Thinkers50 is delighted to be partnering with Mercer on an ebook entitled The Human-Centric Enterprise. I'm Stuart Crainer, cofounder of Thinkers50. Today I'm talking to one of the contributors to the ebook, Kai Anderson. Kai's contribution looks at the cultural components of human-centered transformation. Kai, well, let's start the conversation by asking, what does the idea of the human-centric enterprise mean to you?
Stuart, thanks. Thanks for having me. Thanks for, well, the time. And that question, human-centric enterprise, well, Stuart, in the end, all enterprises depend on people, right? We tend to forget that when we talk about, for example, tech companies-- but also here it's not tech that does the job, but it's people coding, people innovating, products and services.
So human-centric organizations acknowledge the fact that people with the right skills and the right engagement make the difference. And that is why we don't talk about workers or employees anymore but rather contributors. So in the human-centered enterprise, we have contributors and that shows.
And you argue that all transformation is human-centered. Can you explain what you mean by that? I presume you mean that there's no transformation without people and yet transformation is increasingly seen in terms of technology, digital transformation and so on.
There's a different twist to that, Stuart, and that is first that starts with who we are as a human being. People resist change. There's biological reasons for that. It takes seven times less energy to follow our proven paths than to explore something new. And that is something we try to avoid.
So whenever we want to truly change, and that is to transform a system, we need to start with the people in the organization. And we need to explain the reasons for that transformational exercise. And we need to explain the nature of that exercise. We don't have to pretend we know it all, right? We need to align on the destination of that journey.
But we need to be very clear that it is a journey and we don't know all ways we will go. And that is why we rather invite people to participate to be part of that exercise and that makes the transformation truly successful.
I suppose it depends on how they respond to that invitation because their human nature is telling them not to. [INAUDIBLE].
Yeah, right. That is why we start with the, let's say, the reason for change. And in many of these transformational exercises, we tend to forget and involve people early on. We see that in our exercises when executives have planned for a transformation for quite some time.
And then you have a team and everything is clear to people. And then you assume that it is also people-- that is also clear for people who have not been part of that process. So we underestimate the time it takes to onboard people onto that journey.
When we do, we see great support for that. When we get into a real dialogue, when we also listen to people, listen to their concerns and then make clear this is a true invitation and you're truly invited to be part of that change, we see a lot of engagement for that.
So does your heart sink when you hear a CEO talking about announcing a new digital transformation initiative?
Well, digital transformation is a great example, right? I mean, most companies are still in that exercise. And most of them started like 5, 10 years ago. And when companies started that exercise, it was in fact all about tech, right? We didn't ask that much for people. And what happened, Stuart, was that chief digital officers were announced.
Chief digital-- well, digital offices were built. Now, that was indicating that the entire task was delegated to a small group of people in the organization. And others could lean back and say, OK, it's their responsibility, right? Especially with digital transformation, we have-- there is a notion in that saying like, well, that's IT stuff. That's not me.
So that is so-- what I explain in inviting everybody, that is so true for digital transformation. And a lot of executives, also CEOs today, have really embraced the idea of involving people, building digital skills, and creating engagement for that exercise.
So you view culture as part of an equation and business objectives as the output.
Right.
Can you explain what you mean by that? How is culture part of an equation?
Yeah. Well, I mean, I think many, many leaders, former leaders, thought culture is some fluffy stuff, right? Culture is hard to really get a hold on. And others thought or some still think that you can't change culture, right? And it doesn't have a real output.
I mean, we all remember Peter Drucker saying, "Culture eats strategy for breakfast." And that is very true. That is why we say you can change a culture. You have to change a culture because it-- will your strategy make it work or make it not work?
And that is why change management, on the one hand, that is maybe more like the soft piece of changing a culture. We're adding to that harder pieces, like objective setting, incentive systems, leadership development. The combination of that is meant to change a culture and is meant to deliver on objectives, which is, like you mentioned, digital transformation.
That is a change exercise. What is a digital organization good without a digital culture? You need a digital culture. You need a digital mindset to be truly digital. And we can work on that with the things I mentioned.
And you've identified a number of cultural shifts in your article in the ebook. Could you talk about them, why they're important? And there are things that have been like move from command and control to trust and accountability. We've been talking about that for a long time. But if there has been that shift, it's a very slow shift.
It is because it's hard. A cultural shift is really changing an organization's fundamental beliefs. And that is why it is so hard, right? We have been socialized in a different world under different paradigms, and that is a new paradigm. And we know it's hard to trust other people, right? We know that from our private lives.
And that is why it takes time. That is why we can't change it overnight, giving trust. The good thing is with the pandemic, we had to give trust. Managers had to give trust to their teams, to their team members because they needed to work on their own in their home offices from one day to another. And it worked out, right? Trust was given and guess what? Performance didn't drop.
So there is good reason to give trust. But there's the counter side and that is accountability. And the funny thing is that we saw trust being given in the pandemic. The kind of new world of working is based on trust. But there is the accountability piece that is as important. And with the economic headwinds many organizations are now having, we see that there is, well, at least more like a demand for that accountability piece, which is part of the equation as well.
And do you see, well, it's pretty amazing that it takes a global pandemic for trust to rear its head in the organization.
It did, yeah. I mean, there are organizations that started earlier. There are organizations with great leaders that went into these exercises long before the pandemic. And still also after the pandemic, companies are struggling with that. So it is an exercise. It is a transformational exercise. And definitely, I have all respect for companies that are really addressing that issue and that really want to make it work.
And we're often told that younger members of the world's workforces have a different attitude to things. And it strikes me that the cultural shifts you outlined are all things that the younger generations are absolutely comfortable with. And if that's the case, it's surprising there's not a greater move to cultural transformation.
I think the younger generation is used to express themselves and that is part of their culture as well. They're much more open to talk about their needs. They are much more open to talk about, well, illness, for example, right? So mental health, these things. I don't know your age, Stuart, but I assume we have been-- well, entered our professional life in a very different time, right?
You are not supposed to talk about things like mental disease and burnout, these things, right? That is a different generation and it's used to speak up, which is good, I think, and which is kind of-- well, creating a bottom-up movement that comes together with the willingness of executives to change the system.
I'm English so those things don't come comfortably.
You know, I'm German.
Let's talk about the key cultural components of human-centered transformation and just talk about each one. So the first one, cocreating, not top-down directed.
Yeah.
Do you do you sense or see change in that appetite for cocreation? Because after all in the tech industries, there have been cocreating for generations, decades.
Yeah, and more and more it gets into traditional industries, which I think is really good. And, I mean, let's be fair. Software industry, you can ship immature products and services. You don't want to see that in industries like aerospace, right? We don't want to have that.
But these industries clearly differentiate their innovation processes versus their manufacturing processes. So there is some great, let's say, progress that we see in other industries that are adopting these kind of new paradigms from the tech industry.
The second element you talk about is organizations being capability focused and enablement driven. Can you talk us through what you mean by that, so capability focused and enablement driven?
Well, this is part of what we call the skill-based organization. And my coauthors have written about that. It is not that much more about the job and the length of time you've spent with the job. It's the experience you got in your job. It's the capabilities you build. It's the skills and the competencies.
So we have to say goodbye, to some extent, to traditional career paths. We have to say goodbye to the chimneys that we used to see by saying we need to enable people. We want to make them progress. But progress is not like the only way is up but can be lateral moves, can be this.
And this is beneficial for both the organization that is far more flexible in the way they allocate appropriate skills to tasks and work to be done. And it's, of course, beneficial for contributors, for people that have brilliant opportunities to develop.
The third element you talk about is being employee experience driven. Tell us more about that. And where do customers fit in? Because we were always taught that over the last few decades that customers come first.
Yeah, wasn't it Richard Branson saying, if you take care of your people, they will take care of your customers. I think it was Richard Branson, wasn't it? And that's the idea, right? And we're not saying forget about customer experience. We're taking, in fact, some of the I think really good approaches in dealing with customers and customer management.
We take that into the workforce, so we internalize that. And the employee experience is part of that. And the employee experience is contributing to the fact that, well, younger generations today, they want to experience work in a different way than probably we were used to experience it and we were meaning to experience it. So that is something and--
I think we don't have the time to get into labor shortage, these things. But we have to face the fact that the demographics don't lie. Labor shortage will remain for decades to come. And for that, we need to be attractive. For that, we need to provide a good experience for people that work in our organizations to make them join, to make them stay.
And the final element you talk about is practice not preached. And there's a sense reading your contribution that transformation programs in organizations have tended historically to be preachy rather than practical.
That is a fact. Yes, of course. But things have changed here as well. And what we're seeing is like executive teams that were delegating a transformational exercise that thought they didn't need to be part of that. Have you come across that?
Often, yes.
Yes. So the first thing we do when we get into a transformational exercise, we're talking to the executive team, to the CEO, to really stakeholders, and we ask them, how serious are you? Are you willing to really make a change yourself? Because this is what people will look for.
And that brings us to the one silver bullet we have in transformation, and that is reflection, feedback, right? If you manage to become truly reflective as an organization, as an individual, I wouldn't say you're almost done, but that is the magic potion.
And if you achieve that a leadership team from the very top starts reflecting on where do we need to improve, what do we need to change, if they role model that kind of change, if they make people see, hey, yes, this person is really changing something in the way he/she is working. That's the point.
Have we reached the point where you get promoted for being reflective?
That's a nasty question, you know that. Personally, from my very personal experience, I experience the people that were speaking up being more likely to being promoted than the ones that didn't speak up and that-- well, the yeasayers, right? So I believe that a real good organization is really promoting the ones that have different perspectives that reflect on their own behavior. So, yeah, I would say we're on our way.
It was a nasty question. But historically, people have been promoted for their capacity to get jobs done for their action orientation. And what you're talking about is a completely different orientation or a combination of orientations perhaps.
It's the combination, Stuart. That is important. I'm not saying-- and we tend to forget because we're in that corner of new work and keep everybody happy. That is why I mentioned the other side of the equation-- it's trust and accountability. We cannot forget about performance and accountability, right? So the job has to be done, full stop. But the way we do our jobs, that changes.
Are you talking about different attitudes to errors and failures?
Yeah.
And do you think that's happening? Do you think there's a kind of a more grown up realization that we all make mistakes and it's our ability to learn from them, which is key?
Also, this is a mantra that comes from the tech industries. And we're seeing that really being taken up by a lot of companies. And they are serious about it. We see companies having fuck up nights which is I tell you about one of my biggest mistakes and we celebrate that. So it's happening.
And I'm not saying that we have a tendency, especially coming from Germany, you know German engineering is like spotting the error for the sake of it. And that is not the kind of attitude we want to see. So we want to see, I spot an error, and we can learn from that. And we try to avoid it next time. That is some thinking that has really made its way into a lot of organizations. Not into all organizations, but into many.
When you talk to executives and business leaders and people in organizations, do you detect a real change, a willingness to embrace these ideas?
Yes and no. It really depends on the people, on the personalities that your partner have. There are some that really bought into the idea of people centricity, of the new world of work. There are some that really understand we need a change. And really, some understood that the pandemic was a kind of pivot.
The pandemic turned our views towards our employees. It was a very human crisis, other than the financial crisis back in 2008, 2009. This was a very human crisis, so quite some executives now much better understand the idea of human centricity, people centricity.
Here is the but. But of course, with the economic headwinds we are facing, some of these, well, some people question the entire idea of trust and accountability, new world of work. There is a tendency of the pendulum to swing back. And that is, of course, what we also see.
The pendulum is always swinging.
It is.
Kai, thank you very much.
Stuart, thanks so much. Great talking to you.