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

Ambidexterity – How Do I Engage Our Board & What’s Their Role?

Building a two-gear organization (aka ambidexterity) is the senior leader’s Job One. Can we both protect the core business with OpEx/Lean AND ignite new Growth with digital methods? So, how do we engage the Board and what’s their role?

Doing nothing is our riskiest option...

Let’s start with the second question. The role of the Board includes:

• 1.     Oversee strategy.
• 2.     Oversee risk management.
• 3.     Assess the CEO and plan for succession, and
• 4.     Develop & oversee executive compensation plans.

The purpose of a high-performance Board is to secure & sustain the creation of value and prevent the destruction of value. Ambidexterity is a core element of risk reduction, and therefore of strategy in the 21^st C. Ambidexterity inoculates us to our era’s dark triad of risk – obsolescence, ceaseless turbulence, and Black Swans.

The Board, therefore, must ensure the company’s winning logic & strategic plan explicitly address ambidexterity and commit to developing the needed capabilities. The Board must also a) ensure the annual business plan translates this into concrete action & metrics, b) align incentives, and c) monitor & assess progress.

Doing Nothing Is the Riskiest Option

How do we engage the Board in our quest for ambidexterity? Board members usually come from areas like Operations, Finance, and Engineering, and have deep insight in how to protect the core business. But they’re usually less familiar with the methods & mental models of disruptive innovation.

So, Board members are at a distinct disadvantage when asked to assess, say, a portfolio of innovation initiatives. All the usual indicators – Market Share, Revenue, Profitability, ROI, CAGR and the like – are zero. By contrast, the existing business portfolio, even if it’s in decline, reliably generates measurable value. So, the Board member’s mind & gut say, “Stop!”

But shooting down innovation initiatives is our riskiest option. How will we grow? How will we learn? How will we build our muscles for the daunting challenges ahead? Some Boards are committed to growth through M & A. Nothing wrong with a well-planned & executed M & A. But if our organization fails to embrace disruptive innovation, how will our new acquisition grow? In my experience, the new unit absorbs the mindset of the mother ship – and adieu, innovation.

So, how do we help the Board understand disruptive innovation? I’m partial to Executive Forums, Learning Expedition, and Board mentorship. I’ve addressed that last one in earlier articles.

Executive Forums

My colleague & co-author, Laurent Simon, has organized a series of Exec Forums in Singapore in partnership with our joint alma mater, INSEAD (‘Business School to the World’).  Our idea is to connect senior executives with a) peers from other industries facing the same challenges, and b) talented ecosystem practitioners who can demonstrate both what’s happening, and what’s possible.

Learning Expeditions

These entail visits to an innovation hot spot and the leading industries therein over three or four days. Each attendee accepts a specific learning objective & must report out what they saw & what it means at a structured debriefing. (No corporate tourism). Learning Expeditions are a major undertaking, but tremendously valuable. A high-performance innovation team in the midst of a splendid sprint is hard to forget!

In summary, the Board has a leading role in Strategy and Risk Management. By educating the Board on the methods & mindsets of disruptive innovation, we can help them understand ambidexterity. And that doing nothing is our riskiest option.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

Don’t Out Outsource Empathy to AI (Embrace Your Inner Hipster)

 

Pascal Dennis, co-author of Harnessing Digital Disruption

‘I’d rather put a gun in my mouth,’ David Simon, when asked if he uses AI to write.

This my favorite response to a question about AI and writing. David Simon, creator of ‘The Wire’ did not mince words. AI can be a helpful assistant, but is a debilitating master. Use AI to do the donkey work – research a database, summarize a series of dull papers and the like.  But the blank page is sacred – let it pull you in. 

And so, I’ve stopped using AI to generate images.  I played around with it for a while but now I’m drawing out things by hand, like I always have. The feedback has been gratifying. ‘I really like your drawings…’

I am not a graphic artist. (Management & music are my twin passions.) But I like having a pen in my hand & letting it run freely across the page. I like playing with shape & color & balancing full & empty space. Most of all, I like feeling in touch with myself and expressing it in a careless, droll doodle.

So what?, you ask. How is this relevant to our business?

Ambidexterity wins nowadays – can we protect our core business, while igniting new Growth? Growth entails developing new journeys, offerings, and even new businesses. I’m describing the capability & mindset of the ‘Hipster’ – one of three personas we need in a kick-ass innovation team. The other two, the Hacker and Hustler, are equally important, but much better understood. The Hipster’s super power is empathy. A great Hipster can sense the entire customer journey, from the top of the customer funnel (I know…) to the bottom (I’m going to tell all my friends…). Great Hipsters, (think Steve Jobs or Jony Ive) can turn the customer funnel into an hour glass. Demand for your new offering grows by word of mouth.

The feeling I get while drawing or playing my instrument is how I feel in a fine innovation sprint. We’re playing and thereby getting closer & closer to the customer – who they are, what they value, and why they embrace an offering, or not. Each experiment is quick & easy, like a whimsical doodle. But it gets you close and closer to creating something delightful.

So, do not outsource empathy to AI. By all means, use AI in the ways I’ve described. But the blank page is sacred and the domain of the human heart. Let it pull you in.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

Business Ambidexterity – Where Do We Start?

 Ambidexterity is the senior leader’s Job One. Can we 

1. Protect the core business with OpEx/Lean, and
2. Ignite new Growth using the Digital methods

 Let’s imagine our C-suite & Board are aligned. ‘We need to do this. Where do we start?’

Our mantra is ‘Thing big, start small and scale fast’.

Think Big

Think big means defining your Aspiration & Winning Logic. For example: We want to be the best (fill in the blank) in the world. And here’s our overall approach:

1.     Take out the waste & variation

2.     Get close to the customer, and

3.     Get Digital to the core

Each of these elements must of course be translated & deployed as concrete activities at each level using our management system & the disciplines of Strategy Deployment. Constancy of purpose provides a ballast during the inevitable rough patches.

Start Small

Start small means building a Lighthouse (aka Showcase) project that proves ‘this thing actually flies’. Our showcase project typically entails levelling up a critical customer journey or creating & launching an entirely new offering. Our showcase is also a space – physical, financial, strategic and cultural – wherein a kick-ass innovation team can work in a new way, protected from organizational blockers. Typical goals: 50%+ improvement in launch lead time & cost, customer satisfaction, and profitability. Prerequisites: executive air cover, otherwise the proverbial corporate ‘antibodies’ will shut you down. 

‘New ways of working’ means daily huddles around a team board (either analogue or virtual or both), visual management, weekly planning & review, and data-based decision-making.  No HIPPOs or ZEBRAS[1]. New ways of working also means bi-weekly playbacks for senior leaders, and bi-monthly report outs to a ‘Shark Tank’ who will continue to fund the project (or not) based on demonstrated traction.

How do we pick our Lighthouse (showcase) project?  Start with an internal audit of your core management systems:

·       Voice of the Customer

·       People system

·       Work system, and

·       Management system

Where are the biggest gaps? Which of the candidate projects can help fill these gaps?

Then apply a strategic filter: Is this project aligned with our Aspiration & Winning Logic?  And then or course, do an Ease/Impact assessment.

The Lighthouse project will likely follow the proverbial ‘hockey stick’ curve illustrated above. We need to pass the following tests:

1.     Does it wow? (If not, why build it?)

2.     Can we make money? (Kind of essential)

3.     Does it work?

The third questions entails two levels of scaling Can we scale our showcase across the target markets? Can we scale our new ways of working across the organization?

Best wishes,

Pascal    E: pascal.dennis@leansystems.org

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[1] Highest paid person’s opinion; Zero expertise, but really arrogant.