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Why study HRM?

Practicing managers : Familiar with HR


processes, but get an explanation……

Why? Are we having this process.


What? Is it intended to achieve.
How? Does it contribute to the achievement of
organization goals.

Ex: medical test prior to joining.

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Topics to be covered
Behavioral Sciences
– Linkage with HRM

Organization
- Certain percepts / lowest common denominator

Strategy
– Difference between strategy and tactics
– Different levels of strategy
– Strategy in fast changing world: mechanistic vs complex
paradigm

HRM
– Definition
– Its relevance
– Its interface with strategy
– Major areas
2
Behavioral Sciences: Involves systematic analysis
and investigation of human behavior studied
through experimental and observational methods.
Organiz ational Behavior:
Ex: Understanding human beings.
– your project team member, and what makes him tick
– the set of relationships surrounding you and your team
member, including authority relationship
– small-group dynamics, working together to accomplish
well defined tasks
– Organization as a whole: its culture, processes and
ways of doing things that affect you, your member, the
relationship and the small project team of which both of
you are a part.
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Motivation

The basic motivation process:

NEEDS DRIVES INCENTIVES

Needs: get created when there is a physiological


or psychological imbalance.
Drives: Or motives are set up to alleviate needs.
Action oriented.
Incentives: Anything that will alleviate a need and
reduce a drive. 4
Motivation theories

Content theories: ways to analyse


individuals by identifying needs that
motivate their behavior. Maslow’s
(physical and conceptual needs) and ERG
(existential, relatedness and growth)

Process theories: seeks to understand


the thought processes that take place in
the minds of people that act to motivate
their behaviour.
Equity theory 5
Motivation

Motivation: describes the forces within an


individual that account for the

level (amount of effort),


direction (what he chooses to do when presented with a
no. of options), and
persistence (how long will he stick to exert effort)

of effort expended at work.

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Motivation

Job Performance?

• individuals attributes: capacity to perform


• organizational support: opportunity to perform
• work effort: willingness to perform

Linkage with HRM:


• Recruitment and Selection
• Job design, Right person in Right role,
Training, employee/labour relations, safety
and health
• Right Incentives : Performance appraisals,
Compensation and benefits, Developmental 7
Ex: ITES sector: attrition
What motivates people to stick around in company X?

Organization Development (OD):


– a planned effort,
– organization-wide
– managed from top
– to increase organization effectiveness and health
– through interventions in the organization’s processes,
using behavioral science principles and practices.

It is a complex strategy intended to change the beliefs,


attitudes, values and structure of organizations so that
they can better adapt to new technologies, markets and
challenges

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Topics to be covered
Behavioral Sciences
– Linkage with HRM

Organization
- Certain percepts / lowest common
denominator

Strategy
– Difference between strategy and tactics
– Different levels of strategy
– Strategy in fast changing world: mechanistic vs complex
paradigm

HRM
– Definition
– Its relevance
– Its interface with strategy
– Major areas 9
What is an Organisation:

– Collective
– Purpose
• Brings together an array of resources and applies their
specialisations to a common end-product.

- Open system : they take input from the environment,


transform them and discharge outputs in the form of
products and services.
• Organisation and its ecosystem Ex: watch & mobile
• Second law of thermodynamics, entropy

- What distinguishes business organisation?


• Ramdev vs Brinda Karat

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I. Business organisation:

Money in ~ Money out

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II. Purpose of a business
Is it solely for profit?

Business organisation has to run for profit.


But, running business only for profit tends to be
corrosive.
Profit with values is the right approach.

Refer book Built to Last.


Ex: Managing the expectations of variety of stakeholders of
the business : shareholders, employees, community,
society at large, environment, government.
Microsoft: computing power at every desktop
Pfizer: medicine for river blindness
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II. Purpose of a business
To create a customer.
Ex: tractors (horse that eats less and is always willing to
work), tape recorder (Sony).
A customer buys a utility, ie, what a product does for him.

To add value to the customer.


Ex: Intel and its faster chips. “Good enough computing”
Can you make an Eskimo your customer?
“what our business is, and what it should be”?
Customer: Who is he? Where is he? What does he buy? What
would he like to buy? 13
III. EMPLOYMENT ?

– Employment is a contract.
– Entails expectations from each
party.

Exercise: Tell me something about your


relationship with your employer.

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Employment
Employment: nature of relationship between
individual and firm has components that makes it
different from other contractual relationship

• Economic: pay-effort bargain.

• Legal: network of common law and statutory rights and


obligations governing both the parties to the contract.
– Various employment Acts and Rules of India.

• Social relationship: members of social groups.


Responding to social norms that influence their actions in
place of work.
– Mentorship

• Psychological relationship: dynamic two-way exchange


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of perceived promises and obligations between employees
Psychological relationship: dynamic two-
way exchange of perceived promises and
obligations between employees and firm.
– These are shaped by the social and economic
context, leadership, communication and HR
practices.

Challenges for managers: disbalance


– Communication through different voices ~
different beliefs about reciprocal promises and
obligations.
– Ensure that anticipated exchange of value is
confirmed.
• Boss promises, but cannot deliver.
• Training facilities
• Cutting edge work

Example: effective communication reduces breach


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of psychological contract.
IV. Input ~ Output ~ Outcome

Ex: from corporate social responsibility sector

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Effective Manager?

• performance efficiency: measures how well


resources are being used. focus on efficiency and cost
containment. Means – ends relationship is certain. So,
managers monitor & control performance.
Input ~ output.

• performance effectiveness: measures whether


important task goals are being attained. Focus on actual
result. Means-ends relationship is uncertain. So,
managers need to engage worker’s intellectual capital,
commitment and cooperation.
Goal attainment. Outcome
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Middle managers:

• accountable to higher level for work unit


results, and dependent on the efforts of
subordinates and other team members to
make this happen.

• link between brains and its hands.

• depends on them for organizational


performance

Increasingly, they are taking up leadership 19


High performance=effectiveness+efficiency

Good
Effective and efficient:
Effective, but not goals achieved
Performance efficient: and resources well
Effectiveness some
How well are
used: area of high
resources wasted
productivity
Goals being
attained?
Neither effective nor Efficient but not
efficient: effective:
goals not achieved; No wasted
Area of true resources, but goals not
resources wasted in the
managerial achieved
success process
Poor
Performance efficiency Good 20
How well are resources being used?
V. WHAT IS MANAGEMENT ?
Role of a manager (resource
based view)

Finance Plan

Infrastructure Acquire

Machines Deploy
Manager
Manpower Monitor

Vendors Assess

Clients Develop

Permits…….. Exit

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Management – as science, politics,
control and practice.

Management as science Management as politics


Successful managers are Successful managers are those
those who have learned the who work out and cope with
unwritten laws in the
appropriate body of
organisation. (knowledgeable agents
knowledge, skills and working in dynamic arena,where
competencies. (PODC) resources and outcomes are shaped by
actions, networks, alliances)
MANAGEMENT
Management as practice Management as control
Successful managers are those Successful managers are
who can work out and cope those who can exploit and
with contradictory demands control resources.
and purposes. (activities aimed at
continual melioration of diverse,
(structures and strategies are
fragmented and contested complex instrument and techniques to
practices) Eg, INTEL control and raise productivity) Eg,
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Manufacturing
Topics to be covered
Behavioral Sciences
– Linkage with HRM

Organization
- Certain percepts / lowest common denominator

Strategy
– Difference between strategy and tactics
– Different levels of strategy
– Strategy in fast changing world: mechanistic vs
complex paradigm

HRM
– Definition
– Its relevance
– Its interface with strategy
– Major areas
23
What is strategy?

• Strategy is the creation of a unique


and valuable position, involving a
different set of activities.
• Strategy is making trade offs in
competing.
• The essence of strategy is deciding
what not to do.
• Strategy is creating fit among a
company’s activities.
Michael E
Porter, “What is
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strategy?”, HBR, 1996
Strategy:
1. A process through which
- the basic mission and objectives of the organisation
are set, and
- the organisation uses its resources to achieve its
objectives.

2. Concerned with the definition of competitive advantage


and the development of activities, resources and
capabilities that enable the firm to sustain advantage in
a changing world.

3. A bridge between high-order goals (vision/mission) and


concrete actions (money out)
Tactics = actual means to achieve the end

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Strategy: its three levels
- corporate
values
financial goals
non financial goals
- competitive
how a firm competes in a
given industry
- functional
marketing
financial
research
operations
HR, and so on.
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Strategy development process:

• Industry analysis – today and tomorrow


• Positioning – sources of competitive advantage
• Competitor analysis – past and predicted
• Current strategy assessment – relative position and
sustainability
• Option generation – a creative look at new
customers and positions
• Assessment of capabilities – positioning for future
opportunities
• Choosing or improving a strategy – position, trade
offs, fit
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Hierarchy of strategy

• Business Level: How do we compete.


Porter’s competitive strategy model (1985): cost
leadership, differentiation and focus.

Competitive advantage
Low cost Uniqueness

Competi Broad Low-cost leadership Differentiation


tive Target
eg, Wal-Mart (10 feet rule) eg, Levi’s
Scope
Narrow
Target
Focused low-cost Focused differentiation
leadership eg, Air Deccan eg, High priced boutiques

What would be the HRM practices in each of these companies?


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Topics to be covered
Behavioral Sciences
– Linkage with HRM

Organization
- Certain percepts / lowest common denominator

Strategy
– Difference between strategy and tactics
– Different levels of strategy
– Strategy in fast changing world: mechanistic vs complex
paradigm

HRM
– Definition
– Its relevance
– Its interface with strategy
– Major areas
29
hRm
Focus people as resources to be utilised
like any other resource:
management as a control

• labour is disposable commodity to be


bought and controlled.
• takes a “rational” approach towards
managing employees, that is, views it
as a any other economic factor, or takes
a marginal cost decision – invest in
labour or technology.
• Bureaucratic control, technical control
– Henry Ford: production lines 30
Manpower: peculiarities

Traits that people bring to the work place –


intelligence, aptitudes, commitment, tacit
knowledge and skills, and the ability to learn.

But, the contribution of this human resource to


the firm is both variable and unpredictable.

This, indeterminacy of an employee’s


contribution makes human resources most
“vexatious of assets to manage”.

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hrM
Management of people - Looks at
sophisticated ways of enhancing
performance thro’ forms of control that
are based on commitment rather than
compliance
Management as a politics
• “Commitment” strategies to ensure that
employee give an organisation its
competitive advantage.
• Needing to be managed ? To be
motivated to produce the best.

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Hrm
Focus on people as complex and valuable
members or stakeholders of the firm.
Management as a practice
• To be attracted, retained and developed.
• The sum of people’s knowledge and
expertise, and social relationship has the
potential to provide non substitutable
capabilities that serve as competitive
advantage.
• Characteristic of resource – value, rarity,
inimitability, non substitutability – drive
the competitive advantage.
Ex: knowledge worker 33
HRM is…..
HRM is the set of philosophies, processes and
procedures that a company uses to manage:

- The entry and exit processes in the firm


- The growth and development of employees
- The reward and recognition systems
- The total organizational climate for how
people are treated

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HRM is…..
The entry and exit processes in the firm:

Earlier: implicit psychological contract ~ life


long employment for loyal and productive
work.

Today: implicit psychological contract ~


create employability

Microsoft: Recruitment is every body’s business


AT&T: took advertisement offering good people
to other companies.
Make workers into suppliers.
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HRM is…..
The growth and development of employees:

• Training vs Development
Learning is a relatively permanent change in behavior that occurs as
a result of experience. Internalising and not acquiring facts.

- Make him able for handling a role, not a job.


Role: how does a successful employee looks in a particular setting.
part that an employee is expected to play.
- Fewer managerial positions for promotions up: so move
employee into a number of lateral positions.
- 360 degree feedback

Ex: Motorola : two weeks of mandatory training. Education is a strategic


tool here. As the Co. dominates its core market through expertise and
technology. Quick learning needed to enter new markets
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HRM is…..
The reward and recognition systems:
– Reward refers to all of the monetary, non-monetary
and psychological payments that an organisation
provides for its employees in exchange for the work
they perform.

Pay: an actual income in exchange for labour/effort.

Recognition: psychological income, or what makes


coming to work really worth while.

– Psychological contract : perceived incongruence?


notion of fairness?
tensions?
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HRM is…..
The total organizational climate for how people
are treated:

- Alignment with vision, strategy, competitive


advantage and function.
- HR paradigms

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HRM is…..
seeking alignment of the employment system
of a firm with the

• strategy,
• internal context, and
• nature of the circumstances (external
context) that an firm faces.

Integration is the key word. The set of


employment policies, programmes and
practices needs to be coherent and
integrated with above three.

Exercise: Give examples of contexts in Intel. 39


Each HR strategy represent a distinctive HR paradigm,
or a set of beliefs, assumptions and values that guide the
managers . One example:

Acquisition of
Internal
employees External

Outcomes Commitment Collaboration


HR Strategy (sales HR Strategy (IT)
Locus of
driven)
Workplace Paternalistic Traditional
control HR Strategy
HR Strategy (Govt
dept) (manufacturing?)
Process

Exercise: Link each strategy with external context.

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Changing contexts

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Characteristics of present day workers
Knowledge technologists:
• Their work is based on substantial amount of
theoretical knowledge which can be acquired
only through formal education, not through
apprenticeship
• Their job require putting formal knowledge to
work, and
• Continual updation of knowledge throughout
their working lives to keep it current for their
work.

Application of thinking power during production


process/service delivery!!!!

Ex: from a publication industry. Arvind plant at


Chennai. Bajaj plant at Chakhan 42
Changing expectations
Of workers:
• Allegiance to his branch of
specialised knowledge, so
• First loyalty is to others of same
profession???
• Thus, point of reference may lie
outside the organisation.
• Each is an autonomous entity,
who come together for project,
but can easily disband. 43
Changing expectations
Of workers:
• Organisation can therefore be
conceptualised as an collective of
autonomous units – workers.
• Organisation is defined by
interactions, relationships and
networks between these
autonomous entities, as well as
with outside environment that
create unexpected outcomes. 44
Changing expectations
Of workers:
• The success of organization
depends on potential power of its
workers, and how they interact to
produce something unparallel.
That is, there has to be a
mutually symbiotic relationship.
• With mobility, and self
confidence, no more adult-child
relationship inside the
organisation.
• People practices that tend to be 45
Changing contexts
• External contexts:
– Global integration
• Fewer tariffs
• Easy flow of capital, labour, know-how
• Interdependency
– Linkage to capitalist system
– Maturation of markets in developed
economies
– Technological change
– Political change
• New employment and environment laws
– Social change
• Aging population in developed countries
• Young population in developing countries
• Value system
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Changing contexts
• Internal context
– Educated work force
– Increased awareness
– More women
– Knowledge work
– Movement of labour across time and
space
– Competition
– Constant learning

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New forms of organisations

•Virtual corporation: a temporary network or


alliance of otherwise independent companies. Eg,
textiles industries of Italy

• More of a confederation: Loose network


together by strategy,etc, Eg a syndication, a cooperative

• Life span of organisation: Employees outlive


even successful organisations. Manual workers: working
life of say 30 years, before they wore out. Knowledge
workers : working life of say 50 years.

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New forms of organisations

• Ideas and partnership needed: Organisations


will build up on the incremental competencies of scores
of others to provide their services to customer. Ex:
Hollow Corporation

•Up-side down pyramid: Perspective that views


managers as helpers, coaches and supporters to serve
line managers to deliver to customers. Because, with
information, customer has the power. Ex: British Airways

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New forms of organisations

• Coming together of equals: Knowledge workers


need access to an organisation—a collective that brings
together an array of resources and applies their
specialisations to a common end-product. But, for
organisation, these are the main factor of production, the
primary capital.

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New forms of organisations

• Shamrock (three petal) organisation:


core group of workers with critical jobs, outside
consultants performing key jobs, and part-time
workers. Orgn don’t control them, don’t manage
them, but have to make them productive.

• Virtual workplace:

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Newer ways of working in organisations

• Workforce diversity: elderly, women, student,


global mix, high mobility

• New work options: job sharing, multiple careers,


part time

• Newer form of collectives: allegiance to their


specialisation, formation of a guild

• Non hierarchical: Knowledge is either relevant, or it


is not. So, instead of hierarchy of boss and
subordinates, it will be that of seniors and juniors.
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New forms of organisations

• Necessity to learn continually:

• Job is life: Earlier, mostly job is an means to an end,


now job mostly is an end in itself

• Social responsibility:

• Quality of work life:

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HR Strategy

Environmental/internal Business strategy


influences

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The Harvard Model (1984)
Stakeholder
interests
-Shareholders
-Management
-Employee groups
-Government
-Community Human Long term
-Unions Human resource resource consequen
management outcomes ces
policy
choices -Commitment
Strategy -Individual well-
-Competence
-Employee being
-Congruence
Internal/external -Organisational
influence -Cost
contexts effectivenes
-Human resource effectiveness
-Workforce s
flow
characteristics -Societal well-
-Reward systems
-Business strategy being
-Work systems
and conditions
-Management
philosophy
-Labour Market
-Union strength
-Task technology
-Law and societal 55
• What do HRM professionals do?
• What affects what they do?
• And, how do HR professionals do
what they do?

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Skills
Three related dimensions of HRM
•Communication
Functions •Legal
•Power
•Instructional
•Planning
•Interpersonal
•Staffing
•Cognitive
•Developing
•Technical
•Motivating
•Maintaining
•Managing
relationships HR
•Managing strategy
change
•Evaluating Matching Ps
•Exit Philosophy
Policies
Programmes
Practices
Processes

External context Strategy Internal context

Contingencies
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The components of the ideal human
organisation
Alignment of HR processes
to create ideal culture and
mindset to achieve strategy Strategy

Culture Long term


and mindset competencies

Core Organisation
processes structure

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The performance of the system is not the sum of its parts, but product of their interactions.
The strategic HR planning
process
Analysis of
Critical success factors

Trends
(threats, opportunities) Strategy

Strategies set in the Which executes the


criteria for the characteristics of: strategy……

Human organisation

The characteristics of the human Which creates the


organisation set the criteria for: human organisation…

Organisational initiatives
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Strategy: Planned vs
emergent
• Mechanistic models:
– Assumes that the future can be
known, predicted and to some
extent controlled by managers
– Emphasis is on intention – strategic
intent, stability and return to
equilibrium.
– Success depends on extensive
planning and design, accurate
anticipation of resistance to change
and overcoming
rational, linear, planned such
process,resistances.
where risk is
measured, evaluated and implemented 60
Strategy: Planned vs
emergent
• Complex models:
– Assumes that the future cannot be predicted
with any degree of certainty; instead it
emerges with its own distinctive properties
through random or unexpected events.
– Emphasis is on managing the show with
imperfect information, and at various levels
with high degree of accountability; nobody
has the “whole picture”.
– Success depends on tapping the ideas of
various groups of people, as they are in
touch with customers and changing
marketplace. Seemingly adhoc activities are
driven by people who have a sense of
advisingownership of ideas
and modifying being and
the direction put the
into practice.within
boundaries
which effective, improvised, self organized solutions can evolve. 61
Competitive advantage
-organisational capability: represents the
business’s ability to manage organisational
systems and people in order to match customer
and strategic needs. Ex: restaurant

In complex, dynamic, uncertain and turbulent


environment, this capability derives from the
flexibility, adaptiveness and responsiveness.

In less dynamic environment, the capability


derives from maintaining continuity and stability
of organisational practices.
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Complex paradigm:

• Keen to espy patterns in the seemingly


discrete sets of phenomena.
• Comfortable with incomplete set of
information, and is able to take small,
iterative steps rather than wait for the best
solution to evolve.
• Keeps on seamlessly moving between past,
present and future through simultaneous
attention and linkage.
• Doesnot believe that there is one best way;
instead uses “maps” as thinks fit in the given
situation.
• Believes that situations and results that are
unknown and unstable cannot be analysed
using present day’s tools and frameworks. 63
Complex paradigm:
 Encourage new ideas
 Stimulate innovative approach.
 Is comfortable with improvisations
 Can take “leaps of faith”, even with incomplete
information.
 Thrives on constant changes.
 Uses collaborative and participative approach.
 Does not control, but content with advise and
boundary management.

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Strategizing using Complex paradigm:

 Enhancing possibility space


 Self organizing around new opportunities
 Recognition of new patterns emerging
 Managing co evolution with other
players

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Complex paradigm and knowledge
worker:
 autonomous entities. Control tendency may
backfire, instead advising, guiding and
mentoring helps
 generally have external points of reference,
that is, in contact within the organisation and
its ecosystem. Thus, outside-in approach is
expectable.
 centralised decision making is passe when
the world changes fast, distributed decision
making at variety of levels is needed.

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Complex paradigm:
Leader:

• Mirroring the future:


– Enhancing the possibility space: beacon
– Self organising around new opportunities:
torchbearer
– Recognising new patterns emerging: seller of
dreams
– Manage coevolution with other players:
enablers
• Move towards edge of chaos:
– Resiliency
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– Tolerance to ambiguity

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