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


Monday, September 17, 2018

Big Data – Caveat Emptor

By Pascal Dennis (bio)

Render to Caesar the things that are Caesar’s.

Let the buyer beware…

Don’t want to be misunderstood folks. Big Data is, in my view, one of the essential technologies.

Big Data, and its partner technology, Artificial Intelligence, Robotics, Augmented Reality, Drones, 3-D Printing, Internet of Things, and Blockchain are transforming our lives – mostly for the better.

But we need to know where each technology applies, and where it does not.

Aristotle defined two domains: the domain of things that cannot be otherwise, and that of things than can be otherwise.

The former comprises things like matter, physics and chemistry. Water is water and cannot be otherwise. It evaporates when heated and freezes when cooled.

You can predict how it will behave by applying the laws of science. Big Data works well here.

The latter domain, that of things than can be otherwise, comprises fickle things like economics, politics, fashion, public opinion, and behavior.

Big Data does not work so well here. (A deep bow here to the great Roger Martin, former dean of the University of Toronto’s business school.)

Can we expect Big Data to effectively answer questions of design, marketing, opinion and behavior? Can we outsource our thinking about strategy to Big Data?

These are all the purview of creativity, intuition, imagination – which are our forte.


Gary Kasparov, arguably the greatest chess player ever, emphasizes the importance of ‘fantasy’ in chess, arguably our greatest strategy game and business metaphor.

This is the same man who played the super-computer, Big Blue, to a draw, an encounter the New York Times likened to ‘Man vs Forklift’.

(Big Blue, let it emphasized, was programmed by the world’s top grandmasters, and rebooted before each game, so that Kasparov was, in effect, facing a new super-computer opponent.)

Render to Caesar the things that are Caesar’s – let’s use Big Data where it works best, and recognize its limitations.

For example, don’t expect Big Data analytics to give you the ‘super-nova” moment, the blinding strategic insight that illuminates the path forward.

In my view, the centaur concept provides the proper metaphor and way forward.

Like the half human-half horse of mythology, the intelligent human being working with, and guiding, well-designed AI, has the potential to blend the best of both worlds, machine and human.

I like the thought of my doctor working with AI and Big Data.

The next Kasparov or Kasparova may well have Big Data and AI riding shotgun.

Best regards,

Pascal


Monday, September 3, 2018

There is No Right Answer in Strategy

By Pascal Dennis (bio)

Building on my last blog, the strategy is not about perfection. In fact, there is no right strategy.

This is often difficult for senior leaders to accept because it runs contrary to their experience.

Senior leaders are usually the smartest kids in the class, the ones who always have the right answer.

They naturally enjoy the glow of being ‘right’ (synonymous with being ‘smart’). This pattern deepens as they embark on their chosen professions.

Again, they are the smartest people in the room, the ones with the answers, who confidently define what we need to do next.

Such confidence is an important element of leadership. Indeed, good leaders exude a feeling of ‘we will succeed beyond any possibility of doubt.’

Such confidence allows people to relax and get on with the job.

And so, most senior leaders have been conditioned to want to be ‘right’. But, as I said, there is no right strategy.

The past is not the future, and no amount of analysis and reflection will predict the myriad permutations the business chessboard will express.


Some people conclude therefore, that there is no point to developing strategy, that it’s best to ‘just react’ to what happens.

[For strategy geeks, in my opinion, doing so entails misunderstanding the great Henry Mintzberg’s ‘emergent strategy’ concept.]

Yes, it’s true that nowadays it seems there are ‘Black Swans’ everywhere. So why bother with strategy at all?

Twas ever thus – and forever will be. You want to see Black Swans? Check out Ken Burns splendid Vietnam documentary – the episodes that focus on 1968.

There is no right strategy – but there is a right process. By reflecting deeply on what’s happened, on where we want to go, and on what’s preventing us, we better understand the chessboard, the terrain, the pieces, competitors, and our capabilities.

If our strategic planning and deployment process is simple, waste- and hassle-free, we begin the understand the important gaps in technology, customer experience, culture, capability and management systems.

And we take action, we strengthen our weak points, we plug the gaps, we prepare.

In effect, we are projecting our nervous system in to the future, so that when and if the Black Swan appears, we’re not paralyzed. We’re alert, focused and confident. “Folks, this isn’t anything that hasn’t happened before…”

Sound strategic planning, therefore, builds fortitude and tenacity. This is most obvious in sports, where Black Swans are not uncommon. Nobody can predict which way the ball will bounce, or what the score is after the first ten minutes.

But is you have a clear plan and a good understanding of the terrain, competition, your capabilities and have worked on your gaps, you’re much more likely to recover from whatever fate throws your way.

Our articulated Purpose and strategy, therefore, should be clear and simple, as should our strategic planning process.

Nimbleness is of the essence. We should be able to quickly align and deploy, and just as quickly realign and redeploy.

Modular plans, visual management, stand-up meetings, brevity, a shared simple problem solving method are important elements of agility. (How does all this fit together? My books are essentially movies about it, pardon the plug.)

Corporate planning in many large organizations is, sadly, the opposite of nimble. The following adjectives come to mind: ponderous, heavy, boring, wasteful, difficult, confusing…

By adhering to a heavy, formal annual planning process, we are, in effect, projecting our punches. A droll competitor might wait till we publish our strategy, and then the day after, change theirs…

There is no right answer in strategy, but there is a right process.

Best wishes,

Pascal