Do Your Internal Functions Have a Strategy?

Don’t know? Then answer this: Is there close collaboration between departments?

Published: Wednesday, June 10, 2015 - 16:56

A significant portion of my strategic facilitation work is with internal functions, a click or two below corporate and business-unit strategy, which includes marketing, human resources, purchasing, and even internal strategy groups.

There’s good news and bad news in this. The good news is that those engaged in internal functions have recognized the need to be strategic, even if it’s because higher-level strategies demand supporting strategies. The bad news is the number of those who think strategy doesn’t apply to them.

When I ask internal functions people to show me what guides their department’s work, I’m more often than not handed a plan, which is a budget in disguise. It’s rarely explicit in laying out a winning aspiration of clear where-to-play and how-to-win choices.

Now, in fairness to internal functions, there is a reasonable explanation for not having a clear strategy: Most internal functions have been granted what many believe is a monopoly. In other words, they don’t have to worry about customers or competitors because they think they’re the only game in town (i.e., in the broader organization). Generally speaking, monopolies exist to serve themselves. The language I hear from internal functions often reveals this mentality: They almost think of the broader organization in an adversarial way: ”they this” and “they that,” never “we” or “our customers.”

Wake-up call to internal functions: You most definitely are not the only game in town. You must have customers other than yourselves. If by chance your feathers are getting ruffled by internal customers demanding better value from you, know that in all likelihood you’re being considered for replacement. Ever heard of outsourcing? Business process outsourcing is a multibillion dollar market. What about automation? Disintegration?

One of my all-time favorite stories is that of French auto parts manufacturer FAVI and its newly promoted-from-within CEO, who immediately flattened the organization upon his appointment and simply got rid of the human resources department. The company operated far more effectively with that deletion.

Internal functions should, in fact must, think strategically—meaning, focusing outwardly on customers and competition. So while I’m on the topic of human resources, how would HR approach crafting a strategy?

Let’s suppose we’re talking about the HR group in a fictitious, rapidly expanding midsize company, GrowthSpurt Inc., which true to its name, is experiencing rapid growth due to a new service division launch demanding dozens of new hires.

Sam Stickler, the senior vice president who heads the department, is getting complaints from hiring managers as well as his own team of internal recruiters. Positions aren’t being filled quickly enough with the right high-quality candidates, and the recruiting team is spent from trying to respond to all the requests. Stickler has a seat at the executive table; the new service division launch absolutely must be successful, so he needs a win.

Stickler realizes his team is all over the map, essentially firefighting without focused priorities. He doesn’t have an explicit strategy for handing the demands of the organization, but it’s clear that whatever the team is currently doing isn’t going to produce the win he needs. He gathers his best thinkers to think through a strategy.

The team defines the problem simply: inability to effectively meet GrowthSpurt hiring needs due to a lack of focused priorities and overburdened recruiting team.

Using the team-based facilitation tool discussed in Playing to Win, by A. G. Lafley and Roger L. Martin (Harvard Business Review Press, 2013), the team reframes the problem as a choice between two mutually independent, high-level options: outsourcing to a recruiting firm, or focusing the internal recruiting services—essentially a buy vs. build choice. The team uses these two options to brainstorm and generate a dozen where-to-play/how-to-win possibilities.

For outsourcing, the possibilities that were generated run to a central theme of handing off some or all of the recruiting. There are many more possibilities for creating focus, though, including teaching hiring managers to do their own recruiting, designating recruiters to specific needs, creating SWAT-like teams to handle critical and urgent hires, handling the squeakiest wheel first, focusing on the highest level positions only, or focusing on the positions most in need by the service business end-users.

The team doesn’t find the outsourcing route attractive because it builds no long-term capability. They decide that two different strategies for focusing recruiting services should be explored. One is a centralized recruiting strategy that requires developing a clear approach to prioritization. The other is a decentralized recruiting strategy, which requires an approach to building recruiting capability among key hiring managers within the new service division. The team names the first strategy SWAT and the second strategy TEACH.

Both potential strategies are then developed using the Playing to Win framework: winning aspiration, where to play, how to win, capabilities needed, and systems required. For illustration purposes, let’s look at just the SWAT strategy.

The SWAT winning aspiration is defined as “to become a highly effective recruiting partner for GrowthSpurt with the ability to identify and hire the highest quality candidate within an informal service-level agreement period of 15 working days.” This represents a three-fold improvement and rivals the promise of the leading outside recruiting firm.

Where-to-play spaces include hiring managers with the most business-critical needs: sales, client support, and marketing. The “channel” is direct partnership and collaboration.

How to win is the essence of the SWAT approach: The best recruiters with the deepest, specific subject matter knowledge in the need area swarm the position to be filled in a compressed time period in close partnership with the hiring manager.

The needed capabilities include candidate persuasion, internal relationship-building with hiring managers, project agility, hiring-needs finding, and close collaboration. Systems include a unique talent-identification database, candidate attraction methodology, and a streamlined onboarding process.

The team then reverse-engineers the strategy to identify the conditions that must be true for the SWAT strategy to be a good set of choices. Of the several identified, the one that is most worrisome to the team, the one least likely to be true, is: We can recruit as, or more effectively as, an outside recruiting firm.

That’s where the team must start testing the strategy.

This type of strategic approach is what the best-in-breed organizations rely on to support and sustain their corporate strategy and move their business forward.

Does yours?

First published May 22, 2015, on Matthew E. May’s Creative Facilitation blog.

About The Author

Matthew E. May

Matthew E. May counsels executives and teams through custom designed facilitation, coaching, and training using four basic ingredients: strategy, ideation, experimentation, and lean. He’s been counseling for 30 years, a third of it as a full-time advisor to Toyota. He is the author of four books, the latest The Laws of Subtraction (McGraw-Hill, 2013), and is working on his fifth book. His work has been appeared in The New York Times, The Wall Street Journal, Harvard Business Review, and many other publications. May holds an MBA from The Wharton School and a bachelor’s degree from Johns Hopkins University.