HR functions need to focus on building and developing an internal talent pool which can readily understand, implement and leverage digital business models, according to strategy guru Vijay Govindarajan.
“HR really needs to gear up talent acquisition, talent development and talent retention around digital capabilities associated with the internet, software, artificial intelligence, augmented reality, robotics and other innovations,” said Govindarajan, who is a professor at Dartmouth’s Tuck School of Business, fellow at Harvard Business School and New York Times and Wall Street Journal best-selling author.
This is particularly important as every business will become an information business in the future, and Govindarajan said value will be created in information and not just in the “hardware” of business.
“I think that trend is really starting to accelerate,” he said.
“Think about the automotive industry. It’s not about mechanical engineering anymore – there are driverless cars and new economies like Uber.
“They are shifting to artificial intelligence, so that’s where the game is going to be.”
However, what this means for jobs and the employment market in the future is uncertain, and Govindarajan said this remains the “billion dollar question”.
“Certainly, jobs will have to shift and this is what technology does,” said Govindarajan.
“What this implies for humanity? I don’t know the answer to that, because I don’t know if everybody can become a computer scientist.”
Historically, there have been profound implications for people every time there has been a significant technological development, according to Govindarajan.
“We don’t use landlines anymore; we have cell phones, and we don’t horse buggies anymore – we have automobiles,” he said.
“Every time there is a technological shift, there’s going to be a shift in the nature of the work and the shift is so dramatic now, the implications are profound.”
“The HR manager should be in there alongside other functional leaders such as the R&D manager or marketing manager”
Understanding the potential of these developments is important, but Govindarajan, said the key to leveraging these effectively is in understanding the business strategy.
“HR should play more of a strategic role, and not just that of a personnel function,” he said.
“When strategy discussions take place, the HR manager should be in there alongside other functional leaders such as the R&D manager or marketing manager.”
HR should develop talent management strategies in conjunction with the development or broader business and corporate strategy, according to Govindarajan.
“Aligning HR strategy to business strategy is the critical piece,” he said.
Govindarajan predicted that HR will become increasingly central to the strategy of organisations, as ultimately “everything is about people.”
“Strategy for corporations means nothing unless you accrue the right talent, put the right incentives in place, develop and keep the best people,” he said.
Govindarajan pointed to GE, which is currently reinventing itself to shift from a “hardware business” which focused mostly on products and services in the past, to becoming an information business which collects, analyses and leverages opportunities through data.
“One of the things they make is aircraft engines; an aircraft engine has hundreds of sensors, and a single flight from Boston to LA, for example, generates a huge amount of data,” he said.
“So what GE is developing now is the capability to capture and create valuable information using big data, and then understand the commercial applications and benefits of that.”
HR functions play a critical role in this process due to the talent required to make this shift successful.
“HR needs to understand the strategy – but the strategy doesn’t make any sense without HR, because ultimately GE has to become an information business.
“It’s all about people and it’s all about acquiring talent. So five years from now I would want to see HR as a central part of the corporate strategy in any business,” he said.
“Five years from now I would want to see HR as a central part of the corporate strategy in any business”
Innovation is another hot topic for many companies, and Govindarajan said HR also plays a foundation role in getting this process right.
“I think the key reason why innovation fails is execution, it’s as simple as that,” he said.
“Innovation is not about ideas, there are plenty of ideas – but companies do not know how to execute ideas.
“Executing innovation is troublesome for many companies, because execution involves finding and keeping the right people, setting up the right organisational structure, putting in place the right performance network, setting up the right work system, and so on.
“It is all a part of what HR does, and historically HR has viewed itself as a personnel function.
“Instead it should view itself as a strategic talent function, because HR can do so much more when it views itself this way.”
Govindarajan said this came back to HR understanding talent in both the individual and organisational context, and he said there are three key factors in this process: knowledge, experience and network.
Knowledge is about the academic qualifications and an individual’s ability to continuously learn and develop, while experience is about what happens on the job with different experiences to develop and nurture talent, and networking is about linking talent to other people to make the most of opportunities.
“If you can do those three, then you can effectively tap into the right talent base,” said Govindarajan, who added that this will become increasingly important in the future.
“The rate of change will accelerate in the digital world, so innovation will command a premium” he said.
“If you don’t innovate, you die.”
Image: supplied
