Human Capital in the Cloud

Cloud as a verb. Picture credit: Marc Lagneau http://www.flickr.com/photos/marc-lagneau/6056044037/

Cloud as a verb. Picture credit: Marc Lagneau http://www.flickr.com/photos/marc-lagneau/6056044037/

I just stumbled into an excellent article on the future of the IT & HR departments by Forbes blogger, IBMer Rawn Shah.  Shah refers to an interesting blog post by Mr. Richie Etwaru (Director of Applied Innovation & Transformation Portfolio at UBS). The article has a very cool angle; the gentlemen speak about ‘Human as a Service’. Surprising and beautiful.

(Note. I am not a HR professional, but I do care about people; colleagues, partners, competitors – ecosystem-wide. Even if I am an eager social technology lover, I do understand it is all about the people!)

Cloud as a Verb

Firstly, in the article, Mr. Etwaru coins ‘clouding as a verb’. That stuck right away, an excellent thought – cloud is an enabler and therefore using it as a verb is very fitting:

“Practitioners looking to the future for a vision of the IT department a decade or two ahead must stop looking at the cloud as a noun and start looking at clouding as a verb. Cloud is a noun describing a set of efficiency principles that can now be applied to a newly stateless once state-ful storage and compute IT estate driven by virtualization and cloud operating systems…

Looking one or two decades ahead, leaders are pressed to answer what can be clouded above and beyond compute and storage… Leaders must imagine a world where Workplace can be a Service, Expertise can be a Service, Business Process can be a Service…”

Well put. All my favorite topics; cloud computing, the role of IT department, and here for the new kind of leadership and HR practices. All areas needing a fresh re-think, and some serious unlearning. The decades of siloed functions must come to an end. Similarly, so-called support functions for business – as the IT & HR depts are – must become truly supporting in the meaning of new ways of working. Social IT, as my dear friend Chris Dancy calls it. He has also coined another interesting notion: ‘People as a Platform‘.

I believe that more social IT would be less hated IT. HR departments have it a bit easier, I suppose.

Stateful and Stateless Design of Work

Secondly, the article discusses ‘talent as a cloud’ and takes a very interesting view on the design of work – namely ‘stateful’ and ‘stateless’ design of work.

Let me explain. The design of work within a stateful talent system requires that the resources are carefully planned and in place in advance, and making sure that all the puzzle pieces are in place before any activity can begin. Sounds familiar? Yes, this is the way most of us are used to work.

As the opposite, a stateless talent system, does not require the reservation of resources,  but “instead each step of the process completes it portion of activity and there is some indication of whom should receive the output next”, Rawn Shah writes. That does sound scary and too chaos-like to many. Rawn further explains the pros and cons:

“There are pros and cons to both, although it generally boils down to the overhead involved in knowing previous and next steps. Stateful devices made more efficient use of resources but were fairly inflexible or ‘brittle’. Stateless devices were cheaper and simpler to create, requiring less memory and processing to keep track of things. In the end, a stateless system is much more agile and resilient.”

Absolutely fabulous thinking and very much needed for the more flexible, agile business models. I’ll find this very inspiring. Not a simple task at all, but I feel and believe that we must – and especially leaders and HR departments must – start to rethink a bit. Many of you are already doing it, of course. 

Bad Fit with Your Business Processes?

The existing business processes are mainly designed for long-term to a group of specific jobs: a stateful reservation of resources (people and their expertise), managed by a single manager, for a certain project, under a certain period of time. Why it would be wise to try out a different way of work design? Here’s more of Rawn Shah’s brilliant thinking:

“Why is this? We often consider only the primary talents of an individual, their main skills or knowledge domain. The goal is to maximize their potential by applying them where they are best suited. Noble intent, but it ignores the reality that people are generally multidimensional and everyone has creativity and knowledge that can apply to other areas.

A stateful talent system focuses on a single purpose and seeks to optimize it to the utmost; a stateless model recognizes that they could be doing different things at different times and balances variety with skill.”

Yes for multidimensional talents, yes for creativity & knowledge flows over the borders. This is what is needed in the global competition: an organization cannot cope with the old style, with closed teams, one-trick-pony-managers, and strict hierarchies. Indeed, like rock’n’roll, social business design is here to stay.

Human Capital as a Service – in the cloud, beautiful!

Smart Robots as a Service

In his own blog Mr. Etwaru states:

“We may never move clouding up the stack all the way to making human capacity stateless and hence delivering said capacity as a Service, but the companies that move furthest and fastest up the stack clouding state-ful resources along the way will engineer the agility and on-demand efficient operating models to win.”

He also asks “Will smart robots eventually be instantiated to spin up more human capacity when demand is needed?”. His question is utmost relevant. My dear friends Cristina Andersson and Jari Kaivo-oja have written an interesting book (in Finnish) related to this topic – BohoBusiness. (As soon as it is available in English, I will share the link here.)

This is Not a New Idea?  

The thoughts by Mr. Etwaru and Rawn Shah reminded me of an old quote related to the adaptable structures and ecosystems, by Michael Porter himself:

“Industries are profitable not because they are sexy or high tech; they are profitable only if their structures are attractive.”

Most industries and organizations are trying to score right under the constant change by requiring these new types of adaptable structures – the structures within and outside of an organization, within the ecosystem it belongs to. The development is very, very rapid and it raises increased demand for choice, chance, change and flexibility. The stateless talent system might be a step towards a right direction.

This discussion also reminds me of old HBR article of Normann and Ramírez (From Value Chain to Value Constellation: Designing Interactive Strategy, Harvard Business Review, 1993). They stated that those organizations that are going to survive in the disruptive, changing environment are:

“[…] those looking beyond their immediate boundaries to the social and business systems in which they are enmeshed and discover new ways to reconfigure those systems in order to reinvent value for their customers.”

And this article is 19 years old.

Looking forward to follow the discussion by the people who know more about Talent Management and HR than I do. An interesting challenge for all HR professionals, I almost hope I could work with these issues : )

Human Capital instead of Human Resources?  

By the way, why don’t we speak more often about Human Capital (HC) instead of Human Resources (HR)?  I think that HR is a notion that belongs to the stateful system thinking, and HC fits in perfectly with the idea of the stateless talent system.

What do you think?


Related to this topic:

Excellent video by John Hagel: Recognizing the Power of Pull

For IT professionals, a great article by Chris Dancy, Bradley Busch and Kathryn Howard IT Service Management Going Social

Picture credit goes to Marc Lagneau – my friend found the lovely photo and thought it describes ‘Cloud as a verb’ perfectly. I agree.

15 thoughts on “Human Capital in the Cloud

  1. An interesting proposition, certainly, but can in practice only find application in a limited number of scenarios, and even then, subject to limitations. (I need to add a disclaimer right away: I didn’t look at the links in the article but am responding to the story as-is.)

    It’s obvious you can’t devise a manufacturing assembly line around the stateless principle. You need an “owned”, always available, predictable and controlled workforce.

    In intellectual work contexts the chance to succeed is more likely. But even then, there needs to be a person or a group that keeps an eye on the big picture and can keep the micro-tasks, if you will, focused on the desired end result.

    The question then presents itself: will it demand more resources to manage the micro-tasking, “stateless” piece-work than to create an “owned” task force? Yes, individuals can probably contribute to many other things besides their chief competence, but what’s the cost of finding all those secondary competences, defining their usefulness for the project at hand and managing the entity?

    Also, the model doesn’t address the issue of on-time availability of resources (unless I accidentally skipped something essential). To make sure the project owner’s requirements are met, an enormous pool of reserves is needed, further adding to the management burden.

    In the end, it all comes down to alternative investments. Or, in other words, what will be the way of least resistance and lowest cost.

    • Thank you, Kimmo, love your response. And yes, indeed, I should have mentioned this – of course I discuss about information workers, intellectual work as you put it. Material flows, hmm, a bit more difficult to ‘agilizise’. Further, there is/will be lots of challenges to solve, as you mention. Your last question is excellent. If I only knew the answer. I will follow up this topic closely, lots of HR pros are discussing it. I am so willing to learn🙂

    • Dear Rawn, firstly, thank you for the inspiration for this post – and secondly, thanks for reminding about Verna Allee’s work. I have read her posts (found via Twitter), and will indeed re-read her ideas and posts. Role based perspective instead of department view is welcome and surely the direction in the future. Do you happen to know good examples of this, existing already now?

  2. Thank you Riitta for a great blog post! Interesting comments here already. Kimmo, with new technology the cost of finding and connecting the right expertise flexible and effectively is not that big anymore when you use tools like Linkedin and xTune for example (http://intunex.fi/xtune). A bigger problem is that the culture eats the technology for breakfast. In order to develop more flexible and efficient organizations we need to move from command and control -style leadership to more inspire and involve -style leadership.

  3. Riitta,

    Thank you for adding such excellent context and extending the conversation. Human capital used for commercial purposes must be categorized. There is much debate around said categorization. The existence of the category “knowledge workers” is seemingly one we can all agree on. The concept of Human as a Service is likely easier to apply to knowledge workers over categories that are more physical in nature. Ring fencing the conversation around knowledge workers helps to digest the somewhat foreign concept for Human as a Service.

    -R

    • Thank you, Richie! Indeed, this requires new kind of perspectives and thinking – and lots of discussion, as you said. Have you written about the different functions & roles – how the attitude and maturity for this kind of thinking differs?

  4. I have not written about functions and role publicly but have spoken, researched and pontificated about said perspective extensively. The HUaaS post was one of my first blog posts in thought leadership. I plan to post more of my ideas and will notify you if interested.

    Happy holidays,
    -R

  5. Pingback: Achieving a Stateless Workplace | Collaborative Planning & Social Business

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