Optimism was not one of the 'positives' to come out of the 2012 annual meeting of the World Economic Forum in Davos, Switzerland which took place at the end of January. Much of the programme focused on the issues that are prohibiting a return to global prosperity, and two of the principal problems identified were unemployment and a shortage of highly skilled workers. When several hundred participants of one session were asked if 21st century capitalism was failing to positively impact on today's society, significantly more were in agreement than in dissent.
Yet on a somewhat brighter note, there was a general consensus among the hundreds of CEOs, thought leaders and public officials who attended the Davos meeting of the growing demand for high-end human capital, the expertise on which managing complexity and stimulating innovation more often than not depends.
It is one thing to agree that 21st century capitalism is failing 21st century society (the problem), it is quite another to come up with a solution. Obviously, the World Economic Forum was not the proper venue to conclude appropriate solutions, so it was not unexpected that attendees would come away from Davos with much to think about.
Unlike the West, economic growth in the East and other emerging markets continues unabated. From discussions I have had with several Asian executives, there is a widely held belief that their growth has not been, and will not be, based on imitating the West.
How prophetic given that "over here" business schools and management training programmes have actively encouraged managers to adopt the same processes and procedures as the 'best-in-class'. Even today, business gurus and industry commentators continue to play a role in peddling the same formulae from one organisation to another and from one industry to another. In the provcess, they have driven out differentiation - one of the keys to the success enjoyed by organisations in the East.
In 2012 we are now witnessing a breaking down of the way things are being done, both at a corporate and a political level. Many of the problems we face today stemmed from the global financial crisis that started in America in 2008 (a corporate failure) and from the current European sovereign crisis (a state failure).
At the corporate level, management in the West has, for years, widely adopted the concept that giving greater emphasis to core competencies results in sustainable competitive advantage. Many have supported the theory that by benchmarking and imitating the best practices of other companies, they can develop the required core competencies in their own organisation.
What they have failed to appreciate, however, is that practices that work well for other companies may not automatically fit equally well in their own organisations and provide similar benefits.
Understanding how the distinct functional components of the organisation - production, product mix, distribution and human resources - should be complementary and reinforcing has been overlooked, because senior executives have concentrated on other concepts to analyse and explain why organisations are effective. Their thinking has become compartmentalized and this has led to the adoption of practices that are a poor fit and work to their organisation's disadvantage.
The result is that companies have become, somewhat paradoxically, more and more alike, despite their best efforts to differentiate their offerings or set themselves clearly apart from the competition. It's easy to understand why executives from the emerging markets are not tempted to follow the ways of their Western counterparts.
Even with the growing demand for highly-skilled, highly talented workers, the recruitment practices of companies all too often produce more of the same old nonsense. There is an inherent concentration on ticking the right competency boxes - yesterday's competency boxes at that - rather than finding the people who can add value tomorrow. Questions such as "Why do you think you are the ideal candidate for this position?" only encourages candidates to respond with the same solutions they had applied to similar situations in their previous roles.
Despite the fact that people are often a major point of differentiation between organisations and are one of the major drivers in the competitiveness of an organisation, recruitment is a process which is frequently handled poorly and without clearly defined objectives.
What is generally not appreciated by recruiting managers (even though many will deny it) is the need for an in-depth understanding of the drivers behind the role or the personal attributes required to achieve medium- to long-term (rather than short-term) success in the role (or even what the medium or long term objectives of the role might be).
The usual course of events is that the recruiting line manager will adopt a previous job description which is passed onto the HR Department. A shortlist of candidates is then developed but, more often than not, the hiring manager is disappointed with the field of choice and ends up recruiting a candidate who is a close fit to what is perceived as the "right" candidate, a safe choice whose appointment will not rock the boat, but someone who is almost axiomatically less likely to be capable of driving change.
In order to create sustainable business models and solutions we need to be able to learn from the past and build on it to achieve more fluid and flexible corporate structures. Business leaders should take this opportunity (the economic turmoil) to clearly assess which business models no longer apply to their current needs and focus more on creating business models that are developed on long-term future needs.
Whilst driving change tends to be something that emanates from the top of an organisation, the "dare to do it differently" mentality should be encouraged from the lowest levels right up to the boardroom. At Davos 2012, the British Prime Minister David Cameron said: "This is the time for boldness. Fear of failure should not hold us back."
If an organisation embraces a clear desire to recruit in an "aspirational" way which may achieve spectacular results (but which also carry a risk of failure), then the recruitment process is an ideal point from which to start. Without innovation in human resources, a true step-change in innovation throughout the organisation becomes more difficult to achieve and businesses will not seize the exciting opportunities which the current turmoil has thrown up.
