People have defined and segmented Human Capital / Resources / Capabilities in many different ways. Of these myriad of approaches, the best approach for managing innovation and commercialization of sustainable businesses is to simplify Human Capital / Resources / Capabilities to three basic parameters. These are the skills of the individuals and organization, the motivation of the individuals and organization, and the level of thought (an expanded practical IQ metric) of the individuals in the organization.
The relationship between Human Capital and other Intellectual Capital of the corporation can best be visualized in the “Human Capital as One Element of the Corporation’s Intellectual Capital” figure. It is the human skills, motivation and level of thought that creates the know-how and other Intellectual Assets unique to the corporation. These Intellectual Assets provide for the long term sustainability of the organization.
To obtain the best probability of creating a high output innovative organization, a Human Capital Strategic plan starts with the Corporation’s Vision, Mission, Values, Business Strategic Plan and Technical / New Business Strategic Plans. These plans describe what projects the company needs to undertake to be successful. The Human Capital Strategic Plan looks at the requirements of these plans and ascertains how many people, with which skill level, motivation, and level of thought will be necessary to deliver on the other plans. Clearly, companies that plan to follow the market leaders and conduct incremental innovation will be most cost-effective and productive if populated by individuals capable and motivated to do that type of work. On the other hand, companies whose strategic plans call for new-to-the-world products and services to achieve their strategic plan goals will need a completely different population of human resources as described by the skills, motivation, and level of thought their employees and contractors possess.
Don Kash and Robert Rycroft provide a good starting point for setting a Human Capital Strategic Plan. They ask five questions that frame the skills, motivation and level of thought needed from Human Resources. Answers to these five questions should be found in the Corporation’s Vision, Mission, Values, Business Strategic Plan and Technical / New Business Strategic Plans. The five questions are:
1. Is your technology simple or complex? Simple technologies are those that can be understood in detail by an individual expert, i.e., can be described in detail and communicated over time and distance to another expert. Complex technologies cannot be understood in detail by an individual. Such complexity requires organizational networks that are managed by self-organized learning processes. Increasingly product and process technologies have become so complex that many of their subsystems and components also have evolved into highly complex technologies too. Complex technologies require broader skill sets and higher levels of thought be present in the corporation’s human resources.
2. In which technological sector or sectors are you innovating or going to be innovating? The innovation of complex technologies requires the synthesis of resources from different sectors. Especially important has been the integration of infrastructure technologies like advanced materials and information and communication systems. The skills the corporation’s personnel possess has to at least cover the technologies it intends to practice.
3. Is the innovation you are pursuing normal (incremental), transitional (major redesign), or transformational (first-of-a-kind)? For complex technologies the economic payoff comes from normal innovations, the capacity to repeatedly carry out incremental technologies (see the section on R&D Game Types). Some business plans however require transitional or transformational work. The skills, motivation and level of thought requirements will be different for each.
4. What mix of tacit and explicit knowledge is needed? In the case of complex technologies where rapid innovation is necessary, networks are essential because only very adaptable structures can provide the required diversity of tacit and explicit knowledge inputs fast enough to stay ahead of competitors. Tacit knowledge requires higher levels of skill, motivation and levels of thought are present in the organization.
5. What will be your major sources of knowledge? In addition to internal company resources, what level of academic, institute, trade associations, standard setting entities will be required? The more diverse the knowledge sources also require higher levels of skill, motivation and levels of thought are present.
Knowing the answers to these questions for the preponderance of projects undertaken by an organization lays the foundation for planning the skills, motivation and level of thought needed.
The first step in putting together a Human Capital Strategic Plan is to specify in detail the type and quantity of skills necessary to carry out the technology and business strategic plans. These skills include the technical knowledge and expertise is needed carry out the science and engineering aspects of technical projects. In determining number and type of skill sets required in an organization it is best to categorize them in three ways.
The first skill level is that of a technician who can carry out the directions of a senior technical expert or project leader. The second skill level is that of a technical expert or project leader who has demonstrated the ability to conduct incremental and next-generation projects. The skills include the layout of a project plan, gathering and organizing the necessary resources to create the solution and complete the project. It also includes interfacing with others in the organization’s marketing, sales, manufacturing, and legal to complete the project on time and on budget.
The third skill level is that of technical expert or project leader who has demonstrated the ability to successfully undertake breakthrough or radical innovation projects. This person possesses the same abilities as the second skill level individual, but at a more advanced level, working very independently and creatively in all areas of the project; i.e. business model, marketing, technical, production and legal to bring a new to the world technology and/or product to the market.
The number of individuals needed for each technical area in an organizations R&D, Engineering, and/or technical support functions can be derived from the Strategic Business and Technology Plans. In those plans the project needs have been specified and the Technical Leadership can translate those requirements into a “needs” matrix, an example of which is shown in the ”Example Inventory of Human Capital Skills Needed in a Technical Organization” figure.
The three “need” columns of the ”Example Inventory of Human Capital Skills Needed in a Technical Organization” figure are derived from business and technology plans. The three “have” columns are provided by the Human Resource and Technology Leadership teams. The ”Example Inventory of Human Capital Skills Needed in a Technical Organization” figure shows as green colors where there is sufficient or excess bench-strength, and yellow or red colors where there is a deficiency of resources to carry out projects. Recommendation is to update this table quarterly and renew the strategic plan annually.
A common flaw in most HR planning is to not account accurately for the skill levels needed. In particular a common problem is that break-through level projects are resourced by individuals not having the skill to conduct such work. Technical and HR leadership has to be honest in what resources they have, and if there are miss-balanced resources they need to be readjusted, typically with hiring and firing (as “personnel growth” is typically insufficient and takes too long to make the business and technical plans successful).
Motivation is a term that is often not well defined. As a way to make an individual’s and organization’s motivation visible, Teresa Amabile worked with the Center for Creative Leadership to create a “KEYS Survey” that looks at the work environment affecting motivation. The organizational results of individuals taking such a survey are shown in the “Example of KEYS Evaluation of the Environment Affecting Motivation” figure.
The Work Environment Inventory is a 78 multiple choice item assessment tool (see Appendix 1 at the end of this Chapter). The tool uncovers the stimulants and barriers to creativity that exist in a company, division, or work group. It is not a 360 degree instrument nor a leadership assessment for development tool. Rather it is a climate survey with the specific goal of looking at creativity and innovation in the work place. The major elements are defined in the “Scale Definitions of the KEYS (WEI) Instrument” figure.
By conducting KEYS (WEI) assessments on a daily, weekly (recommended frequency), or monthly basis, technical leadership can find strengths, weaknesses, opportunities and threats to its goal of creating and leading a strong innovative organization. Weekly trends in the results provide statistical process control insight into removing special causes of motivational decline as well as improving the overall environment to steadily improve innovation levels. It is a fast, easy to utilize tool that provides actionable information for improved performance. That said, senior technical leaders have to look themselves in the mirror if the results don’t meet their expectations and needs. Teresa showed in her research the strong impact of a Senior Technical Leader’s style and capability on work environment motivational factors.
when thinking about how to design work environments that are highly motivational, Jane McGonigal advocates that work should be structured as a game. This is because when you strip away the different genre differences and the technological complexities; all games share four defining traits also characteristic of highly motivated organizations: a goal, rules, a feedback system, and voluntary participation. When these four elements are present in a game or in a workplace, people will spend extraordinary amounts of productive time in this environment.
The GOAL is the specific outcomes that players will work to achieve. It focuses their attention and continuing orients her participation throughout the game. The goal provides players with a sense of purpose.
RULES place limitations on how players can achieve a goal. By removing or eliminating the obvious ways of getting to the goal, the rules push players to explore previously uncharted possibility spaces. They unleash creativity and foster strategic thinking.
The FEEDBACK SYSTEM tells players how close they are to achieving the goal. They can take the form of points, levels, a score, or progress bar. Real-time feedback serves as a promise to the players that the goal is definitely achievable, and it provides motivation to keep them playing.
Finally, VOLUNTARY PARTICIPATION requires that everyone who’s playing the game knowingly and willingly accepts the goal, the rules, and the feedback. Knowing this establishes common grounds for multiple people to play together. And the freedom to enter or leave the game at will ensures that intentionally stressful and challenging work is experienced as a safe and pleasurable activity.
Work environments constructed as games provide intrinsic rewards which are most essential to human happiness. Positive intrinsic rewards fall into four major categories.
First and foremost, we crave satisfying work, every single day. The exact nature of the satisfying work is different from person to person, but for everyone it means being immersed in clearly defined, demanding activities that allow us to see the direct impact of our efforts.
Second we crave the experience, or at least the hope, of being successful. We want to feel powerful in our own lives and show off to others that were good at it. We want to be optimistic about our own chances for success, to aspire to something, and to feel like we’re getting better over time.
Third, we crave social connection. Humans are extremely social creatures and even the most introverted among us derive a large percentage of our happiness from spending time with the people we care about. We want to share experiences and build bonds, and want to most often accomplish that by doing things that matter together.
Fourth, and finally, we crave meaning or the chance be part of something larger than ourselves. We want to feel curiosity, awe, and wonder about the things that unfold on epic scales. Most importantly, we want to belong to and contribute to something that has lasting significance beyond our own individual lives. These four kinds of intrinsic rewards are the foundation for optimal human experience, and thus also a motivating workplace. These are the most powerful motivations we have other than our basic survival needs of food, safety, and sex. And what these rewards all have in common is they are all ways of engaging deeply with the world around us, with our environment, with other people, and with the causes and projects bigger than ourselves. Robust Human Capital Strategic Plans provide for each of these four kinds of intrinsic rewards.
The best practical model to assess Levels of Thought / Mental Capability was described in Executive Leadership by Elliott Jaques. High output organizations are characterized by clearly demarcated levels of authority and accountability, and ensuring the people at each level of the organization are mentally equipped to do their jobs. Elliott Jaques’ developed a Stratified systems Theory to explain organizational behavior and organize people into roles that match their mental capabilities.
The first step in this process is to define the task capabilities needed for each role in the organization. Fortunately there are only four classes of task capabilities and roles as relate to mental processing. They are shown in the “The Four Types Of Task Complexity” figure.
Excerpting from the Executive Leadership book, these four types of task complexity can be described in terms of the minimum that has to be done to cope with the variables that are encountered in solving problems related to the task.
Diagnostic accumulation: Problems have to be anticipated and resolved by sorting out and accumulating significant information and putting it together to anticipate problems and overcome
Alternative Serial Plans: Possible ways of carrying out a task have to be devised and evaluated, and one of the alternatives chosen and planned. That plan is then followed, always with the possibility of changing to an alternative plan if major difficulties are encountered.
Mutually Interactive Programs: The task requires that numbers interactive serially planned projects be undertaken, and adjusted to each other with regard to resources and timing as the work proceeds, so as to keep the total program on target.