Strategy is an increasingly important skill-set for HR leaders, according to design thinking expert Roger Martin, who said that HR professionals need to think about strategy and people in the same way their CEO does.

“Every CEO knows what they need to do, and in order to understand how CEOs think, any head of HR has got to learn strategy,” said Martin.

“Unless you understand strategy you’re not going to be able to really help the CEO, and help support them and help them make things happen the way they want them to happen.”

Martin, a global expert in design thinking and institute director of the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management, said that HR leaders need to get with the same program that the CEO runs to, in order to help produce the business results that the CEO is attempting to produce.

“There is some good news and bad news for HR”

“Often, HR runs contra to this and says, ‘no, you can’t do that, that’s against this or that’ or ‘that’s against our culture’.

“The CEO is dealing with activist investors, hedge funds – and head of their HR department, which really should be focused on improving the performance of the company and getting profitability up,” he said.

Talent: the lynchpin asset
Martin also said the HR function is experiencing some crisis, and predicted that it may eventually be rolled into another function – unless it steps up to the plate in more companies.

“I think there is some good news and bad news for HR,” he said.

“The good news is we’ve moved from an economy that for most of the 20th century, the key asset that you needed to bring to bear was a combination of capital and raw materials, such as mineral resources, ports or land.

“However, in the last quartile of the 20th century, that has changed and the biggest companies in the world are actually talent based now.

“If you literally said to Google, “here’s the deal, we either have to strip your bank account down to zero and burn down all your buildings, or take all your people to other companies”, they wouldn’t take five seconds to make that decision.

“The pressure really is on HR to understand talent as an asset and what they can do to make their company a talent magnet”

“They would say “that’s sad, but you’ll have to take our money and buildings, because we can just rebuild Google with our people” said Martin.

“But if you went to ExxonMobil and said “we’re going to either take away all of your oil and gas assets, reserves and money, or take all your people”, they might probably say “take our people to other companies, because we can’t replicate our assets”.

There are more companies like Google than ExxonMobil at the top of business now, according to Martin, who said this is because talent is now the “lynchpin asset”.

“The CFO was the right-hand man of the CEO for most of the 20th century, because capital and physical assets were absolutely the most important assets to the company,” he said.

“But now, talent is the most important lynchpin asset, and that’s good for HR because this is the domain of HR’s supposed expertise.

“So the pressure really is on HR to understand talent as an asset and what they can do to make their company a talent magnet, and all the strategy around talent as a resource.”

For the full interview with Martin and story on how HR can benefit from applying design thinking to their role in the future, see the next issue of Inside HR magazine. Image: supplied