The New Normal: Put Employees at the Top of the Value Pyramid

At Unstructure.org’s 5th Annual Global Meet in Orlando last week, Vineet Nayar, CEO of HCL Technologies, delivered an extremely compelling message in his Opening Address. He described how, in the new reality for any organization to successfully attain business goals in a post-recession world (“The New Normal”), it must first invert its value pyramid and place employees at the top, creating an environment where the employees are the initiators of transformation and the managers are the supporters who make that transformation reality.

Although, you might think this is not a novel business approach, within the context of Unstructure.org’s MENSA-type thought leadership discussions and within the context of the “The New Normal,” this message really resonated into four main points at a much deeper, more personal level.

The New Normal 1: Value is Created in the Interface of the Employees and the Customers

The learning from HCL’s transformation journey started five years and seven days ago, and is very relevant in addressing the new normal. The value zone in manufacturing was very closely aligned with the control zone. With this philosophy, what happened is that you have the control leg and the value leg and both of them are working together. And you run faster than everybody else. However, over time, what really happened is that things changed. The service economy and the knowledge economy grew. What changed? The control zone remained where it is but the value zone moved closer to the customer. So, what is the value zone? Value is created in the interface of the employees and the customers. Whether it is an airline industry or an IT services industry or a retail industry, that’s a value zone. Once the value zone moves away from the control zone, organization structures became irrelevant.

The New Normal 2: Look UP for Change, Not Down

So, if what you do is challenging, what is the mega idea? I think how you run the company could be very, very interesting to think about. And we have learned that from Southwest Airlines, from Starbucks and from the experiments which we have done in HCL – what you do and how you do could be a very interesting way of thinking about change. So, how do you execute the change in how you run your teams? If we outsource our thinking and believe that the real responsibility of bringing about transformation really belongs to the CEO, I think we’re making a mistake. Each and every manager can bring about a fundamental change in the way he runs his company and teams, and I think he will succeed significantly more than if he looks up to somebody else to bring about a change.

The New Normal 3: Create a Star Organization by Maximizing the Value Created in the Value Zone

If you look at the control pyramid, which is very critical in running your organization, I think you have to leave it intact for governance reasons. But if the value pyramid could be inverted, we have to ask three questions of ourselves. Where is the value of the company being created? In the interface of the employee and the customer. So, what is the business of the company? To maximize the creation of the value in that value zone. So, therefore, what should be the business of the management of the company? To maximize the value created in the value zone. If all companies focus on that, they can maximize the value that is being created in the value zone and the management will be infusing, encouraging, enabling, rather than controlling and reviewing.

So, how would organizations work? There is a pyramid structure which is a control structure. And then you create a reward structure, which is a value structure. And you will create, what I call, a star organization. So, the control structures continue to remain. However, for value accountability, the management and the manager becomes a servant, or are accountable to the employee as the employee is to him. The moment you do that, you create the value zone and the control zone comes closer together, and the explosion of growth happens as it happened in HCL. So, if you remember what we said in the last GCM at HCL, we do believe the recession is an opportunity not an excuse. And therefore, we grew 21 percent even in the recession. We are the only IT services company that grew.

The New Normal 4: Energy from Your Employees is More Valuable Than Fear Delivered by Your Competitors

We launched no new idea, no new service, no new geography; nothing new. And yet, all of you supported us to grow our business, because I think you saw the passion in the eyes of our employees.The energy the employees were exhibiting was a lot more than the fear which some of our competitors were delivering in your value zone and you saw us as a solution rather than as a problem. And with that little change, I think, we could deliver significantly larger value for you, because we inverted the value pyramid in the organization and we made us accountable to the employees who were delivering the true value for you.

You can read the full text of the Opening Address here.

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