Segmentation: Not For Customers Only

These days, most of us know that if we aren’t segmenting customers in order to understand needs, retention patterns, expectations, profitability and so on, we can’t draw a straight line between our revenue generators and the results we want to achieve.

I’m reading an excellent book by Jac Fitz-Enz titled The New HR Analytics and, no, it’s not for HR practitioners only otherwise, I wouldn’t be reading it. The book is essential reading for those responsible for delivering results. Isn’t that all of us?

Dr. Fitz-Enz suggests that organizations are at the last gasp of the Industrial Age in terms of how we plan our workforces, improve our processes, use data and design our work. Trying to steer a new course using old thinking isn’t going to get us where we want to go. For example, he recommends capability planning, not workforce planning to support a business strategy. Workforce planning involves filling the same kind of jobs with broadly the same skill sets as we have now. Capability planning involves segmenting current and future skills into four categories:

Mission Critical: These skills are key to ongoing success and are necessary in any function; what Fitz-Enz calls a “make or break situation”. (Think David Petraeus)

Differentiating: Based on your current strategic direction or one that you want to execute on, what capabilities will give you a competitive advantage? These skills are similar to Mission Critical but not identical as their impact on the business is unique. (Think Steve Jobs)

Operational: What skills do you need or will you need to keep the company functioning? This is capability without which you would be less efficient, less productive and less effective.

Moveable: This is a critical segment. As the environment and a business’s response to it changes, the work changes but skills often don’t keep up with the change. The result usually is a build up of unnecessary costs and when they become a significant enough drain on results, leaders are faced with massive lay-offs and costly re-structuring.

Thinking "capability" and not "workforce" shifts the paradigm in terms of how your business acquires and builds necessary skills. You may hire Differentiating skills but bring in some Mission Critical skills on an as needed, project-by-project basis. You may outsource some of your Operational skills and will need to look long and hard at Moveable skills.

This is not a once-in-a-while event; it’s an ongoing process of scanning, evaluating and updating your game plan.

There is a growing body of opinion expressed by thought leaders like Jac Fitz-Enz and others who believe that what has worked in the glory days of the Industrial and Information Ages will not work in this Knowledge and Innovation Age. Tomorrow is already here; we should be asking the right questions about our capability and skills; otherwise, we run the risk of becoming irrelevant.

Are you caught between the Industrial and Innovation Ages? Have you started building capability or are you filling jobs?