Over the past decade or so, a new generation of companies- IDEO, Cheskin, Point Forward, Ziba, Design Continuum- has been including customers within the brainstorming and prototyping process.  This is no small change.

These innovation consultancies are demonstrating that, unlike the blue-blood traditional management consultancies (whose names will be spared here), the ‘consultant does not always know best.’  This subverts the expert model that has been the stock in trade for the consulting industry for two generations.  We’ll do the research. We’ll figure out the problem. Then we’ll tell you what to do.

Turns out that, despite some successes here and there, such a top-down consultancy model  no longer reflects the values of collaboration, transparency, and openness that a new generation of business leaders expect.  Rather, the consulting industry in general is heading towards the IDEO-Ziba model where consultants, employees, and customers create new solutions together.

Such a model is more like a design studio than it is a clinic where experts hand out prescriptions.  A studio approach to management consulting is an iterative process grounded in user experience and experience design.  Giving up some of the ‘power’ that makes consultants expensive might just be what makes them more effective in the coming generation.

The book, tentatively titled Inside-Out: ReDesigning Your Company from the Inside-Out, applies the principles and methods of design thinking to helping companies rethink the basic elements of how they define their work, their brand, their purpose.

• What workspaces do companies present to employees?- Where
• What types of talent do they recruit and develop?- Who
• How much flexibility and discretion do they extend to employees?- How
• What are the core messages and ‘Brand’ that the company communicates to employees and customers?- Why
• What workplace policies and processes define the firm?- What

These ‘basic building blocks of the firm’ cut across the traditional silos- such as HR and Marketing- that so often separate one part of the company’s work from another.  Our motivation in writing the book, and for using the template and process of design thinking to organize our thoughts, is our conviction that there is only ONE brand within a company.  Most companies operate, really, as if there are two separate brands- one that is communicated with employees and one that is communicated to customers and ‘the market.’  Rarely do the internal brand and the external brands come together in a single set of values and messages.  When the internal brand and the external brand are the same, you have a ‘Whole of Brand’ moment when the two brands are reconciled within a singular brand!  The ‘Whole of Brand’ concept is Justin’s insight, and underscores the holistic and integrated understanding he has of Business.

Twitter ‘R Us

In the post-twitter world in which we live today, ignoring this can be risky business.  Employees casually tweet out to friends and colleagues what is going in inside their company (whether it is positive or negative), and no amount of corporate spin and PR can ever get those communiques back.  If double speak is outed, then the authenticity and believability of that brand are questioned.  Transparency goes from being a word to being a gut check: Either you are or you are not who you say you are as a company.

The virtuous spiral of rebuilding from the inside-out runs something like this.

1. If you recruit imaginative and creative hard-workers to compliment your left-brain analytical types, you have the kernels of effective and sustainable innovation.

2. If you present inspiring and open workspace environments where colleagues can openly collaborate and communicate, then you attract people who like collaboration, sharing, and innovation.

3. If you listen closely to customers and keep their voice at the center of company branding and messaging- messaging to employees and customers- then you build an environment of transparency and consistency.

4. If you implement policies that give employees flexibility to work in ways, spaces and times where they work best, then you will get the best of their energy and their best work.

5. If work is project work set on a deadline and not ongoing ‘jobs’ where people get paid for just showing up, you create a culture and community of results and accountability and not a culture of ‘coasting.’

None of this is Easy

None of these resets- or redesigns- are easy.  Any meaningful change is difficult.  However, if we have learned one thing from the current recession, it is that the frameworks and common sense that got us into this pickle will not get us out of it.  It is time, as we argue in the book, for new solutions to new problems.

The problem with books like this is that, at their core, they are simply trying to make HR tough…and strategic!  Faith in the power of the word ’strategic’ has rarely been so great.  But to what end?

This book falls into that category of books which uses terms such as strategic HR as if, by using the word strategic, HR ceases to be a supportive, back-end, mothering function.  In this particular case, the authors suggest that firms differentiate their workforce by slotting in A players into A level jobs, B players into B level jobs, and C players into C level jobs.  Their understanding of differentiation is derived from the traditional, left-brain, analytical MBA world where differentiation is all about bigger, stronger, faster.  The central idea here is that some jobs and functions within the firm are more central to the firm’s strategy, and thus the A players need to be there.  This makes perfect sense, and in this respect the book is safe as milk.  It is common sense… For a previous generation, but not for web 2.0 and beyond!

Why Do We Need HR Anyway?

Certainly, some functions within a company need a third party, back-end support partner.  Think benefits, compensation, compliance, and the various legal components of a job contract.  With respect to the talent side of ’strategic impact,’ I suggest that HR (as a function and perspective) is dated and no longer necessary.

Look at SEMCO, the sprawling Brazilian industrial manufacturer run by the maverick CEO Ricardo Semler.  When Semler took over the company from his father some 25 years ago, the first thing he did was let go most of the senior management, abolished the HR function altogether, and dissolved all of the HR-ish decisions to the heads of the various business units.  If one of the individual businesses feels like it needs a new employee, the members of the group do a search, interview the candidates themselves, and decide as a group who to bring on…Not HR.

SEMCO has grown at around 14% annually over the past 20 years, and is now a $400 million a year company with several thousand employees…and no HR department.

I mention SEMCO simply to suggest that this is possible.

Real Differentiation

Back to the Differentiated Workforce.  No where in the book do the authors venture into a definition of differentiation that includes…creatives.  In their rush to seem tough, and strategic, differentiation for them is a matter of separating A players from C players so that the company’s strategy (i.e. Strategic HR) is more effectively supported.  Meanwhile, others- in Business Week and Harvard Business Review- are suggesting that the next wave of differentiation in terms of talent lies in bringing right-brain knowledge workers into the ranks of mainstream management as part of a larger left-brain/right-brain talent balancing process.

For HR professionals eager to appear tough and…strategic, the last thing they want to do is advocate such soft skills as creativity and design.  To win favor in the board room, the discourse of ’strategic management,’ almost by definition, needs to be left-brain analytical and bigger/faster/stronger.  This is what (most) boards want to hear, so this is what strategic HR people tell them.

Meanwhile, real differentiation- i.e. actually different types of people and talent altogether- gets passed over just as quickly by ’strategic’ HR advocates as by their boards.

HR 2.0

In the current, post-recessionary talent management environment, we are beginning to see the other side of the talent chasm.  Yesterday’s employment model (and contract) was premised on the idea that companies attract and recruit talent, develop them, get them engaged, and keep them for a certain period of time.  Today, as late Gen Xers and Gen Yers slowly come to dominate the talent market, these assumptions no longer hold.

As a recent Business Week article suggests (The Disposable Worker), we are now entering a labor market defined by permanent temps who work within a ‘just-in-time’ talent management model. This particular BW articles suggests that this is great for companies but horrible for workers.  It is horrible, indeed, for Baby Boomers who still hold on to an earlier model premised on the ideas of:

• Attraction
• Retention
• Engagement

However, for younger knowledge workers driven by a different set of values– values defined more by flexibility, autonomy and work/life balance– a just-in-time talent market is sweet music.  Among many of the Gen Y technologists that we know, they see the large firms for whom they do projects as clients, not as employers.  This is exactly how they want it.  Furthermore, they are less inclined to take on a ‘client’ if they have little-to-no respect for that company.  And, in what is even better news for the company (or ‘client’), these young technologists are passionate about results, and not so much about ‘job security’ and retention.  For the rising demographic of Millennial knowledge workers (70 + million), the idea of ‘retention’ is very 1.0.

Instead, what we are seeing is a model that is shifting from attraction, retention, and engagement, to:

• Relationships
• Results
• Reputation

Companies that are consistent in how they communicate with customers and employees will attract bright, young talent eager to do projects with them.  By building relationships with talent within an ecology of trust, a firm will have a reliable network of knowledge workers to turn to when the project requires it.  Sustaining a reputation as an organization that gets it makes you more likely to keep a pipeline of differentiated talent at your finger tips.

Call it Differentiation 2.0.  Or, if you insist, HR Strategery…

Next Tuesday- January 26 (7-9pm)- we are hosting another Salon, this time at New Work City in Manhattan.  The theme of this Salon is: ‘What Can Companies Learn From Coworking?’  While we have our own ideas about this, we are really interested in what others have to say.

Some of the themes we propose:

• Open Workspaces & Group Work
• Collaboration
• Community
• Innovation
• Workspace Design
• Flexibility

These are mere starters.  We do know, though, that most companies desire more innovation.  One thing that we have learned in our year-long journey into coworking, is that coworking spaces are often innovation labs where new and creative things are happening every day.  For example, Indy Hall Labs is pioneering a social/entrepreneurial environment that any large firm would be envious of.  How to export this?  How to build-in a community of discovery and sharing inside the big company?

Come help us explore these questions! (RSVP)

You know the format.  Each speaker gets 5 minutes to talk to 20 slides, with the slides auto advancing every couple of seconds.  While all of the presenters were thoughtful and insightful, Bijoy Goswami was brilliant!

Among other things, Bijoy is behind Bootstrap Austin, a research/community/thought-leadership network for entrepreneurs in Austin.  His talk last night, though, has a broader relevance that is worth extending.

In his presentation- Austin Equation- he builds on the work of Richard Florida to ask, essentially: What makes Austin such a vibrant, compelling, creative, and productive place?  The slides he spoke to last night are the same as the ones on the home page at Austin Equation, which I highly recommend.  What he gets to by the end of his talk is that, while other cities have their thing, their moniker, Austin’s is truly distinct.  For Bijoy (and I think most of us there would aggree), Austin’s thing is its openness to new possibilities and a community that encourages creative self expression.  People come here to create new things- including new versions of themselves.

The takeaway from Bijoy’s insight, in practical terms, is that Austin is a persistently innovative city, with as much or more creative entrepreneurial churn as just about anywhere on the planet.  Silicon Valley is VC-driven.  Austin is bootstrapping-and-community-driven.  One look at TechRanch Austin, a distinctly Austin style approach to to business incubation, gives an idea of what I’m talking about.

Which is where I think Bijoy’s core points are so critical.  The Austin formula (or Austin Equation)- openness to newness and self-expression that leads to innovation- applies not only to cities and communities, in the way outlined by Florida and Bijoy, but also to companies and other organizations.

If the employees of a company are encouraged to bring newness to their work, in the form of new processes, new strategic possibilities, new markets to enter, new partners to approach, new sources of efficiency, new product and service ideas for customers, for example, then some sources of innovation will likely be discovered.  If, on the other hand, employees just turn up for work to do things that have already been done (over and over and over), then nothing new will happen.  Sometimes this is a function of management and sometimes a function of the employees themselves.  Either way, the result is the same.  The work of that organization is simply a succession of encore performances, dusting off the past to repeat it over and over.

Or, companies can consider incorporating something of the spirit of the Austin Equation and get on with innovating.  It works everyday of the week here in Austin, even when it is raining!

Which leads to the current musings…

A recent article in Business Week  -The Disposable Worker- talks about how in the wake of the current recession many companies are making the transition to what the author refers to as a ‘permanent temporary’ labor market.  The basic points of the article are irrefutable.  Companies are learning that they can do without many of the full timers that they have had on the books for a generation, and are opting instead for a kind of ‘just-in-time’ talent model.  Makes perfect sense.

What the article misses, though, is the role that the values of Gen Y play in how they see the world of work and their careers.  The article suggests that, in the context of the emerging permanent-temp labor market, companies are the clear winners and that workers are clear losers.  Completely missing from the article is the fact that Gen Y (and to some extent Gen X) does not want and expect a corporate handout in the form of a job for life.  They want community, work/life balance, and gigs that make a difference in the world.  Their identity and self-worth inform their work, not the other way around.

This is a huge difference.  Because of this orientation towards work (and life), Gen Y is demonstrating the exact kind of  work-flexibility that companies now recognize they need.

Problem is, BigCo is not listening.  If they paused and listened, even if only briefly, to what has been going on, for example, in the world of coworking over the past couple of years, they would see exactly what they want and need-.

Talented, skilled, independent-minded and extremely capable technologists, designers, project managers, marketers and social media consultants looking to work project-by-project.

I look for 2010 to be the year that a dialogue between BigCo and Coworking begins in earnest.  Both sides of this equation have much to gain!

DJ

For the past 9 months we have been working out of our own coworking space here in downtown Birmingham.  All the while, we have been building up the research capacity for the consultancy side of our business, producing research reports and conducting workshops for clients in both the US and Australia.  As our consultancy picks up momentum and becomes a bigger priority for us, we are beginning to downsize our operation here in Birmingham as we shift (pun intended) our attention to projects in Austin and Sydney.  SHIFT will keep a footprint here in Birmingham, but we are slowly moving our center of gravity to Austin, the Live Music Capital of the World!

We are currently scouting locations for a possible SHIFT location in Austin, which will be different than our current space.  Rather than focusing on providing space and community for independents and small firms, we are looking to liaise with slightly larger companies (primarily law firms, architecture firms, advertising companies, marketing groups, and design firms) in need of space for creative group work, project rooms, charrettes, or other forms of collaborative work.

This may take a while  to get off the ground, but we are looking.  In the meantime we are working on a Workplace Effectiveness Survey with some companies in Austin, and hope to have a final report out in a couple of months.  And finally, SHIFT is working on another book (no title yet), which will formalize our consulting model around the themes of:

• Design Thinking
• The 4 Modes of Work (solo, collaborative, learning, social)
• Workspace Design
• Brand Transparency
• Left-brain/Right-brain Talent Balance
• Collaboration
• Innovation
• Community
• Leadership for Creativity

SHIFT, as a concept and a company, is premised on the idea that we are in the middle of an epochal change in the world of business.  The 78 million Baby Boomers are retiring in record numbers, while the 70 million Millennials (Gen Y) are gradually replacing them as the predominant generation at work.

Going forward, companies that want to be compelling places to work that are also capable of making products, services, and experiences that a post-Twitter society is passionate about, will have to commit to a new style of management.  Successful companies will be all about flexibility, autonomy, community, transparency, work/life balance, lifestyle, innovation, and sustainability.

SHIFT is committed to bringing these values into being in as many companies as possible!