Monday, November 12, 2018

Toyota’s New Rivals & ‘ Life and Death Battle’

By Pascal Dennis (bio)

We are in a 'life & death battle' against our new rivals, Akio Toyoda

Mr. Toyoda is not talking about Volkswagen, GM or Audi…he means Google & Waymo, Uber, Lyft and the rest.

Ironic, no? After seven decades of unparalleled (analogue) excellence, the world’s greatest manufacturer is facing a mortal threat from digital companies

After developing & deploying of the legendary Toyota Production System (TPS) in facilities around the world, Toyota is finding it’s not enough.

TPS is necessary to be sure, as Elon Musk and Tesla are finding to their chagrin, but not sufficient. We have to deepen and extend the Toyota business system with digital methods.

A tough challenge for a proud, conservative company that historically has been slow to adopt digital technology.


For example, in the 1990’s at our old TMMC plant in Cambridge Ontario, providing computers to managers and group leaders was a big deal, which generated much soul-searching.

“Will we lose touch with what’s actually happening on the shop floor?”

Grudgingly, our old senseis relented, though they continued to write their A3s in pencil.

And when it came to strategy or problem solving, they taught us to never trust the computer screen, and always to go and see for ourselves. Were they wrong?

Of course not. TPS and the great old senseis who disseminated TPS have changed the world. (They certainly changed me.)

But in an age of explosive technological change, Value – the raison d’etre of TPS – is a much more elusive target than it was in the 1990’s. And we have to change to keep up with it.

It’s no longer enough to build a splendid car – you also have to stuff it with splendid computers, connect to an ecosystem of enablers, and perhaps make it drive (fly?) by itself.

Which means you have to keep innovating forever. In short, continuous improvement is necessary, but not sufficient.

Whenever we need to create something new in conditions of extreme uncertainty, we need a new set of arrows in our quiver: continuous innovation.

Not everywhere, let me hasten to add. Continuous innovation everywhere, a common cliché & conceit these days, is a practical absurdity.

For example, if you’re making kitchen towels in a factory in Utah, extruding plastic auto parts in Michigan, or piloting a container ship up through the Suez Canal to Rotterdam, your focus will be continuously improving.

Safety, Quality, Delivery and all the related metrics (cycle times, OEE, work-in-process, changeover times etc.)

Every organization needs a foundation of standards and stability. The digital tsunami does not obsolesce these core needs – it depends on them.

But if you’re a product/service leader in any of these industries, the entire customer experience is your chessboard, and the Eight Essential Technologies* must inform your moves and thinking.

Wherever we need to create something new in conditions of extreme uncertainty, we need to learn to iterate to value, i.e. innovate continuously.

Imagine team members and leaders at a world class muffler manufacturer who have spent a few decades refining their Single Minute Exchange of Die (SMED) processes!

Sorry, we’ll be making fewer and fewer mufflers from now on…

So it goes when you focus on methods, and not the thinking behind them. SMED is a countermeasure to a specific problem. If SMED all you know, then digital is a big problem.

But if you understand the thinking behind SMED, and TPS as a whole, with hard work & reflection you should be able to apply it to new problems.

Humility is also a great enabler. It’s healthy to accept that what we did in the past is irrelevant to most people. What have you done for us lately, is a severe, but in my view, fair test.

Indeed, it’s the very question facing Akio Toyoda and his splendid organization.

Good luck!

Pascal


Monday, October 29, 2018

The Power of One Page

By Pascal Dennis (bio)

In times of tumultuous change brevity is king.

Blah, blah, blah…doesn’t cut it when revenue is non-existent and investors are jittery.

Endless PowerPoint decks, no matter how slick, are tiresome and wasteful. The four-hour meeting that goes nowhere is downright irritating.

Less is more remains the cardinal rule in music, art, theater, and the world of business.

Lean masters of the past understood ‘less is more’ in their bones. Toyota in the early 1950’s, for example, was facing bankruptcy, union warfare and public condemnation.

They were a tenth as productive as the American juggernaut car companies, and had little capital with which to buy desperately needed machines.


They created the one-page storyboard, also known as the ‘A3’ (after the paper size), to enable quick effective & communication.

I have a number of friends who are retired Marine corps officers. They tell me that Marine Doctrine also emphasizes clear & simple communication – short stand-up meetings around a board (1-page) are the norm.

Our friends and colleagues in the start-up communities have absorbed this concept and now communicate with various ‘canvases’.

These address broad strategic issues such as Business Model and Value Proposition, as well as, tactical elements like Personas, Empathy Maps and Customer Journeys.

I’m heartened by such cross-fertilization. Both the giver and receiver profit, and develop empathy.

Quality is paramount, of course. A page full of garbage is just that. Clearly expressing a hypothesis and plan of action around a complex business problem or industry takes great skill and understanding.

You have to think deeply, and then get the hell out of the building. (Go see, as the Japanese like to say).

One page takes much longer, therefore, than ten. (You all know the famous Winston Churchill story by now…)

The power of one page emerges in all its glory when use it to tell stories.

Story-telling, narrative, is perhaps our most human quality. “Tell me a story, grandpa…”

“Well, once upon there was a little girl who lived with her family in a town by the sea. And one night she looked out her window and saw a beautiful white horse and the horse had wings…”

Will AI ever be able to make up an enchanting story, on demand (from a loved one)?

That’s the real Turing test, no?

In any event, I tip my hat to our digital & start-up friends. It's fun working with you & I encourage you to continue poaching ‘traditional’ Lean.

Best regards,

Pascal


Monday, October 15, 2018

Strategy in a Time of Explosive Change

By Pascal Dennis (bio)

May you live in interesting times – Chinese Curse

Interesting times indeed, no? The reasons are too long to recite here – changing technology, customer expectations, internationalization, rapid cultural shifts, the explosion of information…

Technological change, for example, is so rapid and severe that in many industries we can no longer confidently define value.

The ‘Eight Essential’ technologies – Augmented Reality, Virtual Reality, AI, Blockchain, Robotics, Drones, Internet of Things, and 3-D Printing have exploded the ‘design space’.


Only by developing deep empathy with our customers & their customer journeys can we begin to understand what’s important to them. And even then, value is a moving target.

So it goes…

How to manage one’s business (and one’s life) in such times?

Let’s focus on the most important things first: How do we develop and deploy strategy in ‘interesting’ times?

Quick & ‘Easy’ Strategy

Keep it simple – if you can’t tell the story with one-page, do you understand it?

Accept that when it comes to strategy, perfection is impossible - and not even desirable! Remember, there is no right answer in strategy – only a right process!

Ensure, therefore, that purpose & logic are clear so that when you inevitably ‘pivot’, you’ll know what parts of your hypothesis were sound or not, and why.

Choose!

Strategy is not about deciding what’s important. All the ideas your team proposes are likely ‘important’. But you can’t do them all – you have to choose.

Too often, leaders try to hedge their bets by choosing too much, with predictable results. Choose the critical few, check frequently, and be prepared to pivot.

Please don’t misunderstand the great Henry Mintzberg’s ‘emergent’ strategies concept. Just because you’re prepared to pivot, doesn’t mean you needn’t articulate a hypothesis!

Failing to do so, of course, condemns you to the limbo of endless reaction & limited learning.

Avoid Boring Strategy Docs

The typical corporate strategy comprises a ‘Mission’, ‘Initiatives’, and in effect, a ‘Budget with Prose’. (Tip of the hat to another great, Dr. Roger Martin, for this.)

These are deadly dull and have a soporific effect on your team. ZZZZZZZZZZZZ…..

Keep your strategy to one page, tell your story, and answer the Big Questions as simply and clearly as you can:

  1. Who are we and what do we believe in?
  2. Where are we going?
  3. How do we get there? (What’s our underlying logic?)
  4. What’s preventing us?
  5. What capabilities do we need to develop?
  6. What management systems do we need to develop?

These are difficult questions, of course, which require deep experience and reflection. To develop a good strategy we need to bounce between the worlds of action and thought.

As the saying goes, get out of the building.

And finally, even though we live in times of explosive change, remember that some things are eternal.

Reflection, experience and the intuition gained thereby are innately human, and unlikely to be replaced by technology.

More likely, in my view, technology will enable the strategist, just as a horse enables the rider.

But that’s the topic of another blog.

Here’s to interesting strategic journeys.

Best regards,

Pascal


Monday, October 1, 2018

Amazon Enters Banking

By Pascal Dennis (bio)

Big news indeed, no?

Amazon is a marvel, and perhaps the exception that proves a rule. Big companies are supposed to be slow, and well, slow.

Yet Amazon is a colossus of intelligence, entrepreneurialism and advanced Lean thinking.

Jeff Bezos is famously customer-focused and Amazon’s management systems express a deep understanding of core Lean principles including Visual Management, Standardized Work, Andon, Flow and Pull.

And now they’re entering Banking, an ancient & fascinating industry that is ripe for ‘disruption’, to use the currently fashionable phrase.


You only understand the importance of healthy financial services and capital markets when you don’t have them.

In many parts of the world ‘simple’ retail banking services like savings accounts, loans, and insurance are life-giving to a family or a small business.

You can get the loan you need to build your home, and buy desperately needed equipment for your business (e.g. a bicycle, a better phone, more reliable internet access…).

In many countries financial services are an oligopoly run by the few, for the few. We can barely imaging the indignities that many of our fellows suffer thereby.

But give people Amazon-level service in Banking, and watch what happens.

(“You mean I no longer have to wait in line for hours, and then be told ‘sorry, we’re closing, go home’? You mean I can access all the services I need from my cell phone?”)

Amazon Web Services (AWS) has had a liberating effect on small businesses around the world. I’m hopeful that Amazon Banking will have similar effect in financial services.

I imagine that the same technology and expertise that informs AWS will inform Amazon’s banking ecosystems. (Outside of Amazon & such, have Lean principles been applied effectively in Digital?)

How will Banking respond? The industry is full of smart, hard-working people, in my experience, and in many cases they’re acutely aware of customer pain points.

The gaps in customer experience, technology, management systems and people capability are significant.

The causes include deep silos (often reinforced by legislation), creaky legacy IT systems, dysfunctional mental models, and a deep hangover from the Great Financial Crisis of 2008-09.

How do you teach an elephant to dance?

In any event, the best banks will become more nimble, smart and customer-focused, and people around the world will benefit.

Yes, I know many people worry that Amazon is too good, too big, too powerful. But in this critical industry they have the potential to change world and do much good.

Giddy-up!

Best regards,

Pascal