Strategy is Iterative, There are No Right Answers – Making Strategy Fun Again (Part 3)

 

Why do smart people struggle with strategy? Because smart people are used to having the right answer – and there’s no such thing in strategy. Humbling, no?

Strategy, like Innovation, exists in Aristotle’s World of Contingency – a strange place where things can be ‘other than they are’. This is the Land of Oz, the Rabbit Hole, the Land of Lost Logic, the World Behind the Curtain – pick your metaphor. It’s a place where ‘normal’ rules, conventions, and scientific truths don’t usually apply, or they do for a while & then they stop.

We’re used to Aristotle’s World of Necessity – where there are universal truths, and a bedrock of scientific knowledge. In the World of Necessity, the laws of mathematics, engineering, production physics, OpEx/Lean, finance and accounting and the like apply in a predictable way. We can figure things out following proven recipes like root cause problem solving.  One of my favorite auto manufacturing sayings is ‘Follow the recipe, and you get a Big Mac every time!’

In the World of Contingency, by contrast, you follow the recipe and sometimes you get a cheese quesadilla or a corned beef sandwich or a plate of tofu! What’s true in Innovation is true in Strategy.

Strategy is Iterative

‘We are ignorant armies clashing by night’, said Matthew Arnold. The great military strategist, Carl von Clausewitz described the inevitability of ‘Friction’.  Secretary of Defence, Paul Rumsfeld, baffled journalists with abstruse allusions to ‘known knowns, known unknowns, and unknown unknowns’. What to do?

·       Accept that Strategy (and Innovation) live in the uncertain world of Contingency.

·       Experiment, experiment, experiment – dispel the fog through quick, cheap experiments that shine light on the path. ‘Fail fast, fail forward,’ as the saying goes.

·       I would add ‘and Learn Easy.’  Keep it light and fun – people learn best when they’re laughing.

·       Analyze using the marvelous tools of AI but recognize their limitations.

·       Thereby develop intuition, ‘taste,’ gut feel, and business savvy

Strategy is iteration, strategy is doing and learning. Be humbler and accept you’re in a different world where different laws apply. Be rigorous in your process – insist on clear testable hypotheses based on a deep grasp of your current condition. Insist on rapid feedback loops and visual management so that everybody knows what’s happening. Make problem solving and innovation thinking central to your management system. Engage everybody in improvement.  Provide continual nudges in this direction – celebrate great hypotheses, great experimentation and learning.  Promote your best & brightest learners.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

Strategy is Distributive - Making Strategy Fun Again (Part 2)

 

Why do so many other smart people struggle with Strategy?  Because smart people are used to being right – and in Strategy very often there are no ‘right’ answers. There is a suitable direction/aspiration, and a testable winning logic. The rest is distribution & iteration.

So what? Team member apathy is at epidemic levels around the world – and strategy is a big part of the problem.

Strategy is usually a drag, no? Flat, boring & superficial directives from on high prepared by disinterested technocrats, or even worse, by LLMs pretending to be human. No wonder people are disengaged.  What’s wrong with strategy & how do we fix it’? (This is 2^nd article in a series.)

Strategy is Distributive

Strategy is distributed problem solving; each level has to solve discrete problems that are aligned with each other, and with our overall Aspiration.  Each level has to define their ‘hot spots’, assign resources, and run experiments around the key questions of problem solving and/or innovation – (a core element in my books).

Few organizations do this well. Some hope that the AI wave will improve the situation, though I am doubtful (for reasons I’ll explore in upcoming articles).

Common Blockers to Distributive Strategy

Here are some of the many blockers I’ve observed:

1.     Lack of trust – currently spiking because of AI

2.     Lack of alignment or clarity around our core Aspiration. Key enablers: Leadership & the related arts of rhetoric, oratory, and storytelling

3.     Inadequate problem-solving skill – root causes include lack of practice, inadequate systemic ‘nudges,’ overly complex algorithms, absence of mentorship.

4.     Fundamental misunderstandings around continuous improvement vs Innovation – OpEx and Innovation live in different worlds - (see my articles on Aristotle’s ‘two worlds’ formulation)

5.     Organizational inertia – deploying and executing Strategy is usually arduous work with few rewards. Running the business consumes all our time & energy.

I’ve addressed many of these blockers in past articles. Let me briefly discuss blocker # 5 here. Even if we have addressed # 1 to 4, we need to create space for strategic problem solving - physical, financial, temporal, organizational, cultural, emotional and cultural space. This means allocating time, money, leadership and organizational energy. It means senior leader playbacks, Shark Tanks, Improvement Fairs, Hackathons and the like, wherein we observe, challenge, mentor and grow our future leaders. It means aligning HR systems, so our best & brightest problem-solvers & innovators are recognized.  It means engaging the Board in levelling up our reward systems. How many organizations have the vision, will & tenacity to do this?

Strategy is Distributive

In my doodle above, each spiral represents are capable team running rapid experiments in pursuit of some strategic improvement or innovation.  Keep these wheels spinning is the job of leaders. Ensuring the management system enables such work is the job of the Board. In some organizations it all comes together & holds – a thing of beauty not easily forgotten. I’ve experienced this beauty more than a few times, and it keeps you coming back for more.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

Strategy is Imagination - Making Strategy Fun Again (Part 1)

 

Strategy can be a drag, no? Flat, boring & superficial directives from on high prepared by disinterested technocrats, or even worse, by LLMs pretending to be human. You’ve probably seen the (dis)engagement data.  If you haven’t, give any AI engine the following prompt: ‘What is the current level of engagement in multinational corporations?’ – and run for cover.

Strategy is a big part of the problem, and over the next several articles, I ask ‘what’s wrong with strategy & how do we fix it’.

Strategy development, deployment & execution should be bracing, exciting and engrossing.  A process wherein you embrace your biggest challenges. Who are we? What are we really trying to accomplish? What are our main blockers & what do we do about them? What management systems and capabilities do we need to build to tackle them?

If such questions don’t engage us, is there any zest, brio or magic left in our working lives?

Strategy is Imagination

Strategy is the domain of the Dreamer, Artist, Hipster and Non-Conformist.  To paraphrase Aristotle, strategy is a place where things can be ‘other than they are’. And yet too often strategy comprises dry analysis performed remotely by disinterested people (or worse, AI) who don’t know or care that much about the business, and certainly not the essential ‘knicks & knacks’ behind a magic piece of hardware, software or service.

Remote technocrats with no skin in the game not only spoil the dish – they drive everybody in the kitchen crazy and eventually turn them off completely.  Hence, the global (dis)engagement scores. I’ve written elsewhere that widely used methods like OKR are prone to this syndrome. What’s the ‘View from the Floor’? Let me quote a team leader in a major bank: ‘Here’s another dumb thing they want us to do.’

Strategy is Storytelling

So, what’s the remedy?  Storytelling – strategy begins and ends there.  A strategy is tale with a beginning, middle and end.  It has a clearly defined shape, internal dramas, peaks & valleys and a hopefully satisfying resolution.  Strategy exists in Aristotle’s ‘World of Contingency’ – a place where things can be ‘other than they are’.  Analysis informs & validates the story, but a human beings shape it, feel it, and commit themselves to it.

There are no ‘new stories’ – researchers around the world agree on this. Some argue for seven basic plots, others cite six emotional arcs, and still others 36 basic dramatic situations. But everyone agrees there are no new story plots, emotional arcs or dramatic situations.

The same is true for strategy. In earlier articles I introduced the ‘Stick’ & most strategies comprise some permutation of its core elements. What makes a strategy compelling is the story.  How well have the strategy leader & team grasped the situation confronting them?  How well have they articulated their aspiration and winning logic?  How deep is their understanding of the conditions that must be true for this to work? How passionate is this team & leader?  Do we trust them to stay the course through the inevitable setbacks, disappointments and unforeseen disasters?

What makes for a great story? Compelling characters and their interaction, meaningful conflict, and emotional resonance.  A great strategy is pitch for the future, full of drama around ‘What Is’ versus ‘What Could Be’.  Great strategies have hooks, crises, heroes & villains, turning points, magical tools, self-realization, and a call to action.  Great strategies, like great pitches, are memorable: they pull you and fire you up.

In summary, strategy is imagination & synthesis. If you can turn your strategic problem into a compelling narrative, you’ve taken the first step towards achievement. More to come.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

Succeeding in an AI World (part 3)

 

In earlier articles I introduced the equation V = Q x A to illuminate the leader’s challenge in an AI world. How to harness the AI’s luminous potential while avoiding the disturbing risks? Today I’d like to go a little deeper.

The value of any intervention is a function of its quality and the degree of acceptance.

Business interventions typically entail novelty - a new vision, aspiration, goals & winning logic, or a new process, technology, way of working and/or thinking, or an innovation needed to solve a problem or fill an evolving need.

Value means something the CFO can point to on a P & L, or in the case of Innovation, validated learning toward filling a critical & unfilled customer need in an important market (Innovation Accounting). Quality means things like how clearly we’ve defined our problem & hypothesis, the quality & completeness of our data, depth of causal analysis, degree to which hypotheses, data & causes are validated, quality of reflection & pivots, how effectively the intervention is deployed, communicated, and sustained. Acceptance means do people like it, use it, trust & believe in the intervention – and in you as its sponsor & leader.

AI can be great for Quality but is toxic for Acceptance. The public backlash against AI & Big Tech in general has gone mainstream. Pixar’s Toy Story 5 for example, carries a strong anti-Tech message - the toys lose their jobs to AI. It’s all there, the screen addiction, loneliness, and phoniness of the chatbots. So, even Tech has joined the anti-Tech crusade. The deep-rooted & growing revulsion to Tech in movies, music, journalism and fields, is well documented by culture critic, Ted Gioia, and many others.

So, what are key drivers of Acceptance? Excellence – the excellence of the humans who propose, develop, and deploy the initiative. By excellence I mean integrity, capability, competence, decency, honesty, courage, tenacity, warm-heartedness, experience, and vision. In fact, I am consciously evoking the ancient Greek word arete.

Here’s my rationale: I have experienced multiple business transformations as a manager, engineer, advisor, and director. The common thread in all successful initiatives has been the excellence (arete) of leadership. In other words, leadership is the spark, killer app, and driver. Leadership animates Acceptance and Quality, and ensures the initiative creates Value.

I experienced all this most intensely as a young Toyota manager in the 1990’s. Toyota was expanding around the world and deployed their best & brightest executives and senseis to facilitate this massive & risky investment. Decades later these facilities remain world-beating paragons of Safety, Quality, Delivery & Value. Why did my colleagues & I embrace the Toyota Production System and it’s complex & often counterintuitive methods & mindsets? Excellence – the excellence of our leaders & senseis. We sensed their excellence and did not want to let them down. We trusted them and knew we would do right by them. They had our trust, loyalty, respect, and affection – and for me, they always will.

In summary, our AI interventions are governed by the simple equation above. Most initiatives that focus on Q at the expense of A, fail. Use AI to enhance Q but understand the limiting factor. If A is zero, then so is Value. In future articles I’ll address AI & Q, and Excellence – what is it, how do we grow it, and how do we scale it?

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

How Do We Win in an AI World? (Part 2)

 

Imagine we’re a large multinational, customer-facing company under intense competitive pressure. We’ve invested heavily in AI & there’s pressure to demonstrate a rapid ROI. Our team members, though loyal & capable, are hesitant to apply AI tools that might eliminate their jobs. What to do?

What’s In It for Them?

Job One is to answer the question: ‘What’s in it for them?’ Please refer to my earlier articles for my thoughts.

Some AI basics

1) AI can be a fine servant but is a dreadful master, 2) AI’s challenge is not unprecedented and mirrors the challenges posed by breakthrough technologies since the Industrial Revolution. In fact, the challenge is not so dissimilar to that posed by Robotic Process Automation (RPA) a decade or so ago in industries like Financial Services.  3) RPA is deterministic AI (If X, then Y) and excels at automating data entry, invoice processing, or high-volume, routine tasks. 4) Agentic AI is non-deterministic (If X, then Y or Z or maybe W) and excels at complex, cognitive tasks like customer support, strategic planning, or managing end-to-end IT operations. Agentic AI learns, which is disturbing to many.

So, let’s imagine we’re the company described above, and our goal is to improve both Customer & Employee Experience (CX & EX) in a critical customer-facing process, while reducing Lead Time & Cost. How do we proceed?

Overall Approach

1)    Begin every AI use case by clearly defining the problem. This is harder than it sounds. Too often, I hear problem statements like: “We need everybody to use AI this year so we can show the Board we’re getting a good ROI.”  Good luck with that.

2)    Lay a solid foundation by taking waste & variation out of the process. I remember our RPA partner telling me, “If you bring us garbage processes, you’ll spend a fortune & create garbage at the speed of light.” This also means levelling up your data. Is it high quality, complete & end-to-end? If not, fix it (with APIs, RPA & advanced analytics)

3)    Look for both analogue & Digital remedies for Value Stream & Customer Journey hot spots. Early on, analogue remedies will be most effective. Let’s say your goal is to reduce cycle time. Start with OpEx/Lean fundamentals like wringing out waste, addressing bottlenecks, level-loading, and creating extra capacity by cross-training.

4)    Agentic AI remedies come into their own after we fix our process & data gaps.

Key Enabler – Ambidexterity

Your Centre of Excellence (innovation support team) must become ambidextrous – in other words, adept at both OpEx/Lean & Digital remedies. In the age of AI, the ambidextrous win.

More to come.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

How Do We Win in an AI World? (Part 1)

 

Is the bloom off the AI rose?  AI optimism seems to be collapsing under a black wave of AI gloom.  To be sure, the effects of AI are everywhere, both good and bad, though the bad tends to grab the headlines. My practice is focused on improvement & innovation– both Digital & analogue.  What am I seeing & what does it mean?

Companies I work with are facing the following conundrum: How do we harness the power of AI while avoiding the jagged rocks dominating the headlines? The pushback against AI is real & growing.  People are rightly worried about their jobs, as industry after industry comes under attack. (And are humans not increasingly repelled, especially by AI in disguise, pretending to be human?)

Let’s imagine we are a large multinational customer-facing company. We have an honorable history of service to our communities, team members and shareholders. We’re under intense competitive pressure & are facing daunting Innovation, Lead Time & Cost challenges. Like so many of our peers, we’ve invested heavily in AI and know the Board expects a rapid ROI. And yet, our team members, though loyal & capable, are understandably hesitant to apply AI tools to improve productivity, reduce & otherwise improve our business. What to do?

AI’s challenge is not unprecedented. In fact, it reminds me of the challenge presented by Robotic Process Automation (RPA) a decade or so ago when it began to be applied at scale in industries like Financial Services. RPA is deterministic AI (If X, then Y) and has been used to automate data entry, invoice processing, and other high-volume, routine tasks. Agentic AI is non-deterministic (If X, then Y or maybe Z or maybe W) and excels at complex, cognitive tasks like customer support, strategic planning, or managing end-to-end IT operations. Unlike RPA, Agentic AI makes decisions based on your needs & the situation on the chessboard. Moreover, and this is perhaps what scares people most, Agentic AI learns through repetition. This is why chess programs like Leela and Alpha Zero continually get stronger, so much so, that human World Champions struggle to secure even a draw against them.

Many of the lessons we learned with RPA apply to Agentic AI. So, how do we win in our brave new world? Let’s begin with the most basic point: Agentic AI, like RPA, is a tool. As such, it can be an good servant but is a dreadful master. Let’s therefore, in every use case, define the problem we are trying to solve, and only then consider what tools might suit. As we’ll learn in coming articles, Agentic AI is rarely the first too you reach for.  Stay tuned.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

How Do We Test Our Winning Logic?

 

How do we test the winning logic underlying our strategy?  How do we avoid the Innovation Theatre & corporate kitsch I’ve described in earlier pieces – smart people going through the motions pretending they’re creating Value?  The Board & senior leader team are often at a disadvantage, lacking the day-to-day connection with the front line, suppliers and customers.

The Value Stick

The Stick is a rough & ready way of testing our winning logic. Ambidexterity is a prerequisite. Can we both protect the core business with OpEx/Lean, and ignite new Growth using Digital methods?

Here are the Stick’s key components:

·       Willingness to Pay - can we increase WtP by providing kick-ass offerings that wow the customer?

o   Can we find new customers, new undiscovered needs, satisfied by news offerings; new channels; new levels of customer understanding & connection that open up new markets – the proverbial Blue Ocean?

·       Price – can we provide so much value that the customer readily pays more?

o   Here, facility with both OpEx/Lean & Innovation methods is essential.

o   A tremendous manufacturer who continually improves the process will both reduce waste and also increase Value in the customer’s eyes. (‘I no longer have to worry about that…’)

o   Similarly, an adept innovator with a deep, intuitive understanding of the customer can identify invisible opportunities that cost little to address but utterly delight the customer.

·       Cost – this is the arena of OpEx/Lean. Most industry remains awash in waste, which represents a giant ‘hidden bank account.’ 

o   OpEx/Lean leaders know both how to find these, and as important, how to engage their people in harvesting the gains.

·       Quantity – means getting people to buy more, which is the wheelhouse of growth hacking & other innovation hacks.

o   Possible means: partner with simpatico companies, develop adroit pricing strategies, understand & access where customers hang out, reduce buying friction, remaining relevant and top-of-mind with funny, engaging just-right content in the right channels.

Caveat: be aware of the Innovator’s Dilemma.  The Value of a given innovation cannot in its early stages be measured by conventional accounting methods – all the standard Value metrics are zero.

Use these elements to test your winning logic. At the very least, you’ll generate a meaningful discussion. Is the Stick enough to validate your strategy? No, but it’s a great way of testing & validating our thinking.  Validating your Strategy entails a good deal more, a topic I’ll take up in upcoming pieces.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

Innovation Theatre Destroys Value – So What’s the Remedy? part 1

 

Ever attended a Sprint or Stratex deep dive that looks good on the surface, but everybody knows, ‘This has no value.’?  ‘Innovation Theatre’ is closely related to what Czech novelist, Milan Kundera, called ‘kitsch’. Phony, tasteless, or overly sentimental, kitsch embraces cliché & superficial emotions, while lacking depth and authenticity.  In dysfunctional organizations, kitsch manifests as the feeling “Isn’t it great that we’re so [fill in the blanks]”.  As in Kundera’s 1960’s Czechoslovakia, everybody knows it’s phony, but nobody dares say anything.

Authenticity

Whether you’re trying to protect the core with OpEx/Lean, or ignite new growth with digital methods, Innovation Theatre is a clear & present danger, which not only fails to create value – it destroys value. So, what’s the remedy?

Recognizing Kitsch

How does Senior Leader Team & Board recognize Innovation Theatre & corporate kitsch in general? Recognizing it in OpEx-related activities is fairly straightforward. Ask yourself: ‘Would the CFO recognize any value here?’

Recognizing kitsch when you’re trying to create something entirely new is harder because of the Innovator’s Dilemma.  Entirely new offerings fail the CFO test because all the standard measures of value (Revenue, ROI, market share and so on) are zero.  This means we need a different way of measuring (Innovation Accounting), which I’ll take up in later articles.

Remedies to Innovation Theatre - Authenticity

Authenticity is the simplest & most daunting remedy.  Personal authenticity means I who know who I am, what I believe in, where I come from, and where I’m going.  Corporate authenticity means the senior leader team can answer these questions on behalf of the company in clear & compelling way.

In such organizations, OpEx & Innovation sprints & playbacks (not to mention senior leader & Board meetings) are focused, factual, serious and often light-hearted (because you don’t have to fake it). The mantra of such organizations is some variation of ‘Target, actual, please explain’, a powerful phrase which embodies the following mental models:

·       We take targets & commitments seriously.

·       We don’t lie about what’s actually happening; we accept reality full on

·       We deal with problems directly & openly.

·       This is a ‘No blah blah blah’ zone.

Authenticity is rooted in a deep commitment to the common good, to the ‘triple bottom line’, if you will. In the words of a respected mentor, ‘Something for the community, something for the team member, and something for the company’.

Authenticity also entails answering the following question is a frank & honest way: ‘What’s in it for you?’ Failing to do so is a form of kitsch. People hear the rhetoric about continuous improvement & breakthrough innovation and wonder, “Are we going to innovate our way out of a job?”.

Role of Leaders

Leaders, therefore, must embody authenticity rooted in simple decency and respect for people. For this reason, in the age of AI, authenticity is the gamechanger, catalyst & killer app. And as the public tires of AI slop, authenticity will grow in importance & value

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

#Innovationleadership #Authenticity #AuthenticLeadership #InnovationTheatre &phonyimprovement #corporatekitsch

Stratex Blockers – Innovation Theatre

Ever attended a Sprint or Stratex deep dive that looks great on the surface – lots of high fives & smiling faces – but leaves you with a nagging feeling that ‘nothing will come of this’? 

Welcome to ‘Innovation Theatre’. Whether you’re trying to protect the core with OpEx/Lean, or ignite new growth with Digital, this pernicious syndrome is a clear & present danger, which not only fails to create value – it destroys value.

Innovation Theatre is closely related to what the great Czech novelist, Milan Kundera, called ‘kitsch’. Gaudy, tasteless, or overly sentimental, kitsch embraces cliché and superficial emotions. Kitsch can be seen as a form of escapism, providing comfort through familiarity while lacking depth and authenticity.  In dysfunctional organizations, kitsch manifests as the feeling “isn’t it great that we’re so innovative/supportive/engaged/aligned…” (fill in the blanks).  As in Kundera’s 1960’s Czechoslovakia, everybody knows the system is phony, but nobody dares say anything.

How do we recognize Innovation Theatre? What causes it & what are the remedies? What’s the role of the Board and Senior Leader Team in recognizing and banishing kitsch? What are the blockers to doing so? 

I’ll be addressing these and other questions in the weeks to come. 

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org