Strategy – What’s Changed & What Hasn’t?

It’s best of times & the worst of times – and it was ever thus.  So, when it comes to Strategy deployment & execution, what has changed & what has not?

What Has Changed

AI has made it easier than ever to answer generic questions of Strategy:

·       Given our business situation, what is our aspiration & winning logic?

·       What OKRs should we use and how should we deploy them?

·       What should our dashboards look like?

·       How do we set up our Obeya (aka Control Tower, Big Room, Cockpit)?

AI also makes it much easier to answer Growth questions like:

·       What’s the size of this market, how fast is it growing and what are historical profit margins?

·       Who are the main competitors & what are their strengths & weaknesses?

·       Who are the key customers in this market, and what do they value?

·       What are current customer satisfaction levels & what opportunities might new entrants exploit?

And so, AI can help you begin to understand the nature of the challenge, and generic approaches you might use to handle it. To use chess analogy, AI can help you understand the basic shape of the board, how many pieces there typically are, and sometimes, how these pieces move.

That’s not nothing, and if we understand AI’s limitations, it’s a helpful start. But if we stop there, we’ll just release more AI-slop & create waste & hassle for our organization.

What Has Not Changed

Strategy deployment & execution remains a messy, ragged human thing, an affair of the heart and of intuition & gut feel gained by decades of work & thoughtful reflection. It’s not enough to articulate an AI-formulated-sort-of-maybe-just-okay winning logic. People can sense & seem to have an innate revulsion to AI slop.

Moreover, developing & deployment a sound strategy is akin the achieving physical fitness through a commitment to a sound workout regime. You have to do the work. If the workout regime calls for daily jogging but you decide to drive, you’ll remain flabby.  Similarly, if rather than walking the value stream and customer journey, doing the messy work of Catchball and all the rest, you default to AI, your strategy will blah-blah-blah.

Leaders at all levels have to validate the aspiration & winning logic with their teams through messy open forums I learned as ‘Catchball’ wherein the leader invites pushback & translation.  ‘Am I on the right track; is there anything I’m missing; can you please share this your teams & come back with what you can do to support this plan.’

Catchball is of course based on data, and ideally YODA – your own data & not stale, incomplete, irrelevant data provided by some out of touch corporate system. Without YODA strategy execution can quickly degenerate into HIPPO (highest paid person’s opinion) & ZEBRA (zero expertise but really adamant) management.

The Value of our strategy (or of any initiative) is a function of the Quality of the intervention and the level of Acceptance: V = Q x A. People dislike AI slop & they don’t respect phony strategies or phony people. And brings us to something else that has not changed: the mysterious catalyst/accelerant called Leadership.

In the Age of AI, Leadership is the Killer App

Leadership is the killer app. Good leaders articulate high quality strategies because they have a deep, intuitive grasp of the industry, value stream, technology, customers and their journeys. Good leaders foster acceptance of the agreed upon aspiration and winning logic because they walk the value stream and the customer journey. They ask, ‘What do you think?’ in a spirit of humble inquiry

In summary, when it comes to Strategy deployment & execution, what’s changed is AI, and what has no changed is the messy, human work of alignment, and the centrality of Leadership. AI can be a fine servant but is a poor master.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

The Trouble With OKRs

 Despite their popularity, OKRs frequently fail to deliver business results. What’s going on?

I grew up professionally in the ‘90’s on a steady diet of the Toyota Production System (TPS). Our compass through the churning, treacherous waters of continuous expansion & new model launches was business system called ‘Hoshin Kanri’ or Strategy Deployment. I’ve written about it extensively & have lived many annual strategy planning & execution cycles with many fine companies. As my practice has evolved towards disruptive Innovation and industries like Banking, Insurance & Tech, I’ve seen more & more OKRs.

Here are some common failure modes I’ve observed:

·     Company winning logic is unclear, and/or poorly communicated - (‘Huh…?’)       

·       Rigid top-down directives with little validation from ‘subordinate’ levels – (‘Here’s another dumb thing they want us to do…’)

·       Teams create objectives disconnected from company ‘winning logic’ – (‘Let’s just do what we’ve always done…’)
·       Key results are disconnected from business outcomes – (‘What is ‘value’, anyhow?’)
·       Departments set goals in silos, few shared measures of success – (‘Let’s just focus on our corner’)
·       Objectives are either too abstract to guide action or too specific to inspire innovation – (‘Looks like AI wrote these things…’)
·       OKRs are invisible, hindering alignment - (‘Can anybody tell me what we’re trying to achieve?’)
·       Organizations try to do too much at once, diluting focus and impact – (‘Keep pressing buttons, something’s bound to happen.’)

The root causes of these failures include the absence of a) a comprehensive system (‘everything is connected to everything else’), and b) a set of mental models (‘how we think determines what we see’). OKRs are also prone to AI-sloppification & all the attendant waste & hassle.

Let me illustrate with the simple image above. Strategy development & deployment continuously cycles between the World of Thought & the World of Experience. Leaders live in the former, Team Members in the latter. Validating a proposed objective and winning logic entails multiple rounds of what I learned as ‘Catchball’ – essentially a series of meetings during which team members challenge, massage, tweak and ultimately validate the Leader’s objective and winning logic. Catchball continues at the front-line level where Team Leaders validate their team’s objectives and winning logic. Catchball concludes with a shared understanding of what we’re trying to achieve, what metrics represent Value, and what critical few activities each team will focus on.

Catchball is a messy, intensely human process & only sticks if a) your management system continually nudges people in the right direction, and b) your core mental models support it.  The key underlying question is ‘What do you think?’ – a simple question and the tip of a proverbial iceberg. Here are some of the underlying mental models:

• I know I’m prone to inherent cognitive biases – (illustrated in the work of Kahneman & Tversky and others).
• I accept that I am out of touch with what’s actually happening at the front line. Engaging team members is my reality check
• The senior team & I are prone to groupthink. That’s why we build management walks into our routines.
• Often team members understand the problem much better than I do.
• A strategic plan is worthless unless team members accept it.
• Our team members are really smart. Give them a challenge & they do incredible things.

Here’s you challenge: the only way to internalize all this is to experience it, which materially changes you. Talk is cheap, and AI slop is worth less than zero.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

Why is Year-End Reflection so Difficult?

 

Everybody wants the answer, but nobody wants to ask why. Everybody wants to go to heaven, but nobody wants to die.

Flatt & Scruggs

Flatts & Scruggs put it well, no?

Daylight wanes, the trees are bare, creatures big & small hunker down for winter. For organizations big & small, it’s also time to hit the PAUSE button and reflect.

Why do we find reflection so hard? Heuristics (mental shortcuts) and cognitive biases explain a great deal.  Scholars like Kahneman & Tversky have illuminated Anchoring, Status Quo, Sunk-Cost, Availability and other traps. Even the most capable Boards & senior leader teams are vulnerable.  Ironically, the more capable a Board, the greater the risk.  Hubris is endemic to the human condition, no?  (How could King Lear, Macbeth, Hamlet have been so blind?) 

In any event, what does reflection entail and how to we get better at it?

What Does Year-End Reflection Entail?

Reflection entails hitting the PAUSE button and asking questions like:

·       What were our goals this year? What was our winning logic & plan?
·       What worked & why? What did not work & why?
·       What have we learned?
·       How do we apply what we’ve learned?

As we get stronger, we can also ask harder questions like:

·       Did we put the Safety of our people, customers, and community first?
·       Did we stick to our core values?
·       Did we recognize problems early? Did we react quickly and intelligently?
·       Did we adjust our strategy and activities in a thoughtful way?
·       Did we stick to our management system & core processes?

How Do We Get Better at Reflection?

1) Recognize & accept we’re not good at it

A color-blind person accepts she can't see certain colors and adjusts their behavior accordingly. Let’s admit we that we see what we want to see, not what’s there, and that we jump to half-baked conclusions & countermeasures.

2) Build humble reflection into our management routines.

Humble means we leave our rank at the door. Data wins arguments, not the most senior person. After every major project, launch, strategy, and cycle, hit the PAUSE button and have a short reflection meeting. What was the objective? What was our winning logic & plan? What actually happened? Why did it happen and what can we learn from it? Over time it becomes part of your muscle memory. I’m a fan of ‘Red-teaming’ wherein a critical strategy is subjected to no-holds barred challenges.

The Control Tower (aka Obeya, Cockpit, ‘Big Room’) is a great enabler. This is a safe visual place wherein senior leaders reflect on the above questions in a frank open way.  The Control Tower is part of a tiered management system, which comprises regular team huddles around a visual board. ‘What you do is what you get’. The onus is on senior leaders to walk the proverbial walk.

So, here’s a challenge to all of us. Pull in your team and reflect on the questions above. Answer them honestly and share what you’ve learned. Then apply them.

Have a safe & prosperous 2026.

Pascal Dennis        E: pascal.dennis@leansystems.org

YODA – the Invisible Enabler

 Guesswork may be our biggest blocker.

Whether you’re trying to protect your core business with OpEx/Lean, or igniting new Growth with Digital methods, a lack of data is an eternal blocker. If you generate your own data (YODA), you’re in the driver’s seat. If not, are we managing, or just doing a random walk? So, how do we generate YODA?

YODA to Protect the Core

Great OpEx/Lean companies generate their own data through daily management walks. Team members at every level record what they see using standardized check-sheets. They upload the data to a shared drive which animates the management system – from the frontline huddle to the senior leader Control Tower (aka Obeya).

The simplest & most robust systems comprise linked Excel spreadsheets. Each level loads their data at the agreed upon frequency. The data populates team boards at all levels, including the senior leader Control Tower (Obeya). The charts, dashboards & such are easily uploaded to virtual systems like Miro or Mural. Thereby, we satisfy the Visual Management Triangle: We see together - We know together - We act together.

YODA to Ignite New Growth

Unfortunately, the same system does not work when you’re trying to ignite new Growth using digital methods.  Innovation work entails running continuous quick & cheap experiments to answer the core questions of Growth:

1. Who is the customer?
2. What does the customer value?
3. Why does the customer buy (or not) from us?

To generate YODA in this realm we need a simple robust method of

• Articulating the hypothesis we’re testing, including binary success/failure indicators,
• Recording what actually happened (& what it means), and
• Sharing the learning at team huddles, Exec deep dives & sprint retros.

In our sprints we use a variation of the simple two-card system introduced by Dr. Alex Osterwalder.  Our experiments include social media ads, landing pages, explainer videos, surveys, and various low-cost product/offering simulations.

Mafia Offer

One of the most important experiments is the “Mafia Offer” – that moment of truth where customers either put money on the table or they don’t. Innovation lives in Aristotle’s “world of contingency,” where people say one thing and then do something completely different. The Mafia Offer keeps you honest and helps confirm problem–solution fit: customers show they’re willing to pay for your solution to their problem.

Done well, this style of lean experimentation generates YODA all along your funnel. With enough discipline (and a bit of luck), you may even get to know the customer better than they know themselves – think Jobs or Ive.

In the end, YODA is the lifeblood of a healthy management system. It shows up as daily, weekly, monthly routines that create an operating rhythm – the heartbeat of the company. YODA is engaging, liberating, and deeply respectful of people. Some folks think AI will just generate all this for us and make these systems obsolete.

Maybe someday. But will AI really have the intuition, empathy, and hard-won feel for customers and industry that comes from years of observation and practice? If you believe that, then, in the words of George Strait, there’s some oceanfront property in Arizona you might want to look at.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org