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If HR Transformation is dead, what is the future of Human Resources?

Source | LinkedIn : By Ruud Rikhof

For over 70 years we have developed the concept of Human Resources against the background of an economic reality in which organizations are the dominant form for how we think about work, be it in a profit or not for profit context. Almost all of our mental models and approaches to HR, organizational development, change management, people development, talent management, reward management and many other HR-related interventions have been designed and developed with the idea that human beings in organizations are an asset that can and need to be managed.

Almost all tested methods and HR interventions are built on theories and science that were developed many years ago. Over the years we have fine-tuned and further developed these models; in essence, we are extrapolating the past into the present with a view that further improvement will make them resilient and robust when faced with the unknown.

Yet, we are on the brink of a new era and that we are at risk of turning a flagship product into an “end of lifecycle” phenomena if we do not start adjusting ourselves now to a new reality, or even better, involve ourselves to shape this new reality. We will need some kind of “creative destruction”, a term coined by Joseph Schumpeter to describe the disruptive process of transformation that sustains economic growth.

What is this brink of a new era?

When we started reading some years ago about Singularity University, it started to dawn that something big was looming around the corner. Most of these developments have been in the making for 20-30 odd years, but only now do they start to approach their breakthrough; this is the result of what has been christened as “exponential growth”. This describes a phenomenon that is different from linear growth (which we have been largely accustomed to over the past 40-50 years). Exponential growth essentially means that after a certain period of slow growth, developments suddenly accelerate at an unprecedented rate. This technology explosion is simultaneously invasive, disruptive and transformative, and it leads to old and tested business models no longer being able to count on automatic survival. We already know that the average half-life of a business competency has dropped from 30 years in 1985 to 5 years today, we know that in the last 15 years 50+% of the S&P companies have disappeared; and in the next 10 years another 40% is predicted to disappear. We need to accept that company valuations accelerate; it took Google 8 years to get to 1 Billion Market cap, Facebook 5 years, Tesla 4 years, Uber 3 years, Snapchat and Oculus Rift less than 2 years. And especially with highly leveraged business models, largely driven by incredibly high valuations, it is now possible for new market entrants to disrupt existing industries. The investments that Google and Uber can put in self driving technology is completely driven on a high valuation of their (low asset) business. Existing market dominators, like Ford, Daimler and others are struggling to keep up and their core business at the same time is attacked from a number of different players, some of them without any previous history to the automotive industry. This picture from CB Insights illustrates the attack on this industry. But automotive is not alone, virtually every industry is attacked from multiple directions at the same time; CB Insights calls this “unbundling”.

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