Towards an Ambidextrous Centre of Excellence

 

Centres of Excellence (CoE) usually focus on protecting the core business by building capability & evangelizing critical methods or technologies (e.g. Lean/OpEx). That’s no longer enough – in an exponential age, the CoE must also help us grow.

The CoE’s Role is Changing

I’ve worked with CoEs for a couple of decades now & have seen them evolve in different directions. Historically, CoEs have focused on Cost – rightfully so.  Most CFOs will tell you Cost improvements tend to last longer than Revenue growth.  Moreover, Cost is amenable to Total Involvement, Quick & Easy Improvement, Kaizen Teian and other core elements of Lean/OpEx.

The CoE’s core functions comprise five key pillars:

1. Standardize & Share Best Processes & Methods

2. Build Knowledge & Capability

3. Lead, Align & Connect

4. On-Demand Support

5. Create Value through Innovation & Continuous Improvement

I’ve italicized ‘innovation’ in Pillar 5 to highlight the Growth imperative. Exponential technologies like AI, Data Analytics, Blockchain and the rest enable Growth.  Agentic AI, for example, is like the Genie in Disney’s Aladdin movies, making questions around How less daunting. Going forward we’ll be far less constrained by the tyranny of the How.

Protecting the Core is No Longer Enough

Ambidexterity

And so, protecting the core business with Lean/OpEx is no longer enough. To help ignite new Growth, the CoE must absorb a) new technologies like those mentioned above, and b) new ways of working including AI-enabled experimentation, Design Thinking, and Growth Hacking. Ambidexterity is Job One – we have to become ‘two-gear’ organizations able to a) Protect our core business with Lean/OpEx, and b) Ignite new Growth with Digital methods.

I don’t wish to be misunderstood: Lean/OpEx lays the essential foundation. Most transformations begin with Lean fundamentals, but we can’t stop there.  Otherwise, we’ll miss enormous Growth opportunities. Moreover, we’ll commission a Kaizen event when we really need an AI agent or Growth Hacking. I’ve also seen the reverse scenario. A digitally-focused CoE jumps to an expense Digital solution (e.g. RPA or Agentic AI) when a Lean/OpEx solution would be quicker, better & cheaper.

Building an Ambidextrous CoE

We need to build connected, complementary ‘learn by doing’ curricula around a) Protecting the Core Business, and b) Igniting New Growth.  We supplement these with time-boxed, focused, fast-paced sprints and other practical events activities like Boot Camps, Hackathons, and Shark Tanks. Such activities are flexible & can be focused where needed. We begin with Lean/OpEx basics – which remain opaque to many people. Every generation has to relearn the fundamentals.

My practice is to run these in a Train-the-Trainer style. Once the CoE levels up, they can take the baton & teach the organization.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

 

Lean Pathways Blog Milestone – 1,500,000 Visits

 

My blog hit a milestone last week – 1,500,000 visits. I started writing in early 2013, tentatively, not understanding the medium, and facing a heavy work burden. My marketing sensei, the splendid Holly Simmons, suggested a weekly blog: “You say you want to share what you’ve learned? Well, what are you waiting for?”

                        Pascal's Ikigai: Mentor, Create, Have Fun

Fourteen years later, I’m still at it.  Blogging is a way of sharing & checking my thinking.  ‘Does this make sense. Am I on the right path?’

I’ve pivoted a number of times, based on fresh interests & new learning. The past several years I’ve been telling the story of my adventures in Singapore & other innovation hot spots. It’s been a nine-year journey working with my colleague, Laurent Simon, in new geographies and industries (Insurance, Banking, Consumer Goods, Energy). I’ve learned that ‘Ambidexterity’ is the leader’s Job One. We must both protect the core business with Lean/OpEx and ignite new Growth using Digital methods. AI only intensifies the need to do so.

My pivot initially caused confusion – I thought you were a Lean guy. Indeed, cost reduction & avoidance through Lean/OpEx provide lasting value - but it’s no longer enough. As Noriaki Kano taught, ‘Delighters’ decay and become ‘must haves’. Lean/OpEx is a necessity, but it’s no longer a Wow. My job is teaching ambidexterity to leaders. In keeping with my ikigai, I have a foot in both camps. Mentor, Create, Have Fun.

Thanks for reading,

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.

The Ambidexterity Challenge – What’s Our Overall Approach?

Ambidexterity is the senior leader’s Job One & entails developing the ability to both:

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

It’s an immense challenge for senior leaders and the Board. Let’s imagine they're are fully aligned & agree to move forward.   What’s our overall approach?

Based on our experience in multiple industries, the following generic logic is a good starting point: 

1. Take out the waste & variation, 
2. Get close to the customer, and 
3. Get Digital to the core

You'll of course tweak, refine, and adjust what you emphasize based on your business situation, but you can’t go wrong if you start with this overall logic.

Take Out the Waste & Variation

It’s not unusual to do dozens of process improvement events (PIEs) in the first few years. OpEx/Lean principles have made major inroads the past few decades but companies that practice them consistently are in the minority.  Bluntly stated: OpEx/Lean is hard. Much ink, tears & vitriol have been spilt debating why this is so. 

Please note that I’ve included Variation in the formula.  Variation degrades the management system. In fact, W. Edwards Deming called it a ‘virus’ that infects everything. PIEs must not devolve into mere ‘scavenger hunts’ for waste – that’s comparatively easy. The challenge is finding the root causes of both waste & variation and eliminating them with OpEx/Lean basics (including standardized work, visual management, quality in the process).

Get Close to the Customer

This is where things start to get interesting. In my experience, many companies believe they know the customer even though they have little direct contact or knowledge of him or her.  For example, an otherwise capable & thoughtful senior leader team comprising predominantly male, Gen Y, English-speaking Engineers & MBAs living in Chicago confidently proclaim this or that about a female, Gen Z, Chinese-speaking and deeply Buddhist persona living in a small east Asia city.

How do they know who she is, what she values and why she buys or does not buy their offering?  ‘We hired a local marketing firm to do a series of focus groups’. Good luck with that. This is where Growth Hacking & other elements of 21^st C marketing comes into their own.  But it’s a very different way of thinking & behaving for most organizations.

Get Digital to the Core

This means embracing so-called ‘exponential technologies’ like AI, Data, Cloud, RPA, AR, VR, Drones, and Blockchain. It also means embracing Digital methodologies like Agile Ways of Working, Design Thinking, Lean Experimentation, and the afore-mentioned Growth Hacking. Here’s the challenge: how to turn these methodologies into an integrated way of working?  One that makes sense for the business challenges you’re facing. Otherwise, you risk getting lost in a forest without a compass.

Each step of course, lays the foundation what follows. For example, if you digitize bad processes you will, as an RPA & Agentic AI executive told me, ‘create garbage at the speed of light’. And the three steps are cyclical, not linear. As your business challenges evolve, you’ll have to keep cycling back to step one.  As the poet said, ‘Rust never sleeps.’ Next time, I’ll talk about the nature of the journey.

Best wishes,

Pascal    

E: pascal.dennis@leansystemss.org

The Leadership Challenge, part 2 – What’s in it for Them?

How will you motivate your team, Pascal-san? 

A cherished mentor asked me this question decades ago. I was a young engineer & manager trying to absorb the legendary Toyota Production System. A lot has happened since those days, but his wisdom still informs me. The leader’s job one today is ambidexterity. How will we both protect the core business, and ignite new Growth? These entail very different mindsets and ways of working. How do we motivate our team members to make such extraordinary efforts?

How will you motivate your team, Pascal-san? 

Ambidexterity entails the ability to both 1) Protect the core business with the proven methods of OpEx/Lean, and 2) Ignite new Growth using Digital methods. It’s an immense challenge, and I’ve described blockers in earlier blogs. So, how do leaders motivate team members to take it on?  Here’s how I would answer the question.

We’re asking you all to help us transform our business. Why? Because it's a big challenge and we can't do it without you.

It's a big ask - life is hard nowadays and many of us are just hanging on, doing our best in a sea of seemingly endless change & turmoil. So, why should you put your backs to the wheel, why should you go the extra mile to help this organization get to the next level, and prosper in the long term? Bluntly stated, what’s in it for you?

First, the bad news.  I cannot guarantee that your jobs will not change.  And it’s likely some positions will be eliminated. As ever, we will do everything within our power to maintain employment stability.

If your job disappears, you’ll have every opportunity to apply for the new jobs we create. If you chose to seek other opportunities, or to retire, we'll be fair & generous.

Regardless, all of you will have the opportunity to grow and to learn. We’re going to invest in you so that you’re multi-skilled & invaluable to our organization.  We’re going to strengthen your capabilities in Operational Excellence and give you the opportunity to learn cutting-edge Innovation skills.

Why? Because we want you to help us continually improve our processes, and to share your innovation ideas so that we can continue to surprise our competitors and delight both existing and new customers.

You’ll have the opportunity to learn by doing through bootcamps, hackathons, our Shark Tank program and other interesting channels. We want you to become ‘employable for life’. We hope you choose to stay with us.

What about AI, you ask? Isn't it going to obsolesce the human & take our jobs?

I believe AI is going to be a tremendous enabler for us. I believe the teams of the future will comprise both people and AI agents, the latter doing specific tasks that free up people for higher level work, especially oversight to ensure our AI agents don't hallucinate and destroy value. But AI will never replace people. AI without acumen equals garbage at the speed of light. We will always need capable, committed people, and that's why we want to invest in you.

So, what's in it for you? Fun, growth, opportunity and being a part of kick-ass team in a kick-ass organization committed to doing the right thing, in the right way.

Best wishes,

Pascal

Ambidexterity – the Battles We Have to Win

 Doing nothing is the biggest risk.  21^st C truism

Nowadays, can we rest on our proverbial oars? Can we afford to coast, confident that our voyage & destination are assured? Are we immune to the deadly diseases of our day – Volatility, Black Swans, and Obsolescence?

Our good luck & curse is to be ‘born in interesting times’. Doing nothing is our riskiest option. When the ocean is in furious flux, alertness, manoeuverability and speed are of the essence. And the clearest expression of these qualities is ambidexterity – the ability to both protect the core business with Lean/OpEx, and also, to ignite new Growth using Digital methods.

This is the first of a series of articles in which I describe the transformation blockers I have experienced.  These are the ‘battles’ we have to win whether we are launching a Lean ‘model line’ or an Innovation ‘showcase’:

• Ignorance
• Fear
• Space
• Scatter
• Guesswork

I'll describe them briefly today and set the stage for a deeper discussion in articles to come.

Ignorance

When I launched our advisory service in year 2,000 the Toyota Production System was all the rage. TPS was indeed the ‘machine that changed the world’, and companies around the world were anxious to absorb & apply its secrets. In a marvelous spirit of generosity, Toyota shared its methods and opened its factories to the world. And yet, it took a long time to lift the veil of ignorance.  Indeed, it’s estimated that between 50 and 90% of Lean transformations fail to achieve their goals.

Fear

Senior leader mentorship is a big part of my personal practice these past few decades. I’ve worked with CEOs, COOs, CFOs, CMOs, CROs and with independent & executive Board members. With very few exceptions, they are smart, capable and committed to doing the right thing for their companies, team members and communities.  (To be clear, I carefully screen mentees – no bozos, a-holes, or ‘dark triad’ types.)

Fear is perhaps their most common shared emotion.  They don’t want to let people down; they don’t want to look bad. They want to leave the company is better shape than they found it.

Space

Transformation requires space – physical, temporal, financial, strategic, and cultural space. Such space requires ‘executive air cover’ against the inevitable ‘corporate antibodies’ that will shut down a model line or showcase in overt and covert ways.

Scatter

Scatter means the inability to pair down one’s activities & focus on the critical few.  The Pareto principle is often cited but rarely practiced consistently. There is something in human nature that likes to push buttons repeatedly, to see what happens, I suppose. This debilitating tendency has reached epidemic proportions in our screen-addled worlds.

Guesswork

Guesswork entails jumping to conclusions in the absence of data. Sometimes the deeper cause is HIPPO management (decisions based on the highest paid person’s opinion). Other times, we simply lack the data – very common when we’re trying to ascend the now mythical ‘hockey stick’ curve.

There you have it – the biggest blockers to ambidexterity that I have experienced.  In articles to come, I’ll do a deeper dive on each one.  Hope you join me.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org

In case you missed earlier blogs... please feel free to have another look….

Ambidexterity-in-practice
AI and Innovation, part 2