It pretty much goes without saying that in order to have a high-performing innovative organization you need to have the right people working together in an innovative culture. The “What Is an Innovative Culture” figure highlights the dichotomy that exists within technical organizations. There is a fine line between what everybody wants and what you also need for success. One of the best ways to achieve this balance is to work towards stakeholders’ commitment behavior that resembles a ”Partner” as shown in the “Behavioral Organization Chart” figure. Thus the strategic direction for human capital planning purposes is to strive for all participants in the organization to behave as if they were partners. The processes to accomplish this are described more detail in the Chapter on HR Processes.

From a strategic standpoint there are some design considerations that will influence the Human Capital Strategic Plan. These are:.

• Organizations which view the environment as a source of inspiration are more likely to adapt to changes through innovations in design rather than short run problem-solving.
• The more turbulent the environment, the more important it is for innovative organizational adaptations to transform the environment as well as the organization.
• To affect change in the environment, actions taken by an organization must at least be as powerful as the forces that originally created the environment.
  Responses to changes in the environment require resources proportionate to the significance of the changes.
• Environmental sensing devices should be at least as sensitive as the context which needs to be understood.
• The greater the influence of tradition on decision-making, the greater the expressed need to make rational versus creative decisions.
• The greater the perceived ability to influence the environment, the more innovative design decisions will be.
• The more turbulent environment the more difficult it is to understand how current trends differ from past experience.
• The more significant the adaptation to the environment required, the more difficult it will be to gain acceptance of new behaviors associated with the change.
• The greater the level of experimentation and organizational design, the greater the likelihood that learning will occur and lead to more effective future adaptations to the environment.
• The more involvement there is in the scanning process, the more commitment there will be to making changes in the organization to meet the challenges uncovered.
• The more energy is put into the scanning process, the more likely it is that attention will shift from exclusively internal to both internal and external opportunities for action.
• The more the design of the organization permits satisfaction of unfilled needs through work, the higher the level of motivation to work will be.
• Needs are neither static nor entirely understood. Therefore, the more flexible the organization design is, the more likely it is that continued motivation can be achieved.
• Needs are often socially determined. Therefore, organizations which both create needs and satisfy them will be more successful than organizations which act only in response to stated needs.
• The extent that organizations are designed to meet lower-level needs exclusively, higher performance is unlikely to occur.
• The greater the involvement of employees in the design process, the more flexible the resulting organizational design is likely to be.
• The greater the involvement of employees in the design process, the clearer the understanding of how behaviors lead to desired rewards.
• Designs created without the direct input of organizational members are unlikely to take into account the influence of unique population characteristics and reactions to design features.
• The greater the disparity between design features and needs of the stemming from unique characteristics of organizational members, the less successful the design will be.
• To the extent that the design of an organization is consistent with naturally occurring group processes, performance will increase.
• The successive group-based designs for work varies directly with the amount of attention given to making group processes effective.
• The effectiveness of groups and social technical systems is related directly to (1) The extent to which group members are technically proficient, and therefore, able to engage in technical problem solving; (2) The extent to which organizational reward systems promote cooperative behavior in the group; (3) The extent to which the group is provided with the training, support and resources required to accomplish its purposes; (4) The extent to which additions and departures to the group are well-managed; and (5) The extent to which the group is able to manage its relationship with its environment.
• The effectiveness of group designs varies directly with the extent to which: (1) The task of the group a stable; and (2) The knowledge differences among group members are small.
• To the extent group tasks are defined to encompass critical interdependencies in the work itself, group cohesiveness and performance will increase.
• The stronger the culture of the organization, the more it will constrain design possibilities.
• The more complexity in the external environment, the greater the potential for internal cultural diversity.
• The greater the cultural diversity within the organization, the more difficult it will be to achieve consensus on design parameters.
• The greater the cultural difference between management and labor, the less receptive employees will be to designs proposed by management.
• The better the fit between the organization’s culture and its external environment, the more effective the organization will be.
  Generally speaking, the design of jobs will be more stimulating when the technology: (1) Demands a variety of skills on the part of employees; (2) Demands higher-level skills which require time to learn and master; (3) Requires higher levels of interaction among the employees; (4) Involves greater variability in inputs, conversion processes, and outputs; (5) Is subject to continuous change or modification; (6) Is designed to provide more direct and immediate feedback; (7) Allows greater flexibility and geographic movement in and work patterns; and (8) Leaves a significant degree of relevant decision-making to employees.

A great way to achieve the balance between what everybody wants and what is needed for success is to make learning a metric that matters most. Learning must be a part of an organization’s overall strategy. To support learning, as Peter Senge says, an accurate, insightful view of current reality is as important as a clear vision.

Shown in “The Learning Wheel” figure is a model developed by Sarita Chawla. It shows two complementary halves of a learning organization. On the left is a path of Innovation and Development and on the right is the path of Insight and Discovery. These paths can be applied organizational learning by addressing the potentials for development across nine interrelated domains of learning.

These nine domains can be viewed as follows: every human being has a deep yearning for the quality of life. To realize such a quality of life, we rely largely on ourselves and others to provide quality goods and services by doing quality work. In an increasingly interconnected world, doing quality work requires building and maintaining quality working relationships. These in turn reflect the quality of performance, efficiency, thinking, attention, depth of wisdom and compassion that each individual brings to their life and work.

Along the path of Insight and Discovery we access and gather information. On this path we live with questions, and engage in the process of research or inquiry that offers progressively deeper and deeper insight into the nature of things. Through penetrating systems analysis, deep inquiry and attention, insight illuminates many important patterns of relationships that were previously mysterious and unknown. Along this path insight deepens to unfold into innovation. The ability to walk this path is determined by both the quality of one’s analytical and attentional skills.

The Path of Innovation and Development provides a complement to the Path of Insight and Discovery. Along this path we give meaning to information by shaping it into images, ideas, communications, and actions. This path unfolds along a spectrum ranging from the most subtle idea on through the progressively more tangible stages of formulation, communication, and action necessary to put an idea into action. Following this path provides an individual, team, or organization with a sense of mastery and control that is balanced by the Path of Insight and Discovery’s sense of mystery.

Together the two paths form The Learning Wheel. Moving around this wheel generates the momentum of continuous learning and development necessary for any learning organization. The Human Capital Strategic Plan should incorporate elements from both pathways.

As David Hurst points out, optimal learning takes place when the gap between action and result is as short as possible in time and space. Then cause and effect can be closely linked and mistakes can easily be learned from. In practice, however, this virtuous cycle is interrupted by the alternating periods of growth and decline that characterize all economies. During periods of extended growth it is very difficult for managers to distinguish objectively between performance that is due to the up cycle versus performance that is due to genuine competitive advantage. In business booms, managers will naturally tend to take the credit for the excellent performance of their organizations. Their belief in their ability will almost certainly be reinforced by the workings of the formal compensation system and the applause of the investment community. The genius of the strategy will be confirmed.

Thus, periods of economic growth interrupt the feedback from performance to learning, preventing organizations from evaluating the effectiveness of their strategies. Healthy skepticism about managerial abilities is swept aside by the tangible evidence from what seems to be sustained success. This will be particularly true in organizations that emphasize financial performance over other measures.

The situation is just reversed in periods of economic decline. Now organizations are overwhelmed by feedback from every action taken during the long up cycle. Panic by the sudden reversal of fortunes, unable to assimilate all the information, yet still confidence in the appropriateness of their strategies, managers are likely to expend their efforts on frantic attempts to maintain performance rather than cycle through a learning process. Of course, the imperative to maintain performance will even be more urgent if the organization has taken on substantial financial commitments during the good times.

Thus, the long invariable delays between action and result, which are by-products of the business cycle, create conditions highly unfavorable to learning. The result is in many organizations, when studied longitudinally, display a pattern of apparently outstanding performance followed by a steep decline. The managerial challenge is to dampen this erratic progress to sustain performance. A key issue in this challenge is to both learn and protect the core value-adding processes.

From a strategic standpoint there are four insights about learning organizations to keep in mind:

• Insight 1: Don’t assume learner homogeneity. Different people learn most productively in different environments and formats.
• Insight 2: Time must be allocated for both students and teachers within an organization to transfer skills as well as time and travel support for individuals to attend professional society meetings and standard and government communities of practice.
• Insight 3: You have access to a variety of conference room settings and styles as simply changing the environment for the same attendees will result in a different learning experience.
• Insight 4: Failure must be viewed within the organization as a learning experience and leaders must walk the talk in this regard. This is particularly critical within Agile/Lean cultures.

The role of psychological safety in Agile/Lean methods is critical to getting the full performance benefits that Agile/Lean offers. The three areas to pay attention to are: (1) Cultural differences related to attitudes towards inclusiveness, (2) Cultural differences related to perceptions of trust and collective responsibility, and (3) Cultural differences related to openness and communication.

With respect to the first point regarding attitudes towards inclusiveness, in Agile practice, the organizational structures are flat rather than hierarchical, and decision making falls to the team, not to managers. The shift in authority and responsibilities from managers to team members often creates awkwardness and low productivity in meetings if participants are not used to being asked to contribute in this way.

With respect to the second point regarding perceptions of trust and collective responsibility, another one of the principles underlying Agile development is a prioritization of individuals and interactions over processes and tools. Agile team members are encouraged trust other team members hunches and suggestions as well as their own, even if accepting a teammates point of view means rethinking solutions or abandoning approaches. It takes a lot of work to build good teams which are made up of people with whom you can argue about a task but with whom the argument will never get personal.

With respect to the third and last point regarding cultural differences related to openness and communication, in Agile practice responding to change is more important than following a plan. This comes full circle back to the above argument for building a learning organization. Agile management stresses the value of communication (minimizing the risk of team members not being kept up to date), simplicity (taking one step at a time), feedback (providing input on why a plan is to be changed), and courage (stressing the value of exploration in reaching a project goal). Transparency is essential; information must be widely available so the team members can make informed decisions and members ought to be able to debate any aspect of the project.

The above three points set the overall direction for human capital strategic planning in Agile/Lean organizations.