lot of the management practices, will not happen without irresistible leadership. So that's sort of two triangle points on the triangle. Now, the third part is HR. Is HR able to facilitate, support, adapt and encourage and really fuel this dynamism? Maybe not. As you read about and hear about in the systemic HR model, we have largely designed HR departments to be groups of specialists. There are more than 400 specialty roles in HR. Most of you entered HR in one particular role. You may have stayed in that role your whole career. You may have moved around. And we set up coes, we set up metrics. In some ways, the whole profession is designed in a bunch of silos. There's events for training people, there's events for recruiting people, there's events for comp people, there's events for tech people. And people don't go to the other ones because they're so specialized. We have to develop t shaped skills in HR. We do that through job rotation. We do that through things like the JVA, our academy. We do that through things like reading and taking courses and going to events and just getting aware. We do that through job rotation within HR. But even more so, we do that by operating HR in a systemic way and what that means. And you're going to be hearing about systemic HR every month this year. Kathy Enderis, who I have just the most utmost respect for, is putting together a month by month communication for our members on systemic HR with examples. You're going to see is what that means is creating a different operating model. Now, I was on the phone with Mastercard this week, and they're going through their operating model with us. And we've looked at Telstra, we've looked at quite a few other companies. The HR operating model has in many ways the same characteristics of the operating model of the company. And one way to think about this more adaptive, agile, systemic operating model in HR is, of course, HR people working together on cross functional projects, pulling people out of the coes, combining the coes where necessary and focusing on the problems, not the solutions, falling in love with the problems the company is facing, and then organizing the HR team around the problems, not around our products, our offerings, our solutions. Now, given that there are 20 or 25 functional job families within HR, and then, as I said, more than 400 job titles, that's not easy. And what we basically found, and Kathy's going to talk more about this in the next couple of months, is that there are four domains in the HR function that need to be brought together. [00:17:12] The first is talent. All of the things that have to do with recruiting, training, internal mobility, performance management, succession management, leadership development, all of those things. Pay rewards, fall into the category of talent. They sound like coes on their own. They're really not. They're all very, very connected to each other. If somebody decides to join your company or not, may have nothing to do with the recruiting function. It might have to do with management, it might have to do with pay, it might have to do with the hybrid work strategy, et cetera. So those things are one area. Second area of clustering is all the things that have to do with services. Employee services, employee experience, the employee call centers, how employees fill out forms, how employees deal with transactions, how employees get support, how employees communicate, how we access and support data. That is the second set of operating services. We need call centers. We need ex platforms, we need communication tools, we need interfaces. We need business partners who can support that stuff. That's the second cluster of things. The third cluster of things in HR is the. [00:18:27] You know, the funny thing about the conversations we've been having this particular week mean this happened to Deloitte, too, is we have somehow come to the conclusion, I don't know who came up with this, that when you implement a new ERP system that transforms HR, well, it's absolutely not true. What it really does is create chaos. And it gives you the opportunity to clean up a lot of things, but it doesn't change the operating model. So we need to clean up the tech stack. We need to reduce the number of systems we make to make them easier to use. We need to have integrated data. We need to implement AI, we need to build talent intelligence layers on top of things we need to do the skills projects, et cetera. That is the third category of activity and cluster of skills and capabilities in HR. The fourth is what we call strategy and consulting. If you don't have a strategy group, if you don't have an analytics group, the Workforce Planning Group, a talent intelligence group that's looking at the problems going on inside the company, looking at the data, analyzing the various metrics that we have about people, then all those other groups are struggling to do all that work themselves and they're doing it for operating reasons. Most of the Coes become really virtual in this model within the talent function. And then you need this strategy group that's pulling that data together, talking to senior executives and supporting the business on a strategic level. By the way, I think the HR business partners are part of this fourth group. They're actually part of the strategy group. I think people analytics is part of this fourth group. I think workforce planning is part of this fourth group. And some of the other strategic functions of HR go in here. DEi probably goes in with the talent group. So relative to the three big triangles being dynamic, leading in an irresistible way and creating systemic HR, that's a 20 minutes summary of all the things we talked about in the big reset today. Now, taking it back to the predictions, and I want to spend just a little more time on predictions and then I'll let you guys decide over the next couple of weeks. Where we go next is the real theme of the predictions report. It's 40 pages is productivity. And the reason I believe productivity is such a big topic in 2024 is we are going into a tightened labor market. I mean, it's been a tough labor market for the last couple of years anyway, but it's going to get worse. We're going to have unions, we're going to have DEI issues, we're going to have challenges with hybrid work and people being burned out. The economy is growing sort of at an astounding rate, 3.23.3% in Q, four in the US. I mean, new demand for people, lots of technology, and so being more dynamic, creating irresistible leadership, creating system. HR has to be done in the context of trying to help our companies deliver better and more innovative customer centric products and offerings for less and less human capital cost. I know that sounds a little bit backwards for somebody in HR, but it's actually a liberating idea because if you say to yourself as a company, we're going to double our revenue or increase our revenue and not hire a single new person. Let's assume you say that, well, think about all the innovations and development programs and mobility programs and agility you're going to be forced to do to make that goal. That is the 2024 agenda. The 2024 agenda isn't just reorganizing and being more dynamic and creating better leaders and all that. It's becoming more productive. It's using the technologies and the tools and the practices we have to grow the business without hiring, and hiring and hiring, because it's taking longer and longer and longer and more and more difficult to hire and to obviously keep people. Okay, so that's kind of the 20 minutes for today. I hope you guys like these podcasts. They're probably a little bit less fancy than the sum of the other ones. A couple of other things coming up. Galileo is now rolling out to our customers over the next couple of weeks, to the corporate members. And I want to highlight, in addition to many, many other things coming in mid March, I am going to be going to the transform conference in Vegas with Joel Hellermark, who is the CEO of Sauna Labs, our partner with Galileo. And we're going to be giving a very, very thought provoking, in depth discussion of AI, the role of AI in HR in general, and the role of AI in empowering and improving and fueling your job as an HR professional. We're going to do a very interesting demo of Galileo so you can see what's possible. And my goal here is not just to sell our own stuff, it's really to inspire you and to educate you on what is possible. We are going to have autonomous learning platforms. I'm going to be writing about that soon. We're going to have amazing advances in talent, intelligence, much more sophisticated, high volume recruiting solutions, lots and lots of exciting things in employee experience and intelligent communications, employee activation. A lot of exciting things. And if you come to that particular conference, and of course, we'll talk about this at all the rest of the conferences here. Hear all about it. Sign up for irresistible May 20 through 22nd. I would anticipate we will probably sell out by the end of February, early March. We want to see you there. We have lots of exciting things going on. And welcome to 2024, the year of increasing focus on being dynamic, creating irresistible leadership, and advancing our HR profession and our HR teams to become more systemic and more problem oriented and more effective. And also, of course, to have more fun. Have a great week, everybody, and I'll talk to you again in a week. Bye for now. [00:24:34] It.

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