Establishing an Organization Guidance System
In this episode of the HR Leaders podcast, I'm joined by my guest Norm Smallwood, who is a partner and co-founder of The RBL Group. His research and consulting focuses on helping organizations increase business value by building organization, leadership, and people capabilities that measurably impact market value. He has written extensively about leadership and organization effectiveness in eight books and over a hundred articles.
Episode Highlights
How Norm's relationship started with Dave Ulrich
How Norm & Dave are constantly disrupting themselves
What is RBL.ai?
How does it work practically?
Why hasn't something like this been done before?
What are your aspirations for a system like this?
How a freemium model benefits everyone involved
Why RBL.ai is an agnostic solution
A look at the online assessment
What the technical side looks like
Why it's hard to stop doing what we do well
How COVID has become a catalyst
Podcast Transcript
Christopher Rainey: Hi, HR nation. Welcome back to another episode of the HR leaders podcast. The show where we explore the future of work with industry experts and HR executives from the world's leading global brands. We have a very special guest on the show. We're joined by Norm Smallwood, who's a leadership organization design and HR expert and co-founder The RBL group. How are you doing, Norm?
Norm Smallwood: I'm doing great. Good to be here, Chris.
Christopher Rainey: I can't believe that before we got started, for those who are listening, that I thought your background was a green screen. But it’s actually the coolest Airbnb of all time. Tell us more.
Norm Smallwood: Well, I'm visiting my mother in southern Alberta, she just had some cancer surgery. And so I needed an Airbnb. And this one is a small Airbnb. It has a bed and this room. So, it's perfectly set up. I don’t know if you can see, but there's a 100” screen.
Christopher Rainey: That's what you need in there.
Norm Smallwood: 100 inch screen setup for Apple TV and Netflix.
Christopher Rainer: That's what you need, a soundproof room. What a coincidence that you’re joining me on the show today and you happen to be in an Airbnb with a soundproof room and 100 inch screen, it couldn’t have worked out any better. Cool, thanks for joining me. It's really a pleasure to have you on the show. See, for some time now. I've been, you know, speaking with your partner in crime, Dave Ulrich for many years. Now, I finally get to meet the man that does all the work in the background while I Dave gets to see you get on a landline. Tell me more about that relationship. How did that start?
Norm Smallwood: You know, Dave and I went to the same graduate school but separate. He was a few years ahead of me, and we had a common business school professor named Bonner Richie. He decided that we should know each other, and we're on a faculty board and that resulted in us writing a book with Jack Zenger called Results-Based Leadership. That became the beginning of a very long and productive partnership that started in 1999.
Christopher Rainey: Wow. And that's what RBL stands for?
Norm Smallwood: Yeah, Results-Based Leadership.
Christopher Rainey: Yeah, I don't know why I asked Dave that before, because I think I found out for the first time on our call our first call was I, oh, I didn't know that was what is stands for
All these years. I should have already asked that question
Norm Smallwood: Everybody thinks it's really big losers, but
Christopher Rainey: One thing I love about speaking to people as yourself and Dave is this constant desire to disrupt yourselves to reinvent yourselves. In fact, you know. Only last week when Dave was on our summit. He said, “You know, my old books? Rip them up and throw them away.” I was like, “What?” He was like, “We've come a long way since then.” And it's actually really refreshing when you hear that. How have you managed to constantly innovate and, you know, disrupt the norm after so many years of working in this profession?
Norm Smallwood: The truth of it is, is that we have really been driven by data even more than theory. And so, we’re constantly doing research on things. Like right now, we’re doing this HR study with HR associations across the world and with the University of Michigan; and, every three or four years we disrupt what we think through that data. We've had people from, especially from, larger firms that have joined us and have built a practice around the data and sort of time one. Our education programs, our consulting all shifts probably 15-20% every single time we do that study in HR.
Then we did the same thing in the leadership space when we were doing the top companies for leaders. We've been sponsored in Asia by the government of Singapore to do different studies and Southeast Asia, and it keeps disrupting ourselves. We're doing the same thing now, where some of our favorite models have been challenged based on the results. And it's both exciting and discouraging when that happened. But it's certainly disruptive. It's kind of nice to create the conditions where others are fast followers to us disrupting.
This one we're doing now is probably the most disruptive that we've had. And that's why Dave would have made the comment about rip up the books.
Christopher Rainey: Yeah. So, to set up a little more, for those that aren't aware, you've just launched the Organization Guidance System: rbl.ai . I noticed is something that you and Dave and the team have had in the works for a while. I can only assume that Covid-19 accelerated that.
Norm Smallwood: Covid-19 gave us the time to do it.
Christopher Rainey: Because you finally had some time.
Norm Smallwood: Probably 60%- 70% of our business—like many, once Covid-19 hit—it just changed the rules of the game significantly.
5:25- Christopher Rainey: And so what is it for everyone listening, what is the Organization Guidance System? Explain that to everyone.
5:31- Norm Smallwood: Most companies invest about 1% of their revenue on people and organization initiatives. And those people and organization initiatives are our leadership, HR, talent, and organization capabilities. Our metaphor for what we're doing is a portfolio. So it's an organization and people portfolio representing those dimensions that I just went through. The other side of it is that we link those initiatives directly to business results. And the reason that we feel like we've got a unique opportunity here is because this notion of being results-based, and focusing on outcomes, and outside-in started with Results-based Leadership, the book that we wrote and then followed on with a number of other books: Leadership Brand, on the customer; Victory through Organization, on capabilities; How Leaders Build Value and Leadership Capital Index, on investors. So our work, and the IP from our work, is really consistent with this idea. And we've just pulled it all together and put all of the IP that we've developed over the last 20-30 years is baked into this portfolio logic.
7:02- Christopher Rainey: And how does it work for everyone, you know, from a practical sense. You know, without being too complicated. People will be listening thinking, “You know what, how's it work for practices,” and what is it?
Norm Smallwood: Typically, what people do today is they do an assessment. So let's say you were going to do a leadership assessment. When you got your results, your results would be best practice-type results. So, you'd compare your scores to either your own scores over time or usually there's some kind of a global benchmark. And when you get a global benchmark to your assessment results, you either fix weaknesses or you build on your strengths and each of those take you a little bit different directions.
This [Organization Guidance System] takes you in a little bit of a different direction. We found a third alternative, which is to say rather than to start with the activity and to see if it impacts something, we start with the outcome. We think about financial results, strategic results, customer employee results, or community results CSR results, then we start with those and people do the same kind of an assessment that we've been doing for years that before led to the either fixing weaknesses or building on strengths that now we can, at the end of the assessment, we can say, depending on which outcome you're looking for we identify the dimensions of these Leadership, Talent, HR capability pathways, and the specific dimensions of the pathway that will deliver the specific results you're looking for.
Or a few times we found that it's really hard for people to pick what their outcome is. There’s such a strong logic around starting with the activity and then going to the result. But, sometimes we’ll say, “Okay which of these areas most impact all your results?” And so there's even a narrower set of dimensions, and when I say dimensions I mean if you were within leadership we've got five dimensions of leadership. So, we've got building a business case, having a leadership profile, measuring, investing, managing reputations, and so on. Talent has nine. Organization has thirteen. HR has nine.
So, we not only tell generally leadership will have an impact but where in leadership, or where in talent, or what in HR will drive which specific outcomes? He started with disruptive. This is a very disruptive logic, you know, in some ways, has been so disruptive that it takes a few times hearing it to get it.
Christopher Rainey: Yeah I get it and I appreciate it from your point of view. It’s so ingrained in your mind, but having to simplify it for the listeners. So just to be clear, there’s four key pathways right? So, you've got talent or capability, HR effectiveness, and leadership. And then underneath each of those you have multiple subsections.
10:27 - Norm Smallwood: Yeah, that's right. And those subsections are the IP that we’ve developed in each of the four pathways over the years and so when people get their results, they’re very specific. The IP that we've developed in each activate pathways over the years and so when people get their results. They're very specific.
10:41 - Christopher Rainey: And actionable.
Norm Smallwood: And actionable, that’s exactly right. You've got it.
Christopher Rainey: So, why has no one done this before?
Norm Smallwood: That's a great question and we're really happy right now that they haven’t. You know, we started with this years ago. I mean, this has been our holy grail for 25 years. Dave and I have written every book and every article that we've written starting with Results-Based Leadership has been talking about this idea of “outside in”. It's about starting with the market and your stakeholders in the market. Again, nobody's done it before, because people don't start with that. Most is inside out, right? So, when we talk about leadership, it's leadership inside the firm. If we talk about culture, it’s what culture is, its values and behaviors. When we talk about culture, we’re talking about how leaders connect employees to customers, right? So, it's different. We started in a different place. And I think that's probably the right answer.
We've been very psychological in investor and in our initiatives around people in organization. And this is starting with business, not with psychology. Psychology is still important. The individual is still critical but it’s just starting from a different place and you get different results.
12:06 - Christopher Rainey: Yeah, and I think that's exactly why many of our listeners and HR partners around the world have been drawn to you on a day's work for so long. That's really the direction that we're moving especially with HR. We’ve come a long way since, I've only been in this game for 15 years, so I can only imagine where you saw it come from, not that I want to age you, to where it is now. It's come a long way, right from where it started?
12:30- Norm Smallwood: Years ago, I had a guru in HR retire. I won't say who it is, but when he retired, after a long career, written many books, we were talking and I said, “Well, what's your biggest regret about leaving?” And he said, “I still haven't got HR people to focus on the business.” I mean, that was 20 years ago that he said that right after his career.
Christopher Rainey: Of still people saying that.
Norm Smallwood: People were saying that, yeah.
13:00- Christopher Rainey: Well, what are your overall aspirations for the Organization Guidance System?
Norm Smallwood: It was great of you to start with disruptive. We really see the COVID world has started a disruption that we would like to continue. We started with the results that we would like to change how people approach our four pathways: leadership, organization capabilities, talent, and HR. And so, we’ve started this so that people have a free version.
And in that free version, we'd love as many people as possible to come in and use it. In the free version, you get very specific results that will be very helpful to your organization. And again you said rbl.ai, go free! You know, try it out and we hope that by creating this free version we can get a lot of people to use it. We used to charge for all of these assessments, right? Our business--
Christopher Rainey: That’s something for the people listening right now to definitely take advantage of that right now before they change their mind.
14:08- Norm Smallwood: And we, so not only is it free, you know, the results that you get to are really useful diagnostics that will point in a direction that will get more results. And so what we want to do is scale this globally and change the way that, you know, to convert people to our “outside in” way of approaching this.
And really for the first time, have HR and business leaders really focused on very similar outcomes. You know, we can get out of this argument about how HR-- what is the value of HR and what are the things that we can do to manage this portfolio better?
I’ll go back to one other thing I said just to be really explicit. So, if you have a $10 billion organization in revenue. So 1% of 10 billion is 100 million. And so we're saying we can show you how to improve that hundred million dollar investment that your company has in HR. If you’re a $1 billion organization obviously, 10 million. Just scale it down. Just do 1%, and again, you should be able to get at least a 10% better return either by focusing on the things that we recommend or by not investing in things that won't have an impact. Either one is going to have a positive result.
14:42- Christopher Rainey: And just to be clear the value for you in terms of giving it away is it's also enriching your data, right, and then don't all have to continuously improve and it provides more insights? Is that right, I'm sorry.
Norm Smallwood: No, that's absolutely right. And we've got a subscription model. People can move and get even more value in the subscription model. Yeah, but what was so hard for us pre-COVID is that we, when we were thinking about-- when our business model was selling the assessments and then getting work based on the results of the assessment, it just changed the dynamics. But yeah, now in this “freemium” model, I guess is the term for it, we get a huge amount of data. The results get for us and for everyone that participates, it just gets better and better. Right? Because we can more accurately determine which initiatives have how much impact and where on these business outcome areas, your business results.
16:50- Christopher Rainey: It also means in this new model yourself and the team can impact so many more people all around the world. This model’s scalable. You know, your previous model is not certain. You’re constricted on time and location, etc.. The work you traditionally did but this you can really impact millions of employees and businesses around the world. And it's scalable.
17:15- Norm Smallwood: And the size of the business doesn't matter, right? So, before if somebody wanted to work with RBL , and I mean what's been fun we've had Thai companies and Indonesian companies that are small companies that can come in and use this “freemium” version and get results that they never would have had access to. At least through us, because they can’t pay for it.
17:40 - Christopher Rainey: Everyone has access to information now and they want to take that step further. They can do that with you. But I think the approach you’ve taken and especially with all the years of research and IP you have behind it, I think that's where you have a unique approach is that you have the IP right and you can’t buy that.
18:00- Norm Smallwood: Yeah, we're not making this up right? We didn't create a technology platform and then figure out what the right content was. I mean, just one other comment on it again, which is so different for us is that we’ve also said that we're going to be solution agnostic.
So if somebody, and people have been surprised that we've said that too. And what I mean by solution agnostic--
18:30 - Christopher Rainey: You mean that you can recommend a solution off the back of that.
18:35 - Norm Smallwood: Yeah, they don't have to use RBL for the solution, right? Which whenever we identify as the dimension, or the area with the highest impact where we'd love to work with them, but they may have their favorite consulting company or they may want to do it on their own. They have a team of, you know, highly qualified people. And again, that's just not what our former business model was. I mean, so it's scalable and we hope to overtime be tracking, you know, the types of-- not over time, we're already tracking it in terms of our implementation inside companies in the subscription model. So, we'll be able to share that info. So, if you wanted to improve the employee engagement and track it, what kinds of initiatives have the most impact on customers or what kind of initiatives have the most impact on financial results and which consulting companies were able to have more impact than others? We want to be able to recommend who the best in the world are to do whatever you're doing, or what their approach was that will enable you to do it better. So again, where we are stepping away.
19:50 - Christopher Rainey: You’re just at the beginning aren’t you? Seems like you're just at the beginning of this. There’s so much. Yeah, there's so much. And that's another thing that always inspires me is just a continuous energy that you all have to just--the passion after. And again I don’t want to age you and Dave, but after all these years, the passion and energy that you bring to your work. It just, it just isn't it. I don't think I could ever see you and Dave ever retiring.
20:19- Norm Smallwood: Now we both talked about that and now we're working on this, we're saying, “Hey, THIS IS SO ENERGIZING for us.”
I mean, Dave and I talk multiple times a day, and are so excited about what we're doing. I mean, for us, we both say this for both of us the pinnacle of anything we've done before, because we really hope that it's... Dave always talks about “ideas with impact”... that it's creating sustainable ideas with impact because someday we won't be around to continue this. I don't expect I’ll be doing this when I’m 90. But for the next few years, I can't imagine anything more fun to do than what we're doing here.
21:10- Christopher Rainey: Just out of curiosity, how long does it typically take to take the assessment
21:15 - Norm Smallwood: Oh, good question. You know, we've got four pathways and each of the pathways take between, depending on which one you do, between 12 and 15 minutes. They're very quick. And so somebody could come in and just do one of the pathways, you could say, “Gee, I'm just interested in leadership or HR.” And so the HR pathway, I think, only takes about 15 minutes. Or you could do--I think the leadership one takes 12.
21:48- Christopher Rainey: Okay, so that’s not a lot of time. For the value.
Norm Smallwood: Yeah, the value is embedded, so we’d really love you to come in and do it.
21:58: Christopher Rainey: So yeah, I'm sure some people are wondering: When did Norm and Dave learn how to code?
Norm Smallwood: You know, I should have talked about that. We are partnering with Alan Todd and he’s the founder and CEO at Corp U, and Allen has been through the tech side. Right now he's got a tech-enabled development business. But he's been through the broader kind of building a tech business. And this is a joint venture Corp U, and believe me, once we get into this implementation, where we're going now, the front end of this was our IP from RBL but all of the back end is really Corp U and it’s so nice to have a partner that knows how to do things that you don't.
22:54- Christopher Rainey: Yeah, sounds like a match made in heaven.
Norm Smallwood: I think so, yeah.
Christopher Rainey: How did that, without going into too much detail, how did that relationship come to life?
Norm Smallwood: Well, Corp U’s business model is that they go to people who primarily write books, so authors of books. I'm not sure they’re broader than Harvard Business School Press, but Dave and I've written multiple books from Harvard Business School Press and every time we write a book, they came and offered to put it on the Corp U platform and we never did it. We always, you know, in the face-to-face model pre-COVID, we were just never that interested. And that's how we knew them and like them and we were in the, again in the pre-COVID, we were talking about beginning to put some of our education materials on the Corp U platform. Since COVID, we've put everything we do on Corp U beyond anything to do with OGS but yeah that's how we met. It was again, it wasn't a competitive but a very collaborative type of partnership. They had very different skills than we did.
And Al is just a delightful guy and his sister too and their team. They’re just really good to work with.
24:22- Christopher Rainey: It's incredible because timing is almost everything, isn't it? Isn’t it with these things? And no one could have foreseen where we are now and where we've gone, but those are the relationships that you kind of don't really understand the value until these moments happen where you're like, “Oh, it's the perfect opportunity for us to collaborate and create something truly special and bring your dreams and aspirations to life.” And then you have someone, the amount of times I say to Shane, my co-founder, “We need a CTO,” even though we're a business that does physical events. The amount of ideas we have around the applications in this space of HR technology, but you need that skill set. Which is a very, you know, so often set of skills to have,
25:10- Norm Smallwood: You know, you need the skill set and you need something really disruptive to happen, like COVID, if you're really going to push it all the way through.
My last meeting that I had before COVID was classic. It was with a large tech company that had been disrupted by the cloud. And in the slowing of Moore's Law, which is what's happening with every tech company. And so, the conversation was about how they needed to change their business model because with everything going to the cloud, having equipment as your business model. So, it's the old notion that Clay Christiansen, his idea of the Innovator's Dilemma. What you do really well and what we did well, what you're saying you and Shane did really well is really hard to stop doing and start doing something else. Because you know how to do it and it works and it's really hard to believe that something's going to change what you've learned how to do and customers are buying and it's so exciting. So, the skills, plus the opportunities seem to be and believe that you can change rather than it will all go back to the same way. That's just classic Innovator's Dilemma, right? It's hard for businesses, it's hard for individuals to stop doing what made them successful but do something new and even when they've got the skills. You need that confluence to do that and you and you guys have changed over the years, you know, dramatically in terms of…
26:55: Christopher Rainey: We have. All the other things we're doing now and we've never been more profitable, which is crazy to think because eight, you know, eight months ago 80% of our business disappeared overnight. You know, physical work with clients and I'm similar with yourselves. And a lot of the ideas that we're working on now, we already had them and we already built them actually they were sitting on the shelf. Not physically, but, you know, sitting on a shelf with all these new ideas. They're not necessarily new. It's just that we never thought that they would work or that it would add as much value, we underestimated the value of it. And I've got to the point where, let's just throw it all out there into the universe.
And let the audience decide and let our customers decide. And to our surprise, these are things that people have been wanting for--longing for a long time. We're now seeing this in the workplace, right? How disruptive it’s been to changing hundreds of years of ways people have been working have now been disrupted in the matter of eight months, nine months.
And I don't think we're ever going to go back. But I do think it's a sustained disruption, which helps. I think if we had a couple of months, and then we would have ended COVID and COVID disappeared. You know, I don't think everyone would have just reverted because it’s been like what a year now? Almost?
28:20 - Norm Smallwood: It started February, right? So, it's coming up to a year. Yeah.
Christopher Rainey: So a year. I think that is really where kind of the realization came from. Unfortunately, some companies are only now starting to shift and they're the ones that are kind of going out of business, or as I said to the team, “We can either sit back and see how this plays out. And, you know, furlough all of our employees or we can go full steam ahead.” Whilst everyone else is trying to figure this out. Let's just go and at least we were controlling our destiny.
Norm Smallwood: Yeah that’s an excellent solution!
Christopher Rainey: Yeah yeah and the team were unanimous. It wasn't my decision. We did it together as a business and they were like, “I don't want to sit out and hope and rely on” You just don't know, right? Again, like it's just and I saw what happened with-- even though I was pretty young--I saw what happened in the 2008 crash. And it was those companies that kept continuing and pushing and innovating that come out to be some of the world's most well known profitable companies of all time and the others, some of the biggest giants actually just fell right from the top of the mountain during that period. So I was like, hey, I’m not going to let history repeat itself in my business. It’s like let’s take charge of that as well. So it's really cool to see how you've innovated and other companies around have pushed through and reinvented themselves. The whole “innovate or die” became very real for everyone.
29.46: Norm Smallwood: Well, and it took us a long time to get together, but really enjoyed the opportunity to talk about it and again if you’ve got listeners that just want to try the free version out and the difference between our subscription model and our free model is that when we shift to subscription, you're comparing your results to your own business. So you're bringing it inside and everything is focused just on you as opposed to in the free version, we're building the data from a consolidated group, so it's the result of all of the companies that are participating versus the scores that you get in your activity. So both are really valuable, but to take it even one more step in value in the subscription model.
30:40 - Christopher Rainey: Is that, is that for like APIs that don’t connect into systems that these organizations have? That way you can use it to gain the data that way? Is that, is that how it works?
Norm Smallwood: Yes, yes. So we're monitoring both the pathways and the dimensions within the pathways. Like what are the solutions or projects that you're using to improve? And we're monitoring, we're linking those to the business, the outcome API. So if you have, you know, net promoter score for customer or EBITDA for profitability, right?. So, the company picks the measures within the outcomes. So there's a mapping exercise and then we can-- again everybody's worked on levels of measurement and we're trying to take it to the ROI level. But we’ll also measure along the way the, you know, satisfaction and sort of intervening between specific outcomes and the and that like satisfaction and so on. We’ll measure all of that in between. That's the only way we can get all the way to know whether a project or solution that you tried really did have impact. And so they would get guidance and scorecards, you know, along the way, and be able to really track and get specific guidance on where to go next. And again, we're keeping the price of the subscription way down as well. So again, we’re really excited about this and thanks for the opportunity here to talk about more.
32:36- Christopher Rainey: That's very exciting. I'm really happy to have you on the show and share to the listeners.
So, if you're listening now go ahead over to rbl.ai check it out. It's free to take 15 minutes, 12 minutes if you’re fast so do that as well. And where can people connect with you Norm if they want to reach out to you personally and say hello?
32:55- Norm Smallwood: Would love to hear from you. nsmallwood@rbl.net, nsmallwood@rbl.net.
Christopher Rainey: Amazing. I'll make sure to link in the description for anyone listening as well. And also we can connect with you on LinkedIn as well?
Norm Smallwood: Absolutely. Yeah, love to hear from you.
Christopher Rainey: Perfect. Well, thanks for coming on the show Norm, means a lot. And I'm super excited for you and Dave. Genuinely really happy for you both. And I can see energy and passion that is kind of taken to a whole other level now so no retirement any time soon.
Norm Smallwood: No retiring. No retiring.
Christopher Rainey: How does your family feel about that? Come on, Norm. That's enough, now. Pack it up!
Norm Smallwood: I think my wife’s ready to hear. Although I think if I retire then I'd be around too much, right?
Christopher Rainey: Yeah, sure, GO BACK TO WORK!
Norm Smallwood: I think my wife, even though I'm pretty young, now she already knows I'm going to be a nightmare if I retire. So she's like, just keep going.
Norm Smallwood: You'll be fine.
Christopher Rainey: It's not work when you love what you do, though, right Norm?
Norm Smallwood: I think that's It really isn't. Like I said, if I wasn't getting, and I'm not getting paid to develop any of us, and I mean, it's just so satisfying to do it right in so many ways.
Christopher Rainey: Amazing. Thanks for everyone listening. Thanks for joining us. As always, if you're new to the podcast, please like, comment, share. Tagging colleagues, share the link with colleagues that you feel would gain value from the episode, apart from that enjoy the rest of your day and I'll see you again soon Norm.
Norm Smallwood: Thanks, Chris
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Email: nsmallwood@rbl.net
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