Innovation Does Not Begin with Technology

Pascal Dennis, co-author of (Harnessing Digital Disruption)

Some years ago, I wrote a book about Strategy execution called Getting the Right Things Done. GRTD has found an audience, and I’ve worked with fine teams around the world implementing its core principles. Since 2017, I’ve also worked in Innovation hot spots like Singapore, helping companies ignited new Growth using Digital methods. How do these two powerful areas of practice relate to one another?

Here's what I have learned. The Strategy execution principles and methods described in GRTD remain fundamental and are the key to protecting our core business. But in the age of AI, we must also ignited new Growth using Digital methods. And that means building on our OpEx/Lean foundation with the methods & mindsets driving Innovation. Our book, Harnessing Digital Disruption, is a sister volume to GRTD set in Singapore and the high-flying world of international finance. Together GRTD & HDD illustrate how to both protect our core business – and ignited new Growth with Digital methods. The good news is that there is a strong synergy between these two essential streams of practice. Our challenge: the methods and mindsets informing each stream differ in important ways. In this and following pieces, I’ll take these ideas up in some detail.

Innovation does not begin with Technology. That’s one of my key lessons working with my friend & co-author Laurent Simon these past eight years on Innovation projects in east Asia. New growth, I’ve learned, does not begin with the proverbial ‘better mouse trap’, that fabulous new service or product you believe in. In fact, that’s a great way to go broke. New product launch failure rates are very high, with estimates ranging from 70% to 95%.

• Harvard Business School: Estimates that over 80% of new products fail to meet their objectives.
• Food Navigator-USA: Reports that failure rates can reach 90% in the Consumer Packaged Goods (CPG) industry.
• MIT Professional Education: estimates that nearly 95% of new products miss the mark.

Why build something nobody wants? Is there a greater waste anywhere in industry?

Innovation begins with a need, a problem that a critical mass of people can’t solve. To be sure, often people don’t know they have the need, or face the problem. How then, do we start?

We begin with a deep, intuitive understanding of the customer: Who are they? What is their story? What do they believe in? What do they long for? What are the realities of their day-to-day existence? What are their pains & gains, hopes & aspirations?

Laurent & Pascal at a hockey game in Toronto

I thought I understood all this. I’m a Toyota-trained engineer, and our Toyota factory had won multiple JD Power Awards for Quality. I remembered the rigorous quality assurance methods we used to identify and reduce defects per unit. I remembered our commitment to Total Involvement and Continuous Improvement. I remembered the terrific visual management methods that each of the major production departments used to illustrate key defects, what caused them, and how we would eliminate them. Our Engine plant, Stamping, Welding, Paint, and Assembly plants were world class. We baked these lessons into standardized work and reinforced them with the methods and rigour of the Toyota Production System. Surely, if anybody understood our customers, it was us.

Working with Laurent’s innovation teams, sprint after sprint, I came to realize that I did not understand the customer. The so-called Lean/OpEx system & methods I had worked so hard to learn apply were essential for protecting your core business, but not sufficient to ensure new Growth and sustained prosperity.

‘We need to understand the customer better than they understand themselves,’ Laurent told me. And I thought, yeah right, that’s just marketing tosh. But as I internalized the methods and mindsets of 21 st century innovation, I had to admit that Laurent was right. When we achieved this level of customer understanding, and crafted an offering that met the unrealized need, customer response was strong and direct. “I love this offering, and I want it now! Here is my credit card, I want to one of the first to have it!”

Igniting new Growth, and ascending the famous ‘hockey stick curve’, entails answering three questions in succession:

1. Does the offering Wow?
2. Can we make money?
3. Does it work?

For a long time, many people believed that Innovation begins with the ‘better mouse trap’ – in other words, with Technology. (Does it work?) In fact, Innovation begins with the customer. If our offering does not wow the customer, why build it? If nobody wants it, who cares if it works?

Mental models informing OpEx/Lean and Innovation can differ in important ways. Getting the Right Things Done in a Digital World entails learning & integrating both.

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS To learn more about my Strategy Execution program, Getting the Right Things Done in a Digital World, feel free to drop me a line.




In case you missed our last few blogs... please feel free to have another look…

Getting the Right Things Done in a Digital World
Igniting New Growth - My Improbable Journey, Part 2
Igniting New Growth - My Improbable Journey, Part 1
Year-End: Why Is Reflection So Difficult?

Getting the Right Things Done in a Digital World

Pascal Dennis, co-author of (Harnessing Digital Disruption)

My career has been a happy & lucky journey of discovery. In the early 1990s, I was a young chemical engineer & aspiring manager absorbed with the management gurus of the 20th century. In the West, Deming, Juran, Peter Drucker; in the East, Shingo, Ohno, Kano and the rest. I believed that if I could absorb this ‘system of profound knowledge’ (Deming’s phrase), I’d have a gift for life: the ability to create Value in any endeavour. When I joined Toyota, in my mind, the world’s greatest university, my learning accelerated. I felt like a kid in a martial arts movie.

By the early 2000s, I felt confident enough to start an advisory business with like-minded people. We began in manufacturing, our home industry. With time we migrated into aerospace, consumer goods, financial services, Health Care…, in each case translating the profound methods we’d learned.

We worked with fine people & companies and got to explore our miraculous world. But about ten years ago, something began to nag at me. I sensed a complacency in myself & my community. Did we really have all the answers? Was OpEx/Lean really the key to the kingdom?

If so, why was everybody talking about Tech startups and places like Silicon Valley & Singapore. Why were companies like Google, Amazon, Facebook, Apple (GAFA), and Baidu, Alibaba, Tencent and Xiaomi (BATX) so valuable, and so famous? Their business valuations exceeded those of the great industrial companies. Toyota, Honeywell, P & G etc. were still great, but something fundamental had changed.

I began to explore the innovation hot spots and the start-up scene. I became acquainted with the work of people like Clay Christensen, Steve Blank, and Alex Osterwalder. I began to develop a basic grasp of Design Thinking, Agile, Lean Experimentation (aka Lean Startup), and Growth Hacking. I quickly realized that these methods share core principles with OpEx/Lean. But Innovation methods & mindsets had evolved in a different direction, because the job to be done was different. Innovation methods were aimed at creating something new - new customer journeys, offerings, and even new business models. The job to be done of OpEx/Lean, by contrast, is to protect the existing company.

And then, one morning in late 2016, I got an extraordinary call from a French banker and innovator named Laurent Simon, who was waiting out a delay in a Moroccan airport. "I like your books,” he said. “Shall we write one together?"

We quickly realized we were simpatico and agreed to work together. I would teach Laurent what I knew, and Laurent would teach me what he knew. And so began the second great learning journey of my charmed career. 

Laurent lived in hot humid Singapore, and I in cold, windy Toronto. Our first meeting was in Pietermaritzburg, South Africa, and that’s where we had our first of many long ‘walk & talks’, which we’ve sustained since then.

I began to visit Singapore regularly and to participate in Innovations sprints led by Laurent. It was a steep learning curve, but it was fun. INSEAD business school has a Singapore campus, which became our home base. In fact, I enrolled and became an INSEAD alumnus.

Singapore’s iconic Marina Bay Sands Hotel – the roof top bar figures prominently in our book!

With time, we built a body of knowledge, and practice. Then we published a book called Harnessing Digital Disruption, a business novel whose setting is a major international bank. ‘HDD’ crystallizes our body of knowledge. 

Here is a summary of what I have learned, and what I believe it means for OpEx/Lean and Innovation professionals, and for progressive organizations around the world. In the months to come, I’ll delve into each of these in detail: 

1. It's no longer enough to Protect the Core business with OpEx/Lean methods, you must also ignite new growth using Digital methods. Prosperity and growth, therefore, will go to the ambidextrous. 
2. Ambidexterity means operating in two very different worlds - worlds that were first described 2400 years ago by Aristotle. Methods & mindsets learned in one world, may not apply in the other. 
3. OpEx/Lean lay the foundation for Igniting new Growth – but is not sufficient. 
4. Innovation begins not with technology, but with the customer. Thus, Harnessing Digital Disruption begins & ends with the CEO and his most important customer, looking out on the Andaman Sea. 
5. Innovation entails the ability to create a) better Customer Journeys, b) new Customer Journeys, and c) new offerings & even new businesses. Laurent Simon and I have developed the corresponding concept of the ‘Innovation Tree’. 
6. The 'front of the house' (i.e. Design, Marketing, Sales) & 'back of the house' (Production, Supply Chain, Distribution) do not understand each other. Result: a Bermuda Triangle of waste. 
7. Protecting the Core and Igniting New Growth are both difficult, but the former is harder and is usually the constraint.
   

What does it mean for business Leaders and for OpEx and Innovation professionals? 

Mastering OpEx/Lean fundamentals is not enough. We must also understand the methods & mindset that underlie new Growth. When confronting a business challenge, leaders must ask: Am I in the world of Protecting the Core, or the world of Igniting new Growth? What methods & mindset apply here? How do I best support and motivate this team? 

The future belongs to the ambidextrous.

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS To learn more about my Strategy Execution program, Getting the Right Things Done in a Digital World, feel free to drop me a line.




In case you missed our last few blogs... please feel free to have another look…

Igniting New Growth - My Improbable Journey, Part 2
Igniting New Growth - My Improbable Journey, Part 1
Year-End: Why Is Reflection So Difficult?
What is a Good Life?

Igniting New Growth - My Improbable Journey, Part 2

Pascal Dennis, co-author of (Harnessing Digital Disruption)

Last time, I described how my improbable journey to Igniting New Growth using ‘Digital’ methods began. I was an engineer and Lean/OpEx acolyte and had spent decades learning & applying the powerful methodologies and mindset of the Toyota Production System (aka ‘Lean’). Then, through my colleague, Laurent Simon, I began to experience the world of ‘Fintech’ and Financial Services Innovation. I attended international conferences in innovation hot spots. I absorbed the work of Steve Blank, Alex Osterwalder, Ash Maurya and Clayton Christensen.

During frequent visits to Singapore, I observed and participated in Digital innovation sprints led by Laurent and team. I made friends with people like Paul Cobban, Chief Transformation Office (retired) of DBS, repeat winner of the ‘Best Digital Bank in the World’ award. I came to realize that ‘Digital’ was as profound as the Lean/OpEx revolution led by Taiichi Ohno, W. Edwards Deming, Shigeo Shingo and Peter Drucker.

Lean/OpEx is necessary, but not sufficient. We also must ignite new growth using Digital methods. Laurent was right. At the same time, I realized that I had a great deal to teach my colleagues in the world’s innovation hot spots. Young innovators have large gaps in their knowledge – (how could it be otherwise?) Things that I took for granted were opaque to them. And so began a journey of shared learning that has inspired me these past eight years.

Singapore, Bugis, the Arab quarter and Sultan Mosque, one of my favorite neighbourhoods.

Igniting new growth entails understanding the customer better than they understand themselves. I know that sounds like a ‘line’, but I have experienced it, and it is true. Igniting new growth entails defining the customer’s journey, needs, wants and jobs-to-be-done through rapid experimentation. And then defining countermeasures, including ‘exponential technologies’, to those needs, wants and jobs to be done – again through rapid experimentation. Each iteration entails the ‘Double-Diamond’ of Design Thinking, surely one of the great paradigms of our age, and recurring cycles of Discover & Validate, Discover & Validate.

Igniting new growth often, but not always, means partnering with technology companies, and developing digital platforms to complement traditional value stream businesses. Igniting new growth often entails digitizing existing Customer Journeys, developing new digital offerings, and new digital ventures.

And here’s the proviso: igniting new growth requires a solid foundation of Lean/OpEx. This insight really landed for me thanks to a senior RPA¹ executive whose firm we had engaged to digitize critical elements of a client bank’s ‘Know Your Customer’ (KYC) process.

‘If you bring us garbage processes,’ the RPA exec told me, ‘you’ll get garbage at the speed of light.’

You cannot sustain Growth unless you have a stable foundation. Andy Grove, Intel’s legendary CEO, called it ‘High Performance Management’, whose principles he expressed in his classic book of the same title. High Performance Management mirrors Lean/OpEx.

My practice these past eight years has comprised mentoring senior leaders through the following programs:

• Exec 101 – Protect your core business
• Exec 201 – Ignite new Growth

I’ve experienced the ‘hockey stick curve’ with Innovation teams around the world - there’s nothing like it. It’s as exciting as launching a major new car model.

Our challenge is a) to fully absorb and inhabit the world of Digital transformation, and b) to help anchor this marvelous world in the eternal verities of Lean/OpEx.

It’s helpful, but not essential, to have a Digital Sherpa. I supplemented Laurent’s teaching by doing robotics projects with my teenage son, Matthew. It was a challenge – the languages I’d learned as a young engineer were now antiques.

Laurent & Pascal at a hockey game in Toronto

Participating in Digital innovation sprints led by Laurent has been invaluable. I thereby absorbed the core methodologies including Design Thinking, Lean Startup, Agile ways of working, and Growth Hacking. I also began to understand the nature of digital transformation in major international organizations. The chessboard became clear, as did its players, laws and core stratagems.

And so did our overall approach to Digital Transformation, which now comprises three ‘Swimlanes’:

• Digital Strategy & Executive Coaching,
• Capability building through the Pragmatic Intrapreneur Network, and
• ‘Hot house’ innovation projects aligned with Aspiration

Laurent and I decided to express our ideas in a business novel, a format I’d had success in the past. People love good stories, especially if they’re based on lived experience. We’d both lived through intense transformations – why not write about what we’d seen and felt?

We chose a glamorous location and industry – Singapore and the heady world of international finance. The story would be a no-holds barred account of real people in a real company in trouble. We wanted to illustrate the situations, characters, and blockers you’ll likely face as you progress through your own journey of discovery and transformation. The book is also love letter to Singapore, and the settings include our favorite watering holes, neighbourhoods and hangouts. In fact, the Appendix includes a map and links to all our favorite places.

Fittingly, we released Harnessing Digital Disruption – How Organizations with Design Thinking, Agile and Lean Startup during the COVID-19 pandemic, which shed a bright light on our core themes. How do we create better customer journeys, new digital offerings and ventures, while protecting our core business?

What new skills and ways of thinking must we develop to remain relevant in a volatile, uncertain, complex and ambiguous world?

What battles must we win on the path to revival and prosperity for all stakeholders?

What kind of leadership will be required?

I’m considering launching a Newsletter to answer such questions & to tell stories about what I’ve seen & learned. Is that something you all would be interested in reading?

Best wishes,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS Drop me an email to learn more about my executive mentoring programs:

• Exec 101 - Protecting the Core Business, and
• Exec 201 – Infighting New Growth

^{1. Robotic Process Automation, also known as software robotics, uses intelligent automation technologies to perform repetitive office tasks of human workers, such as extracting data, filling in forms, moving files and more.↩}



In case you missed our last few blogs... please feel free to have another look…

Igniting New Growth - My Improbable Journey, Part 1
Year-End: Why Is Reflection So Difficult?
What is a Good Life?
All Systems Must Support Humanity – Including Lean

Igniting New Growth - My Improbable Journey, Part 1

Pascal Dennis, co-author of (Harnessing Digital Disruption)

Singapore, Toronto, San Francisco, Bangkok, KwaZulu-Natal, Auckland - all these are part of my improbable journey these past eight years. It all began with a delayed flight out of a Moroccan airport. It was the summer of 2017. I was sitting in the backyard with my wife, Pamela.

Laurent Simon, who would become my friend & business partner, was the one in Morrocco. He decided to send a LinkedIn note.

‘I like your books,’ he said. ‘We should write one together…”

‘About what?’ I asked.

“Harnessing digital disruption…”

Laurent Simon in San Francisco

As we chatted, I checked out Laurent’s LinkedIn profile: INSEAD business school, and impressive achievements in the cosmetics industry, management consulting & financial services. Head of Innovation leader at a major international bank. A smart guy.

‘I’m having a drink with my wife,’ I told him. ‘Maybe we can chat some more next week.’

And thus began our weekly WhatsApp calls. Laurent described his innovation work in the Asia Pacific region. I described my adventures in manufacturing, consumer goods, and health care. And the fun & business results my team & I had enjoyed working with a marvelous financial service company. Each week I would summarize what I’d learned in a mind map, which became part of our body of knowledge.

Laurent and I were natural disruptors, simpatico both professionally and temperamentally. I loved being a Strategy sherpa and mentor to senior leaders. But I was also a composer & leader of the Crazy Angels band. Laurent was a Renaissance man who swam effortlessly in multiple languages and cultures.

Pascal Dennis in San Francisco

Laurent lived in Singapore; I lived in Toronto. His environment was heat, humidity and rain. Mine was snow, ice and the cold wind sweeping down from Hudson’s Bay. We finally met in person in the fall of 2017 at a conference in Kwazulu-Natal, South Africa, where I was giving a talk. And that’s where we added another routine – long walks during which we would ‘shoot the breeze’. Soon after we began to have regular meetings in Singapore, Toronto and places in between.

We had both spent the previous decade helping companies transform their work, people and management systems. We’d both seen the power of the so-called Lean management system – the methods and mindset underlying the Toyota Production System. We understood that Lean represented a series of revolutions that had ‘changed the world’:

• Quality in the process – the realization that all work comprises a system of activities and information, and that the value chain will only work if each step was done right the first time
• Flow – understanding demand, capacity and the process in great detail; applying the laws of so-called production physics to maximize flow and minimize lead time and cost
• Continuous improvement – the realization that virtually nothing in the work is ‘fixed’, and that things like working content, sequence, layout, timing are all malleable and can be endlessly improved
• Leadership – the art of defining, deploying and executing a great aspiration in accord with a concise winning logic; how to build a learning infrastructure to supports, develops and deeply engages people
• ‘Customer in’ mentality – putting oneself in the customer’s shoes, and deeply understanding their needs and wants
• Strategy and decision-making – how strategy is developed and implemented; how we align and motivate disparate groups of people in complex organizations toward a shared Aspiration; how we make problems visible and deploy remedies; how we overcome the thorny problems of governance.

But Laurent and I differed on a critical point. He believed that Lean is essentially about protecting your core business, and not about igniting new growth. I disagreed: ‘Lean is also a growth strategy,’ I argued. It took a while, but I came around to Laurent’s point of view. Lean is necessary, but not sufficient. If it was, why were the business valuations of GAFA - Google, Amazon, Facebook (Meta) and Apple – higher than those the great industrial companies I revered? Had Toyota, Honeywell, Proctor & Gamble and the like lost their mojo? Certainly not – the great industrials were as strong as ever. Something was happening, and I was determined to find out what it was.

Best wishes,

Pascal Dennis




In case you missed our last few blogs... please feel free to have another look…

Year-End: Why Is Reflection So Difficult?
What is a Good Life?
All Systems Must Support Humanity – Including Lean
To Learn Corporate Strategy, Study the Military Masters